<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 3, 1997
REGISTRATION NO. 333-16233
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BAY VIEW AUTO TRUSTS
(ISSUER WITH RESPECT TO THE SECURITIES)
BAY VIEW SECURITIZATION CORPORATION
(ORIGINATOR OF THE TRUSTS DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF 93-1225376
INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
2121 SOUTH EL CAMINO REAL
SAN MATEO, CALIFORNIA 94403
(415) 573-7300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL PLACE OF BUSINESS)
----------------
ROBERT J. FLAX
BAY VIEW SECURITIZATION CORPORATION
2121 SOUTH EL CAMINO REAL
SAN MATEO, CALIFORNIA 94403
(415) 573-7300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
CHRISTOPHER R. KELLY, P.C. RICHARD M. SCHETMAN, ESQ.
DAVE M. MUCHNIKOFF, P.C. CADWALADER, WICKERSHAM & TAFT
SILVER, FREEDMAN & TAFF, L.L.P. 100 MAIDEN LANE
1100 NEW YORK AVENUE NEW YORK, NEW YORK 10038
WASHINGTON, D.C. 20005
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined
by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
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 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. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
===============================================================================
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains a form of Prospectus relating to the
offering of Series of Asset Backed Certificates by various Bay View Auto
Trusts created from time to time by Bay View Securitization Corporation and
two forms of Prospectus Supplement relating to the offering by Bay View 199--
Auto Trust of the particular Series of Asset Backed Certificates described
therein. Each form of Prospectus Supplement relates only to the securities
described therein and is a form that may be used, among others, by Bay View
Securitization Corporation to offer Asset Backed Certificates under this
Registration Statement.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, +
+NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED , 199
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 199 )
$ [LOGO HERE]
BAY VIEW 199 - AUTO TRUST
$ % CLASS A AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
CLASS I INTEREST ONLY AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
BAY VIEW SECURITIZATION CORPORATION
DEPOSITOR
CALIFORNIA THRIFT & LOAN
SERVICER
----------
Principal, and interest at the applicable Pass-Through Rate shown above, will
be distributed to Class A Certificateholders on the third business day after
the 5th day of each month (the "Distribution Date"), beginning , 199 . The
final scheduled Distribution Date of the Class A Certificates will be , 199
(the "Final Scheduled Distribution Date"). The Class I Certificates will not
receive principal payments, but interest at the Class I Pass-Through Rate of %
per annum on the Notional Principal Amount (as defined herein) of the Class I
Certificates will be distributed to Class I Certificateholders on each
Distribution Date. The Original Notional Principal Amount will be $ and will
decrease on each Distribution Date. Each Certificate offered hereby will
represent an undivided interest in the Bay View 199 - Auto Trust (the "Trust")
to be formed by Bay View Securitization Corporation, a Delaware corporation,
having its principal office and place of business in San Mateo, California (the
"Depositor"). The Trust property will include a pool of simple and precomputed
interest installment sale and installment loan contracts originated in various
states in the United States of America, secured by new and used automobiles,
light trucks, motorcycles and vans (the "Receivables"), certain monies due
thereunder as of and after , 199 (the "Cutoff Date"), security interests in
the vehicles financed thereby and certain other property. The Trust Property
will also include an irrevocable surety bond guaranteeing payments of interest
and principal on the Class A Certificates and Class I Monthly Interest (the
"Surety Bond") issued by and a Spread Account for the benefit of the Class
A and the Class I Certificateholders, as well as the surety bond issuer.
Concurrently with the issuance of the Class A Certificates and the Class I
Certificates, the Trust will issue a Class IC Automobile Receivable Pass-
Through Certificate (the "Class IC Certificate"). The Class IC Certificate will
be issued to Bay View Securitization Corporation, the Depositor, and will not
be offered hereby. The rights of the Class IC Certificateholder to receive
distributions with respect to the Receivables are subordinated to the rights of
holders of the Class A Certificates and Class I Certificates, to the extent
described herein. See "The Offered Certificates--Distributions on the Class IC
Certificate" and "--Distributions on the Offered Certificates." The Class A
Certificates and the Class I Certificates are together sometimes referred to
herein as the "Offered Certificates."
Prior to their issuance there has been no market for the Offered Certificates
nor can there be any assurance that one will develop, or if it does develop,
that it will provide the holders of the Offered Certificates with liquidity or
will continue for the life of the Offered Certificates. The Underwriters
intend, but are not obligated, to make a market in the Offered Certificates.
The yield to maturity of the Class I Certificates will be sensitive to the
rate and timing of principal payments (including prepayments) on the
Receivables. Investors in the Class I Certificates should fully consider the
associated risks, including the risk that a rapid rate of principal payments
could result in the failure of such investors to recoup their initial
investments. See "Risk Factors--Prepayment Risks Associated with Class I
Certificates," "Yield and Prepayment Considerations" and "The Offered
Certificates--The Class I Certificates--Calculation of Notional Principal
Amount" herein.
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION
SET FORTH UNDER "RISK FACTORS" ON PAGE S- HEREOF AND PAGE 12 OF THE
PROSPECTUS.
THE CERTIFICATES DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF BAY VIEW
SECURITIZATION CORPORATION OR ANY AFFILIATE THEREOF. NEITHER THESE
SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS
PUBLIC DISCOUNTS(1) TO DEPOSITOR(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Certificate.................. % % %
- --------------------------------------------------------------------------------
Per Class I Certificate.................. % % %
- --------------------------------------------------------------------------------
Total................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) With respect to the Class I Certificates, the Price to Public and Proceeds
to Depositor are expressed as a percentage of the Notional Principal Amount
(initially $ ), and the Underwriting Discounts are expressed as a
percentage of the related Price to Public.
(2) Before deducting expenses, estimated to be $ .
The Offered Certificates are offered, subject to prior sale, when, as and if
accepted by the Underwriters, and subject to approval of certain legal matters
by Cadwalader, Wickersham & Taft, counsel for the Underwriters. It is expected
that delivery of the Offered Certificates in book-entry form will be made on or
about , 199 through the facilities of The Depository Trust Company, against
payment therefor in immediately available funds.
The date of this Prospectus Supplement is , 199 .
<PAGE>
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. THIS PROSPECTUS SUPPLEMENT CONTAINS INFORMATION THAT IS
SPECIFIC TO THE TRUST AND THE CERTIFICATES AND, TO THAT EXTENT, SUPPLEMENTS
AND REPLACES THE MORE GENERAL INFORMATION PROVIDED IN THE PROSPECTUS.
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT MAY ALSO REFLECT LEGAL,
ECONOMIC AND OTHER DEVELOPMENTS SINCE THE DATE OF THE PROSPECTUS. TO THE
EXTENT INFORMATION IN THIS PROSPECTUS SUPPLEMENT CONFLICTS WITH INFORMATION IN
THE PROSPECTUS, THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Until 90 days after the date of this Prospectus Supplement, all dealers
effecting transactions in the Offered Certificates, whether or not
participating in this distribution, may be required to deliver this Prospectus
Supplement and the Prospectus. This is in addition to the obligation of
dealers to deliver this Prospectus Supplement and the Prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur only
under the limited circumstances described herein), , as Trustee, will
provide to Cede & Co., the nominee of The Depository Trust Company, as
registered holder of the Class A Certificates, monthly and annual statements
concerning the Trust and the Class A Certificates. Such statements will also
be provided to the registered holders of the Class I Certificates. Such
statements will not constitute financial statements prepared in accordance
with generally accepted accounting principles. A copy of the most recent
monthly or annual statement concerning the Trust and the Offered Certificates
may be obtained by contacting the Servicer at California Thrift & Loan, 818
Oakpark Road, Covina, California 91724, ( ) - .
<PAGE>
SUMMARY OF TERMS
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
Prospectus. Certain capitalized terms used in this Summary are defined
elsewhere in this Prospectus Supplement on the pages indicated in the "Index of
Principal Terms" or, to the extent not defined herein, have the meanings
assigned to such terms in the "Index of Principal Terms" on page 53 of the
Prospectus.
Issuer........................ Bay View 199 - Auto Trust.
Depositor..................... Bay View Securitization Corporation (the
"Depositor").
Servicer...................... California Thrift & Loan (in its capacity as
servicer, the "Servicer," otherwise "CTL").
Trustee....................... .
The Certificates.............. The Trust will be formed and will issue the
Certificates on or about (the "Closing
Date") pursuant to a pooling and servicing
agreement (the "Pooling and Servicing
Agreement"). The Certificates will consist of:
(i) % Class A Automobile Receivable Pass-
Through Certificates in the aggregate principal
amount of $ ; (ii) the Class I Interest Only
Automobile Receivable Pass-Through
Certificates; and (iii) the Class IC Automobile
Receivable Pass-Through Certificate. The Class
I Certificates are interest only certificates
and will not receive distributions of
principal. The Class IC Certificate will be
issued to the Depositor on the Closing Date and
is not being offered hereby. Each of the
Certificates will represent a fractional
undivided interest in the Trust. The Trust
assets will include the Receivables, certain
monies due thereunder as of and after the
Cutoff Date, security interests in the related
Financed Vehicles, monies on deposit in the
Certificate Account and the proceeds thereof,
any proceeds from claims on certain insurance
policies relating to the Financed Vehicles or
the related Obligors, any lender's insurance
policy, the Spread Account for the benefit of
the Class A and Class I Certificateholders and
the surety bond issuer, the Surety Bond for the
benefit of the Class A and Class I
Certificateholders and certain rights under the
Purchase Agreement and the Pooling and
Servicing Agreement. Interest paid to the
Certificateholders on the first Distribution
Date will be based upon the amount of interest
accruing from the Closing Date, and will
therefore not include a full month's interest.
The Class A Certificates...... Interest. Interest will be distributable on
each Distribution Date beginning , 199 ,
to holders of record as of the last day of the
calendar month immediately preceding the
calendar month in which such Distribution Date
occurs (the "Record Date") of the Class A
Certificates (the "Class A Certificateholders")
in a maximum amount equal to the product of
1/12th of % (the "Class A Pass-Through Rate")
and the aggregate outstanding principal balance
of the Class A
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Certificates (the "Certificate Balance") as of
the preceding Distribution Date (after giving
effect to all distributions to
Certificateholders on such date) or, in the
case of the first Distribution Date, as of the
Closing Date. Interest on the Class A
Certificates will be calculated on basis of a
360-day year consisting of twelve 30-day months
or, in the case of the first Distribution Date,
the number of days from the Closing Date
remaining in the month of the closing (assuming
a 30-day month). See "The Offered
Certificates--Distributions on the Offered
Certificates." The effective yield on the Class
A Certificates will be below that otherwise
produced by the applicable Pass-Through Rate
because the distribution of Monthly Principal
(as defined below) and Class A Monthly Interest
in respect of any given month will not be made
until the third business day after the fifth
calendar day of the following month (the
"Distribution Date"). See "Yield and Prepayment
Considerations" herein.
Principal. On each Distribution Date, the
Trustee will distribute as principal to the
Class A Certificateholders in a maximum
aggregate amount equal to the aggregate
outstanding principal amount of the Receivables
(the "Pool Balance") on the last day of the
second preceding calendar month (or, in the
case of the first Distribution Date, as of the
Cutoff Date) less the Pool Balance on the last
day of the immediately preceding calendar month
("Monthly Principal"). For the purpose of
determining Monthly Principal, the unpaid
principal balance of a Defaulted Receivable or
a Purchased Receivable will be deemed to be
zero on and after the last day of the calendar
month in which such Receivable became a
Defaulted Receivable or a Purchased Receivable,
as applicable.
The weighted average life of the Offered
Certificates will be reduced by full or partial
prepayments on the Receivables (except certain
prepayments in respect of Precomputed
Receivables). See "The Offered Certificates--
Distributions on the Offered Certificates"
herein.
The Class I Certificate ...... Interest. The Class I Certificates are interest
only certificates which will not be entitled to
any principal distributions. Interest will
accrue on the Notional Principal Amount
(defined below) of the Class I Certificates at
the rate of % per annum (the "Class I Pass-
Through Rate"). The Notional Principal Amount
represents a designated principal component of
the Receivables, originally $ (the "Original
Notional Principal Amount").
Solely for the purpose of calculating the
amount payable with respect to the Class I
Certificates, the Certificate Balance will be
divided into two principal components, the "PAC
Component" and the "Companion Component." The
sum of the PAC
S-2
<PAGE>
Component and the Companion Component will at
all times equal the then aggregate unpaid
Certificate Balance. The "Notional Principal
Amount" of the Class I Certificates at any time
will be equal to the principal balance of the
PAC Component as calculated based on the
allocations of principal payments described
below, originally $ .
Interest with respect to the Class I
Certificates will accrue on the basis of a 360-
day year consisting of twelve 30-day months or,
in the case of the first Distribution Date, the
number of days from the Closing Date remaining
in the month of the closing (assuming a 30-day
month). On each Distribution Date, except the
first Distribution Date, the Trustee shall
distribute pro rata to holders of Class I
Certificates (the "Class I Certificateholders")
of record as of the preceding Record Date,
Class I Monthly Interest at the Class I Pass-
Through Rate on the Notional Principal Amount
outstanding on the immediately preceding
Distribution Date (after giving effect to any
reduction of the Notional Principal Amount on
such Distribution Date) or, in the case of the
first Distribution Date, as of the Closing
Date. Holders of the Class I Certificates will
not be entitled to any distributions after the
Notional Principal Amount thereof has been
reduced to zero.
Planned Amortization Feature; Calculation of
the Class I Notional Principal Amount. The
Class I Certificates represent an interest-only
planned amortization class. The planned
amortization feature is intended to reduce the
uncertainty to investors in the Class I
Certificates with respect to prepayments.
Because the Class I Certificates will receive
interest based on their Notional Principal
Amount, this is accomplished by basing the
reduction in the Notional Principal Amount on a
principal paydown schedule rather than on the
reduction in the actual principal balances of
the Receivables, as described below. The amount
which will be paid to the Class I
Certificateholders will come from the excess of
interest earned on the Receivables over the
Class A Monthly Interest and the monthly
Servicing Fee to the Servicer (the "Monthly
Servicing Fee").
The Pooling and Servicing Agreement establishes
a schedule (a "Planned Notional Principal
Amount Schedule") which is set forth herein
under "The Offered Certificates--Class I
Certificates--Calculation of Notional Principal
Amount." On each Distribution Date, the Monthly
Principal will be allocated first to the PAC
Component in an amount up to the amount
necessary to reduce the amount thereof to the
Planned Notional Principal Amount for such
Distribution Date, as set forth in the Planned
Notional Principal Amount Schedule, second, to
the Companion Component until the outstanding
amount thereof is reduced to zero and third, to
the PAC Component, without regard to the
Planned Notional Principal Amount. As described
above, the
S-3
<PAGE>
Notional Principal Amount of the Class I
Certificates will be equal to the outstanding
amount of the PAC Component and thus will be
reduced as the PAC Component is reduced.
The Planned Notional Principal Amount Schedule
has been prepared on the basis of the
assumption, among other things, that the
Receivables prepay at a constant rate between
% and % ABS (as defined herein), an assumed
annualized constant rate of prepayments and the
prepayment model used in this Prospectus. The
yield to maturity of the Class I Certificates
will be sensitive to the rate and the timing of
principal payments (including prepayments) on
the Receivables and may fluctuate significantly
from time to time. If the Receivables prepay at
a constant rate within the range assumed in
preparing the Planned Notional Principal Amount
Schedule, the PAC Component (and the Notional
Principal Amount of the Class I Certificates)
will be reduced in accordance with the Planned
Notional Principal Amount Schedule. If the
Receivables prepay at a constant rate higher
than % ABS, the amount of the Companion
Component will be reduced to zero more quickly,
and the amount of the PAC Component (and the
Notional Principal Amount of the Class I
Certificates) will be reduced more quickly than
provided in the Planned Notional Principal
Amount Schedule, thereby reducing the yield to
holders of the Class I Certificates. In
general, a rapid rate of principal prepayments
(including liquidations due to losses,
repurchases and other dispositions) will have a
material negative effect on the yield to
maturity of the Class I Certificates.
The Planned Notional Principal Amount Schedule
is set forth herein under "The Offered
Certificates--The Class I Certificates--
Calculation of Notional Principal Amount." The
Planned Notional Principal Amount Schedule has
been prepared on the basis of certain
assumptions, which are described herein under
"The Offered Certificates--Class I Yield
Considerations." Prospective investors in the
Class I Certificates should fully consider the
associated risks, including the risk that a
rapid rate of prepayments could result in the
failure of investors in the Class I
Certificates to recoup their initial
investment. See "Risk Factors--Prepayment Risks
Associated with Class I Certificates," and
"Yield and Prepayment Considerations--The Class
I Certificates" herein.
Subordination; Spread The Depositor will establish an account (the
Account....................... "Spread Account") on the Closing Date. On each
Distribution Date thereafter, the Servicer will
deposit into the Spread Account any amounts
remaining in the Certificate Account after the
payment on such date of all amounts owing
pursuant to the Pooling and Servicing Agreement
to the Certificateholders (other than the Class
IC Certificateholder), the Surety Bond Issuer
and the Servicer for the
S-4
<PAGE>
Monthly Servicing Fee. In the event that
Available Funds are insufficient on any
Distribution Date prior to the termination of
the Trust (after payment on the Monthly
Servicing Fee) to pay Monthly Principal and
Class A Monthly Interest and Class I Monthly
Interest to the Class A Certificateholders and
Class I Certificateholders, draws will be made
on the Spread Account to the extent of the
balance thereof and, if necessary, the Surety
Bond, in the manner and to the extent described
herein. The Spread Account is solely for the
benefit of the Class A Certificateholders and
Class I Certificateholders and the Surety Bond
Issuer. In the event the amount on deposit in
the Spread Account is zero after giving effect
to any draws thereon for the benefit of the
Class A Certificateholders and Class I
Certificateholders, and there is a default
under the Surety Bond, losses on the
Receivables will be borne directly pro rata by
the Class A Certificateholders and Class I
Certificateholders, as described here. Any such
reduction of the principal balance of the
Receivables due to losses on the Receivables
will also result in a reduction of the Class I
Notional Principal Amount. See "The Offered
Certificates--Distributions on the Offered
Certificates" and "--Accounts" herein.
The Class A Certificates and Class I
Certificates will be senior in right and
interest to the Class IC Certificate. The Class
A Certificateholders and the Class I
Certificateholders will have equal rights with
respect to amounts collected on or with respect
to the Receivables and other assets of the
Trust in the event of a shortfall. The Trustee
will first withdraw funds from the Spread
Account on each Distribution Date to the extent
of any shortfall in the Class A Monthly
Interest and Class I Monthly Interest and the
Monthly Principal as described above. Any
amount on deposit in the Spread Account on any
Distribution Date in excess of the Required
Spread Amount (defined below) after all other
required deposits thereto and withdrawals
therefrom have been made, and after payment
therefrom of all amounts due the Surety Bond
Issuer, will be distributed to the holder of
the Class IC Certificate (the "Class IC
Certificateholder"). Any amount so distributed
to the Class IC Certificateholder will no
longer be an asset of the Trust. While it is
intended that the amount on deposit in the
Spread Account will grow over time, through the
deposit thereof of the excess collections, if
any, on the Receivables, to the Required Spread
Amount, there can be no assurance that such
growth will actually occur. The "Required
Spread Amount" with respect to any Distribution
Date will equal % of the initial Pool
Balance. If the average aggregate yield of the
Receivables Pool in excess of losses falls
below a prescribed level set forth in the
Insurance Agreement, the Required Spread Amount
will be increased to % of the Pool Balance.
Upon and during the continuance of an Event of
Default or upon the occurrence of certain other
events described in the Insurance
S-5
<PAGE>
Agreement generally involving a failure of
performance by the Servicer or a material
misrepresentation made by the Servicer or a
material misrepresentation made by the Servicer
under the Pooling and Servicing Agreement or
the Insurance Agreement, the required Spread
Amount shall be equal to the Surety Bond
Amount, as further described below. See "The
Offered Certificates--Accounts" and "--The
Surety Bond" herein.
Surety Bond................... The Depositor shall obtain an irrevocable
surety bond (the "Surety Bond") issued by the
Surety Bond Issuer (as specified below), for
the benefit of the Trustee on behalf of the
Class A Certificateholders and Class I
Certificateholders. The Trustee shall draw on
the Surety Bond in the event that sufficient
funds are not available (after payment of the
Monthly Servicing Fee and after withdrawals
from the Spread Account to pay the Class A
Certificateholders and Class I
Certificateholders on any Distribution Date in
accordance with the Pooling and Servicing
Agreement) to distribute Class A Monthly
Interest and Class I Monthly Interest and
Monthly Principal, up to the Surety Bond
Amount. See "The Offered Certificates--The
Surety Bond."
Surety Bond Amount............ The term "Surety Bond Amount" means with
respect to any Distribution Date: (x) the sum
of (A) the lesser of (i) the Certificate
Balance (after giving effect to any
distribution of Available Funds and any funds
withdrawn from the Spread Account to pay
Monthly Principal on such Distribution Date)
and (ii) the Net Principal Surety Bond Amount,
plus (B) Class A Monthly Interest, plus (C)
Class I Monthly Interest, plus (D) the Monthly
Servicing Fee; less (y) all amounts on deposit
in the Spread Account on such Distribution
Date. "Net Principal Surety Bond Amount" means
the Certificate Balance as of the first
Distribution Date minus all amounts previously
drawn on the Surety Bond or from the Spread
Account with respect to Monthly Principal.
Surety Bond Issuer............ .
Optional Purchase........ The Servicer has the right to purchase all the
Receivables (referred to herein as an "Optional
Purchase") as of the last day of any Collection
Period, at a purchase price equal to the fair
market value of the Receivables (but not less
than the sum of (i) their aggregate outstanding
principal balance plus accrued and unpaid
interest thereon and (ii) any amounts due the
Surety Bond Issuer), if (i) the Certificate
Balance as of the following Distribution Date
will equal 10% or less of the initial
Certificate Balance and (ii) the Class I
Notional Principal Amount has been reduced to
zero.
Tax Status.................... In the opinion of Silver, Freedman & Taff,
L.L.P., special tax counsel to the Depositor,
the Trust will not be treated as an association
taxable as a corporation or as a "publicly
traded partnership" taxable as a corporation.
The Trustee and the
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<PAGE>
Certificateholders will agree to treat the
Trust as a partnership for federal income tax
purposes, which will not be subject to federal
income tax at the Trust level. See "Certain
Federal Income Tax Consequences" in the
Prospectus.
Ratings....................... As a condition to the issuance of the Offered
Certificates, the Class A Certificates and
Class I Certificates must be rated in one of
the four highest rating categories by at least
one nationally recognized rating agency. The
rating of the Class I Certificates does not
address the possibility that rapid rates of
principal prepayments, including prepayments
resulting from the purchase of the Receivables
by the Servicer, could result in a failure of
the holders of the Class I Certificates to
fully recover their investment. A security
rating is not a recommendation to buy, sell or
hold securities and may be subject to revision
or withdrawal at any time by the assigning
rating agency. See "Risk Factors-- Ratings of
the Certificates."
ERISA Considerations.......... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Class A Certificates and the
Class I Certificates may be eligible for
purchase by employee benefit plans subject to
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Any benefit plan
fiduciary considering the purchase of an
Offered Certificate should, among other things,
consult with experienced legal counsel in
determining whether all required conditions for
such purchase have been satisfied. See "ERISA
Considerations" herein and in the Prospectus.
S-7
<PAGE>
RISK FACTORS
Investors should carefully consider the information set forth below as well
as the other investment considerations described in this prospectus.
LIMITED LIQUIDITY
There is currently no secondary market for the Offered Certificates. The
Underwriters currently intend to make a market in the Offered Certificates,
but are under no obligation to do so. There can be no assurance that a
secondary market will develop or, if one does develop, that it will provide
Certificateholders with liquidity of investment or that it will continue for
the life of the Offered Certificates.
CERTIFICATES SOLELY OBLIGATIONS OF THE TRUST
The Offered Certificates are interests in the Trust only and do not
represent the obligation of any other person. The Class A Certificateholders
and Class I Certificateholders are senior in right and interest to the Class
IC Certificateholder (as described under "The Offered Certificates--
Distributions on the Offered Certificates"). The Trustee will withdraw funds
from the Spread Account, up to the full balance of the funds on deposit in
such account, only in the event that Available Funds are insufficient in
accordance with the Pooling and Servicing Agreement to distribute Class A
Monthly Interest and Class I Monthly Interest and Monthly Principal (after
payment of the Monthly Servicing Fee). The amount on deposit in the Spread
Account is intended to increase over time to an amount equal to the Required
Spread Amount. There is no assurance that such growth will occur or that the
balance in the Spread Account will always be sufficient to assure payment in
full of Monthly Principal and Monthly Interest. If the amount on deposit in
the Spread Account is reduced to zero after giving effect to all amounts to be
deposited to and withdrawn from the Spread Account pursuant to the Pooling and
Servicing Agreement, on any Distribution Date prior to termination of the
Trust, the Trustee will draw on the Surety Bond, in an amount equal to the
shortfall in respect of Class A Monthly Interest and Class I Monthly Interest
and Monthly Principal, up to the Surety Bond Amount. If the Spread Account is
reduced to zero and there is a default under the Surety Bond, the Trust will
depend solely on current distributions on the Receivables to make
distributions on the Certificates. See "The Receivables Pool--Delinquencies,
Repossessions and Net Losses" and "The Offered Certificates--Accounts" herein.
PREPAYMENT RISKS ASSOCIATED WITH THE CLASS I CERTIFICATES
If the Receivables prepay at a constant rate within the range assumed in
preparing the Planned Notional Principal Amount Schedule, the PAC Component
and the Class I Notional Principal Amount will be reduced in accordance with
the Planned Notional Principal Amount Schedule. If the Receivables prepay at a
constant rate higher than % ABS, the Class I Notional Principal Amount will
be reduced more quickly than provided in the Planned Notional Principal Amount
Schedule, thereby reducing the yield to holders of the Class I Certificates.
In general, a rapid rate of principal prepayments (including liquidations due
to losses, repurchases and other dispositions and prepayments resulting from
any sale of the Receivables to the Servicer) will have a material negative
effect on the yield to maturity of the Class I Certificates. Prospective
investors should fully consider the associated risks, including the risk that
a rapid rate of prepayments could result in the failure of investors in the
Class I Certificates to recoup their initial investment. See "Yield and
Prepayment Considerations" herein.
RATINGS OF THE CERTIFICATES
It is a condition of issuance of the Offered Certificates that the Class A
Certificates and the Class I Certificates be rated in one of the four the
highest categories by at least one nationally recognized rating agency. Such
ratings will reflect only the views of the relevant rating agency. There is no
assurance that any such rating will continue for any period of time or that it
will not be revised or withdrawn entirely by such rating agency if, in its
judgment, circumstances so warrant. A revision or withdrawal of such rating
may have an adverse effect on the market price of the Offered Certificates.
The rating of the Class I Certificates does not address the possibility that
rapid rates of principal prepayments, including prepayments resulting from a
sale of the
S-8
<PAGE>
Receivables to the Servicer, could result in a failure of the holders of the
Class I Certificates to fully recover their investment. A security rating is
not a recommendation to buy, sell or hold securities.
GEOGRAPHIC CONCENTRATION
As of the Cut-Off Date, based upon billing address information provided to
CTL, the Obligors resided in states and the District of Columbia, two of
which, California and Texas, account for % and %, respectively, of the
aggregate principal balance of the Receivables. Adverse economic conditions in
California or Texas could adversely affect the delinquency, loan loss or
repossession experience of the Trust.
FORMATION OF THE TRUST
The Depositor will establish the Trust by selling and assigning the Trust
property, as described below, to the Trustee in exchange for the Offered
Certificates. The Depositor will retain the Class IC Certificate. CTL will be
responsible for servicing the Receivables pursuant to the Pooling and
Servicing Agreement and will be compensated for acting as the Servicer. See
"Description of the Transfer and Servicing Agreements--Servicing Compensation
and Payment of Expenses" in the Prospectus. To facilitate servicing and to
minimize administrative burden and expense, the Servicer will be appointed
custodian of the Receivables by the Trustee, but will not stamp the
Receivables to reflect the sale and assignment of the Receivables to the Trust
or make any notation of the Trust's lien on the certificates of title of the
Financed Vehicles. In the absence of such notation on the certificates of
title, the Trustee may not have perfected security interests in the Financed
Vehicles securing the Receivables. See "Certain Legal Aspects of the
Receivables" in the Prospectus. Under the terms of the Pooling and Servicing
Agreement, CTL may delegate its duties as Servicer and custodian; however, any
such delegation will not relieve CTL of its liability and responsibility with
respect to such duties.
The Depositor will establish, for the benefit of the Class A
Certificateholders and Class I Certificateholders and the Surety Bond Issuer,
the Spread Account and will obtain the Surety Bond. Withdrawals from the
Spread Account and, only after such withdrawals, draws on the Surety Bond will
be made in accordance with the Pooling and Servicing Agreement in the event
that sufficient funds are not available (after payment of the Monthly
Servicing Fee) to distribute, in the case of Class I Monthly Interest, Class A
Monthly Interest and Monthly Principal, up to the Surety Bond Amount. If the
Spread Account is exhausted and there is a default under the Surety Bond, the
Trust will look only to the Obligors on the Receivables and the proceeds from
the repossession and sale of Financed Vehicles that secure Defaulted
Receivables for distributions of interest and principal on the Certificates.
In such event, certain factors, such as the Trustee's not having perfected
security interests in some of the Financed Vehicles, may affect the Trust's
ability to realize on the collateral securing the Receivables, and thus may
reduce the proceeds to be distributed to Certificateholders. See "The Offered
Certificates--Accounts" herein and "Certain Legal Aspects of the Receivables"
in the Prospectus.
THE RECEIVABLES POOL
The Receivables were selected from CTL's portfolio for purchase by the
Depositor by several criteria, including that each Receivable: (i) has an
original number of payments of not more than payments and not less than
payments, (ii) has a remaining maturity of not more than months and
not less than months, (iii) provides for level monthly payments that fully
amortize the amount financed over the original term, and (iv) has a Contract
Rate (exclusive of prepaid finance charges) of not less than %. The weighted
average remaining maturity of the Receivables will be approximately months
as of the Cutoff Date.
Approximately % of the Receivables as of the cutoff date are simple
interest contracts which provide for equal monthly payments. Approximately %
of the aggregate principal balance of the Receivables as of the Cutoff Date
are Precomputed Receivables (as defined in the Prospectus) originated in
California. All of such Precomputed Receivables are Rule of 78's Receivables
(as defined in the Prospectus). Approximately % of the aggregate principal
balance of the Receivables as of the Cutoff Date represent financing of new
vehicles; the remainder of the Receivables represent financing of used
vehicles.
S-9
<PAGE>
Obligors of the Receivables representing more than 10% of the aggregate
principal balance of the Receivables as of the Cutoff Date reside in each of
the States of California and Texas, based upon billing address information
provided to CTL. The performance of the Receivables in the aggregate could be
adversely affected in particular by the development of adverse economic
conditions in any such state. See "Risk Factors--Geographic Concentration" and
"--Delinquencies, Repossessions and Net Losses" herein.
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
AGGREGATE ORIGINAL WEIGHTED
NUMBER OF PRINCIPAL PRINCIPAL AVERAGE
RECEIVABLES BALANCE BALANCE RATE
----------- --------- --------- --------
<S> <C> <C> <C> <C>
New automobiles and light-duty
trucks.............................. $ $ . %
Used automobiles and light-duty
trucks..............................
New vans(1)..........................
Used vans(1).........................
Motorcycles..........................
All receivables......................
</TABLE>
- --------
(1) References to vans include minivans and van conversions.
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED PERCENT OF
AVERAGE AVERAGE AGGREGATE
REMAINING ORIGINAL PRINCIPAL
TERM(2) TERM(2) BALANCE(3)
--------- -------- ----------
<S> <C> <C> <C>
New automobiles and light-duty trucks............. months months . %
Used automobiles and light-duty trucks............
New vans(1).......................................
Used vans(1)......................................
Motorcycles.......................................
All receivables...................................
</TABLE>
- --------
(1) References to vans include minivans and van conversions.
(2) Based on scheduled maturity and assuming no prepayments of the
receivables.
(3) Sum may not equal 100% due to rounding.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
PRINCIPAL
STATE(1)(2) BALANCE(3)
- ----------- ----------
<S> <C>
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
</TABLE>
- --------
(1) Based on address of the Obligor.
(2) $ of Receivables were originated by Dealers and purchased from such
Dealers by CTL.
(3) Sum may not equal to 100% due to rounding.
S-10
<PAGE>
DISTRIBUTION OF RECEIVABLES VEHICLES BY MODEL YEAR
<TABLE>
<CAPTION>
PRINCIPAL
MODEL NUMBER OF PERCENTAGE BALANCE AS OF PERCENTAGE
YEAR RECEIVABLES OF TOTAL(1) CUT OFF DATE OF TOTAL(1)
- ----- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
19 .......................... . % $ . %
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
19 ..........................
Total.......................
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
DISTRIBUTION OF THE RECEIVABLES BY NOTE RATE AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE
AGGREGATE OF AVERAGE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL PRINCIPAL
NOTE RATE RANGE RECEIVABLES BALANCE BALANCE BALANCE(1)
- --------------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
to %............................... $ . % $
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
to %...............................
Total.............................
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
S-11
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY REMAINING TERM AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE
REMAINING AGGREGATE AVERAGE OF AGGREGATE
SCHEDULED NUMBER OF PRINCIPAL PRINCIPAL PRINCIPAL
TERM RANGE RECEIVABLES BALANCE BALANCE BALANCE(1)
---------- ----------- --------- --------- ------------
<S> <C> <C> <C> <C>
0 to 6 months..................... $ . % $
7 to 12 months....................
13 to 24 months...................
25 to 36 months...................
37 to 48 months...................
49 to 60 months...................
61 to 66 months...................
67 to 84 months...................
Total...........................
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning the experience of CTL
pertaining to delinquencies, repossessions, and net losses on its prime fixed
rate retail automobile, light truck and van receivables serviced by CTL. There
can be no assurance that the delinquency, repossession, and net loss
experience on the Receivables will be comparable to that set forth below.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
-------------------- ----------------------------------------------------------------
1996 1995 1994 1993
-------------------- -------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT
----------- -------- ----------- -------- ----------- -------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Servicing portfolio..... 24,427 $303,665 22,261 $266,106 22,997 $261,325 22,034 $239,353
Delinquencies
30-59 days............. 97 1,022 84 811 102 977 110 822
60-89 days............. 65 686 66 692 55 394 69 528
90 days or more........ 60 482 49 348 59 382 37 279
------ -------- ------ -------- ------ -------- ------ --------
Total delinquencies..... 222 2,190 199 1,851 216 1,753 216 1,629
------ -------- ------ -------- ------ -------- ------ --------
Total delinquencies as a
percent of servicing
portfolio.............. .91% .72% .88% .70% .94% .67% .98% .68%
====== ======== ====== ======== ====== ======== ====== ========
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------------------------------------
1996 1995 1994 1993
-------------------- -------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT
----------- -------- ----------- -------- ----------- -------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average servicing
portfolio(2)........... 23,524 $284,886 22,809 $266,746 22,516 $252,144 25,266 $257,034
Net charge-offs:
Gross charge-offs...... 520 3,182 644 3,787 527 2,500 856 4,692
Recoveries.............. 587 581 573 554
-------- -------- -------- --------
Net losses.............. 2,595 3,206 1,927 4,138
======== ======== ======== ========
Gross charge-offs as a
percent of average
servicing portfolio ... 2.95% 1.49% 2.82% 1.42% 2.34% .99% 3.39% 1.83%
Recoveries as a percent
of gross charge-offs... 18.45% 15.34% 22.92% 11.81%
Net losses as a
percentage of average
servicing portfolio.... 1.21% 1.20% .76% 1.61%
</TABLE>
- --------
(1) There is generally no recourse to Dealers under any of the receivables in
the portfolio serviced by CTL, except to the extent of representations and
warranties made by Dealers in connection with such receivables.
(2) Equals the monthly arithmetic average.
(3) Variation in the size of the portfolio serviced by CTL will affect the
percentages in "Gross Charge-Offs as a Percentage of Average Servicing
Portfolio" and "Net Losses as a Percentage of Average Servicing
Portfolio."
S-12
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
GENERAL
Monthly Interest (as defined herein) on the Receivables will be distributed
to Certificateholders on each Distribution Date to the extent of the Pass-
Through Rate applied to the Certificate Balance or Notional Principal Amount,
as applicable, as of the preceding Distribution Date or the Closing Date, as
applicable (after giving effect to distributions of principal on such
preceding Distribution Date). See "The Offered Certificates--Distributions on
the Offered Certificates" herein. In the event of a full or partial prepayment
on a Receivable, Certificateholders will receive interest for the full month
of such prepayment either through the distribution of interest paid on other
Receivables or withdrawal from the Spread Account.
Although the Receivables will have different Contract Rates, each
Receivable's Contract Rate generally will exceed the sum of (a) the Class A
Pass-Through Rate (b) the per annum rate used to calculate the Surety Bond Fee
(c) the Class I Pass-Through Rate and (d) the per annum rate used to calculate
the Servicing Fee. The Contract Rate on a small percentage of the Receivables,
however, will be less than the foregoing sum. Disproportionate rates of
prepayments between Receivables with higher and lower Contract Rates could
affect the ability of the Trust to distribute Monthly Interest to
Certificateholders.
The effective yield to Certificateholders will be below the yield otherwise
produced by the Pass-Through Rate because the distribution of Monthly
Principal and Monthly Interest in respect of any given month will not be made
until the related Distribution Date, which will not be earlier than the eighth
day of the following month.
THE CLASS I CERTIFICATES
The Class I Certificates are interest only certificates. Although the
planned amortization feature of the Class I Certificates is intended to reduce
the uncertainty of prepayments with respect to the Class I Certificates, if
the Receivables prepay sufficiently quickly, the Notional Principal Amount of
the Class I Certificates may be reduced more quickly than provided in the
Planned Notional Principal Amount Schedule, thereby reducing the yield to the
holders of the Class I Certificates. The yield to maturity on the Class I
Certificates will therefore be very sensitive to the rate of prepayments,
including voluntary prepayments, prepayments due to liquidations, repurchases
and losses and prepayments resulting from any sale of the Receivables to the
Servicer. Prospective investors should fully consider the associated risks,
including the risk that a rapid rate of prepayments could result in the
failure of investors in the Class I Certificates to recoup their initial
investment. See "Risk Factors" and "The Offered Certificates--The Class I
Certificates--Calculation of Notional Principal Amount," and "--Class I Yield
Considerations."
THE DEPOSITOR AND CTL
CTL currently acquires loans from over 2,800 manufacturer franchised
automobile dealerships and 160 used car dealers in eight states. CTL is a
California industrial loan company, formed in 1959. In addition to the
indirect automobile finance business, CTL underwrites and purchases
residential real estate loans and commercial equipment leases. For the fiscal
years ended December 31, 1995, 1994 and 1993 and for the nine months ended
September 30, 1996, CTL acquired automobile loans aggregating $142.6 million,
$156.2 million and $172.0 million and $137.9 million, respectively. Of the
$303.7 million of loans in the automobile servicing portfolio of CTL
(consisting of the principal balance of loans held for sale) at September 30,
1996, approximately 74% represented loans on used cars and approximately 26%
represented loans on new cars. CTL began to offer its motor vehicle loan
products to an increased number of selected used car dealerships in 1994. In
years prior, the amount of Receivables secured by used cars was immaterial.
S-13
<PAGE>
Additional information regarding CTL and the Depositor is set forth under
"California Thrift & Loan and Affiliates" in the Prospectus.
THE SURETY BOND ISSUER
[INFORMATION TO BE PROVIDED BY SURETY BOND ISSUER]
S-14
<PAGE>
THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement. Copies of the Pooling and Servicing Agreement (without
exhibits) may be obtained by Certificateholders upon request in writing to the
Servicer at the address set forth herein under "Reports to
Certificateholders." Citations to the relevant sections of the Pooling and
Servicing Agreement appear below in parentheses. The following is a summary of
the material terms of the Certificates and is subject to and qualified in its
entirety by reference to the Pooling and Servicing Agreement.
DISTRIBUTIONS
In general, it is intended that the Trustee distribute to the Class A
Certificateholders on each Distribution Date beginning , 199 , the
aggregate principal payments, including full and partial prepayments (except
certain prepayments in respect of Precomputed Receivables as described below
under "--Accounts") received on the Receivables during the related Collection
Period, plus a full month's interest at the Class A Pass-Through Rate. It is
also intended that the Trustee distribute to the Class I Certificateholders,
on each Distribution Date beginning on , 199 and continuing until the
Distribution Date on which the Class I Notional Principal Amount is reduced to
zero, a full month's interest at the Class I Pass-Through Rate on the Class I
Notional Principal Amount. (Section 9.04.) See "--Distributions on the Offered
Certificates." Interest to Certificateholders may be provided by a payment
made by or on behalf of the Obligor, by an Advance made by the Servicer to
cover interest due on a defaulted Receivable or by a withdrawal from the
Spread Account. If such interest represents Class A Monthly Interest or Class
I Monthly Interest it may be provided by a draw on the Surety Bond if there
are not sufficient funds (after payment of the Monthly Servicing Fee and after
giving effect to any withdrawals from the Spread Account for the benefit of
the Class A Certificateholders and Class I Certificateholders) to pay Class I
Monthly Interest, Class A Monthly Interest and Monthly Principal. Draws on the
Surety Bond to pay Class A Monthly Interest and Class I Monthly Interest and
Monthly Principal will be limited to the Surety Bond Amount. See "--Sale and
Assignment of Receivables" and "--Accounts" herein.
THE CLASS I CERTIFICATES--CALCULATION OF NOTIONAL PRINCIPAL AMOUNT
The Class I Certificates are interest-only planned amortization securities.
The Class I Certificates are entitled to receive interest at the Class I Pass-
Through Rate on the Notional Principal Amount of the Class I Certificates,
initially $ . The planned amortization feature is intended to reduce the
uncertainty to investors in the Class I Certificates with respect to
prepayments because the Class I Certificates will receive interest based on
their Notional Principal Amount on a principal paydown schedule rather than on
the reduction in the actual Certificate Balance as a result of principal
payments and prepayments, as described below. Solely for the purpose of
calculating the amount payable with respect to the Class I Certificates, the
Certificate Balance will be divided into two principal components, the "PAC
Component" and the "Companion Component." The Notional Principal Amount will
be equal to the PAC Component, originally $ . The sum of the PAC Component
and the Companion Component will at all times equal the then aggregate unpaid
Certificate Balance.
The Agreement establishes a schedule (the "Planned Notional Principal Amount
Schedule") pursuant to which principal will be allocated to the PAC Component
and the Companion Component, as described below. As the PAC Component is
reduced, the Notional Principal Amount of the Class I Certificates, and so
payments to the holders of the Class I Certificates, will also be reduced.
On each Distribution Date, the Monthly Principal will be allocated first to
the PAC Component up to the amount necessary to reduce the PAC Component to
its Planned Notional Principal Amount for such Distribution Date, as set forth
in the Planned Notional Principal Amount Schedule, second, to the Companion
Component until the balance thereof is reduced to zero and third, to the PAC
Component, without regard to the Planned Notional Principal Amount for such
Distribution Date. The foregoing allocations will be made solely for purposes
of calculating the Notional Principal Amount of the Class I Certificates and
correspondingly, the amount of interest payable with respect to the Class I
Certificates. The Class I Certificates are not entitled to receive any
principal payments. The foregoing calculations will not affect distributions
of principal with respect to the Class A Certificates.
S-15
<PAGE>
PLANNED NOTIONAL PRINCIPAL AMOUNT SCHEDULE
<TABLE>
<CAPTION>
PLANNED NOTIONAL
DISTRIBUTION DATE PRINCIPAL AMOUNT
----------------- ----------------
<S> <C>
[Initial]...................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
</TABLE>
The Class I Certificates will not be entitled to any distributions after the
Notional Principal Amount of the Class I Certificates has been reduced to
zero.
CLASS I YIELD CONSIDERATIONS
Although the planned amortization feature of the Class I Certificates is
intended to reduce the uncertainty relating to prepayments of the Receivables
with respect to the Class I Certificates, the yield to maturity of the Class I
Certificates will remain extremely sensitive to the prepayment experience of
the Receivables, including voluntary prepayments, prepayments due to
liquidations, repurchases and losses and prepayments resulting from any sale
of the Receivables to the Servicer. Prospective investors should fully
consider the associated risks, including the risk that such investors may not
fully recover their initial investment. In particular, investors in the Class
I Certificates should note that they will not be entitled to any distributions
after the Class I Notional Principal Amount has been reduced to zero, and that
Receivables may be repurchased due to breaches of representations. See also
"Risk Factors--Prepayment Risks Associated with the Class I Certificate"
herein.
The following table illustrates the significant effect that prepayments on
the Receivables have upon the yield to maturity of the Class I Certificates.
The table shows the approximate hypothetical pre-tax yields to maturity of the
Class I Certificates, stated on a corporate bond equivalent basis, under
different prepayment assumptions based on the assumed purchase price and the
ABS prepayment model described below. The following table also assumes that
the Receivables have been aggregated into hypothetical pools having the
following characteristics and that the level scheduled monthly payment for
each of the four pools (which is based on its principal balance, weighted
average Contract Rate and weighted average remaining term as of the Cutoff
Date and its weighted average original term) will be such that such pool will
be fully amortized by the end of its weighted average remaining term.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
REMAINING TERM TO ORIGINAL TERM
CUTOFF DATE WEIGHTED WEIGHTED AVERAGE MATURITY TO MATURITY
POOL PRINCIPAL BALANCE NOTE RATE (IN MONTHS) (IN MONTHS)
- ---- ----------- -------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
1........ $ . %
2........
3........
4........
</TABLE>
For purposes of the table, it is also assumed that (i) the purchase price of
the Class I Certificates is as set forth below, (ii) the Receivables have the
characteristics set forth under "--The Class I Certificates--Calculation of
Notional Principal Amount" above, (iii) the Receivables prepay monthly at the
specified percentages of ABS as set forth in the table below, (iv) prepayments
representing prepayments in full of individual Receivables are
S-16
<PAGE>
received on the last day of the month and include a full month's interest
thereon, (v) the Closing Date for the Offered Certificates is , 199 ,
(vi) distributions on the Offered Certificates are made, in cash, on the
eighth day of each month, commencing in , 1996, (vii) no defaults or
delinquencies in the payment of the Receivables are experienced, and (viii) no
Receivable is repurchased for breach of representation and warranty or
otherwise.
SENSITIVITY OF THE CLASS I CERTIFICATES TO PREPAYMENTS
<TABLE>
<CAPTION>
1.0% 1.6% 1.8% 2.5% 3.0%
PRICE(1) ABS ABS ABS ABS ABS
- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
..................................................
</TABLE>
- --------
(1) Expressed as a percentage of the original Notional Principal Amount.
Based on the assumptions described above and assuming a purchase price of %
at approximately % ABS, the pre-tax yield to maturity of the Class I
Certificates would be approximately %.
It is highly unlikely that the Receivables will prepay at a constant rate
until maturity or that all of the Receivables will prepay at the same rate.
The foregoing table assumes that each Receivable bears interest at its
specified Contract Rate, has the same remaining amortization term, and prepays
at the same rate. In fact, receivables will prepay at different rates and have
different terms.
The yields set forth in the preceding table were calculated by determining
the monthly discount rates which, when applied to the assumed stream of cash
flows to be paid on the Class I Certificates, would cause the discounted
present value of such assumed cash flows to equal the assumed purchase price
of such Class I Certificates and by converting such monthly rates to corporate
bond equivalent rates. Such calculations do not take into account variations
that may occur in the interest rates at which investors may be able to
reinvest funds received by them as distributions on the Class I Certificates
and consequently do not purport to reflect the return on any investment in the
Class I Certificates when such reinvestment rates are considered.
The Receivables will not necessarily have the characteristics assumed above,
and there can be no assurance that (i) the Receivables will prepay at any of
the rates shown in the table or at any other particular rate or will prepay
proportionately, (ii) the pre-tax yield on the Class I Certificates will
correspond to any of the pre-tax yields shown above or (iii) the aggregate
purchase price of the Class I Certificates will be equal to the purchase price
assumed. Because the Receivables will include Receivables that have remaining
terms to stated maturity shorter or longer than those assumed and Contract
Rates higher or lower than those assumed, the pre-tax yield on the Class I
Certificates may differ from those set forth above, even if all of the
Receivables prepay at the indicated constant prepayment rates.
As used herein, "ABS" refers to a prepayment model which assumes a constant
percentage of the original number of contracts in a pool prepay each month.
ABS does not purport to be either an historical description of the prepayment
experience of any pool of receivables or a prediction of the anticipated rate
of prepayments of any pool of receivables, including the Receivables.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyance of the Receivables (i)
from CTL to the Depositor pursuant to the Purchase Agreement dated as of
, 199 , and (ii) from the Depositor to the Trust pursuant to the Pooling
and Servicing Agreement is set forth under "Description of the Transfer and
Servicing Agreements--Sale and Assignment of the Receivables" in the
Prospectus.
S-17
<PAGE>
ACCOUNTS
In addition to the Certificate Account, the property of the Trust will
include the Spread Account and the Payahead Account.
Spread Account. On the Closing Date, the Depositor will establish the Spread
Account. Thereafter, the amount held in the Spread Account will be increased
up to the Required Spread Amount by the deposit thereto of payments on the
Receivables not utilized to make payments to the Certificateholders (other
than the Class IC Certificateholder), the Surety Bond Issuer or the Servicer
on any Distribution Date. While it is intended that the Spread Account will
grow over time to equal the Required Spread Amount through monthly deposits of
excess collections on the Receivables, if any, there can be no assurance that
such growth will actually occur. The Spread Account will be established for
the benefit of the Class A Certificateholders, Class I Certificateholders and
the Surety Bond Issuer. On each Distribution Date, any amounts on deposit in
the Spread Account after the payment of any amounts owed to the Surety Bond
Issuer in excess of the Required Spread Amount will be withdrawn from the
Spread Account and distributed to the Class IC Certificateholder.
Under the terms of the Pooling and Servicing Agreement, the Trustee will
withdraw funds from the Spread Account and transfer them to the Certificate
Account for any deficiency of Monthly Interest or Monthly Principal as further
described below under "--Distributions on the Offered Certificates," to the
extent available, prior to making any draw on the Surety Bond.
In the event that the balance of the Spread Account is reduced to zero and
there is a default under the Surety Bond on any Distribution Date, the Trust
will depend solely on current distributions on the Receivables to make
distributions of principal and interest on the Certificates. Any reduction in
the principal balance of the Receivables due to losses on the Receivables will
also result in a reduction of the Notional Principal Amount of the Class I
Certificates. In addition, because the market value of motor vehicles
generally declines with age and because of difficulties that may be
encountered in enforcing motor vehicle contracts as described in the
Prospectus under "Certain Legal Aspects of the Receivables," the Servicer may
not recover the entire amount due on such Receivables in the event of a
repossession and resale of a Financed Vehicle securing a Receivable in
default. In such event, the Certificateholders may suffer a corresponding
loss. Any such losses would be borne pro rata by the Class A
Certificateholders and Class I Certificateholders.
Payahead Account. The Servicer will establish an additional account (the
"Payahead Account"), in the name of the Trustee and for the benefit of
Obligors on the Receivables, into which, to the extent required by the
Agreement, early payments by or on behalf of Obligors on Precomputed
Receivables will be deposited until such time as the payment becomes due.
Until such time as payments are transferred from the Payahead Account to the
Certificate Account, they will not constitute collected interest or collected
principal and will not be available for distribution to Certificateholders.
The Payahead Account will initially be maintained with the Trustee. Interest
earned on the balance in the Payahead Account will be remitted to the Servicer
monthly. Collections on a Precomputed Receivable made during a Collection
Period shall be applied first to any overdue scheduled payment on such
Receivable, then to the scheduled payment on such Receivable due in such
Collection Period. If any collections remaining after the scheduled payment is
made are insufficient to prepay the Precomputed Receivable in full, then
generally such remaining collections shall be transferred to and kept in the
Payahead Account until such later Collection Period as the collections may be
retransferred to the Certificate Account and applied either to a later
scheduled payment or to prepay such Receivable in full.
ADVANCES
With respect to each Receivable delinquent more than 30 days at the end of a
Collection Period, the Servicer will make an Advance in an amount equal to 30
days of interest, but only to the extent that the Servicer in its sole
discretion, expects to recoup the Advance from subsequent collections on the
Receivable. The Servicer will deposit the Advance in the Certificate Account
on or before the fifth calendar day of the month following the Collection
Period. The Servicer will recoup its Advance from subsequent payments by or on
behalf of the respective Obligor, from insurance proceeds or, upon the
Servicer's determination that reimbursement from the preceding sources is
unlikely, will recoup its Advance from any collections made on other
Receivables. (Section 9.05.)
S-18
<PAGE>
DISTRIBUTIONS ON THE CLASS IC CERTIFICATE
The Class IC Certificate will be initially issued to the Depositor and will
entitle it to receive monthly all funds held in the Spread Account in excess
of the Required Spread Amount after payment of all amounts owed to the Surety
Bond Issuer. Upon termination of the Trust the Class IC Certificateholder is
entitled to receive any amounts remaining in the Spread Account (only after
all required payments to the Surety Bond Issuer are made) after the payment of
expenses and distributions to Certificateholders. See "--Accounts" above.
DISTRIBUTIONS ON THE OFFERED CERTIFICATES
The Servicer will deposit in the Certificate Account the amount of payments
on all Receivables received with respect to the preceding Collection Period.
All such payments on the Simple Interest Receivables, the scheduled payments
on Precomputed Receivables, plus the net amount to be transferred from the
Payahead Account for the related Distribution Date, all Advances for such
Collection Period, and the Purchase Amount for all Receivables that became
Purchased Receivables during the preceding Collection Period, will be
available for distribution pursuant to the terms of the Pooling and Servicing
Agreement on the next succeeding Distribution Date ("Available Funds") and
will determine the amount of funds necessary to make distributions of Monthly
Principal and Monthly Interest to the Certificateholders and the Monthly
Servicing Fee to the Servicer. If there is a deficiency with respect to Class
A Monthly Interest or Class I Monthly Interest or Monthly Principal on any
Distribution Date after giving effect to payments of the Monthly Servicing Fee
on such Distribution Date, the Servicer will withdraw amounts, to the extent
available, from the Spread Account in the amount of such deficiency and notify
the Trustee of any remaining deficiency, whereupon the Trustee will draw on
the Surety Bond to pay Class A Monthly Interest and Class I Monthly Interest
and Monthly Principal on any Distribution Date, up to the Surety Bond Amount.
Moreover, if the Available Funds for a Distribution Date are insufficient to
pay current and past due Surety Bond Fees, and other amounts owed to the
Surety Bond Issuer, pursuant to the Insurance Agreement, plus accrued interest
thereon, to the Surety Bond Issuer, the Servicer will notify the Trustee of
such deficiency, and the amount, if any, then on deposit in the Spread Account
(after giving effect to any withdrawal to satisfy a deficiency described in
this and the preceding sentence) will be available to cover such deficiency.
If acceptable to each Rating Agency without a reduction in the rating of any
class of Offered Certificates, the Servicing Fee due to the Servicer in
respect of each Collection Period will be distributed to the Servicer during
such Collection Period from Collections for such Collection Period.
On each such Distribution Date, the Trustee will apply or cause to be
applied the Available Funds (plus, to the extent required for payment of
Monthly Interest or Monthly Principal any amounts withdrawn from the Spread
Account or drawn on the Surety Bond, as applicable) to make the following
payments in the following priority:
(a) the aggregate amount of outstanding Advances on all Receivables (x)
that became Defaulted Receivables during the prior Collection Period
and (y) that the Servicer determines to be unrecoverable, to the
Servicer;
(b) the Servicing Fee, including any overdue Servicing Fee, to the
Servicer, to the extent not previously distributed to the Servicer;
(c) pro rata, (y) Monthly Principal and Class A Monthly Interest, including
any overdue Monthly Principal and Class A Monthly Interest, to the
Class A Certificateholders and (z) Class I Monthly Interest, including
any overdue Class I Monthly Interest, to the Class I
Certificateholders;
(d) the Surety Bond Fee (including any overdue Surety Bond Fee, plus
accrued interest thereon) to the Surety Bond Issuer;
(e) the amount of recoveries of Advances (to the extent such recoveries
have not previously been reimbursed to the Servicer pursuant to clause
(a) above), to the Servicer;
S-19
<PAGE>
(f) the amount of Liquidation Proceeds on Purchased Receivables repurchased
by the Depositor, to the Depositor;
(g) the aggregate amount of any unreimbursed draws on the Surety Bond
payable to the Surety Bond Issuer, under the Insurance Agreement, for
Class A Monthly Interest, Class I Monthly Interest and Monthly
Principal, plus accrued interest thereon and any other amounts owing to
the Surety Bond Issuer under the Insurance Agreement; and
(h) the balance into the Spread Account.
After all distributions pursuant to clauses (a) through (h) above have been
made for each Distribution Date, the amount of funds remaining in the Spread
Account on such date, if any, in excess of the Required Spread Amount, will be
distributed by the Trustee to the Class IC Certificateholder. Any amounts so
distributed to the Class IC Certificateholder will no longer be property of
the Trust and Certificateholders will have no rights with respect thereto.
If on any Distribution Date there are not sufficient Available Funds to pay
the distribution required by (c) above, the Available Funds distributable
thereunder shall be distributed proportionately on the basis of the ratio of
the required distribution due each of the Class A and Class I
Certificateholders, respectively, to the sum of the distributions required by
(c) to the Class A Certificateholders and the Class I Certificateholders. The
amount so distributed to the Class A Certificateholders hereunder shall be
allocated first to Class A Monthly Interest, and second to Monthly Principal.
"Monthly Interest" for any Distribution Date will equal the sum of the Class
A Monthly Interest and the Class I Monthly Interest.
"Class A Monthly Interest" for any Distribution Date will equal (i) for the
first Distribution Date, the product of the following: (one-twelfth of the
Class A Pass-Through Rate) multiplied by (the number of days remaining in the
month of the Closing Date (assuming a 30 day month) from the Closing Date
divided by 30) multiplied by (the Certificate Balance at the Closing Date) and
(ii) with respect to each subsequent Distribution Date, the product of one-
twelfth of the Class A Pass-Through Rate and the Certificate Balance on the
preceding Distribution Date (after giving effect to any distribution of
Monthly Principal required to be made on such preceding Distribution Date).
"Monthly Principal" for any Distribution Date will equal the amount
necessary to reduce the Certificate Balance to the aggregate unpaid principal
balance of the Receivables on the last day of the preceding Collection Period;
provided, however, that Monthly Principal on the Final Scheduled Distribution
Date will equal the Certificate Balance on such date. For the purpose of
determining Monthly Principal, the unpaid principal balance of a Defaulted
Receivable or a Purchased Receivable is deemed to be zero on and after the
last day of the Collection Period in which such Receivable became a Defaulted
Receivable or a Purchased Receivable.
"Class I Monthly Interest" for any Distribution Date will equal (i) for the
first Distribution Date, the product of the following: (one-twelfth of the
Class I Pass-Through Rate) multiplied by (the number of days remaining in the
month of the Closing Date (assuming a 30 day month) from the Closing Date
divided by 30) multiplied by (the Class I Notional Principal Amount at the
Closing Date) and (ii) with respect to each subsequent Distribution Date, the
product of one-twelfth of the Class I Pass-Through Rate and the Notional
Principal Amount on the preceding Distribution Date (after giving effect to
any application of Monthly Principal on such preceding Distribution Date).
"Surety Bond Fee" for any Distribution Date will equal one-twelfth of the
product of the Surety Bond per annum fee rate set forth in the Insurance
Agreement and the Certificate Balance calculated as of the first day of the
Collection Period to which such Distribution Date relates and payable monthly
in arrears.
"Defaulted Receivable" will mean, for any Collection Period, a Receivable as
to which any of the following has occurred: (i) the Receivable is 120 days or
more delinquent as of the last day of such Collection
S-20
<PAGE>
Period; (ii) the Financed Vehicle that secures the Receivable has been
repossessed; or (iii) the Receivable has been determined to be uncollectable
in accordance with the Servicer's customary practices on or prior to the last
day of such Collection Period; provided, however, that any Receivable which
the Depositor or the Servicer is obligated to repurchase or purchase pursuant
to the Pooling and Servicing Agreement shall be deemed not to be a Defaulted
Receivable.
As an administrative convenience, the Servicer will be permitted to make the
deposit of Collections and aggregate Advances and Purchase Amounts for or with
respect to the Collection Period, net of distributions to be made to the
Servicer or Depositor with respect to the Collection Period. The Servicer,
however, will account to the Trustee and to the Certificateholders as if all
deposits and distributions were made individually. (Section 9.06.)
The following chart sets forth an example of the application of the
foregoing provisions to a monthly distribution:
.... Collection Period. The Servicer receives monthly payments,
prepayments, and other proceeds in respect of the Receivables and
deposits them in the Certificate Account. The Servicer may deduct the
Servicing Fee from such deposits.
.... Record Date. Distributions on the Distribution Date are made to
Certificateholders of record at the close of business on this date.
.... On the fifth calendar day after the end of the Collection Period (the
""Determination Date'') the Servicer notifies the Trustee of the
amounts to be distributed on the Distribution Date and of any
deficiencies.
.... On the third business day after the Determination Date (the
""Distribution Date'') the Trustee withdraws funds from the Spread
Account and/or draws on the Surety Bond, if necessary, to pay Monthly
Principal and Monthly Interest to Certificateholders as described
herein. The Trustee distributes to Certificateholders amounts payable
in respect of the Offered Certificates, and pays the Servicing Fee to
the extent not previously paid, the Surety Bond Fee and any amounts
owing to the Surety Bond Issuer.
THE SURETY BOND
On or before the Closing Date, the Depositor and CTL, in its individual
capacity and as Servicer, and the Surety Bond Issuer will enter into an
Insurance and Reimbursement Agreement (the "Insurance Agreement") pursuant to
which the Surety Bond Issuer will issue the Surety Bond. Under the terms of
the Pooling and Servicing Agreement, after withdrawal of any amounts in the
Spread Account with respect to a Distribution Date to pay a deficiency in
Class A Monthly Interest or Class I Monthly Interest or Monthly Principal, the
Trustee will be authorized to draw on the Surety Bond for the benefit of the
Class A Certificateholders and Class I Certificateholders and credit the
Certificate Account for such draws as described under "--Distributions on the
Offered Certificates." The maximum amount that may be drawn under the Surety
Bond on any Distribution Date is limited to the Surety Bond Amount for such
Distribution Date. The Surety Bond Amount, with respect to any Distribution
Date, shall equal (x) the sum of (A) the lesser of (i) the Certificate Balance
(after giving effect to any distribution of Available Funds and any funds
withdrawn from the Spread Account to pay Monthly Principal on such
Distribution Date) and (ii) the Net Principal Surety Bond Amount, plus (B)
Class A Monthly Interest, plus (C) Class I Monthly Interest, plus (D) the
Monthly Servicing Fee; less (y) all amounts on deposit in the Spread Account
on such Distribution Date. "Net Principal Surety Bond Amount" means the
Certificate Balance as of the first Distribution Date minus all amounts
previously drawn on the Surety Bond or from the Spread Account with respect to
Monthly Principal.
The Surety Bond Issuer will be entitled to receive the Surety Bond Fee and
certain other amounts on each Distribution Date as described under "--
Distributions on the Offered Certificates" and to receive amounts on deposit
in the Spread Account as described above under "Accounts." The Surety Bond
Issuer will not be entitled to reimbursement of any amounts from the
Certificateholders. The Surety Bond Issuer's obligation under the Surety Bond
is irrevocable. The Surety Bond Issuer will have no obligation other than its
obligations under the Surety Bond to the Certificateholders or the Trustee.
S-21
<PAGE>
In the event that the balance in the Spread Account is reduced to zero and
there has been a default under the Surety Bond, the Trust may depend solely on
current distributions on the Receivables to make distributions of principal
and interest on the Offered Certificates. Any reduction in the principal
balance of the Receivables due to losses on the Receivables may also result in
a reduction of the Notional Principal Amount of the Class I Certificates. In
addition, because the market value of motor vehicles generally declines with
age and because of difficulties that may be encountered in enforcing motor
vehicle contracts as described in the Prospectus under "Certain Legal Aspects
of the Receivables," the Servicer may not recover the entire amount due on
such Receivables in the event of a repossession and resale of a Financed
Vehicle securing a Receivable in default. In such event, the
Certificateholders may suffer a corresponding loss. Any such losses would be
borne pro rata by the Class A Certificateholders and Class I
Certificateholders.
RIGHTS OF THE SURETY BOND ISSUER UPON EVENTS OF DEFAULT, AMENDMENT OR WAIVER
Upon the occurrence of an Event of Default, the Surety Bond Issuer, or the
Trustee upon the consent of the Surety Bond Issuer, will be entitled to
appoint a successor Servicer. In addition to the events constituting an Event
of Default as described in the Prospectus, the Pooling and Servicing Agreement
will also permit the Surety Bond Issuer to appoint a successor Servicer and to
redirect payments made under the Receivables to the Trustee upon the
occurrence of certain additional events involving a failure of performance by
the Servicer or a material misrepresentation made by the Servicer under the
Insurance Agreement. See "Risk Factors -- Insolvency Considerations" in the
Prospectus.
The Pooling and Servicing Agreement cannot be amended or any provisions
thereof waived without the consent of the Surety Bond Issuer if such amendment
or waiver would have a materially adverse effect upon the rights of the Surety
Bond Issuer.
ERISA CONSIDERATIONS
[Subject to the considerations set forth under "ERISA Considerations" in the
Prospectus, the Class A Certificates and the Class I Certificates may be
eligible for purchase by an employee benefit plan or an individual retirement
account (a "Plan") subject to ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"). A fiduciary of a Plan must determine
that the purchase of a Class A Certificate or of a Class I Certificates is
consistent with its fiduciary duties under ERISA and does not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Code. For additional information regarding treatment of the Class
A Certificates and the Class I Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.] [TO BE REVISED FOR EACH ISSUANCE]
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement for the sale of the Offered Certificates, dated 199 , the
Depositor has agreed to sell and each of the underwriters named below (the
"Underwriters") severally agreed to purchase the principal amount of the
Offered Certificates set forth opposite its name below:
<TABLE>
<CAPTION>
NOTIONAL PRINCIPAL
-------------------------
PRINCIPAL
AMOUNT AMOUNT OF
OF CLASS A CLASS I
UNDERWRITERS CERTIFICATES CERTIFICATES
------------ ------------ ------------
<S> <C> <C>
............................................. $ $
.............................................
.............................................
.............................................
.............................................
</TABLE>
S-22
<PAGE>
In the underwriting agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Offered
Certificates offered hereby if any of the Offered Certificates are purchased.
The Underwriters propose to offer part of the Offered Certificates directly
to the public at the prices set forth on the cover page hereof, and part to
certain dealers at a price that represents a concession not in excess of % of
the denominations of the Class A Certificates or % of the gross proceeds of
the Class I Certificates. The Underwriters may allow and such dealers may
reallow a concession not in excess of % of the denominations of the Class A
Certificates or % of the gross proceeds of the Class I Certificates to
certain other dealers.
The Depositor, Bay View and CTL have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act.
The Depositor has been advised by the Underwriters that the Underwriters
presently intend to make a market in the Offered Certificates, as permitted by
applicable laws and regulations. The Underwriters are not obligated, however,
to make a market in the Offered Certificates and any such market-making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Offered Certificates.
LEGAL OPINIONS
Certain legal matters relating to the Offered Certificates will be passed
upon for the Depositor by Silver, Freedman & Taff, L.L.P., Washington, D.C.,
and for the Underwriters by Cadwalader, Wickersham & Taft, New York, New York.
Certain federal income tax consequences with respect to the Offered
Certificates will be passed upon for the Depositor by Silver, Freedman & Taff,
L.L.P.
EXPERTS
[TO BE COMPLETED]
S-23
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ---- -----------
<S> <C>
ABS................................................................. S-17
Bay View............................................................
Available Funds..................................................... S-19
Certificates........................................................ S-1
Certificate Balance................................................. S-1
Class A Certificateholders.......................................... S-1
Class A Certificates................................................
Class A Monthly Interest............................................ S-20
Class A Pass-Through Rate........................................... S-1
Class I Certificateholders.......................................... S-3
Class I Certificates................................................ S-2
Class I Monthly Interest............................................
Class I Pass-Through Rate........................................... S-2
Class IC Certificate................................................ Supp. Cover
Class IC Certificateholder.......................................... S-5
Closing Date........................................................ S-1
Code................................................................ S-22
Companion Component................................................. S-2
CTL................................................................. S-1
Cutoff Date......................................................... Supp. Cover
Defaulted Receivable................................................ S-20
Depositor........................................................... Supp. Cover
Determination Date.................................................. S-21
Distribution Date................................................... Supp. Cover
Duff & Phelps.......................................................
ERISA............................................................... S-7
Final Scheduled Distribution Date................................... Supp. Cover
Holdings............................................................
Insurance Agreement................................................. S-21
Moody's.............................................................
Monthly Interest.................................................... S-20
Monthly Principal................................................... S-2
Monthly Servicing Fee............................................... S-3
Net Principal Surety Bond Amount.................................... S-6
Notional Principal Amount........................................... S-3
Offered Certificates................................................ Supp. Cover
Optional Purchase................................................... S-6
</TABLE>
S-24
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Original Notional Principal Amount.................................. S-2
PAC Component....................................................... S-2
Payahead Account.................................................... S-18
Planned Notional Principal Amount Schedule.......................... S-3
Plan................................................................ S-22
Pool Balance........................................................ S-2
Pooling and Servicing Agreement..................................... S-1
Receivables......................................................... Supp. Cover
Record Date......................................................... S-1
Required Spread Amount.............................................. S-5
Servicer............................................................ S-1
Spread Account...................................................... S-4
Standard & Poor's...................................................
Surety Bond......................................................... Supp. Cover
Surety Bond Amount.................................................. S-6
Surety Bond Fee..................................................... S-20
Surety Bond Issuer.................................................. S-6
Trust............................................................... Supp. Cover
Trustee............................................................. S-1
Underwriters........................................................ S-22
</TABLE>
S-25
<PAGE>
[SURETY BOND FINANCIAL INFORMATION]
S-26
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, +
+NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED , 199
PROSPECTUS SUPPLEMENT TO PROSPECTUS
DATED , 1996
BAY VIEW 199 - AUTO TRUST
$ % CLASS A AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
$ % CLASS B AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
BAY VIEW SECURITIZATION CORPORATION
DEPOSITOR
CALIFORNIA THRIFT & LOAN
SERVICER
-----------
The Bay View 199 --Auto Trust (the "Trust") will be formed and will issue its
% Class A Automobile Receivable Pass-Through Certificates (the "Class A
Certificates") and the % Class B Automobile Receivable Pass-Through
Certificates (the "Class B Certificates" and, with the Class A Certificates,
the "Certificates") pursuant to a pooling and servicing agreement dated as of
, 199 (the "Pooling and Servicing Agreement") among Bay View Securitization
Corporation, as Depositor, California Thrift & Loan, as Servicer, and , as
Trustee.
Principal and interest will be distributed to holders of the Certificates on
the third business day after the fifth day of each month (each, a "Distribution
Date"), in the manner and to the extent described herein. The Class A
Certificates will evidence in the aggregate an undivided ownership interest in
approximately % of the Trust, and the Class B Certificates will evidence in
the aggregate an undivided ownership interest in approximately % of the Trust.
Principal and interest at the applicable Pass-Through Rate generally will be
distributed to Certificateholders on the day of each month, commencing ,
199 . The rights of the Class B Certificateholders to receive distributions are
subordinated to the rights of the Class A Certificateholders to the extent
described herein. The outstanding principal amount, if any, of the Certificates
will be due and payable on (the "Final Scheduled Distribution Date").
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION
SET FORTH UNDER "RISK FACTORS" ON PAGE S- OF THIS PROSPECTUS SUPPLEMENT AND
PAGE 12 OF THE PROSPECTUS.
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF BAY VIEW SECURITIZATION
CORPORATION OR ANY AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY BAY VIEW SECURITIZATION
CORPORATION, ANY OF ITS AFFILIATES OR ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND
PRICE TO PUBLIC COMMISSIONS PROCEEDS TO DEPOSITOR(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Certifi-
cate.................. % % %
- -------------------------------------------------------------------------------
Per Class B Certifi-
cate.................. % % %
- -------------------------------------------------------------------------------
Total................ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) Before deducting expenses, estimated to be $ .
The Certificates are offered, subject to prior sale, when, as and if accepted
by the Underwriters, and subject to approval of certain legal matters by
Cadwalader, Wickersham & Taft, counsel for the Underwriters. It is expected
that delivery of the Certificates in book-entry form will be made on or about
, 199 through the facilities of The Depository Trust Company, against
payment therefor in immediately available funds.
, 199
<PAGE>
The Certificates represent undivided interests in the Trust, the property of
which will include a pool of simple interest and precomputed interest
installment sale and installment loan contracts originated in various states
of the United States (the "Receivables"), security interests in the new and
used automobiles, motorcycles, light trucks and vans financed thereby and
certain monies due thereunder after , 199 (the "Cutoff Date"). The Trustee
will also hold monies on deposit in a Pre-Funding Account, which will be used
to purchase additional Receivables from the Depositor from time to time on or
before , 199 . The Trust may also draw on funds on deposit in a Yield
Supplement Account and a Cash Collateral Account, to the extent described
herein, to meet shortfalls in amounts due to Certificateholders on any
Distribution Date. The Yield Supplement Account and the Cash Collateral
Account will be maintained with the Trustee for the benefit of the
Certificateholders, but will not be part of the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. THIS PROSPECTUS SUPPLEMENT CONTAINS INFORMATION THAT IS
SPECIFIC TO THE TRUST AND THE CERTIFICATES AND, TO THAT EXTENT, SUPPLEMENTS
AND REPLACES THE MORE GENERAL INFORMATION PROVIDED IN THE PROSPECTUS.
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT MAY ALSO REFLECT LEGAL,
ECONOMIC AND OTHER DEVELOPMENTS SINCE THE DATE OF THE PROSPECTUS. TO THE
EXTENT INFORMATION IN THIS PROSPECTUS SUPPLEMENT CONFLICTS WITH INFORMATION IN
THE PROSPECTUS, THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Until 90 days after the date of this Prospectus Supplement, all dealers
effecting transactions in the Certificates, whether or not participating in
this distribution, may be required to deliver this Prospectus Supplement and
the Prospectus. This is in addition to the obligation of dealers to deliver
this Prospectus Supplement and the Prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur only
under the limited circumstances described herein), , as Trustee, will
provide to Cede & Co., the nominee of The Depository Trust Company, as
registered holder of the Certificates, monthly and annual statements
concerning the Trust and the Certificates. Such statements will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. A copy of the most recent monthly or annual statement concerning
the Trust and the Certificates may be obtained by contacting the Servicer at
California Thrift & Loan, 818 Oakpark Road, Covina, California 91724,
( ) - .
ii
<PAGE>
SUMMARY OF TERMS
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
Prospectus. Certain capitalized terms used in this Summary are defined
elsewhere in this Prospectus Supplement on the pages indicated in the "Index of
Principal Terms" or, to the extent not defined herein, have the meanings
assigned to such terms in the "Index of Principal Terms" on page 53 of the
Prospectus.
Issuer........................ Bay View 199 --Auto Trust.
Depositor..................... Bay View Securitization Corporation (the
"Depositor").
Servicer...................... California Thrift & Loan (in its capacity as
servicer, the "Servicer," otherwise "CTL").
Trustee.......................
The Certificates.............. The Trust will be formed and will issue the
Certificates on , 199 (the "Closing Date")
pursuant to the Pooling and Servicing
Agreement. The Certificates will consist of the
% Class A Automobile Receivable Pass-Through
Certificates in the aggregate principal amount
of $ and the % Class B Automobile
Receivable Pass-Through Certificates in the
aggregate principal amount of $ . The Class A
Certificates will evidence in the aggregate an
undivided ownership interest in approximately
% of the Trust (the "Class A Percentage"),
and the Class B Certificates will evidence in
the aggregate an undivided ownership interest
in approximately % of the Trust (the "Class B
Percentage"). The Class B Certificates will be
subordinated to the Class A Certificates to the
extent described herein. See "The Certificates"
herein.
Each of the Certificates will represent a
fractional undivided interest in the Trust. The
Trust assets will include the Receivables,
certain monies due thereunder after the Cutoff
Date, security interests in the related
Financed Vehicles, monies on deposit in the
Yield Supplement Account, the Certificate
Account and the proceeds thereof, any proceeds
from claims on certain insurance policies
relating to the Financed Vehicles or the
related Obligors, any lender's insurance
policy, the Cash Collateral Account, and
certain rights under the Pooling and Servicing
Agreement.
Class A Pass-Through Rate..... % per annum, payable monthly at one-twelfth
the annual rate.
Class B Pass-Through Rate..... % per annum, payable monthly at one-twelfth
the annual rate.
Distribution Date............. The third business day after the fifth day of
the month following the Record Date, commencing
, 199 .
S-1
<PAGE>
Monthly Interest.............. Interest will be distributable on each
Distribution Date beginning , 199 , to
holders of record as of the last day of the
calendar month immediately preceding the
calendar month in which such Distribution Date
occurs (the "Record Date") of (i) the Class A
Certificates (the "Class A Certificateholders")
in a maximum amount equal to the product of
1/12th of % (the "Class A Pass-Through
Rate") and the aggregate outstanding principal
balance of the Class A Certificates (the "Class
A Principal Balance") as of the preceding
Distribution Date (after giving effect to all
distributions to Certificateholders on such
date) and (ii) the Class B Certificates (the
"Class B Certificateholders") in a maximum
amount equal to the product of 1/12th of %
(the "Class B Pass-Through Rate") and the
aggregate outstanding principal balance of the
Class B Certificates (the "Class B Principal
Balance") as of the preceding Distribution Date
(after giving effect to all distributions to
Certificateholders on such date). Interest on
the Class A Certificates and the Class B
Certificates will be calculated on the basis of
a 360-day year consisting of twelve 30-day
months. See "The Certificates--Distributions".
The effective yield on the Class A Certificates
and the Class B Certificates will be below that
otherwise produced by the Class A Pass-Through
Rate and the Class B Pass-Through Rate,
respectively, because the distribution of
Monthly Principal and Monthly Interest in
respect of any given month will not be made
until on or about the day of the following
month. See "Yield and Prepayment
Considerations" herein.
Monthly Principal............. On each Distribution Date, the Trustee will
distribute to the Class A Certificateholders
and the Class B Certificateholders
(collectively, the "Certificateholders") all
principal payments on the Receivables,
including full and partial prepayments received
by the Trustee during the preceding calendar
month. Monthly Principal will be passed through
to Certificateholders on each Distribution Date
in a maximum amount equal to the aggregate
outstanding principal amount of the Receivables
(the "Pool Balance") on the last day of the
second preceding calendar month (or, in the
case of the first Distribution Date, as of the
Cutoff Date) less the Pool Balance on the last
day of the immediately preceding calendar
month. For the purpose of determining Monthly
Principal, the unpaid principal balance of a
Defaulted Receivable or a Purchased Receivable
will be deemed to be zero on and after the last
day of the calendar month in which such
Receivable becomes a Defaulted Receivable or a
Purchased Receivable, as applicable.
The weighted average life of the Certificates
will be reduced by full or partial prepayments
on the Receivables (except certain prepayments
in respect of Precomputed Receivables). Neither
the Servicer nor the Depositor nor any of their
affiliates maintains
S-2
<PAGE>
specific statistical data regarding the
historical prepayment experience of its
automobile receivable portfolio. See "The
Certificates--Distributions" herein.
The Receivables............... On the Closing Date, the Depositor will convey
Receivables to the Trust (the "Initial
Receivables") having an aggregate principal
balance of approximately $ as of , 199
(the "Initial Cutoff Date"). The Trust will
acquire the Initial Receivables from the
Depositor pursuant to the Pooling and Servicing
Agreement. In addition, the Depositor will be
obligated under the terms of the Pooling and
Servicing Agreement to sell additional
Receivables (the "Subsequent Receivables") to
the Trust (subject only to the availability
thereof) having an aggregate principal balance
equal to approximately $ (the "Pre-Funded
Amount"), and the Trust will be obligated to
purchase the Subsequent Receivables from the
Depositor (subject to the satisfaction of
certain conditions set forth in the Pooling and
Servicing Agreement) prior to the end of the
Funding Period. The Depositor will designate as
a cutoff date (each, a "Subsequent Cutoff
Date") each date as of which particular
Subsequent Receivables are conveyed to the
Trust. Each date during the Funding Period on
which Subsequent Receivables will be conveyed
to the Trust is referred to herein as a
"Subsequent Transfer Date." See "The
Certificates--Sale and Assignment of
Receivables; Subsequent Receivables" and "The
Receivables Pool" herein and "The Receivables
Pools" in the Prospectus.
The Depositor will acquire the Initial
Receivables on or prior to the Closing Date
from California Thrift & Loan ("CTL") pursuant
to a purchase agreement dated as of , 199
(the "Purchase Agreement") among the Depositor
and CTL. CTL also will be obligated under the
Purchase Agreement to sell the Subsequent
Receivables to the Depositor, for resale by the
Depositor to the Trust. In the Purchase
Agreement, CTL will make certain
representations and warranties with respect to
the Receivables and CTL will undertake to
repurchase any Receivable with respect to which
an uncured breach of any such representation or
warranty exists if such breach materially and
adversely affects the rights of the Depositor
or its assignee in such Receivable and if such
breach is not cured by CTL in a timely manner.
Pursuant to the Pooling and Servicing
Agreement, the Depositor will assign its rights
against CTL with respect to any Receivable of
which there exists a breach of any
representation and warranty that materially and
adversely affects the rights of the
Certificateholders. See "The Certificates--Sale
and Assignment of Receivables; Subsequent
Receivables" herein. Neither CTL nor the
Depositor will have any other obligation with
respect to the Receivables or the Certificates.
The Receivables arise, or will arise, from
Contracts originated or acquired, directly or
indirectly, by CTL from Dealers located in
S-3
<PAGE>
various states of the United States. The
Initial Receivables have been selected, and the
Subsequent Receivables will be selected, from
the Contracts owned by CTL based on the
criteria specified in the Pooling and Servicing
Agreement and described herein under "The
Receivables Pool" and in the Prospectus under
"The Receivables Pools." As of the Initial
Cutoff Date, the weighted average Contract Rate
of the Initial Receivables was approximately
%, the weighted average remaining term to
maturity of the Initial Receivables was
approximately months, and the weighted average
original term to maturity of the Initial
Receivables was approximately months. No
Initial Receivable has, and no Subsequent
Receivable will have, a scheduled maturity
later than , 199 (the "Final Scheduled
Maturity Date").
Subsequent Receivables may be originated or
acquired by CTL at a later date using credit
criteria that differ from those that were
applied to the Initial Receivables and may be
of a different credit quality and seasoning. In
addition, following the transfer of Subsequent
Receivables to the Trust, the characteristics
of the entire pool of Receivables included in
the Trust may vary significantly from those of
the Initial Receivables. For a description of
provisions for the transfer of Subsequent
Receivables and verification that Subsequent
Receivables conform to the requirements of the
Pooling and Servicing Agreement, see "Risk
Factors--The Pre-Funding Account," "--
Conveyance of Subsequent Receivables to the
Trust," "The Receivables Pool" and "The
Certificates--Sale and Assignment of
Receivables; Subsequent Receivables" herein.
See also "Risk Factors--Sales of Subsequent
Receivables," and "Description of the Transfer
and Servicing Agreements--Sale and Assignment
of Receivables" in the Prospectus.
Pre-Funding Account........... During the period (the "Funding Period") from
and including the Closing Date until the
earliest to occur of (a) the date on which the
amount on deposit in the Pre-Funding Account is
equal to $ or less, (b) the occurrence of an
Event of Default under the Pooling and
Servicing Agreement, (c) the occurrence of
certain events of insolvency with respect to
the Depositor or the Servicer or (d) the
[third] Distribution Date, the Pre-Funded
Amount will be maintained in an account (the
"Pre-Funding Account") in the name of the
Trustee. The Funding Period will not be more
than three calendar months. The Pre- Funded
Amount initially will equal $ and, during
the Funding Period, will be reduced by the
amount thereof used to purchase Subsequent
Receivables in accordance with the Pooling and
Servicing Agreement. See "Description of the
Transfer and Servicing Agreements--Accounts--
Pre-Funding Account" in the Prospectus and "The
Certificates--Sale and Assignment of
Receivables; Subsequent Receivables" herein.
S-4
<PAGE>
Funds on deposit in the Pre-Funding Account
during the Funding Period will be invested by
the Trustee in Eligible Investments, provided,
however, that such funds will not be invested
in money market funds unless the Trustee
receives an opinion of counsel to the effect
that such an investment in money market funds
would not require the Trust to register as an
investment company under the Investment Company
Act of 1940. Eligible Investments held in the
Pre-Funding Account will be required to mature
not later than the business day preceding the
next scheduled Distribution Date or the next
Subsequent Transfer Date within the Funding
Period identified by the Depositor. Any
Investment Income with respect to such Eligible
Investments will be transferred from the Pre-
Funding Account to the Certificate Account on
each Distribution Date and will be included in
Available Funds for such Distribution Date. Any
Pre-Funded Amount remaining at the end of the
Funding Period will be payable to the
Certificateholders. The Certificates will be
prepaid, in part, pro rata on the basis of
their initial principal amounts, on the
Distribution Date on or immediately following
the last day of the Funding Period in the event
that any amount remains on deposit in the Pre-
Funding Account after giving effect to the
purchase of all Subsequent Receivables,
including any such purchase on such date. The
aggregate principal amount of Certificates to
be prepaid will be an amount equal to the
amount then on deposit in the Pre-Funding
Account. Such prepayment will reduce the
Certificateholders' outstanding principal
balance and anticipated yield. See "Risk
Factors--The Pre-Funding Account" and "The
Certificates--Sale and Assignment of
Receivables; Subsequent Receivables" herein.
See also "Description of the Transfer and
Servicing Agreements--Accounts" in the
Prospectus.
Subordination of Class B
Certificates............... The rights of the Class B Certificateholders to
receive distributions to which they otherwise
will be entitled to with respect to the
Receivables are subordinated to the rights of
the Class A Certificateholders. No distribution
of interest will be made to the Class B
Certificateholders on any Distribution Date
until the full amount of interest payable on
the Class A Certificates on such Distribution
Date has been distributed to the Class A
Certificateholders and no distribution of
principal will be made to the Class B
Certificateholders on any Distribution Date
until the full amount of interest on and
principal of the Class A Certificates payable
on such Distribution Date has been distributed
to the Class A Certificateholders.
Distributions of interest on the Class B
Certificates will not be subordinated to
distributions of principal of the Class A
Certificates. Because the rights of the Class B
Certificateholders to receive distributions of
principal will be subordinated to the rights of
the Class A Certificateholders to receive
distributions of interest and principal, the
Class B Certificates will be more sensitive
than the
S-5
<PAGE>
Class A Certificates to losses on the
Receivables. If the aggregate amount of losses
on the Receivables exceeds the amount on
deposit in the Cash Collateral Account, Class B
Certificateholders may not recover their
initial investment in the Class B Certificates.
See "The Certificates--Distributions" and "--
Subordination of the Class B Certificates"
herein.
Cash Collateral Account....... The Depositor will establish the Cash
Collateral Account on the Closing Date and will
deposit in such account an amount equal to %
of the sum of the initial Class A Principal
Balance and the Class B Principal Balance
(collectively, the "Certificate Principal
Balance"). On each Distribution Date
thereafter, the Servicer will deposit into the
Cash Collateral Account any amounts remaining
in the Certificate Account after the payment on
such date of every other obligation of the
Trust. The Trustee will withdraw funds from the
Cash Collateral Account on each Distribution
Date to the extent of any shortfall in the
Monthly Interest and Monthly Principal. Any
amount on deposit in the Cash Collateral
Account on any Distribution Date in excess the
Required Cash Collateral Amount after all other
required deposits thereto and withdrawals
therefrom have been made, will be distributed
to the Depositor. Any amount so distributed to
the Depositor will no longer be an asset of the
Trust. The "Required Cash Collateral Amount"
with respect to any Distribution Date will
equal % of the Certificate Principal
Balance.
While it is intended that the amount on deposit
in the Cash Collateral Account grow over time,
through the deposit thereto of the excess
collections, if any, on the Receivables, to the
Required Cash Collateral Amount, there can be
no assurance that such growth will actually
occur. See "The Certificates--Accounts" herein.
The Cash Collateral Account will be maintained
with the Trustee as a segregated trust account
for the benefit of Certificateholders, but will
not be part of the Trust.
Optional Purchase............. The Servicer may purchase all of the
Receivables (referred to herein as an "Optional
Purchase") as of the last day of any Collection
Period, at a purchase price equal to the fair
market value of the Receivables (but not less
than their aggregate outstanding principal
balance plus accrued and unpaid interest
thereon), if the Certificate Principal Balance
as of the following Distribution Date will
equal 10% or less of the initial Certificate
Principal Balance.
Tax Status.................... In the opinion of Federal Tax Counsel, the
Trust will be treated as a grantor trust for
federal income tax purposes and will not be
subject to federal income tax. Owners of
beneficial interests in the Certificates will
report their pro rata share of all income
S-6
<PAGE>
earned on the Receivables (other than amounts,
if any, treated as "stripped coupons") and,
subject to certain limitations in the case of
such owners who are individuals, trusts or
estates, may deduct their pro rata share of
reasonable servicing and other fees.
See "Certain Federal Income Tax Consequences"
in the Prospectus for additional information
concerning the application of federal income
tax laws to the Trust and the Certificates.
ERISA Considerations.......... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Class A Certificates may be
eligible for purchase by employee benefit plans
subject to the Employee Retirement Income
Security Act of 1974, as amended. See "ERISA
Considerations" herein and in the Prospectus.
Because the Class B Certificates are
subordinated to the Class A Certificates, the
Class B Certificates may not be purchased by
Plans.
Ratings.................. It is a condition to the issuance of the
Certificates that the Class A Certificates and
the Class B Certificates each be rated in one
of the four highest rating categories by at
least one nationally recognized statistical
rating agencies. A rating is not a
recommendation to purchase, hold or sell the
Certificates, inasmuch as such rating does not
comment as to market price or suitability for a
particular investor. The ratings address the
likelihood that principal of and interest on
the Certificates will be paid pursuant to their
terms. There can be no assurance that a rating
will not be lowered or withdrawn by a rating
agency if circumstances so warrant. See "Risk
Factors--Ratings of the Certificates" herein.
S-7
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus Supplement
and the Prospectus, prospective investors should carefully consider the
following risk factors and those discussed in the Prospectus under the heading
"Risk Factors" before investing in the Certificates.
THE PRE-FUNDING ACCOUNT
On the Closing Date, the Depositor will deposit the Pre-Funded Amount to the
Pre-Funding Account. The Pre-Funding Account will be maintained as an Eligible
Deposit Account. The Pre-Funded Amount will be used only to purchase
Subsequent Receivables. Prior to their withdrawal from the Pre-Funding Account
as payment for Subsequent Receivables, funds on deposit in the Pre-Funding
Account will be invested in Eligible Investments, and any investment income
thereon will be included on the following Distribution Date as part of
Available Funds. Any amounts remaining in the Pre-Funding Account at the end
of the Funding Period will be distributed pro rata to Certificateholders as a
prepayment of principal of the Certificates. Such prepayment will reduce the
Certificateholder's outstanding principal balance and anticipated yield. See
"Yield and Prepayment Considerations--Mandatory Repurchase" herein and
"Description of the Transfer and Servicing Agreements --Accounts--Pre-Funding
Account" in the Prospectus. The amounts on deposit may be invested in Eligible
Investments, provided, however, that such funds will not be invested in money
market funds unless the Trustee receives an opinion of counsel to the effect
that such an investment in money market funds would not require the Trust to
register as an investment company under the Investment Company Act of 1940.
CONVEYANCE OF SUBSEQUENT RECEIVABLES TO THE TRUST
On the Closing Date, the Depositor will convey to the Trust approximately
$ of Initial Receivables and the approximately $ Pre-Funded Amount on
deposit in the Pre-Funding Account. If the principal amount of eligible
Receivables originated or acquired by CTL prior to the termination of the
Funding Period is less than the Pre-Funded Amount, CTL will have insufficient
Receivables to sell to the Depositor, and the Depositor will have insufficient
Receivables to sell to the Trust, thereby resulting in a prepayment of
principal to the Certificateholders as described below. In addition, any
conveyance of Subsequent Receivables is subject to the satisfaction, on or
before the related Subsequent Transfer Date, of the following conditions,
among others: (i) each such Subsequent Receivable shall satisfy the
eligibility criteria specified in the Pooling and Servicing Agreement and
shall not have been selected from among such eligible Receivables in a manner
that CTL or the Depositor deems adverse to the interests of the
Certificateholders; (ii) as of the related Subsequent Cutoff Date, the
Receivables in the Trust at that time, including the Subsequent Receivables to
be conveyed by the Depositor to the Trust as of such Subsequent Cutoff Date,
must satisfy the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; (iii) CTL shall have executed
and delivered to the Depositor, and the Depositor shall have executed and
delivered to the Trustee, a written assignment (including a schedule
identifying such Subsequent Receivables) conveying such Subsequent Receivables
to the Depositor and the Trust, respectively. In addition, the conveyance of
the Subsequent Receivables to the Trust will also be subject to the
satisfaction of the following requirements within days after the termination
of the Funding Period: (a) the Depositor shall deliver certain opinions of
counsel to the Trustee and the Rating Agencies with respect to the validity of
the conveyance of the Subsequent Receivables to the Trust; (b) the Trustee
shall receive written confirmation from a firm of certified public accountants
that the Receivables, including the Subsequent Receivables, meet the criteria
described herein under "The Receivables Pool" and in the Prospectus under "The
Receivables Pools"; and (c) the Rating Agencies shall have notified the
Depositor in writing that, following the conveyance of the Subsequent
Receivables to the Trust, the Certificates will continue to be rated by such
Rating Agencies in the same rating categories in which they were rated on the
Closing Date. Such confirmation of the ratings of the Certificates may depend
on factors other than the characteristics of the Subsequent Receivables,
including the delinquency, repossession and net loss experience on the
automobile, light truck and van receivables in the portfolio serviced by CTL.
CTL will immediately repurchase from the Trust any Subsequent Receivable
that fails to satisfy the conditions listed in the preceding paragraph, at a
purchase price equal to the Purchase Amount therefor.
S-8
<PAGE>
To the extent that amounts on deposit in the Pre-Funding Account have not
been fully applied to the purchase of Subsequent Receivables by the Trust by
the end of the Funding Period, the Certificateholders will receive a
prepayment of principal in an amount equal to the Pre-Funded Amount remaining
in the Pre-Funding Account following the purchase of all Subsequent
Receivables. It is anticipated that the principal amount of the Subsequent
Receivables sold to the Trust will not be exactly equal to the amount on
deposit in the Pre-Funding Account and, therefore, that there will be at least
a nominal amount of principal prepaid to the Certificateholders. See "Yield
and Prepayment Considerations--Mandatory Repurchase."
Each Subsequent Receivable, at the time it is conveyed to the Trust, must
satisfy the eligibility criteria specified in the Pooling and Servicing
Agreement. However, Subsequent Receivables may have been originated or
acquired by CTL at a later date using credit criteria different from those
that were applied to the Initial Receivables and may be of a different credit
quality and seasoning. Therefore, following the transfer of Subsequent
Receivables to the Trust, the characteristics of the entire Receivables Pool
included in the Trust may vary significantly from those of the Initial
Receivables. See "The Receivables Pool" and "The Certificates--Sale and
Assignment of Receivables; Subsequent Receivables" herein and "The Receivables
Pools" in the Prospectus.
CERTIFICATES SOLELY OBLIGATIONS OF THE TRUST
The Certificates are interests in the Trust only and do not represent the
obligation of any other person. The Trustee will withdraw funds from the Cash
Collateral Account, up to the full balance of the funds on deposit in such
account, in the event that sufficient funds are not available in accordance
with the Pooling and Servicing Agreement to distribute Monthly Interest and
Monthly Principal and to pay the Servicing Fee on any Distribution Date. The
Cash Collateral Account is initially % of the Certificate Principal Balance
and is intended to increase over time to % of the Certificate Principal
Balance. There is no assurance that such growth will occur or that the balance
in the Cash Collateral Account will always be sufficient to assure payment in
full of Monthly Principal and Monthly Interest on the Certificates. In the
event the amount on deposit in the Cash Collateral Account is reduced to zero,
losses on the Receivables will be borne directly first by Class B
Certificateholders until the Class B Principal Balance is reduced to zero, and
then by Class A Certificateholders. See "The Receivables Pool--Delinquencies,
Repossession and Net Losses" and "The Certificates--Accounts --Cash Collateral
Account."
LIMITED OBLIGATIONS OF THE DEPOSITOR, CTL AND THE SERVICER
None of the Depositor, CTL or the Servicer is generally obligated to make
any payments in respect of the Certificates or the Receivables; however, if
CTL were to cease acting as Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in
delays in payment to the Certificateholders. In addition, CTL makes certain
representations and warranties with respect to the Receivables and, in the
event of a breach of any such representation or warranty that materially and
adversely affects the rights of the Certificateholders in a Receivable, CTL is
obligated under the Purchase Agreement and the Pooling and Servicing Agreement
to repurchase such Receivable from the Trust at a repurchase price equal to
the Purchase Amount thereof. See "The Certificates--Sale and Assignment of
Receivables; Subsequent Receivables" herein and "Description of the Transfer
and Servicing Agreements--Sale and Assignment of Receivables" in the
Prospectus.
RATINGS OF THE CERTIFICATES
As a condition to the issuance of the Offered Certificates, the Class A
Certificates and the Class B Certificates must be rated in at least one of the
four highest rating categories by a nationally recognized rating agency. A
rating is not a recommendation to purchase, hold or sell the Certificates,
inasmuch as a rating does not comment as to market price or suitability for a
particular investor. The ratings of the Certificates address the likelihood of
the timely payment of interest on, and the ultimate repayment of principal of,
the Certificates pursuant to their terms. There can be no assurance that a
rating will remain for any given period of time or that a
S-9
<PAGE>
rating will not be lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances in the future so warrant. In the event that a rating is
subsequently lowered or withdrawn, no person or entity will be required to
provide any additional credit enhancement. The ratings of the Class A
Certificates are based primarily on the credit quality of the Receivables, the
subordination of the Class B Certificates and the availability of funds in the
Cash Collateral Account, and the ratings of the Class B Certificates are based
primarily on the credit quality of the Receivables and the availability of
funds in the Cash Collateral Account.
GEOGRAPHIC CONCENTRATION
As of the Cut-Off Date, based upon billing address information provided to
CTL, the Obligors resided in states and the District of Columbia, two of
which, California and Texas, account for % and %, respectively, of the
aggregate principal balance of the Receivables. Adverse economic conditions in
California or Texas could adversely affect the delinquency, loan loss or
repossession experience of the Trust.
FORMATION OF THE TRUST
GENERAL
The Depositor will establish the Trust by selling and assigning the Trust
property, as described below, to the Trustee in exchange for the Certificates.
The Servicer will service the Receivables pursuant to the Pooling and
Servicing Agreement and will be compensated for acting as the Servicer. See
"Description of the Transfer and Servicing Agreements--Servicing Compensation
and Payment of Expenses" in the Prospectus. To facilitate servicing and to
minimize administrative burden and expense, the Servicer will be appointed
custodian of the Receivables and the related documents by the Trustee, but
will not stamp the Receivables to reflect the sale and assignment of the
Receivables to the Trust or amend the certificates of title of the Financed
Vehicles. In the absence of amendments to the certificates of title, the
Trustee may not have perfected security interests in the Financed Vehicles
securing the Receivables in some states. See "Risk Factors--Perfection of
Security Interests in Financed Vehicles" and "Certain Legal Aspects of the
Receivables" in the Prospectus. Under the terms of the Pooling and Servicing
Agreement, CTL may delegate its duties as Servicer and custodian; however, any
such delegation will not relieve CTL of its liability and responsibility with
respect to such duties.
If the protection provided to Certificateholders by the Cash Collateral
Account and, in the case of the Class A Certificateholders, the subordination
of the Class B Certificates is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale of
Financed Vehicles that secure defaulted Receivables to fund distributions of
principal and interest on the Certificates. In such event, certain factors,
such as the Trust's not having first priority perfected security interests in
some of the Financed Vehicles, may affect the Trust's ability to realize on
the collateral securing the Receivables and thus may reduce the proceeds to be
distributed to Certificateholders with respect to the Certificates. See "The
Certificates--Distributions" and "--Subordination of the Class B Certificates;
Cash Collateral Account" herein and "Certain Legal Aspects of the Receivables"
in the Prospectus.
Each Certificate represents a fractional undivided ownership interest in the
Trust. The Trust property includes the Contracts transferred by the Depositor
to the Trust and certain payments due thereunder after the Cutoff Date. The
Trust property also includes (i) such amounts as from time to time may be held
in the Certificate Account; (ii) the right to draw on funds on deposit in the
Cash Collateral Account, the Payahead Account and the Yield Supplement
Account, to the extent described herein, (iii) security interests in the
Financed Vehicles and any accessions thereto; (iv) the rights to proceeds with
respect to the Receivables from claims on physical damage, credit life and
disability insurance policies covering the Financed Vehicles or the Obligors,
as the case may be, and any lender's insurance policy; (v) any property that
shall have secured a Receivable and that shall have been acquired by the
Trustee; (vi) the Pre-Funding Account; and (vii) any and all proceeds of the
foregoing. The Cash Collateral Account and the Yield Supplement Account will
be maintained by the Trustee for the benefit of the Certificateholders, but
will not be part of the Trust. The assets of the Trust will not include, and
the Certificateholders will have no interest in, any contract between CTL and
any Dealer establishing "dealer reserves" or any right pursuant to any such
contract to recapture dealer reserves.
S-10
<PAGE>
THE TRUSTEE
is Trustee under the Pooling and Servicing Agreement. is a
banking corporation, and its principal offices are located at . The
Depositor and its affiliates may maintain normal commercial banking relations
with the Trustee and its affiliates.
THE RECEIVABLES POOL
The pool of Receivables conveyed to the Trust (the "Receivables Pool") will
include the Initial Receivables purchased as of the Initial Cutoff Date and
any Subsequent Receivables purchased as of the applicable Subsequent Cutoff
Dates.
The Initial Receivables were, and the Subsequent Receivables were or will
be, selected from CTL's portfolio for purchase by the Depositor by several
criteria, including that each Receivable: (i) had or will have an original
number of payments of not more than payments and not less than
payments, (ii) had or will have a remaining maturity of not more than
months and not less than months, (iii) provided or will provide for level
monthly payments that fully amortize the amount financed over the original
term, (iv) had or will have a Contract Rate (exclusive of prepaid finance
charges) of not less than %, and (v) was not or will not be more than days
past due as of the Cutoff Date. The weighted average remaining maturity of the
Initial Receivables will be months as of the Initial Cutoff Date.
Approximately % of the Initial Receivables are simple interest contracts
which provide for equal monthly payments. Approximately % of the aggregate
principal balance of the Initial Receivables as of the Initial Cutoff Date are
Precomputed Receivables (as defined in the Prospectus) originated in . All
of such Precomputed Receivables are Rule of 78's Receivables (as defined in
the Prospectus). Approximately % of the aggregate principal balance of the
initial Cutoff Date represent financing of new vehicles; the remainder of the
Initial Receivables represent financing of used vehicles.
Obligors of the Initial Receivables representing more than 10% of the
aggregate principal balance of the Receivables as of the Cutoff Date reside in
each of the States of California and Texas, based upon billing address
information provided to CTL. The performance of the Receivables in the
aggregate could be adversely affected in particular by the development of
adverse economic conditions in any such state. See "Risk Factors--Geographic
Concentration" and "--Delinquencies, Repossessions and Net Losses" herein.
The obligation of the Trust to purchase Subsequent Receivables on a
Subsequent Transfer Date will be subject to the following criteria: [SPECIFY
APPLICABLE CRITERIA]. In addition, such obligation will be subject to the
Receivables (including the Subsequent Receivables to be transferred to the
Trust on such Subsequent Transfer Date) having a weighted average remaining
term not greater than months. Such criteria will be based on the
characteristics of the Initial Receivables on the Initial Cutoff Date and any
Subsequent Receivables on the related Subsequent Cutoff Date.
The Initial Receivables will represent approximately % of the aggregate
initial principal balance of the Certificates. However, except for the
criteria described in the preceding paragraphs, there will be no required
characteristics of the Subsequent Receivables. Therefore, following the
transfer of Subsequent Receivables to the Trust, the aggregate characteristics
of the entire Receivables Pool, including the composition of the Receivables,
the distribution by Contract Rate and the geographic distribution, may vary
significantly from those of the Initial Receivables. The composition,
distribution by Contract Rate and geographic distribution of the Initial
Receivables as of the Initial Cutoff Date are as set forth in the following
tables.
S-11
<PAGE>
COMPOSITION OF THE INITIAL RECEIVABLES AS OF
THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
AGGREGATE ORIGINAL
NUMBER OF PRINCIPAL PRINCIPAL WEIGHTED
RECEIVABLES BALANCE BALANCE AVERAGE RATE
----------- --------- ------------- ------------
<S> <C> <C> <C> <C>
New Automobiles and Light-
Duty Trucks.................
Used Automobiles and Light-
Duty Trucks.................
New Vans(1)..................
Used Vans(1).................
Motorcycles..................
--- --- --- ---
All Receivables..............
=== === === ===
<CAPTION>
WEIGHTED WEIGHTED PERCENTAGE OF SCHEDULED
AVERAGE AVERAGE AGGREGATE WEIGHTED
REMAINING ORIGINAL PRINCIPAL AVERAGE
TERM(2) TERM(2) BALANCE(3) LIFE(2)
----------- --------- ------------- ------------
<S> <C> <C> <C> <C>
New Automobiles and Light-
Duty Trucks.................
Used Automobiles and Light-
Duty Trucks.................
New Vans(1)..................
Used Vans(1).................
Motorcycles..................
--- --- --- ---
All Receivables..............
=== === === ===
</TABLE>
- --------
(1) References to vans include minivans and van conversions.
(2) Based on scheduled maturity and assuming no prepayments of the Receivables.
(3) Sum may not equal 100% due to rounding.
GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF AGGREGATE
STATE(1)(2) PRINCIPAL BALANCE(3)
- ----------- --------------------
<S> <C>
</TABLE>
- --------
(1) Based on address of the Obligor.
(2) $ of receivables were originated by Dealers and purchased from such
Dealers by CTL.
(3) Percentages may not add to 100% because of rounding.
S-12
<PAGE>
DISTRIBUTION OF INITIAL RECEIVABLES VEHICLES BY MODEL YEAR
<TABLE>
<CAPTION>
PRINCIPAL
NUMBER OF PERCENTAGE OF BALANCE AS OF PERCENTAGE OF
MODEL YEAR RECEIVABLES TOTAL(1) CUTOFF DATE TOTAL(1)
- ---------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
199 ......................
--- --- --- ---
Total...................
=== === === ===
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
DISTRIBUTION OF THE INITIAL RECEIVABLES BY
CONTRACT RATE AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AVERAGE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL PRINCIPAL
CONTRACT RATE RANGE RECEIVABLES BALANCE BALANCE BALANCE(1)
- ------------------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C>
to %.......................
to %.......................
to %.......................
to %.......................
to %.......................
to %.......................
to %.......................
to %.......................
to %.......................
--- --- --- ---
Total...........................
=== === === ===
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
S-13
<PAGE>
DISTRIBUTION OF THE INITIAL RECEIVABLES BY REMAINING
TERM AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AVERAGE AGGREGATE
REMAINING SCHEDULED NUMBER OF PRINCIPAL PRINCIPAL PRINCIPAL
TERM RANGE RECEIVABLES BALANCE BALANCE BALANCE(1)
- ------------------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C>
to months.................
to months.................
to months.................
to months.................
to months.................
to months.................
to months.................
to months.................
to months.................
--- --- --- ---
Total...........................
=== === === ===
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
S-14
<PAGE>
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning the experience of CTL
pertaining to delinquencies, repossessions, and net losses on its prime fixed
rate retail automobile, light truck and van receivables serviced by CTL. There
can be no assurance that the delinquency, repossession, and net loss
experience on the Receivables will be comparable to that set forth below.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
------------------------------------------ ------------------------------------------
1996 1995 1994 1993
-------------------- -------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT
----------- -------- ----------- -------- ----------- -------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Servicing portfolio..... 24,427 $303,665 22,261 $266,106 22,997 $261,325 22,034 $239,353
Delinquencies
30-59 days............. 97 1,022 84 811 102 977 110 822
60-89 days............. 65 686 66 692 55 394 69 528
90 days or more........ 60 482 49 348 59 382 37 279
Total delinquencies..... 222 2,190 199 1,851 216 1,753 216 1,629
------ -------- ------ -------- ------ -------- ------ --------
Total delinquencies as a
percent of servicing
portfolio............... .91% .72% .88% .70% .94% .67% .98% .68%
====== ======== ====== ======== ====== ======== ====== ========
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------------------------ ---------------------------------------------------
1996 1995 1994 1993
-------------------- -------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT
----------- -------- ----------- -------- ----------- -------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average servicing
portfolio(2)............ 23,524 $284,886 22,809 $266,746 22,516 $252,144 25,266 $257,034
Net charge-offs:
Gross charge-off....... 520 3,182 644 3,787 527 2,500 856 4,692
Recoveries............. 587 581 573 554
-------- -------- -------- --------
Net losses.............. 2,595 3,206 1,927 4,138
======== ======== ======== ========
Gross charge-offs as a
percent of average
servicing portfolio..... 2.95% 1.49% 2.82% 1.42% 2.34% .99% 3.39% 1.83%
Recoveries as a percent
of gross charge-offs.... 18.45% 15.34% 22.92% 11.81%
Net losses as a
percentage of average
servicing portfolio..... 1.21% 1.20% .76% 1.61%
</TABLE>
- ----
(1) There is generally no recourse to Dealers under any of the receivables in
the portfolio serviced by CTL, except to the extent of representations and
warranties made by Dealers in connection with such receivables.
(2) Equals the monthly arithmetic average.
(3) Variation in the size of the portfolio serviced by CTL will affect the
percentages in "Gross Charge-Offs as a Percentage of Average Servicing
Portfolio" and "Net Losses as a Percentage of Average Servicing
Portfolio."
S-15
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
GENERAL
Monthly Interest (as defined herein) on the Receivables will be distributed
to Certificateholders on each Distribution Date to the extent of the Pass-
Through Rate applied to the Class A Certificate Principal Balance or Class B
Certificate Principal Balance, as applicable, as of the preceding Distribution
Date or the Closing Date, as applicable (after giving effect to distributions
of principal on such preceding Distribution Date). See "The Certificates--
Distributions." In the event of a full or partial prepayment on a Receivable,
Certificateholders will receive interest for the full month of such prepayment
either through the distribution of interest paid on other Receivables or
withdrawal from the Cash Collateral Account.
Although the Receivables will have different Contract Rates, each
Receivable's Contract Rate generally will exceed the sum of (a) the initial
weighted average of the Class A Pass-Through Rate and the Class B Pass-Through
Rate and (b) the per annum rate used to calculate the Servicing Fee. The
Contract Rate on certain of the Receivables, however, will be less than the
weighted average of the Class A Pass-Through Rate and the Class B Pass-Through
Rate plus the per annum rate used to calculate the Servicing Fee. For such
Receivables, amounts on deposit in the Yield Supplement Account will be used
to cover resulting shortfalls with respect to Monthly Interest and the
Servicing Fee. See "The Certificates--Accounts." The availability of amounts
on deposit in the Yield Supplement Account reduces the likelihood that
disproportionate rates of prepayments between Receivables with higher and
lower Contract Rates will affect the ability of the Trust to distribute
Monthly Interest to Certificateholders.
The effective yield to Certificateholders will be below the yield otherwise
produced by the Pass-Through Rate because the distribution of Monthly
Principal and Monthly Interest in respect of any given month will not be made
until the related Distribution Date, which will not be earlier than the day of
the following month.
MANDATORY REPURCHASE
Cash distributions to Certificateholders will be made, on a pro rata basis,
on the Distribution Date on or immediately following the last day of the
Funding Period in the event that funds remain on deposit in the Pre-Funding
Account after giving effect to the purchase of all Subsequent Receivables,
including any such purchase on such date.
THE DEPOSITOR AND CTL
CTL currently acquires loans from over 2,800 manufacturer franchised
automobile dealerships and 160 used car dealers in eight states. CTL is a
California industrial loan company, formed in 1959. In addition to the
indirect automobile finance business, CTL underwrites and purchases
residential real estate loans and commercial equipment leases. For the fiscal
years ended December 31, 1995, 1994 and 1993 and for the nine months ended
September 30, 1996, CTL acquired automobile loans aggregating $142.6 million,
$156.2 million and $172.0 million and $137.9 million, respectively. Of the
$303.7 million of loans in the automobile servicing portfolio of CTL
(consisting of the principal balance of loans held for sale) at September 30,
1996, approximately 74% represented loans on used cars and approximately 26%
represented loans on new cars. CTL began to offer its motor vehicle loan
products to an increased number of selected used car dealerships in 1994. In
years prior, the amount of Receivables secured by used cars was immaterial.
Additional information regarding CTL and the Depositor is set forth under
"California Thrift & Loan and Affiliates" in the Prospectus.
S-16
<PAGE>
THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement. Copies of the Pooling and Servicing Agreement (without exhibits)
may be obtained by Certificateholders upon request in writing to the Servicer
at the address set forth herein under "Reports to Certificateholders."
Citations to the relevant sections of the Pooling and Servicing Agreement
appear below in parentheses. The following is a summary of the material terms
of the Certificates and is subject to and qualified in its entirety by
reference to the Pooling and Servicing Agreement.
DISTRIBUTIONS
In general, it is intended that the Trustee distribute to the Class A
Certificateholders and the Class B Certificateholders on each Distribution
Date the aggregate principal payments, including full and partial prepayments
(except certain prepayments in respect of Precomputed Receivables as described
below under "--Accounts") received on the Receivables during the related
Collection Period, plus a full month's interest at the Class A Pass-Through
Rate or the Class B Pass-Through Rate, as applicable, payable monthly at one-
twelfth the annual rate, calculated on the basis of a 360-day year consisting
of twelve 30-day months. (Section 14.04.) The Class A Certificates are
entitled to a certain priority, relative to the Class B Certificates, in right
of distributions on the Receivables. See "--Distributions on the
Certificates." Interest to Certificateholders may be provided by a payment
made by or on behalf of the Obligor, by an Advance made by the Servicer to
cover an Interest Shortfall, by a withdrawal from the Cash Collateral Account
to cover an Interest Shortfall, and, in respect of certain Receivables, by the
withdrawal of the Yield Supplement Amount from the Yield Supplement Account.
See "--Sale and Assignment of Receivables; Subsequent Receivables" and "--
Accounts" herein.
SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance of the Initial
Receivables from CTL to the Depositor, and from the Depositor to the Trust, on
the Closing Date pursuant to the Purchase Agreement and the Pooling and
Servicing Agreement, respectively, is set forth under "Description of the
Transfer and Servicing Agreements--Sale and Assignment of the Receivables" in
the Prospectus. In addition, during the Funding Period, pursuant to the
Pooling and Servicing Agreement, CTL will be obligated to sell to the
Depositor and the Depositor will be obligated to sell to the Trust, Subsequent
Receivables having an aggregate principal balance equal to approximately $
(such amount being equal to the initial Pre-Funded Amount) to the extent that
such Subsequent Receivables are available.
During the Funding Period on each Subsequent Transfer Date, subject to the
conditions described below, CTL will sell and assign to the Depositor, and the
Depositor will sell and assign to the Trust, without recourse, their
respective interests in the Subsequent Receivables. The Subsequent Receivables
will be designated by CTL as of the related Subsequent Cutoff Date and
identified in a schedule attached to a subsequent transfer assignment relating
to such Subsequent Receivables, which will be executed and delivered on such
date by the Depositor for delivery to the Trustee pursuant to the Pooling and
Servicing Agreement.
Any conveyance of Subsequent Receivables is subject to the satisfaction, on
or before the related Subsequent Transfer Date, of the following conditions
precedent, among others: (i) each such Subsequent Receivable must satisfy the
eligibility criteria specified in the Pooling and Servicing Agreement and
shall not have been selected from among such eligible Receivables in a manner
that CTL or the Depositor deems adverse to the interests of the
Certificateholders; (ii) as of the related Subsequent Cutoff Date, the
Receivables in the Trust at that time, including the Subsequent Receivables to
be conveyed by the Depositor as of such Subsequent Cutoff Date, will satisfy
the parameters described under "The Receivables Pool" herein and under "The
Receivables Pools" in the Prospectus; and (iii) CTL shall have executed and
delivered to the Depositor, and the Depositor shall have executed and
delivered to the Trustee, a written assignment conveying such Subsequent
Receivables to the Depositor and the Trust, respectively (including a schedule
identifying such Subsequent Receivables). Moreover, any such conveyance of
Subsequent Receivables will also be subject to the satisfaction
S-17
<PAGE>
of the following requirements within days after the termination of the Funding
Period: (a) the Depositor must deliver certain opinions of counsel to the
Trustee and the Rating Agencies with respect to the validity of the conveyance
of the Subsequent Receivables to the Trust; (b) the Trustee shall have
received written confirmation from a firm of certified independent public
accountants that the Receivables, including the Subsequent Receivables,
satisfy the parameters described under "The Receivables Pool" herein and under
"The Receivables Pools" in the Prospectus; and (c) the Rating Agencies shall
have notified the Depositor in writing that, following the addition of the
Subsequent Receivables to the Trust, the Certificates will continue to be
rated by such Rating Agencies in the same rating categories in which they were
rated on the Closing Date. Such confirmation of the ratings of the
Certificates may depend on factors other than the characteristics of the
Subsequent Receivables, including the delinquency, repossession and net loss
experience on the automobile, light duty truck and minivan receivables in the
portfolio serviced by the Servicer. CTL will immediately repurchase from the
Trustee, at a price equal to the Purchase Amount thereof, any Subsequent
Receivable that fails to satisfy any of the foregoing conditions subsequent.
Subsequent Receivables may have been originated or acquired by CTL at a
later date using credit criteria different from those that were applied to the
Initial Receivables. See "Risk Factors--Conveyance of Subsequent Receivables
to the Trust" and "The Receivables Pool" herein.
ACCOUNTS
In addition to the Certificate Account (as described in the Prospectus), the
Servicer will establish with the Trustee for the benefit of the
Certificateholders [the Yield Supplement Account,] the Cash Collateral Account
[and the Payahead Account].
Yield Supplement Account. For each Receivable on which the Contract Rate is
less than the sum of (a) the initial weighted average of the Class A Pass-
Through Rate and the Class B Pass-Through Rate and (b) the annual percentage
rate at which the Servicing Fee is calculated with respect to the Certificate
Principal Balance for such Receivable, on the Closing Date the Depositor will
deposit into the Yield Supplement Account an amount equal to the aggregate of
such shortfall over the term of such Receivables (the "Total Yield Supplement
Deposit") based on the scheduled payments of the Receivables. On each
Determination Date, the Servicer shall withdraw an amount to apply to
distributions on the Certificates on the related Distribution Date equal to
the scheduled shortfall for the previous Collection Period (the "Yield
Supplement Amount"). The Yield Supplement Account will be maintained by the
Trustee for the benefit of the Certificateholders and will not form part of
the Trust. (Section 14.08.)
Cash Collateral Account. On the Closing Date, the Depositor will deposit an
amount equal to % of the initial Certificate Principal Balance into the
Cash Collateral Account. Thereafter, the amount held in the Cash Collateral
Account will be increased up to the Required Cash Collateral Amount by the
deposit thereto of payments on the Receivables not utilized to make payments
to the Certificateholders or the Servicer on any Distribution Date. While it
is intended that the Cash Collateral Account will grow over time to equal the
Required Cash Collateral Amount through monthly deposits of excess collections
on the Receivables, if any, there can be no assurance that such growth will
actually occur.
Under the terms of the Pooling and Servicing Agreement, the Trustee will
withdraw funds from the Cash Collateral Account and transfer them to the
Certificate Account for any deficiency as described above under "--
Distributions on the Certificates," to the extent available. Amounts available
for deficiencies on any Distribution Date will be limited to the sum of
amounts on deposit in the Cash Collateral Account on such Distribution Date.
In the event that the balance of the Cash Collateral Account is reduced to
zero on any Distribution Date, the Trust will depend solely on current
distributions on the Receivables to make distributions of principal and
interest on the Certificates. In addition, because the market value of motor
vehicles generally declines with age and because of difficulties that may be
encountered in enforcing motor vehicle contracts as described in the
Prospectus under "Certain Legal Aspects of the Receivables," the Servicer may
not recover the entire amount
S-18
<PAGE>
due on such Receivables in the event of a repossession and resale of a
Financed Vehicle securing a Receivable in default. In such event, the
Certificateholders may suffer a corresponding loss. Any such losses would also
be borne first by the Class B Certificateholders, up to the Class B Principal
Balance, and then by the Class A Certificateholders.
Payahead Account. On the Closing Date, the Depositor will establish the
Payahead Account, into which payments on Precomputed Receivables will be
deposited and held until they are withdrawn and applied as payments on the
Certificates. [DESCRIBE MECHANISM FOR DETERMINING THE PRECOMPUTED PAYMENT
SCHEDULE.]
SUBORDINATION OF THE CLASS B CERTIFICATES
The rights of the Class B Certificateholders to receive distributions with
respect to the Receivables will be subordinated to such rights of the Class A
Certificateholders to the extent described herein. This subordination is
intended to enhance the likelihood of timely receipt by the Class A
Certificateholders of the full amount of interest and principal distributable
to them on each Distribution Date, and to afford the Class A
Certificateholders limited protection against losses in respect of the
Receivables.
No distribution of interest will be made to the Class B Certificateholders
on any Distribution Date until the full amount of interest payable on the
Class A Certificates on such Distribution Date has been distributed to the
Class A Certificateholders and no distribution of principal will be made to
the Class B Certificateholders on any Distribution Date until the full amount
of interest on and principal of the Class A Certificates payable on such
Distribution Date has been distributed to the Class A Certificateholders.
Distributions of interest on the Class B Certificates will not be subordinated
to distributions of principal of the Class A Certificates. Because the rights
of the Class B Certificateholders to receive distributions of principal will
be subordinated to the rights of the Class A Certificateholders to receive
distributions of interest and principal, the Class B Certificates will be more
sensitive than the Class A Certificates to losses on the Receivables. If the
aggregate amount of losses on the Receivables exceeds the amount on deposit in
the Cash Collateral Account, Class B Certificateholders may not recover their
initial investment in the Class B Certificates.
In the event of delinquencies or losses on the Receivables, the protection
afforded to the Class A Certificateholders will be effected both by the
preferential right of the Class A Certificateholders to receive distributions
on the Receivables in the manner and to the extent described above and by the
establishment of the Cash Collateral Account.
ADVANCES
To the extent that interest collected on a Receivable during a Collection
Period falls short of the scheduled interest payment, the Servicer will make
an Advance of the resulting Interest Shortfall, but only to the extent that
the Servicer in its sole discretion, expects to recoup the Advance from
subsequent collections on the Receivable, or withdrawals from the Cash
Collateral Account. The Servicer will deposit the Advance in the Certificate
Account on or before the calendar day of the month following the Collection
Period. The Servicer will recoup its Advance from subsequent payments by or on
behalf of the respective Obligor, from insurance proceeds or, upon the
Servicer's determination that reimbursement from the preceding sources is
unlikely, will recoup its Advance from any collections made on other
Receivables. (Section 14.05.)
DISTRIBUTIONS ON THE CERTIFICATES
The Servicer will deposit in the Certificate Account the amount of payments
on all Receivables received with respect to the preceding Collection Period,
the Yield Supplement Amount for the related Distribution Date, all Advances
for such Collection Period, and the Purchase Amount for all Receivables that
became Purchased Receivables during the preceding Collection Period, all of
which amounts will be available for distribution pursuant to the terms of the
Pooling and Servicing Agreement on the next succeeding Distribution Date
("Available Funds") and will determine the amount of funds necessary to make
distributions of Monthly
S-19
<PAGE>
Principal and Monthly Interest to the Certificateholders and the Servicing Fee
to the Servicer. If there is a deficiency with respect to the foregoing, the
Servicer will withdraw amounts, to the extent available, from the Cash
Collateral Account in the amount of such deficiency and notify the Trustee of
any remaining deficiency.
If acceptable to each Rating Agency without a reduction in the rating of any
class of Certificates, the Servicing Fee due to the Servicer in respect of
each Collection Period will be distributed to the Servicer at the beginning of
such Collection Period from collections during such Collection Period.
On each such Distribution Date, the Trustee will apply or cause to be
applied the Available Funds plus any amounts withdrawn from the Cash
Collateral Account to make the following payments in the following priority:
(a) the aggregate amount of outstanding Advances on all Receivables (x)
that became Defaulted Receivables during the prior Collection Period, and
(y) that the Servicer determines to be unrecoverable, to the Servicer;
(b) the Servicing Fee, including any overdue Servicing Fee, to the
Servicer, to the extent not previously distributed to the Servicer;
(c) pro rata, Class A Monthly Interest, including any overdue Class A
Monthly Interest, to the Class A Certificateholders;
(d) Class B Monthly Interest, including any overdue Class B Monthly
Interest, to the Class B Certificateholders;
(e) Class A Monthly Principal, to the Class A Certificateholders;
(f) Class B Monthly Principal, to the Class B Certificateholders;
(g) the amount of recoveries of Advances (to the extent such recoveries
have not previously been reimbursed to the Servicer pursuant to clause (a)
above), to the Servicer;
(h) the amount of Liquidation Proceeds on Purchased Receivables purchased
by the Servicer, to the Servicer;
(i) the amount of Liquidation Proceeds on Purchased Receivables
repurchased by the Depositor, to the Depositor; and
(j) the balance into the Cash Collateral Account.
After all distributions pursuant to clauses (a) through (j) above have been
made on each Distribution Date, the amount of funds remaining in the Cash
Collateral Account on such date, if any, in excess of the Required Cash
Collateral Amount, will be distributed by the Trustee to CTL. Any amounts so
distributed to CTL will no longer be available for distribution to
Certificateholders, and the Certificateholders will have no rights with
respect thereto.
"Monthly Interest" for any Distribution Date will equal the sum of the Class
A Monthly Interest and the Class B Monthly Interest.
"Monthly Principal" for any Distribution Date will equal the sum of the
Class A Monthly Principal and the Class B Monthly Principal.
"Class A Monthly Interest" for any Distribution Date will equal (i) for the
first Distribution Date, the product of the following: (one-twelfth of the
Class A Pass-Through Rate) multiplied by (the number of days remaining in the
month of the Closing Date from the Closing Date divided by 30) multiplied by
(the Class A Principal Balance at the Closing Date) and (ii) with respect to
each subsequent Distribution Date, the product of one-twelfth of the Class A
Pass-Through Rate and the Class A Principal Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly
Principal required to be made on such preceding Distribution Date).
"Class A Monthly Principal" for any Distribution Date will equal the amount
necessary to reduce the Class A Principal Balance to % of the aggregate
unpaid principal balances of the Receivables on the last day of
S-20
<PAGE>
the preceding Collection Period; provided, however, that Class A Monthly
Principal on the final scheduled Distribution Date will equal the Class A
Principal Balance on such date. For the purpose of determining Class A Monthly
Principal, the unpaid principal balance of a Defaulted Receivable or a
Purchased Receivable is deemed to be zero on and after the last day of the
Collection Period in which such Receivable became a Defaulted Receivable or a
Purchased Receivable.
"Class B Monthly Interest" for any Distribution Date will equal (i) for the
first Distribution Date, the product of the following: (one-twelfth of the
Class B Pass-Through Rate) multiplied by (the number of days remaining in the
month of the Closing Date from the Closing Date divided by 30) multiplied by
(the Class B Principal Balance at the Closing Date) and (ii) with respect to
each subsequent Distribution Date, the product of one-twelfth of the Class B
Pass-Through Rate and the Class B Principal Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly
Principal required to be made on such preceding Distribution Date).
"Class B Monthly Principal" for any Distribution Date will equal the amount
necessary to reduce the Class B Principal Balance to % of the sum of the
aggregate unpaid principal balances of the Receivables on the last day of the
preceding Collection Period; provided, however, that Class B Monthly Principal
on the final scheduled Distribution Date will equal the Class B Principal
Balance on such date. For the purpose of determining Class B Monthly
Principal, the unpaid principal balance of a Defaulted Receivable or a
Purchased Receivable is deemed to be zero on and after the last day of the
Collection Period in which such Receivable became a Defaulted Receivable or a
Purchased Receivable.
"Defaulted Receivable" will mean, for any Collection Period, a Receivable as
to which any of the following has occurred: (i) the Receivable is 90 days or
more delinquent as of the last day of such Collection Period; (ii) the
Financed Vehicle that secures the Receivable has been repossessed; or (iii)
the Receivable has been determined to be uncollectible in accordance with the
Servicer's customary practices on or prior to the last day of such Collection
Period; provided, however, that any Receivable which the Depositor or the
Servicer is obligated to repurchase or purchase pursuant to the Pooling and
Servicing Agreement shall be deemed not to be a Defaulted Receivable.
As an administrative convenience, the Servicer will be permitted to make the
deposit of collections and aggregate Advances and Purchase Amounts for or with
respect to the Collection Period, net of distributions to be made to the
Servicer or Depositor with respect to the Collection Period. The Servicer,
however, will account to the Trustee and to the Certificateholders as if all
deposits and distributions were made individually. (Section 14.06.)
The following chart sets forth an example of the application of the
foregoing provisions to a monthly distribution:
<TABLE>
<C> <S>
........................ Collection Period. The Servicer receives monthly
payments, prepayments, and other proceeds in respect
of the Receivables and deposits them in the
Certificate Account. [The Servicer may deduct
Servicing Fees from such deposits.]
........................ Record Date. Distributions on the Distribution Date
are made to Certificateholders of record at the close
of business on this date.
........................ Fifth calendar day. On or before this date, the
Servicer notifies the Trustee of the amounts to be
distributed on the Distribution Date.
........................ The Trustee withdraws funds from the Cash Collateral
Account, if necessary.
........................ Distribution Date. The Trustee distributes to
Certificateholders amounts payable in respect of the
Certificates[, and pays the Servicing Fee].
</TABLE>
S-21
<PAGE>
ERISA CONSIDERATIONS
[Subject to the considerations set forth under "ERISA Considerations--Senior
Certificates Issued By Grantor Trusts" in the Prospectus, the Class A
Certificates may be eligible for purchase by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary of a
Plan must determine that the purchase of a Class A Certificate is consistent
with its fiduciary duties under ERISA and does not result in a nonexempt
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of
the Code. For additional information regarding treatment of the Class A
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
Because the Class B Certificates are subordinated to the Class A
Certificates, the Class B Certificates may not be purchased by Plans.] [TO BE
REVISED FOR EACH ISSUANCE]
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement for the sale of the Certificates, dated, 199 , the Depositor
has agreed to sell and each of the underwriters named below (the
"Underwriters") severally agreed to purchase the principal amount of the
Certificates set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITERS CLASS A CERTIFICATES CLASS B CERTIFICATES
------------ -------------------- --------------------
<S> <C> <C>
................................ $ $
................................
----- -----
Total............................. $ $
===== =====
</TABLE>
In the underwriting agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Certificates
offered hereby if any of the Certificates are purchased.
The Underwriters propose to offer part of the Certificates directly to the
public at the prices set forth on the cover page hereof, and part to certain
dealers at a price that represents a concession not in excess of % of the
denominations of the Class A Certificates or % of the denominations of the
Class B Certificates. The Underwriters may allow and such dealers may reallow
a concession not in excess of % of the denominations of the Class A
Certificates or % of the denominations of the Class B Certificates.
The Depositor, Bay View and CTL have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act.
The Depositor has been advised by the Underwriters that the Underwriters
presently intend to make a market in the Certificates, as permitted by
applicable laws and regulations. The Underwriters are not obligated, however,
to make a market in the Certificates and any such market-making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Certificates.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor by Silver, Freedman & Taff, L.L.P., Washington, D.C., and for
the Underwriters by Cadwalader, Wickersham & Taft, New York, New York. Certain
federal income tax consequences with respect to the Certificates will be
passed upon for the Depositor by Silver, Freedman & Taff, L.L.P.
S-22
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
TERM PAGE
---- -----------
<S> <C>
Available Funds..................................................... S-19
Bay View............................................................
Certificate Principal Balance....................................... S-6
Certificateholders.................................................. S-2
Certificates........................................................ Supp. Cover
Class A Principal Balance........................................... S-2
Class A Certificateholders.......................................... S-2
Class A Certificates................................................ Supp. Cover
Class A Monthly Interest............................................ S-20
Class A Monthly Principal........................................... S-20
Class A Pass-Through Rate........................................... S-1
Class A Percentage.................................................. S-1
Class B Principal Balance........................................... S-2
Class B Certificateholders.......................................... S-2
Class B Certificates................................................ Supp. Cover
Class B Monthly Interest............................................ S-21
Class B Monthly Principal........................................... S-21
Class B Pass-Through Rate........................................... S-1
Class B Percentage.................................................. S-1
Closing Date........................................................ S-1
Code................................................................ S-22
CTL................................................................. S-1
Cutoff Date......................................................... ii
Defaulted Receivable................................................ S-21
Depositor........................................................... S-1
Distribution Date................................................... S-1
Final Scheduled Distribution Date................................... Supp. Cover
Final Scheduled Maturity Date....................................... S-4
Funding Period...................................................... S-4
Initial Cutoff Date................................................. S-3
Initial Receivables................................................. S-3
Monthly Interest.................................................... S-2
Monthly Principal................................................... S-2
Optional Purchase................................................... S-6
Plan................................................................ S-22
Pool Balance........................................................ S-2
Pooling and Servicing Agreement..................................... Supp. Cover
Pre-Funded Amount................................................... S-3
Pre-Funding Account................................................. S-4
Purchase Agreement.................................................. S-3
Receivables......................................................... ii
Receivables Pool.................................................... S-11
Record Date......................................................... S-2
Required Cash Collateral Amount..................................... S-6
Servicer............................................................ S-1
Subsequent Cutoff Date.............................................. S-3
Subsequent Receivables.............................................. S-3
Subsequent Transfer Date............................................
Total Yield Supplement Deposit...................................... S-18
Trust............................................................... Supp. Cover
Underwriters........................................................
Yield Supplement Amount............................................. S-18
</TABLE>
S-23
<PAGE>
[SURETY BOND FINANCIAL INFORMATION]
S-24
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED JANUARY 3, 1997
PROSPECTUS
BAY VIEW AUTO TRUSTS
ASSET BACKED CERTIFICATES
-----------
BAY VIEW SECURITIZATION CORPORATION
DEPOSITOR
CALIFORNIA THRIFT & LOAN
SERVICER
The asset backed certificates described herein (the "Certificates") may be
sold from time to time in one or more series (each, a "Series"), in amounts, at
prices and on terms to be determined at the time of sale and to be set forth in
a supplement to this Prospectus (a "Prospectus Supplement"). Each Series of
Certificates will be issued by a trust (each, a "Trust") to be formed with
respect to such Series and will include one or more classes of Certificates.
The property of each Trust will include a pool of motor vehicle installment
sale or installment loan contracts secured by new and used automobiles, light
trucks, motorcycles and vans (the "Receivables"), certain monies received
thereunder after the applicable cutoff date, security interests in the vehicles
financed thereby and certain other property, as more fully described herein and
in the related Prospectus Supplement. For a description of the types of
property that may be included in the Trusts, see "The Trusts". If so specified
in the related Prospectus Supplement, the property of a Trust will include
monies on deposit in a trust account, which will be used to purchase additional
Receivables after the related closing date. California Thrift & Loan will act
as servicer (in such capacity, the "Servicer") of the Receivables for each
Trust. Except as otherwise specified in the related Prospectus Supplement, each
class of Certificates of any Series will represent the right to receive a
specified amount of payments of principal and interest on the related
Receivables, at the rates, on the dates and in the manner described herein and
in the related Prospectus Supplement. If so provided in the related Prospectus
Supplement, a Series of Certificates may include one or more classes of
Certificates entitled to interest distributions with disproportionate, nominal
or no distributions in respect of principal, or to principal distributions with
disproportionate, nominal or no distributions in respect of interest. As more
fully described herein and in the related Prospectus Supplement, distributions
on any class of Certificates may be senior or subordinate to distributions on
one or more other classes of Certificates of the same Series.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE 12 OF THIS PROSPECTUS AND IN THE RELATED PROSPECTUS
SUPPLEMENT.
-----------
EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, THE
CERTIFICATES OF A SERIES WILL REPRESENT BENEFICIAL INTERESTS IN THE RELATED
TRUST ONLY, AND WILL NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE
NOT GUARANTEED OR INSURED BY, BAY VIEW SECURITIZATION CORPORATION, ANY
AFFILIATE THEREOF OR ANY GOVERNMENTAL INSTRUMENTALITY.
THESE CERTIFICATES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
Retain this Prospectus for future reference. This Prospectus may not be used
to consummate sales of Certificates of any Series unless accompanied by the
related Prospectus Supplement.
-----------
, 1997
<PAGE>
AVAILABLE INFORMATION
The Depositor, as originator of the Trusts, has filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement on Form S-
3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Certificates being offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, which is available for inspection without charge at the public
reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the regional offices of the Commission at
5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648, and
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such
information can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, the Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding the Depositor's electronic filings with the Commission. The address
of the Commission's Web site is "http://www.sec.gov".
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and 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 Supplement and Prospectus, the Depositor or
such Underwriter will promptly deliver, or cause to be delivered, without
charge, to such investor a paper copy of the Prospectus Supplement and
Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Servicer or the Depositor on behalf of the Trust
referred to in the accompanying Prospectus Supplement with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), after the date of this Prospectus
and prior to the termination of the offering of the Certificates offered by
such Trust shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the dates of filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein (or in the accompanying Prospectus Supplement) or in any subsequently
filed document that also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Servicer on behalf of any Trust will provide without charge to each
person to whom a copy of this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated
herein by reference. Requests to the Servicer for such copies should be
addressed to California Thrift & Loan, 818 Oakpark Road, Covina, California
91724, ( ) - .
3
<PAGE>
SUMMARY OF TERMS
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and by reference to the
information with respect to each Series of Certificates contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Certificates. Certain capitalized terms used in this
summary are defined elsewhere in this Prospectus in the "Index of Principal
Terms" on page 53 of this Prospectus.
Issuer........................ With respect to any Series of Certificates, a
Trust formed pursuant to a pooling and
servicing agreement (each, a "Pooling and
Servicing Agreement") among the Depositor, the
Servicer and the Trustee for such Trust.
Depositor..................... Bay View Securitization Corporation, a Delaware
corporation having its principal office and
place of business in San Mateo, California (the
"Depositor"). The Depositor's principal
executive offices are located at 2121 South El
Camino Real, San Mateo, California 94403, and
its telephone number is (415) 573-7300.
Servicer...................... California Thrift & Loan, a California
corporation having its principal office and
place of business in Santa Barbara, California
(in its capacity as servicer, the "Servicer",
otherwise "CTL") The Servicer's operations are
located at 818 Oakpark Road, Covina, California
91724, and its telephone number is ( ) -
.
Trustee....................... With respect to each Trust, the trustee
specified in the related Prospectus Supplement
(the "Trustee").
Securities Offered............ Each Series of asset backed securities issued
by a Trust will consist of one or more classes
of Certificates. Each class of Certificates of
a Series will be issued pursuant to the related
Pooling and Servicing Agreement. The related
Prospectus Supplement will specify which class
or classes of Certificates of the related
Series are being offered thereby.
Each class of Certificates will have a stated
certificate balance (the "Class Certificate
Balance") and will accrue interest on such
Class Certificate Balance at a specified rate
(with respect to each class of Certificates,
the "Pass-Through Rate"). If so specified in
the related Prospectus Supplement, one or more
classes of Certificates ("Strip Certificates")
may be entitled to (i) interest distributions
with disproportionate, nominal or no principal
distributions or (ii) principal distributions
with disproportionate, nominal or no interest
distributions. See "Description of the
Certificates--Distributions of Principal and
Interest."
4
<PAGE>
Each class of Certificates may have a different
Pass-Through Rate, which may be a fixed,
variable or adjustable Pass-Through Rate, or
any combination of the foregoing. The related
Prospectus Supplement will specify the Pass-
Through Rate, or the method for determining the
applicable Pass-Through Rate, for each class of
Certificates.
A Series of Certificates may include two or
more classes of Certificates that differ as to
timing and/or priority distributions,
seniority, allocations of losses, Pass-Through
Rate, amount of distributions in respect of
principal or interest, or any combination of
the foregoing. Additionally, distributions in
respect of principal or interest in respect of
any such class or classes may or may not be
made upon the occurrence of specified events or
on the basis of collections from designated
portions of the related Receivables Pool.
Unless otherwise specified in the related
Prospectus Supplement, Certificates will be
available in book-entry form only and will be
available for purchase in minimum denominations
of $1,000 and integral multiples thereof,
except that one Certificate of each class may
be issued in such denomination as is required
to include any residual amount.
Certificateholders will not be able to receive
physical delivery of the Certificates
beneficially owned by book-entry registration
except in the limited circumstances described
herein or in the related Prospectus Supplement.
See "Description of the Certificates--
Definitive Certificates" and "--Book-Entry
Registration."
Optional Purchase by the
Servicer................ If so provided in the related Prospectus
Supplement, the Servicer may be entitled to
purchase the Receivables of a Trust or to cause
such Receivables to be purchased by another
entity, in the manner and subject to the
conditions described in such Prospectus
Supplement. If the Servicer exercises any such
option to purchase the Receivables or to cause
the Receivables to be purchased, the
Certificates will be prepaid as set forth in
the related Prospectus Supplement. See
"Description of the Transfer and Servicing
Agreements--Termination" herein. In addition,
if the related Prospectus Supplement provides
that the property of a Trust will include a
Pre-Funding Account, one or more classes of
Certificates may be subject to a partial
prepayment of principal following the end of
the Funding Period, in the manner and to the
extent specified in the related Prospectus
Supplement. See "Description of the Transfer
and Servicing Agreements--Accounts--Pre-Funding
Account" herein.
The Trust Property............ The property of each Trust will include a pool
of simple interest and/or precomputed interest
installment sale and installment loan contracts
secured by new and used automobiles, light
trucks,
5
<PAGE>
motorcycles and vans (the "Receivables"),
certain monies due or received thereunder after
the date specified in the related Prospectus
Supplement (each, a "Cutoff Date"), security
interests in the vehicles financed thereby (the
"Financed Vehicles"), any right to recourse the
purchaser of the Receivables may have against
the dealers who sold the Financed Vehicles (the
"Dealers"), proceeds from claims on certain
insurance policies, and certain rights under
the purchase agreement (each, a "Purchase
Agreement") among CTL and the Depositor
pursuant to which the Depositor will purchase
the related Receivables from CTL. The majority
of the Receivables are currently originated in
the States of California and Texas. The
property of each Trust also will include
amounts on deposit in, or certain rights with
respect to, certain accounts, including the
related Certificate Account and any Pre-Funding
Account, Cash Collateral Account, Yield
Supplement Account or any other account or
assets identified in the applicable Prospectus
Supplement. See "Description of the Transfer
and Servicing Agreements--Accounts."
Unless otherwise specified in the related
Prospectus Supplement, the Receivables arise,
or will arise, from motor vehicle installment
sale contracts that were originated by new and
used car and motorcycle dealers for assignment
to CTL or motor vehicle loan contracts that
were solicited by dealers for origination by
CTL (the "Contracts"). Payment of the amount
due under each Contract is secured by a first
perfected security interest in the related
Financed Vehicle. Unless otherwise specified in
the related Prospectus Supplement, CTL is the
registered lienholder on the certificate of
title of each of the Financed Vehicles and the
certificates of title to such Financed Vehicles
will not be amended to reflect the assignment
either to the Depositor or to the Trust. The
Receivables for each Receivables Pool will be
selected from the Contracts owned by CTL based
on the criteria specified in the related
Pooling and Servicing Agreement and described
herein under "The Receivables Pools" and
"Description of the Transfer and Servicing
Agreement--Sale and Assignment of Receivables"
and in the related Prospectus Supplement under
"The Receivables Pool."
Pre-Funding Account...... On the date of issuance of a Series of
Certificates (each, a "Closing Date"), the
Depositor will convey Receivables to the
related Trust in the aggregate principal amount
provided in the related Prospectus Supplement
and, if so provided in such Prospectus
Supplement, will deposit the amount specified
in such Prospectus Supplement (the "Pre-Funded
Amount") into a trust account established in
the name of the Trustee for the benefit of the
Certificateholders (the "Pre-Funding Account").
The Pre-Funded Amount with respect to any Trust
will not exceed 25% of the initial aggregate
Class Certificate Balances for the related
Series (the "Certificate Balance").
6
<PAGE>
If the property of a Trust includes a Pre-
Funding Account, CTL will be obligated under
the related Purchase Agreement to sell
additional Receivables (the "Subsequent
Receivables") to the Depositor from time to
time during the period provided in the related
Prospectus Supplement (the "Funding Period")
having an aggregate principal balance
approximately equal to the Pre-Funded Amount.
The Depositor, in turn, will be obligated under
the Pooling and Servicing Agreement to sell
such Subsequent Receivables to the related
Trust, and the Trust will be obligated to
purchase the Subsequent Receivables, subject to
the satisfaction of certain conditions set
forth in the Pooling and Servicing Agreement
and described herein under "Description of the
Transfer and Servicing Agreements--Sale and
Assignment of Receivables." As used in this
Prospectus, the term Receivables will include
the Receivables transferred to a Trust on the
related Closing Date as well as any Subsequent
Receivables transferred to such Trust during
the related Funding Period. All Receivables
will be underwritten as described herein under
"The Receivable Pools--Underwriting
Procedures." Additionally, the Rating Agencies
must approve the transfer of the Subsequent
Receivables, all as set forth under
"Description of the Transfer and Servicing
Agreements--Sale and Assignment of the
Receivables."
Amounts on deposit in any Pre-Funding Account
during the Funding Period will be invested by
the Trustee (as directed by the Servicer) in
Eligible Investments, and any resultant
investment income (less any related investment
expenses) will be included, on the Distribution
Date immediately following the date on which
such investment income is paid to the Trust, in
the Available Funds for such Distribution Date.
Any funds remaining in a Pre-Funding Account at
the end of the related Funding Period will be
distributed to holders of the related Series of
Certificates (the "Certificateholders") as a
prepayment of principal of the Certificates, in
the amounts and priority described in the
related Prospectus Supplement. No Funding
Period will continue for more than three
calendar months after the related Closing Date.
See "Description of the Transfer and Servicing
Agreements--Accounts--Pre-Funding Account".
Repurchase of Certain
Receivables............. In each Purchase Agreement, CTL will make
certain representations and warranties with
respect to the related Receivables and will
undertake to repurchase from the Depositor at
the Purchase Amount (as defined herein) any
Receivable with respect to which there exists
an uncured breach of any of its representations
or warranties, if such breach materially and
adversely affects the rights of the Depositor,
or the Depositor's assignee, in such
Receivable. In each Pooling and Servicing
Agreement, the Depositor will assign to the
related Trust certain rights under the related
Purchase Agreement, including the right to
cause CTL to repurchase any Receivable in
respect of which there is an uncured breach of
a representation or warranty that materially
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and adversely affects the interest of the Trust
in such Receivable. The repurchase obligation
pursuant to each Purchase Agreement and Pooling
and Servicing Agreement will constitute the
sole remedy available to the related
Certificateholders or Trustee for any uncured
breach of a representation or warranty. See
"Description of the Transfer and Servicing
Agreements--Sale and Assignment of
Receivables."
Credit and Cash Flow If, and to the extent, specified in the related
Enhancement.................. Prospectus Supplement, credit enhancement with
respect to a Trust or any class or classes of
Certificates may include any one or more of the
following: subordination of one or more other
classes of Certificates of the same Series,
Cash Collateral Accounts, yield supplement
accounts, spread accounts, surety bonds,
insurance policies, letters of credit, credit
or liquidity facilities, over-
collateralization, guaranteed investment
contracts, swaps or other interest rate
protection agreements, repurchase obligations,
other agreements with respect to third-party
payments or other support, cash deposits, or
other arrangements. To the extent specified in
the related Prospectus Supplement, a form of
credit enhancement with respect to a Trust or
class or classes of Certificates may be subject
to certain limitations and exclusions from
coverage thereunder.
Transfer and Servicing Unless otherwise provided in the related
Agreements................... Prospectus Supplement, pursuant to each
Purchase Agreement, CTL will sell the related
Receivables to the Depositor without recourse
and, if so stated in the related Prospectus
Supplement, will undertake to sell Subsequent
Receivables, in the aggregate amount specified
therein, to the Depositor during the related
Funding Period. The Depositor, in turn, will
sell such Receivables to the related Trust,
without recourse, and will undertake to sell
any such Subsequent Receivables to the related
Trust during the related Funding Period. In
addition, the Servicer will agree in each
Pooling and Servicing Agreement to be
responsible for servicing, managing,
maintaining custody of and making collections
on the related Receivables.
In the event a Receivable which is outstanding
during the calendar month preceding any
Distribution Date (as defined herein) (the
"Collection Period") becomes more than 30 days
delinquent, the Servicer will advance funds
(each, an "Advance") to cover 30 days of
interest due on such delinquent Receivable
(each, an "Interest Shortfall"), but only to
the extent that the Servicer, in its sole
discretion, expects to be able to recoup such
Advance from subsequent payments on the
Receivable. Advances by the Servicer will add
to the funds available for distributions to
Certificateholders on a Distribution Date, but
the Servicer will be entitled to reimbursement
for such Advances from subsequent payments of
the Receivables or, to the
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extent set forth in the related Prospectus
Supplement, from insurance proceeds or
withdrawals from any Cash Collateral Account or
similar form of credit enhancement. See "Risk
Factors--Risks Associated with Automobile
Loans," and "Description of the Transfer and
Servicing Agreements--Advances."
Certificateholders will receive notice of such
Advance as described herein under "Description
of the Certificates--Statements to
Certificateholders."
Unless otherwise provided in the related
Prospectus Supplement, CTL will be obligated to
repurchase from the Trust any Receivable in
which the interest of such Trust is materially
and adversely affected as a result of a breach
of any representation or warranty made by CTL
in the related Purchase Agreement if such
breach is not cured in a timely manner
following the discovery by or notice to CTL. In
addition, unless otherwise provided in the
related Prospectus Supplement, the Servicer
will be obligated under each Pooling and
Servicing Agreement to purchase any Receivable
at the Purchase Amount (as defined herein) if
(i) among other things, the Servicer reduces
the rate of interest under the related Contract
(the "Contract Rate"), reduces the amount of
the scheduled monthly payments or reduces the
amount financed or if the Servicer fails to
maintain a perfected security interest in the
related Financed Vehicle and (ii) the interest
of the Certificateholders in such Receivable is
materially and adversely affected by such
action or failure to act of the Servicer. If
the Servicer extends the date for final payment
by the obligor on the related Contract (each,
an "Obligor") so that the Receivable remains
outstanding on the final scheduled maturity
date with respect to a Series of Certificates
specified in the related Prospectus Supplement
(the "Final Scheduled Maturity Date"), the
Servicer will be obligated to purchase the
Receivable at the Purchase Amount as of the
last day of the Collection Period preceding
such Final Scheduled Maturity Date.
The Servicer will receive a fee for servicing
the Receivables of each Trust equal to the
Servicing Fee Rate times the aggregate
outstanding principal balance of the related
Receivables (the "Pool Balance"), plus certain
late fees, prepayment charges and other
administrative fees or similar charges. Unless
otherwise provided in the related Prospectus
Supplement, the Servicer may also receive
investment earnings from certain accounts and
other cash flows with respect to a Trust. See
"Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment
of Expenses."
Certain Legal Aspects of the
Receivables; Repurchase In connection with each sale of Receivables by
Obligations.................. CTL to the Depositor and by the Depositor to a
Trust, security interests in the related
Financed Vehicles will be assigned by CTL to
the
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Depositor and by the Depositor to the Trust;
due to the administrative and quality control
concerns related to the retitling of a large
amount of certificates of title and related
fees and expenses of each state's Department of
Motor Vehicles, however, the certificates of
title to such Financed Vehicles will not be
amended to reflect the assignment either to the
Depositor or to the Trust. In the absence of
such an amendment, the Trust may not have a
perfected security interest in the Financed
Vehicles securing the Receivables in some
states.
Unless otherwise specified in the related
Prospectus Supplement, CTL will be obligated to
repurchase from a Trust any Receivable sold to
such Trust as to which all action necessary to
secure a first perfected security interest in
the name of the Trust in the Financed Vehicle
securing such Receivable shall not have been
taken as of the date such Receivable is
purchased by such Trust, if such breach
materially and adversely affects the interest
of the related Certificateholders in such
Receivable and if such failure or breach is not
cured by the last day of the month following
the discovery by or notice to the Servicer of
such breach. If a Trust does not have a
perfected security interest in a Financed
Vehicle, its ability to realize on such
Financed Vehicle in the event of a default may
be adversely affected. To the extent the
security interest is perfected, a Trust will
have a prior claim over subsequent purchasers
of the Financed Vehicle and holders of
subsequently perfected security interests.
However, as against liens for repairs of
Financed Vehicles or for taxes unpaid by the
related Obligor, or through fraud or
negligence, a Trust could lose its security
interest or the priority of its security
interest in a Financed Vehicle. Neither the
Depositor nor CTL will be obligated to
repurchase a Receivable with respect to which a
Trust loses its security interest or the
priority of its security interest in the
related Financed Vehicle after the Closing Date
as the result of any such tax lien or
mechanic's lien or the fraud or negligence of a
third party.
Federal and state consumer protection laws
impose requirements on creditors in connection
with extensions of credit and collections of
retail installment loans, and certain of these
laws make an assignee of such a loan liable to
the obligor thereon for any violation by the
lender. Unless otherwise specified in the
related Prospectus Supplement, CTL will be
required to repurchase from the Trust any
Receivable that fails to comply with the
requirements of such consumer protection laws
on or before the last day of the month
following discovery by or notice to the
Servicer of such failure, if such failure
materially and adversely affects the interests
of the related Certificateholders in such
Receivable. See "Risk Factors--Perfection of
Security Interests in Financed Vehicles" and
"Certain Legal Aspects of the Receivables."
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<PAGE>
Tax Considerations............ If a Prospectus Supplement specifies that the
related Trust is a grantor trust, except as
otherwise provided in such Prospectus
Supplement, upon the issuance of the related
Series of Certificates, Silver, Freedman &
Taff, L.L.P., special federal tax counsel to
the Trust, will deliver an opinion to the
effect that such Trust will be treated as a
grantor trust for federal income tax purposes
and will not be subject to federal income tax.
If a Prospectus Supplement does not specify
that the related Trust is a grantor trust, upon
the issuance of the related Series of
Certificates, Silver, Freedman & Taff, L.L.P.
will deliver an opinion to the effect that such
Trust will not be treated as an association
taxable as a corporation or as a "publicly
traded partnership" taxable as a corporation.
See "Certain Federal Income Tax Consequences"
for additional information regarding the
application of federal tax laws to a Trust and
the related Series of Certificates.
ERISA Considerations.......... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
related Prospectus Supplement and unless
otherwise provided therein, any Certificates
that meet certain United States Department of
Labor requirements are eligible for purchase by
employee benefit plans and other retirement
arrangements subject to Title I of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 4975 of the
Internal Revenue Code of 1986, as amended (the
"Code"). Unless otherwise specified in the
related Prospectus Supplement, any class of
Certificates that is subordinated to any other
class of Certificates of the same Series may
not be acquired by any such employee benefit
plan or retirement arrangement. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
Ratings....................... It is a condition to the issuance of the
Certificates to be offered hereunder that they
be rated in one of the four highest rating
categories by at least one nationally
recognized statistical rating organization
(each, a "Rating Agency"). A rating is not a
recommendation to purchase, hold or sell
Certificates inasmuch as a rating does not
comment as to market price or suitability for a
particular investor. Ratings of Certificates
will address the likelihood of the payment of
principal of and interest on the Certificates
pursuant to their terms. There can be no
assurance that a rating will remain for a given
period of time or that a rating will not be
lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances in the
future so warrant. See "Risk Factors--Ratings
of the Certificates" herein. For more detailed
information regarding the ratings assigned to
any class of Certificates of a particular
Series, see "Summary of Terms--Ratings" and
"Risk Factors--Ratings of the Certificates" in
the related Prospectus Supplement.
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<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus and in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of any Series of Certificates, prospective investors should
carefully consider the following risk factors before investing in any class or
classes of Certificates of any such Series.
RISK ASSOCIATED WITH PRE-FUNDING ACCOUNTS
If so provided in the related Prospectus Supplement, on the Closing Date the
Depositor will deposit the Pre-Funded Amount specified in such Prospectus
Supplement into the Pre-Funding Account. In no event will the Pre-Funded
Amount exceed 25% of the initial Certificate Balance of the related Series of
Certificates. The Pre-Funded Amount will be used to purchase Subsequent
Receivables from the Depositor (which, in turn, will acquire such Subsequent
Receivables from CTL) from time to time during the Funding Period. During the
Funding Period and until such amounts are applied by the Trustee to purchase
Subsequent Receivables, amounts on deposit in the Pre-Funding Account will be
invested by the Trustee (as instructed by the Servicer) in Eligible
Investments, and any investment income with respect thereto (net of any
related investment expenses) will be distributed on each Distribution Date
during the Funding Period as part of the Available Funds for the related
Collection Period. No Funding Period will end more than three calendar months
after the related Closing Date.
To the extent that the entire Pre-Funded Amount has not been applied to the
purchase of Subsequent Receivables by the end of the related Funding Period,
any amounts remaining in the Pre-Funded Account will be distributed as a
prepayment of principal to Certificateholders following the end of the Funding
Period, in the amounts and pursuant to the priorities set forth in the related
Prospectus Supplement. Such prepayment will reduce the outstanding principal
balance of one or more classes of the related Series of Certificates and may
reduce the anticipated yield thereon.
SALES OF SUBSEQUENT RECEIVABLES
If so provided in the related Prospectus Supplement, (i) CTL will be
obligated pursuant to the Purchase Agreement to sell Subsequent Receivables
(subject only to the availability thereof) to the Depositor from time to time
during the Funding Period in an aggregate principal amount approximately equal
to the Pre-Funded Amount, (ii) the Depositor, in turn, will be obligated
pursuant to the Pooling and Servicing Agreement to sell such Subsequent
Receivables to the Trust and (iii) the Trust will be obligated to purchase
such Subsequent Receivables, subject only to the satisfaction of certain
conditions set forth in the Pooling and Servicing Agreement and described in
the related Prospectus Supplement. If the principal amount of eligible
Subsequent Receivables originated or acquired by CTL during a Funding Period
is less than the Pre-Funded Amount, CTL and the Depositor may have
insufficient Subsequent Receivables to transfer to a Trust, and holders of one
or more classes of the related Series of Certificates may receive a full or
partial prepayment of principal at the end of the Funding Period as described
above under "--Pre-Funding Accounts."
PERFECTION OF SECURITY INTERESTS IN FINANCED VEHICLES
Simultaneously with each sale of Receivables, CTL will assign to the
Depositor, and the Depositor will assign to the related Trust, security
interests in the related Financed Vehicles; due to administrative and quality
control concerns related to the retitling of a large amount of certificates of
title and related fees and expenses of each state's Department of Motor
Vehicles, however, the certificates of title to such Financed Vehicles will
not be amended to reflect the assignment to either the Depositor or the Trust.
In the absence of such amendments, a Trust may not have a perfected security
interest in such Financed Vehicles in some states, including Texas. In
California the security interest will continue to be perfected against
creditors and transferees of the vehicle owner. Except as otherwise provided
in the related Prospectus Supplement, CTL will be obligated to repurchase from
the related Trust any Receivable sold to a Trust as to which all actions
necessary to secure a first perfected security interest in the name of the
Trust in the Financed Vehicle securing such Receivable shall not have been
taken as of the date such Receivable is transferred to such Trust, if such
breach materially and adversely affects the interest of the Certificateholders
in such Receivable and if such failure or breach is not timely cured following
discovery by or notice thereof to the Depositor or CTL.
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<PAGE>
If a Trust does not have a perfected security interest in a Financed
Vehicle, its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected. To the extent the security interest is
perfected, the Trust will have a prior claim over subsequent purchasers of
such Financed Vehicle and holders of subsequently perfected security
interests; however, the Trust could lose its security interest or the priority
of its security interest in a Financed Vehicle as against liens for repairs of
such Financed Vehicle or for taxes unpaid by the related Obligor or through
fraud or negligence. Neither the Depositor nor CTL will have any obligation to
repurchase a Receivable in respect of which a Trust loses its security
interest or the priority of its security interest in the related Financed
Vehicle as the result of any such mechanic's or tax lien or the fraud or
negligence of a third party occurring after the date such security interest
was conveyed to the Trust. See "Certain Legal Aspects of the Receivables--
Security Interests in Vehicles."
PERFECTION OF SECURITY INTERESTS IN CONNECTION WITH THE TRANSFER OF
RECEIVABLES
Generally each Receivable will be "chattel paper" as defined in the Uniform
Commercial Code ("UCC") as in effect in California (where CTL's and the
Depositor's chief executive offices are located) and the jurisdiction in which
the related Financed Vehicle was located at origination. Under the UCC as in
effect in each such jurisdiction, the sale of chattel paper is treated in a
manner similar to perfection of a security interest in chattel paper. Each of
CTL and the Depositor will make appropriate filings of UCC-1 financing
statements in the Office of the Secretary of State of the State of California
to give notice of the sale of the Receivables. These steps may not be
sufficient to protect the Trust's interest in the Receivables against the
claims of CTL's creditors or a trustee (or a receiver or conservator, as the
case may be) of CTL in bankruptcy to the extent that the Receivables do not
constitute "chattel paper" within the meaning of the UCC as in effect in
California. The Trust's interest in the Receivable could also be defeated if a
subsequent purchaser were able to take physical possession of the Receivables
without notice of such assignment. Pursuant to the Purchase Agreement,
however, CTL will be obligated to repurchase a Receivable if its
representation and warranties with respect to the Receivable are not true and
correct.
RISK ASSOCIATED WITH CONSUMER PROTECTION LAWS
Federal and state consumer protection laws impose requirements on creditors
in connection with extensions of credit and collections of retail installment
loans, and certain of these laws make an assignee of such a loan (such as a
Trust) liable to the obligor thereon for any violation by the lender. To the
extent specified herein and in the related Prospectus Supplement, CTL will be
obligated to make certain indemnities and to repurchase from the related Trust
any Receivable that fails to comply with such requirements. See "Certain Legal
Aspects of the Receivables--Consumer Protection Laws."
INSOLVENCY CONSIDERATIONS
The Depositor has been established as a special purpose subsidiary of Bay
View Capital Corporation ("Bay View"), the holding company of CTL, to reduce
the risk of bankruptcy of the Depositor and its resulting effect on the
Certificates of each Series. In addition, the Depositor has undertaken to
follow certain procedures to preserve its corporate separateness, with a view
to maintaining the assets of the Depositor separate from the assets of Bay
View, with the result that the assets of the Depositor would not be available
directly to creditors of Bay View or its affiliates, to the representative of
any bankruptcy estate of Bay View or to any bankruptcy trustee or receiver or
conservator which may be appointed with respect to Bay View or any of its
affiliates other than the Depositor. There can be no assurance, however, that,
despite the bankruptcy remote nature of the Depositor and the procedures
described above, an appropriate party in interest would not succeed in an
effort to cause consolidation of the assets and liabilities of the Depositor
with those of Bay View or any of its affiliates or that the appointment of the
Federal Deposit Insurance Corporation ("FDIC") as receiver or conservator of
CTL would not have an adverse impact on one or more Series of Certificates.
In the event of impairment of the capital of CTL or certain other events,
the California Commissioner of Corporations has the authority to take
possession of the property and business of CTL and retain possession as
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conservator or liquidator of CTL, and to exercise the powers set forth for
such purpose in the California Industrial Loan Law. In such an event, however,
it is likely that the FDIC would become conservator or receiver of CTL and
able to exercise its powers as such under federal law. So long as CTL remains
an FDIC insured institution, in the event that the FDIC were appointed
receiver or conservator for CTL, the FDIC could exercise legal authority to
prevent the Trustee from taking any remedial action based solely upon such
appointment or insolvency of CTL or the FDIC may take other actions which may
have an adverse impact on one or more Series of Certificates.
CTL will warrant to the Depositor in each Purchase Agreement (the benefit of
which warranty will be assigned by the Depositor to each Trust in the related
Pooling and Servicing Agreement), that the sale of the related Receivables by
CTL to the Depositor is a sale, and not a financing, of the Receivables to the
Depositor. Likewise, the Depositor will warrant to the Trustee under the
related Pooling and Servicing Agreement that the sale of the related
Receivables by the Depositor to the Trustee is a sale, and not a financing, of
the Receivables to such Trust. If the transactions contemplated under the
related Transfer and Servicing Agreements are treated as a sale, the
Receivables would not be part of CTL's or the Depositor's insolvency or
conservatorship estate and would not be available to the creditors of CTL or
the Depositor. Notwithstanding the foregoing, if CTL were to become the
subject of receivership or conservatorship proceedings, or the Depositor were
to become a debtor in a bankruptcy case, and an appropriate party in interest
were to take the position that the sale of Receivables to the Depositor or
such Trust, as applicable, should be treated as a pledge of such Receivables
to secure a borrowing of CTL or the Depositor, then delays in payments of
collections of Receivables to Certificateholders could occur or reductions in
the amounts of such payments could result. If the transfer of Receivables to
the Depositor or any Trust is treated as a pledge instead of a sale, a tax or
government lien on the property of CTL or the Depositor, as applicable,
arising before the transfer of such Receivables to such Trust may have
priority over such Trust's interest in such Receivables.
The decision of the U.S. Court of Appeals for the Tenth Circuit, Octagon Gas
Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May 27, 1993),
contains language to the effect that accounts sold by a debtor would remain
property of the debtor's bankruptcy estate under the UCC, whether or not the
sale of the accounts was perfected. Although the Receivables constitute
chattel paper under the UCC, rather than accounts, Article 9 of the UCC
applies to the sale of chattel paper as well as the sale of accounts, and
perfection of a security interest in both chattel paper and accounts may be
accomplished by the filing of a UCC-1 financing statement. If, following an
insolvency proceeding in respect of the Depositor or an appointment of the
FDIC as receiver or conservator for CTL, a court or the FDIC were to follow
the reasoning of the Tenth Circuit, then the Receivables could be included in
the insolvency estate of the Depositor or the receivership or conservatorship
estate of CTL, as applicable, and delays and reductions in payments of
collections on or in respect of the Receivables could occur.
LIMITED OBLIGATIONS OF CTL AND THE DEPOSITOR
Neither CTL nor the Depositor will be generally obligated to make any
payments to a Trust in respect of the related Certificates or Receivables.
However, in connection with the sale of the Receivables, CTL will make
representations and warranties regarding the characteristics of such
Receivables and, in certain circumstances, CTL will be required to repurchase
from the Trust any Receivables with respect to which such representations and
warranties have been breached. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables." In addition, CTL, as
Servicer, may be required to purchase Receivables from a Trust under certain
circumstances set forth in the Pooling and Servicing Agreement. See
"Description of the Transfer and Servicing Agreements--Servicing Procedures."
SUBORDINATION OF CERTAIN CLASSES OF CERTIFICATES
To the extent specified in the related Prospectus Supplement, distributions
of interest and principal on one or more classes of Certificates may be
subordinated in priority of payment to interest and principal due on one or
more other classes of Certificates of the same Series.
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LIMITED ASSETS OF EACH TRUST
None of the Trusts will have, nor will any such Trust be permitted or
expected to have, any significant assets or sources of funds other than the
related Receivables and, to the extent provided in the related Prospectus
Supplement, a Pre-Funding Account or Cash Collateral Account, yield supplement
account or other form of credit enhancement. Subject to the foregoing, the
Certificates of each Series will represent interests solely in the related
Trust and will not represent obligations of or interests in, or be insured or
guaranteed by, CTL, the Depositor, the Trustee or any other entity.
Consequently, holders of the Certificates of any Series must rely for
repayment upon payments on the related Receivables and, if and to the extent
available, amounts available under any available form of credit enhancement,
all as specified in the related Prospectus Supplement.
RISKS ASSOCIATED WITH AUTOMOBILE LOANS
Automobiles rapidly depreciate. As a consequence, the Obligor's continuing
financial stability rather than the value of the vehicle is generally relied
upon for the repayment of the related receivable. This is especially true with
respect to Receivables purchased by CTL, because CTL's underwriting procedures
are primarily based on the ability of the Obligor to repay. As a result,
subject to the credit score, CTL may permit the origination of a loan in
excess of the manufacturer's suggested retail price, in the case of new
vehicles, or the value established by used car reference publications.
Therefore, a repossessed automobile may not provide an adequate source of
repayment of the outstanding loan balance. See "The Receivables Pools--
Underwriting Procedures." Furthermore, the application of various federal and
state laws, including bankruptcy and insolvency laws, may limit the amount
which can be recovered on such loans. See "The Receivables Pools--
Delinquencies, Repossessions and Net Losses."
MATURITY AND PREPAYMENT CONSIDERATIONS
All of the Receivables are prepayable at any time by the related Obligor. As
used herein with respect to any Receivable, the term prepayment includes
prepayments in full, partial prepayments (including those related to rebates
of extended warranty contract costs and insurance premiums) and liquidations
due to defaults, as well as receipts of proceeds from physical damage, credit
life and disability insurance policies and any lender's insurance policy, and
Purchase Amounts with respect to certain other Receivables repurchased by CTL
as a result of a breach of a representation or warranty or purchased by the
Servicer for administrative reasons. The rate of prepayments on the
Receivables may be influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may not sell or transfer
the Financed Vehicle securing a Receivable without the consent of CTL. The
rate of prepayment on the Receivables may also be influenced by the structure
of the underlying loans. To the extent prepayments on the Receivables are more
rapid than expected, Certificateholders' anticipated yield may be reduced to
the extent the Certificates were purchased at a premium. See "Weighted Average
Life of the Certificates." In addition, if so provided in the related
Prospectus Supplement, the Servicer or one or more other entities may be
entitled to purchase, or to cause another person or entity to purchase, the
Receivables of a given Receivables Pool under the circumstances described in
such Prospectus Supplement. See "Description of the Transfer and Servicing
Agreements--Termination."
In addition, a Series of Certificates may include one or more classes of
interest-only or other Strip Certificates that may be more sensitive than
other classes of Certificates of such Series to the rate of payment on the
related Receivables. Prospective investors in any such class of Certificates
should carefully consider the information provided with respect to such
Certificates under "Risk Factors" and elsewhere in the related Prospectus
Supplement.
RATINGS OF THE CERTIFICATES
It is a condition of the issuance of the Certificates to be offered
hereunder that they be rated in one of the four highest rating categories by
at least one nationally recognized statistical rating organization. A rating
is not a recommendation to purchase, hold or sell Certificates inasmuch as a
rating does not comment as to market price or suitability for a particular
investor. The ratings of the Certificates will address the likelihood of the
payment of principal and interest thereon pursuant to their terms. There can
be no assurance that a rating will remain in effect for any given period of
time or that a rating will not be lowered or withdrawn entirely by a
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Rating Agency if in its judgment circumstances in the future so warrant. For
more detailed information regarding the ratings assigned to any class of a
particular Series of Certificates, see "Summary of Terms--Ratings" and "Risk
Factors--Ratings of the Certificates" in the related Prospectus Supplement.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, each class
of the Certificates of a given Series initially will be represented by one or
more certificates registered in the name of Cede & Co. ("Cede"), or any other
nominee of The Depository Trust Company ("DTC") set forth in the related
Prospectus Supplement, and will not be registered in the names of the holders
of such Certificates or their nominees. Because of this, unless and until
Definitive Certificates for such Series are issued, the beneficial owners of
such Certificates will not be recognized by the Trustee as
"Certificateholders" (as such term is used herein or in the related Pooling
and Servicing Agreement). Hence, until Definitive Certificates are issued,
beneficial owners of the Certificates will be able to exercise the rights of
Certificateholders only indirectly through DTC and its participating
organizations. See "Description of the Certificates--Book-Entry Registration"
and "--Definitive Certificates."
LIMITED LIQUIDITY
There can be no assurance that a secondary market will develop for the
Certificates or, if it does develop, that it will provide the holders of the
Certificates with liquidity of investment or that it will remain for the term
of the Certificates. The issuance of the Certificates in book-entry form may
reduce the liquidity of such Certificates in the secondary trading market
since investors may be unwilling to purchase Certificates in the secondary
trading market for which they cannot obtain physical certificates. See
"Description of the Certificates--Book-Entry Registration."
DIFFICULTY IN PLEDGING
Since transactions in Certificates can be effected only through DTC,
participating organizations, indirect participants and certain banks, the
ability of a beneficial Owner to pledge a Certificate to persons or entities
that do not participate in the DTC system, or otherwise to take actions in
respect of such Certificates, may be limited due to the lack of a physical
certificate representing the Certificates. See "Description of the
Certificates--Book-Entry Registration."
THE TRUSTS
Each Series of Certificates will be issued by a separate Trust established
by the Depositor pursuant to a Pooling and Servicing Agreement for the
transactions described herein and in the related Prospectus Supplement. The
property of each Trust will include a pool (a "Receivables Pool") of simple
interest and/or precomputed interest retail installment sale or installment
loan contracts secured by new or used automobiles, light trucks, motorcycles
or vans and certain payments due or received thereunder after the applicable
Cutoff Date. Unless otherwise specified in the related Prospectus Supplement,
the Receivables in each Receivables Pool were or will be either (a) originated
by Dealers for assignment to CTL or (b) solicited by Dealers for origination
by CTL. Unless otherwise specified in the related Prospectus Supplement, CTL
is the registered lienholder listed on the certificates of title of the
Financed Vehicles. The Receivables will continue to be serviced by CTL as the
initial Servicer under each Pooling and Servicing Agreement.
On or prior to the applicable Closing Date, CTL will sell to the Depositor,
pursuant to the Purchase Agreement, Receivables in the aggregate principal
amount specified in the related Prospectus Supplement. Thereafter, on such
Closing Date, the Depositor will convey such Receivables and, if so provided
in the related Prospectus Supplement, the Pre-Funded Amount to the related
Trust in exchange for the delivery to the Depositor of the Series of
Certificates issued on such date by such Trust. If the Prospectus Supplement
provides for the conveyance of a Pre-Funded Amount to the related Trust, CTL
will also be required under the Purchase Agreement, and the Depositor will be
required under the related Pooling and Servicing Agreement, to convey to
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the Depositor and the Trust, respectively, Subsequent Receivables from time to
time during the Funding Period in an aggregate principal amount approximately
equal to such Pre-Funded Amount. Any Subsequent Receivables so conveyed to a
Trust will also be assets of such Trust. The property of each Trust will also
include (i) interests in certain amounts that may from time to time be held in
separate trust accounts established and maintained pursuant to the related
Pooling and Servicing Agreement and, if so provided in the related Prospectus
Supplement, the proceeds of such accounts; (ii) security interests in the
Financed Vehicles and any other interest of CTL and the Depositor in such
Financed Vehicles; (iii) any recourse rights of CTL against Dealers; (iv) any
rights of CTL to proceeds from claims on or refunds of premiums with respect
to certain physical damage, credit life and disability insurance policies
covering the Financed Vehicles or the Obligors, as the case may be, including
any lender's insurance policy; (v) any property that secures a Receivable and
that has been acquired by the Trust; (vi) certain rights under the related
Purchase Agreement; and (vii) any and all proceeds of the foregoing. CTL will
not convey to the Depositor, and the Depositor will not convey to a Trust, and
the related Certificateholders will have no interest in, any contract with a
Dealer establishing "dealer reserves" or any rights to recapture dealer
reserves pursuant to such a contract. To the extent specified in the related
Prospectus Supplement, a Pre-Funding Account or a Cash Collateral Account, a
yield supplement account, surety bond, swap or other interest rate protection,
or any other form of credit enhancement may be a part of the property of a
Trust or may be held by the Trustee for the benefit of holders of the related
Certificates.
CTL, as initial Servicer under each Pooling and Servicing Agreement, will
continue to service the Receivables held by each Trust and will receive fees
for such services. See "Description of the Transfer and Servicing Agreements--
Servicing Compensation and Payment of Expenses" herein. To facilitate the
servicing of the Receivables, the Depositor and each Trustee will designate
the Servicer as custodian of the Receivables and the related documents for the
related Trust; due to the administrative burden and expense, however, the
certificates of title to the Financed Vehicles will not be amended to reflect
the sale and assignment of the security interest in the Financed Vehicles to
either the Depositor or the Trust. In the absence of such an amendment, a
Trust may not have a perfected security interest in certain of the Financed
Vehicles in some states. See "Certain Legal Aspects of the Receivables" and
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables."
If the protection provided to the holders of the Certificates of any Series
(the "Certificateholders") by the subordination, if any, of one or more
classes of Certificates of such Series and by any Cash Collateral Account,
yield supplement account or other available form of credit enhancement for
such Series is insufficient, such Certificateholders will have to look to
payments by or on behalf of Obligors on the related Receivables and the
proceeds from the repossession and sale of Financed Vehicles that secure
defaulted Receivables for distributions of principal of and interest on the
related Certificates. In such event, certain factors, such as the Trust's not
having perfected security interests in all of the Financed Vehicles, may limit
the ability of a Trust to realize on the collateral securing the related
Receivables or may limit the amount realized to less than the amount due
thereunder. Certificateholders may thus be subject to delays in payment on, or
may incur losses on their investment in, such Certificates as a result of
defaults or delinquencies by Obligors and depreciation in the value of the
related Financed Vehicles. See "Description of the Transfer and Servicing
Agreements--Credit and Cash Flow Enhancement" and "Certain Legal Aspects of
the Receivables."
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale
of the related Certificates is limited solely to the express obligations of
such Trustee set forth in the related Pooling and Servicing Agreement. A
Trustee may resign at any time, in which event the Servicer will be obligated
to appoint a successor Trustee. The Servicer may also remove a Trustee if such
Trustee ceases to be eligible to continue as Trustee under the related Pooling
and Servicing Agreement or if such Trustee becomes insolvent. If the Servicer
so removes a Trustee, the Servicer will be obligated to appoint a successor to
such Trustee. Any resignation or removal of a Trustee and appointment of a
successor Trustee will not become effective until acceptance of the
appointment by the successor Trustee.
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THE RECEIVABLES POOLS
GENERAL
Unless otherwise specified in the related Prospectus Supplement, the
Receivables arise, or will arise, from motor vehicle installment sale
contracts that were originated by new and used car and motorcycle dealers for
assignment to CTL or motor vehicle loan contracts that were solicited by
dealers for origination by CTL in the ordinary course of business. Unless
otherwise specified in the related Prospectus Supplement, CTL is the
registered lienholder on the certificates of title to each of the Financed
Vehicles.
Unless otherwise provided in the related Prospectus Supplement, the
Receivables to be sold to each Trust will be selected from CTL's portfolio for
inclusion in a Receivables Pool based on several criteria, including that each
Receivable (i) is secured by a new or used vehicle, (ii) provides for level
monthly payments (except for the last payment, which may be different from the
level payments) that fully amortize the amount financed over the original term
to maturity of the Receivable, (iii) is a Precomputed Receivable or a Simple
Interest Receivable (each as defined herein) and (iv) satisfies the other
criteria, if any, set forth in the related Prospectus Supplement. No selection
procedures believed by CTL or the Depositor to be adverse to
Certificateholders were or will be used in selecting the Receivables.
UNDERWRITING PROCEDURES
CTL uses the degree of the applicant's creditworthiness as the basic
criterion when originating an installment sales contract or purchasing such a
contract from a Dealer. Each credit application requires that the applicant
provide current information regarding the applicant's employment history, bank
accounts, debts, credit references, and other factors that bear on
creditworthiness. CTL generally applies uniform underwriting standards when
originating loans on new and used vehicles. CTL also typically obtains a
credit report from a major credit reporting agency summarizing the applicant's
credit history and paying habits, including such items as open accounts,
delinquent payments, bankruptcies, repossessions, lawsuits, and judgments.
Information relating to the applicant and supplied by the applicant on the
loan application combined with information provided by credit reporting
agencies is used to generate the borrower's credit score.
The credit score generated is used as the basic determinant for loan
approval. CTL's credit scoring model was developed by an independent firm
experienced in developing such models and utilizes extensive historical data
related to CTL's origination and servicing experience as well as the
experience of CTL's senior management. CTL's credit scoring model evaluates an
applicant's credit profile along with certain applicant specific
characteristics to arrive at an estimate of the associated credit risk.
Additionally, CTL's credit analysts may also verify an applicant's employment
income and/or residency or where appropriate, verify an applicant's payment
history directly with the applicant's creditors. CTL will also generally
verify receipt of the automobile and other information directly with the
borrower. Based on these procedures, a credit decision is considered and
approved by CTL personnel at various levels of authority, depending on a
variety of factors including the amount of the loan and the applicant's credit
score.
CTL's underwriting guidelines adhere to no specific loan-to-value ratios
because the primary focus is on the ability of the borrower to repay the loan
rather than the value of underlying collateral. The amount financed by CTL
will generally be up to the full sales price of the vehicle plus sales tax,
dealer preparation fees, license fees and title fees, plus the cost of service
and warranty contracts and premiums for physical damage, credit life and
disability insurance obtained in connection with the vehicle or the financing
(such amounts in addition to the sales price, collectively the "Additional
Vehicle Costs"). Accordingly, the amount financed by CTL under an installment
contract generally may exceed, depending on the credit score, in the case of
new vehicles, the manufacturer's suggested retail price of the financed
vehicle and the Additional Vehicle Costs. In the case of used vehicles, if the
applicant meets CTL's creditworthiness criteria, the amount financed may
exceed the vehicle's value as assigned by one of the three standard reference
sources for dealers of used cars and the Additional Vehicle Costs. Depending
on the dealer's location, CTL will use the "Kelley Blue Book," "NADA Official
Used Car Guide" or the "Black Book" published by National Auto Research to
obtain a value to assign to a used vehicle for underwriting purposes.
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CTL believes based on its historical experience that the resale value of a
new vehicle purchased by an obligor will generally decline below the
manufacturer's suggested retail price and, in some cases, may decline for a
period of time below the principal balance outstanding on the related
installment contract. CTL also believes that the resale value of a used
vehicle purchased by an obligor will generally decline, but believes that the
percentage of such decline generally will be less than the percentage of
decline in the resale value of a new vehicle. CTL regularly reviews the
quality of the Contracts purchased from Dealers and periodically conducts
quality control audits to ensure compliance with its established policies and
procedures. See also "California Thrift & Loan and Affiliates" herein.
ALLOCATION OF PAYMENTS
The Receivables will be either Simple Interest Receivables or Precomputed
Receivables. "Simple Interest Receivables" provide for equal monthly payments
that are applied, first, to collection fees, if any, then to applicable late
charges, then to pay interest accrued to the date of such payment, then to
principal due on such date, and then to further reduce the outstanding
principal balance. Accordingly, if an Obligor pays a fixed monthly installment
before its due date under a Simple Interest Receivable, the portion of the
payment allocable to interest for the period since the preceding payment will
be less than it would have been had the payment been made on the contractual
due date, and the portion of the payment applied to reduce the principal
balance of the Receivable will be correspondingly greater. Conversely, if an
Obligor pays a fixed monthly installment under a Simple Interest Receivable
after its contractual due date, the portion of such payment allocable to
interest for the period since the preceding payment will be greater than it
would have been had the payment been made when due, and the portion of such
payment applied to reduce the principal balance of the Receivable will be
correspondingly less, in which case a larger portion of the principal balance
may be due on the final scheduled payment date.
"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "sum of periodic balances" method,
similar to the Rule of 78's ("Rule of 78's Receivables"). An Actuarial
Receivable provides for amortization of the loan over a series of fixed level
payment monthly installments. Each monthly installment, including the monthly
installment representing the final payment of the receivable, consists of an
amount of interest equal to 1/12 of the annual percentage rate of the loan
multiplied by the unpaid principal balance of the loan, and an amount of
principal equal to the remainder of the monthly payment. A Rule of 78's
Receivable provides for the payment by the Obligor of a specified total amount
of payments, payable in equal monthly installments on each due date, which
total represents the principal amount financed and add-on interest for the
term of the receivable. The rate at which the amount of add-on interest is
earned and, correspondingly, the amount of each fixed monthly payment
allocated to reduction of the outstanding principal amount of the Receivable
are calculated in accordance with the sum of the periodic time balances or the
"Rule of 78's." If a Precomputed Receivable is prepaid in full (voluntarily or
by liquidation, acceleration or otherwise), under the terms of the Contract a
"refund" or "rebate" will be made to the Obligor of the portion of the total
amount of payments then due and payable under the Contract allocable to
"unearned" interest. Unearned interest is calculated in accordance with the
sum of the periodic time balances method, the Rule of 78's or an equivalent
method. The amount of any such rebate under a Precomputed Receivable generally
will be less than or equal to the remaining scheduled payments of interest
that would have been due under a Simple Interest Receivable for which all
payments were made on schedule and generally will be significantly less than
such amount.
Unless otherwise stated in the related Prospectus Supplement, all of the
Receivables that are Precomputed Receivables will be Rule of 78's Receivables;
however, the Trust will account for all Rule of 78's Receivables as if such
Receivables were Actuarial Receivables. Except as otherwise indicated in the
related Prospectus Supplement, early payments on Precomputed Receivables
("Payaheads") will be deposited to the Payahead Account as described under
"Description of the Transfer and Servicing Agreements--Accounts." Amounts
received upon prepayment in full of a Rule of 78's Receivable in excess of the
then outstanding principal balance of such Receivable (computed on an
actuarial basis) will not be passed through to Certificateholders, except to
the extent necessary to pay interest and principal on the Certificates.
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In the event of the liquidation of a Receivable or the repossession of a
Financed Vehicle, amounts recovered are applied first to the expenses of
repossession, and then to unpaid interest (to the extent not previously
written off) and principal and any related payment or other fee.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the experience of CTL pertaining to
delinquencies, repossessions and net losses with respect to new and used
retail automobile, light truck, motorcycle and van receivables will be set
forth in each Prospectus Supplement. There can be no assurance that the
delinquency, repossession and net loss experience with respect to any
Receivables Pool will be comparable to prior experience or to such
information.
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
The weighted average life of the Certificates of any Series generally will
be influenced by the rate at which the principal balances of the related
Receivables are paid, which payment may be in the form of scheduled
amortization or prepayments. For this purpose, the term prepayments includes
prepayments in full, partial prepayments (including those related to rebates
of extended warranty contract costs and insurance premiums), liquidations due
to defaults, as well as receipts of proceeds, if any, from physical damage,
credit life and disability and/or any lender's insurance policies, and the
amount of Receivables repurchased by CTL due to a breach of a representation
or warranty or purchased by the Servicer for administrative purposes. All of
the Receivables are prepayable at any time without penalty (or with a de
minimis charge) to the Obligor. The rate of prepayment of automotive
receivables is influenced by a variety of economic, social and other factors,
including the fact that an Obligor generally may not sell or transfer the
Financed Vehicle securing a Receivable without the consent of the registered
lienholder (or the Servicer on behalf of such lienholder). The rate of
prepayment on the Receivables may also be influenced by the structure of the
loan. In addition, under certain circumstances, CTL will be obligated to
repurchase Receivables from a Trust pursuant to the related Purchase Agreement
and Pooling and Servicing Agreement as a result of breaches of representations
and warranties, and the Servicer will be obligated to purchase Receivables
from a Trust pursuant to the related Pooling and Servicing Agreement as a
result of breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures." See also "Description of the Transfer and Servicing Agreements--
Termination" regarding the option of the Servicer to purchase or cause the
Receivables to be purchased from a Trust.
A Series of Certificates may include one or more classes of Strip
Certificates that are more sensitive than certain other classes of
Certificates of the same Series to the rate of payment of the related
Receivables. Prospective investors in any such Strip Certificates should
consider carefully the information regarding such Certificates in the related
Prospectus Supplement.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Certificates of a Series on any
Distribution Date since such amount will depend, in part, on the amount of
principal collected on the related Receivables Pool during the applicable
Collection Period. Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables will be borne entirely by the
Certificateholders. The related Prospectus Supplement may set forth certain
additional information with respect to the maturity and prepayment
considerations applicable to the particular Receivables Pool and the related
Series of Certificates or particular classes of Certificates.
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POOL FACTORS AND OTHER CERTIFICATE INFORMATION
The "Certificate Pool Factor" for each class of Certificates will be a
seven-digit decimal which the Servicer will compute prior to each distribution
with respect to such class of Certificates and which will indicate the
remaining Class Certificate Balance of such class of Certificates, as of the
applicable Distribution Date (after giving effect to distributions to be made
on such Distribution Date), as a fraction of the initial Class Certificate
Balance of such class of Certificates. Each Certificate Pool Factor will be
1.0000000 as of the related Closing Date and thereafter will decline to
reflect reductions in the applicable Class Certificate Balance. A
Certificateholder's portion of the aggregate outstanding Class Certificate
Balance will equal the product of (a) the original denomination of such
Certificateholder's Certificate and (b) the applicable Certificate Pool Factor
at the time of determination.
The Certificateholders will receive reports on or about each Distribution
Date concerning payments received on the Receivables, the Pool Balance and
each Certificate Pool Factor. In addition, Certificateholders of record during
any calendar year will be furnished information for tax reporting purposes not
later than the latest date permitted by law. See "Description of the
Certificates--Statements to Certificateholders."
USE OF PROCEEDS
On each Closing Date, the Depositor will convey the Receivables and, if so
provided in the related Prospectus Supplement, the applicable Pre-Funded
Amount to the related Trust in exchange for the related Series of
Certificates. Unless otherwise provided in the related Prospectus Supplement,
the Depositor will apply the net proceeds from the sale of the Certificates to
the purchase of the Receivables from CTL and, if so provided in the related
Prospectus Supplement, to fund the Pre-Funding Account. CTL will use the
portion of such proceeds paid to it to repay deposits, short-term borrowings
and for general corporate purposes.
CALIFORNIA THRIFT & LOAN AND AFFILIATES
CTL is a 38 year-old, FDIC-insured California thrift and loan. CTL's
business is the underwriting and purchasing of high yield consumer loans
(primarily retail installment sales contracts secured by new and used
automobiles and light-duty trucks), residential real estate loans and
commercial equipment leases for small and medium sized businesses. CTL
conducts its business primarily in the States of California, Arizona,
Colorado, Illinois, New Mexico, Nevada, Oregon and Texas.
On June 14, 1996 Bay View acquired CTL Credit, Inc., the holding company of
CTL. CTL is now a wholly-owned subsidiary of Bay View.
The Depositor is a wholly-owned subsidiary of Bay View, formed in November
1996 as a Delaware corporation, and is organized for the limited purpose of
purchasing, acquiring owning and holding vehicle installment sale and
installment loan contracts, reselling such receivables and conducting
activities incidental thereto.
The Depositor has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary
application for relief by the Depositor under the United States Bankruptcy
Code or other applicable laws ("Insolvency Laws") will not result in the
consolidation of the assets and liabilities of the Depositor with those of Bay
View or CTL. These steps include the creation of the Depositor as a separate,
limited-purpose subsidiary pursuant to a certificate of incorporation
containing certain limitations (including restrictions on the nature of the
Depositor's business, as described above, and restrictions on the Depositor's
ability to commence a voluntary case or proceeding under any Insolvency Law
without the unanimous affirmative vote of all its directors). However, there
can be no assurance that the activities of the Depositor would
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not result in a court concluding that the assets and liabilities of the
Depositor should be consolidated with those of Bay View or CTL in a proceeding
under an Insolvency Law. See "Risk Factors--Insolvency Considerations."
In addition, tax and certain other statutory liabilities, such as
liabilities to the Pension Benefit Guaranty Corporation, if any, relating to
the underfunding of pension plans of Bay View or its affiliates can be
asserted against the Depositor. To the extent that any such liabilities arise
after the transfer of Receivables to a Trust, the Trust's interest in the
Receivables would be prior to the interest of the claimant with respect to any
such liabilities. However, the existence of a claim against the Depositor
could permit the claimant to subject the Depositor to an involuntary
proceeding under the Bankruptcy Code or other Insolvency Laws. See "Risk
Factors--Insolvency Considerations."
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each Trust will issue a Series of Certificates pursuant to a Pooling and
Servicing Agreement. A form of the Pooling and Servicing Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The following is a summary of the material terms of the
Certificates and is subject to, and is qualified in its entirety by reference
to, the provisions of the related Certificates and Pooling and Servicing
Agreement.
Unless otherwise specified in the related Prospectus Supplement, the
Certificates will be available for purchase in minimum denominations of $1,000
and integral multiples in excess thereof in book-entry form only.
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of losses,
Pass-Through Rate and amount of or method of determining distributions with
respect to principal and interest on each class of Certificates of a Series
will be described in the related Prospectus Supplement. Distributions on such
Certificates will be made on the dates specified in the related Prospectus
Supplement (the "Distribution Date") and may be made prior to distributions
with respect to principal of such Certificates. To the extent provided in the
related Prospectus Supplement, a Series of Certificates may include one or
more classes of Strip Certificates entitled to (i) interest distributions with
disproportionate, nominal or no principal distributions or (ii) principal
distributions with disproportionate, nominal or no interest distributions.
Each class of Certificates may have a different Pass-Through Rate, which may
be a fixed, variable or adjustable Pass-Through Rate (and which may be zero
for certain classes of Strip Certificates) or any combination of the
foregoing. The related Prospectus Supplement will specify the Pass-Through
Rate for each class of Certificates of a Series or the method for determining
such Pass-Through Rate.
To the extent specified in any Prospectus Supplement, one or more classes of
Certificates of a given Series may have fixed principal and/or interest
distribution schedules, as set forth in such Prospectus Supplement.
In the case of a Series of Certificates that includes two or more classes of
Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal, and any schedule or
formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement.
Distributions in respect of interest on and principal of any class of
Certificates will be made on a pro rata basis among all holders of
Certificates of such class.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, each class
of Certificates initially will be represented by one or more certificates, in
each case registered in the name of the nominee of DTC. Unless
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another nominee is specified in the related Prospectus Supplement, the nominee
of DTC will be Cede. Accordingly, such nominee is expected to be the holder of
record of the Certificates of each Series, except for Certificates, if any,
retained by the Depositor. Unless and until Definitive Certificates are issued
under the limited circumstances described herein or in the related Prospectus
Supplement, no Certificateholder will be entitled to receive a physical
certificate representing a Certificate; all references herein and in the
related Prospectus Supplement to actions by Certificateholders will refer to
actions taken by DTC upon instructions from its participating members
("Participants"), and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders will refer to distributions, notices, reports and
statements to DTC or its nominee, as the case may be, as the registered holder
of the Certificates, for distribution to Certificateholders in accordance with
DTC's procedures with respect thereto. Beneficial owners of the Certificates
("Certificate Owners") will not be recognized as "Certificateholders" by the
related Trustee, as such term is used in each Pooling and Servicing Agreement,
and Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and its Participants.
DTC is a limited-purpose trust company organized under the laws of the State
of New York, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the 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 was created to hold securities for the Participants and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entries, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations. 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
Participant, either directly or indirectly (the "Indirect Participants").
Unless otherwise specified in the related Prospectus Supplement, Certificate
Owners that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or an interest in, the
Certificates may do so only through Participants and Indirect Participants. In
addition, all Certificate Owners will receive all distributions of principal
and interest from the related Trustee through Participants. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the Trustee to DTC's
nominee. DTC will then forward such payments to the Participants, which
thereafter will forward them to Indirect Participants or Certificate Owners.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Certificates
and to receive and transmit distributions of principal of and interest on the
Certificates. Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Certificates similarly are required
to make book-entry transfers and to receive and transmit such payments on
behalf of their respective Certificate Owners. Accordingly, although
Certificate Owners will not possess physical certificates representing the
Certificates, the Rules provide a mechanism by which Participants and Indirect
Participants will receive payments and transfer interests, directly or
indirectly, on behalf of Certificate Owners.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner to pledge Certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions with respect to such
Certificates, may be limited due to the lack of a physical certificate
representing such Certificates.
DTC may take any action permitted to be taken by a Certificate Owner under
the Pooling and Servicing Agreement only at the direction of one or more
Participants to whose account with DTC the Certificates are credited. DTC may
take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
Except as required by law, the related Trustee will not have any liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of Certificates of any Series held by
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DTC's nominee, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
DEFINITIVE CERTIFICATES
Unless otherwise stated in the related Prospectus Supplement, the
Certificates of a given Series will be issued in fully registered,
certificated form ("Definitive Certificates") to Certificateholders or their
respective nominees, rather than to DTC or its nominee, only if (i) the
related Trustee determines that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to the related
Certificates and such Trustee is unable to locate a qualified successor, (ii)
the Trustee elects, at its option, to terminate the book-entry system through
DTC or (iii) after the occurrence of an Event of Default or Servicer Default,
Certificate Owners representing at least a majority of the outstanding
principal amount of the Certificates of such Series, advise the related
Trustee through DTC that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the best interests of the related
Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the related Trustee will be required to notify the
related Certificate Owners, through Participants, of the availability of
Definitive Certificates. Upon surrender by DTC of the certificates
representing all Certificates of any affected class and the receipt of
instructions for re-registration, the Trustee will issue Definitive
Certificates to the related Certificate Owners. Distributions on the related
Definitive Certificates will be made thereafter by the related Trustee
directly to the holders in whose name the related Definitive Certificates are
registered at the close of business on the applicable record date, in
accordance with the procedures set forth herein and in the related Pooling and
Servicing Agreement. Distributions will be made by check mailed to the address
of such holders as they appear on the register specified in the related
Pooling and Servicing Agreement.
Definitive Certificates will be transferable and exchangeable at the offices
of the related Trustee (or any security registrar appointed thereby). No
service charge will be imposed for any registration of transfer or exchange,
but such Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith.
STATEMENTS TO CERTIFICATEHOLDERS
With respect to each Series of Certificates, on or prior to each
Distribution Date, the Servicer (to the extent applicable to such
Certificateholder) will prepare and forward to the related Trustee to be
included with the distribution to each Certificateholder of record a statement
setting forth for the related Collection Period substantially the following
information (and any other information specified in the related Prospectus
Supplement):
(i) the amount of the distribution allocable to principal (including any
overdue principal) of each class of Certificates of such Series;
(ii) the amount of the distribution allocable to interest (including any
overdue interest) on each class of Certificates of such Series;
(iii) the amount of fees and compensation paid to the Servicer and the
Trustee with respect to the related Collection Period;
(iv) the Class Certificate Balance and Certificate Pool Factor for each
class of Certificates of such Series as of the related record date;
(v) the amount, if any withdrawn from and the balance of any Cash
Collateral Account or other form of credit enhancement, after giving
effect to any additions thereto or withdrawals therefrom or reductions
thereto to be made on the following Distribution Date;
(vi) with respect to any Series of Certificates as to which a Pre-Funding
Account has been established, for Distribution Dates during the
Funding Period, the remaining Pre-Funded Amount; and
(vii) for the Distribution Date that falls on or immediately after the end
of the Funding Period, if any, the amount of the Pre-Funded Amount
that has not been used to purchase Subsequent Receivables.
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(viii) the aggregate net losses on the Receivables for the related
Collection Period;
(ix) the aggregate principal balance of all Receivables which were
delinquent 30 days or more as of the last day of the related
Collection Period; and
(x) the amount of Advances made on such Distribution Date; the aggregate
amount of outstanding Advances on such Distribution Date; and the
amount of Advances reimbursed to the Servicer on such Distribution Date
based on the fact (x) that the related Receivable became a Defaulted
Receivable during the prior Collection Period or (y) that the Servicer
determines the related Advance to be unrecoverable.
Dollar amounts described in items (i), (ii) and (iv) above will be expressed
as a dollar amount per $1,000 of initial Class Certificate Balance of such
Certificates.
In addition, within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of each Trust, the related
Trustee will mail to each person who at any time during such calendar year
shall have been a registered Certificateholder a statement containing certain
information for the purposes of such Certificateholder's preparation of
federal income tax returns. See "Certain Federal Income Tax Consequences."
LIST OF CERTIFICATEHOLDERS
Each Trustee, within 15 days after receipt of written request of the
Servicer, will provide the Servicer with a list of the names and addresses of
all holders of record as of the most recent record date of the related Series
of Certificates. In addition, three or more holders of the Certificates of any
Series or one or more holders of such Certificates evidencing not less than
25% of the applicable Certificate Balance may, by written request to the
related Trustee, obtain access to the list of all Certificateholders
maintained by such Trustee for the purpose of communicating with other
Certificateholders with respect to their rights under the related Pooling and
Servicing Agreement or under such Certificates.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following is a summary of the material terms of each Purchase Agreement
and Pooling and Servicing Agreement (collectively, the "Transfer and Servicing
Agreements") pursuant to which the Depositor will purchase Receivables from
CTL, a Trust will purchase Receivables from the Depositor, and the Servicer
will agree to service such Receivables. Forms of the Purchase Agreement and
Pooling and Servicing Agreement have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part. The following
summary is subject to, and is qualified in its entirety by reference to, the
provisions of the related Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On the related Closing Date, (i) CTL will sell and assign to the Depositor
pursuant to the related Purchase Agreement, without recourse, its entire right
in the related Receivables, including its security interests in the related
Financed Vehicles and (ii) the Depositor will sell and assign to the related
Trust pursuant to the related Pooling and Servicing Agreement, without
recourse, (a) its entire right in such Receivables and all of its right, title
and interest under the Purchase Agreement, including the security interests in
the Financed Vehicles, and (b) if so provided in the related Prospectus
Supplement, the applicable Pre-Funded Amount. Each Receivable will be
identified in a schedule appearing as an exhibit to the related Purchase
Agreement and Pooling and Servicing Agreement. The Trustee will, concurrently
with such sale and assignment of the Receivables and, if applicable, the Pre-
Funded Amount, to the related Trust, execute, authenticate and deliver the
related Series of Certificates to the Depositor in exchange for such
Receivables and such Pre-Funded Amount, if any. The related Prospectus
Supplement will specify whether the property of a Trust will include the Pre-
Funded Amount and, if so, the terms, conditions and manner under which
Subsequent Receivables will be sold and assigned by the Depositor to the
related Trust.
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In each Purchase Agreement, CTL will represent and warrant to the Depositor,
among other things, that (i) the information provided with respect to the
related Receivables is correct in all material respects; (ii) the Obligor on
each such Receivable has obtained or agreed to obtain and maintain physical
damage insurance covering the Financed Vehicle in accordance with CTL's normal
requirements; (iii) at the Closing Date, with respect to Receivables conveyed
to a Trust on the Closing Date, and on the applicable Subsequent Transfer Date
with respect to any Subsequent Receivables, the Receivables are free and clear
of all security interests, liens, charges and encumbrances, other than the
lien of the Depositor, and no offsets, defenses or counterclaims against the
Depositor or CTL have been asserted or threatened with respect to the related
Receivables; (iv) at the Closing Date or Subsequent Transfer Date, as
applicable, each of the related Receivables is secured by a first perfected
security interest in the related Financed Vehicle in favor of the Trust or all
necessary action has been taken by CTL to secure such a first perfected
security interest; and (v) each of the related Receivables, at the time it was
originated, complied and, at the Closing Date or Subsequent Transfer Date, as
applicable, complies, in all material respects with applicable federal and
state laws, including, without limitation, consumer credit, truth in lending,
equal credit opportunity and disclosure laws. As of the last day of any
Collection Period following the discovery by or notice to CTL of a breach of
any such representation or warranty that materially and adversely affects the
interests of the Depositor or its assignee in a Receivable (or as of the last
day of the preceding Collection Period, if CTL so elects), CTL, unless it has
cured such breach, will repurchase the Receivable at a price equal to the
unpaid principal balance owed by the Obligor thereon plus, accrued interest
thereon at the applicable Contract Rate to the date of purchase (the "Purchase
Amount"), and such Receivable will be considered a "Purchased Receivable" as
of such date. In each Pooling and Servicing Agreement, the Depositor will
assign certain rights under the related Purchase Agreement to the related
Trust, including the right to cause CTL to repurchase Receivables with respect
to which it is in breach of any such representation and warranty. The
repurchase obligation of CTL pursuant to each Purchase Agreement and Pooling
and Servicing Agreement will constitute the sole remedy available to the
related Certificateholders or Trustee for any uncured breach of a
representation or warranty.
If the related Prospectus Supplement provides that the property of a Trust
will include a Pre-Funding Account, CTL will be obligated to sell and assign
to the Depositor pursuant to the related Purchase Agreement, and the Depositor
will be obligated to sell and assign to the related Trust pursuant to the
related Pooling and Servicing Agreement, Subsequent Receivables from time to
time during the Funding Period in an aggregate outstanding principal amount
approximately equal to the Pre-Funded Amount. Any conveyance of Subsequent
Receivables to a Trust is subject to the satisfaction, on or before the
related transfer date (each, a "Subsequent Transfer Date"), of the following
conditions precedent, among others: (i) each such Subsequent Receivable must
satisfy the eligibility criteria specified in the related Pooling and
Servicing Agreement; (ii) the Subsequent Receivables shall have been selected
based on the criteria specified in the applicable Prospectus Supplement and
neither CTL nor the Depositor shall have selected such Subsequent Receivables
in a manner that it deems is adverse to the interests of holders of the
related Certificates; (iii) as of the respective Cutoff Date for such
Subsequent Receivables, all of the Receivables in the Trust, including the
Subsequent Receivables to be conveyed to the Trust as of such date, must
satisfy the parameters described under "The Receivables Pools" herein and "The
Receivables Pool" in the related Prospectus Supplement; (iv) any required
deposit to any Cash Collateral Account or other similar account shall have
been made; and (v) CTL must execute and deliver to the Depositor, and the
Depositor must execute and deliver to such Trust, a written assignment
conveying such Subsequent Receivables to the Depositor or such Trust, as
applicable. In addition, the conveyance of Subsequent Receivables to a Trust
is subject to the satisfaction of the following conditions subsequent, among
others, each of which must be satisfied within the applicable time period
specified in the related Prospectus Supplement: (a) the Depositor must deliver
certain opinions of counsel to the related Trustee with respect to the
validity of the conveyance of the Subsequent Receivables to the Trust; (b) the
Trustee must receive written confirmation from a firm of certified independent
public accountants that, as of the end of the period specified therein, the
Receivables in the Trust, including the Subsequent Receivables, satisfied the
parameters described under "The Receivables Pools" herein and "The Receivables
Pool" in the related Prospectus Supplement; and (c) each of the Rating
Agencies must notify the Depositor in writing that, following the conveyance
of the Subsequent
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Receivables to the Trust, each class of Certificates will have the same rating
assigned to it by such Rating Agency that it had on the Closing Date. Such
confirmation of the ratings of the Certificates may depend on factors other
than the characteristics of the Subsequent Receivables, including the
delinquency, repossession and net loss experience on the automobile, light
truck, motorcycle and van receivables in the portfolio serviced. If any such
conditions precedent or conditions subsequent are not met with respect to any
Subsequent Receivables within the time period specified in the related
Prospectus Supplement, CTL will be required under the related Purchase
Agreement and Pooling and Servicing Agreement to repurchase such Subsequent
Receivables from the related Trust, at a purchase price equal to the related
Purchase Amounts therefor. See "Risk Factors--Sales of Subsequent
Receivables."
CUSTODY OF RECEIVABLE FILES
Unless otherwise specified in the related Prospectus Supplement, CTL
initially will be appointed to act as custodian for the Receivable files of
each Trust. Unless otherwise specified in the related Prospectus Supplement,
pursuant to the related Pooling and Servicing Agreement, CTL or such other
institution will agree to hold the Receivable files on behalf of the related
Trust. Any such custodial arrangement may be terminated by the Trust or any
credit enhancer upon the terms set forth therein. See also "Risk Factors--
Insolvency Considerations."
If, through inadvertence or otherwise, any of the Receivables were sold to
another party (or a security interest therein were granted to another party)
that purchased (or took such security interest in) any of such Receivables in
the ordinary course of its business and took possession of such Receivables,
the purchaser (or secured party) would acquire an interest in the Receivables
superior to the interest of the related Trust if the purchaser (or secured
party) acquired (or took a security interest in) the Receivables for new value
and without actual knowledge of such Trust's interest. See "Risk Factors--
Perfection of Security Interests in Connection with the Transfer of
Receivables."
ACCOUNTS
Certificate Account. With respect to each Trust, the Servicer will establish
and maintain with the related Trustee one or more accounts, in the name of the
Trustee on behalf of the related Certificateholders, into which all payments
made on or in respect of the related Receivables will be deposited and from
which all distributions with respect to the related Certificates will be made
(the "Certificate Account"). The amounts on deposit in the Certificate Account
will be invested by the Trustee in Eligible Investments.
Payahead Account. If so provided in the related Prospectus Supplement, the
Servicer will establish an additional account (the "Payahead Account"), in the
name of the Trustee and for the benefit of Obligors on the Receivables, into
which, to the extent required by the Pooling and Servicing Agreement,
Payaheads on Precomputed Receivables will be deposited until such time as the
payment becomes due. Until such time as payments are transferred from the
Payahead Account to the Certificate Account, they will not constitute
collected interest or collected principal and will not be available for
distribution to Certificateholders. The Payahead Account will initially be
maintained with the Trustee. Interest earned on the balance in the Payahead
Account will be remitted to the Servicer monthly. Collections on a Precomputed
Receivable made during a Collection Period shall be applied first to any
overdue scheduled payment on such Receivable, then to the scheduled payment on
such Receivable due in such Collection Period. If any collections remaining
after the scheduled payment is made are insufficient to prepay the Precomputed
Receivable in full, then generally such remaining collections shall be
transferred to and kept in the Payahead Account until such later Collection
Period as the collections may be retransferred to the Certificate Account and
applied either to a later scheduled payment or to prepay such Receivable in
full.
Pre-Funding Account. If so provided in the related Prospectus Supplement,
the Servicer will establish and maintain an account, in the name of the
related Trustee on behalf of the related Certificateholders, into which the
Depositor will deposit the Pre-Funded Amount on the related Closing Date (the
"Pre-Funding Account"). In no
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event will the Pre-Funded Amount exceed 25% of the aggregate Certificate
Balance of the related Series of Certificates. The Pre-Funded Amount will be
used by the related Trustee to purchase Subsequent Receivables from the
Depositor from time to time during the Funding Period. The amounts on deposit
in the Pre-Funding Account during the Funding Period will be invested by the
Trustee in Eligible Investments. Any investment income received on the
Eligible Investments during a Collection Period (such amounts, net of any
related investment expenses, "Investment Income") will be included in the
interest distribution amount on the following Distribution Date. The Funding
Period, if any, for a Trust will begin on the related Closing Date and will
end on the date specified in the related Prospectus Supplement, which in no
event will be later than the date that is three calendar months after the
related Closing Date. Any amounts remaining in the Pre-Funding Account at the
end of the Funding Period will be distributed to the related
Certificateholders, in the manner and priority specified in the related
Prospectus Supplement, as a prepayment of principal of the related
Certificates.
Any other accounts to be established with respect to a Trust, including any
Cash Collateral Account or yield supplement account, will be described in the
related Prospectus Supplement.
For each Series of Certificates, funds in the Certificate Account, Pre-
Funding Account and any other account identified as such in the related
Prospectus Supplement (collectively, the "Trust Accounts") will be invested as
provided in the related Pooling and Servicing Agreement in Eligible
Investments and any related Investment Income will be distributed as described
herein and in the related Prospectus Supplement. "Eligible Investments"
generally will be limited to investments acceptable to the Rating Agencies as
being consistent with the rating of the related Certificates. Except as may be
otherwise indicated in the applicable Prospectus Supplement, Eligible
Investments will include (i) direct obligations of, and obligations guaranteed
by, the United States of America, the Federal National Mortgage Association,
or any instrumentality of the United States of America; (ii) demand and time
deposits in or similar obligations of any depository institution or trust
company (including the Trustee or any agent of the Trustee, acting in their
respective commercial capacities) rated P-1 by Moody's or A-1+ by Standard &
Poor's (an "Approved Rating") or any other deposit which is fully insured by
the FDIC; (iii) repurchase obligations with respect to any security issued or
guaranteed by an instrumentality of the United States of America entered into
with a depository institution or trust company having an Approved Rating
(acting as principal); (iv) short-term corporate securities bearing interest
or sold at a discount issued by any corporation incorporated under the laws of
the United States of America or any State, the short-term unsecured
obligations of which have an Approved Rating, or higher, at the time of such
investment; (v) commercial paper having an Approved Rating at the time of such
investment; (vi) a guaranteed investment contract issued by any insurance
company or other corporation acceptable to the Rating Agencies; (vii)
interests in any money market fund having a rating of Aaa by Moody's or AAAm
by Standard & Poor's; and (viii) any other investment approved in advance in
writing by the Rating Agencies.
Except as described herein or in the related Prospectus Supplement, Eligible
Investments will be limited to obligations or securities that mature on or
before the date of the next scheduled distribution to Certificateholders of
such Series; provided, however, that each Pooling and Servicing Agreement will
generally permit the investment of funds in any Cash Collateral Account or
similar type of credit enhancement account to be invested in Eligible
Investments without the limitation that such Eligible Investments mature not
later than the business day prior to the next succeeding Distribution Date if
(i) the Servicer obtains a liquidity facility or similar arrangement with
respect to such Cash Collateral Account or other account and (ii) each rating
agency that initially rated the related Certificates confirms in writing that
the ratings of such Certificates will not be lowered or withdrawn as a result
of eliminating or modifying such limitation.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution has a credit rating from
each Rating Agency in one of its generic rating categories that
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signifies investment grade. "Eligible Institution" means, with respect to a
Trust, (a) the corporate trust department of the related Trustee or (b) a
depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank) (i) that has either (A) a long-term
unsecured debt rating of at least Baa3 from Moody's Investor's Service, Inc.
or (B) a long-term unsecured debt rating, a short-term unsecured debt rating
or a certificate of deposit rating acceptable to the Rating Agencies and (ii)
whose deposits are insured by the FDIC.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables and will, consistent with the related Pooling and
Servicing Agreement, follow such collection procedures as it follows with
respect to comparable automotive installment contracts that it owns or
services for others. The Servicer will continue to follow such normal
collection practices and procedures as it deems necessary or advisable to
realize upon any Receivables with respect to which the Servicer determines
that eventual payment in full is unlikely. The Servicer may sell the Financed
Vehicle securing such Receivables at a public or private sale, or take any
other action permitted by applicable law.
Consistent with its normal procedures, the Servicer may, in its discretion,
arrange with the Obligor on a Receivable to extend or modify the payment
schedule; if, however, the extension of a payment schedule causes a Receivable
to remain outstanding on the Final Scheduled Maturity Date the Servicer will
purchase such Receivable at the Purchase Amount as of the last day of the
Collection Period preceding such Final Scheduled Distribution Date. In
addition, unless otherwise provided in the related Prospectus Supplement, the
Servicer will be obligated under each Pooling and Servicing Agreement to
purchase any Receivable at the Purchase Amount if (i) among other things, the
Servicer reduces the Contract Rate, reduces the amount of the scheduled
monthly payments or reduces the amount financed or fails to maintain a
perfected security interest in the related Financed Vehicle and (ii) the
interest of the Certificateholders in such Receivable is materially and
adversely affected by such action or failure to act of the Servicer. The
Servicer's purchase obligation will constitute the sole remedy available to
the related Certificateholders or Trustee for any such modification of a
Contract.
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments (from
whatever source) on and all proceeds of the related Receivables collected
during a Collection Period into the related Certificate Account not later than
two business days after receipt thereof. However, at any time that and for so
long as (i) CTL is the Servicer, (ii) no Event of Default shall have occurred
and be continuing with respect to the Servicer and (iii) each other condition
to making deposits less frequently than daily as may be specified by the
Rating Agencies or set forth in the related Prospectus Supplement is
satisfied, the Servicer will not be required to deposit such amounts into the
Certificate Account until on or before the applicable Distribution Date.
Pending deposit into the Certificate Account, collections may be invested by
the Servicer at its own risk and for its own benefit and will not be
segregated from its own funds. If the Servicer were unable to remit such
funds, Certificateholders might incur a loss. To the extent set forth in the
related Prospectus Supplement, the Servicer may, in order to satisfy the
requirements described above, obtain a letter of credit or other security for
the benefit of the related Trust to secure timely remittances of collections
on the related Receivables and payment of the aggregate Purchase Amounts with
respect to Receivables purchased by the Servicer.
Payaheads on Precomputed Receivables will be transferred from the
Certificate Account and deposited into the Payahead Account for subsequent
transfer to the Certificate Account, as described above under "--Accounts."
ADVANCES
If a Receivable is delinquent more than 30 days at the end of a Collection
Period, the Servicer will make an Advance in the amount of 30 days of interest
due on such Receivable, but only to the extent that the Servicer, in
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its sole discretion, expects to recoup the Advance from subsequent collections
on the Receivable or from withdrawals from any Cash Collateral Account or
other form of credit enhancement. The Servicer will deposit Advances in the
Certificate Account on or prior to the date specified therefor in the related
Prospectus Supplement. If the Servicer determines that reimbursement of an
Advance from subsequent payments on or with respect to the related Receivable
is unlikely, the Servicer may recoup such Advance from insurance proceeds,
collections made on other Receivables or from any other source specified in
the related Prospectus Supplement.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer will be entitled to receive a fee with respect to each Trust
(the "Servicing Fee"), equal to one percent (1.00%) per annum (the "Servicing
Fee Rate"), payable monthly at one-twelfth the annual rate, of the related
aggregate Pool Balance. The Servicer also will collect and retain any late
fees, prepayment charges, other administrative fees or similar charges allowed
by applicable law with respect to the Receivables and will be entitled to
reimbursement from each Trust for certain liabilities.
The Servicing Fee will compensate the Servicer for performing the functions
of a third-party servicer of automotive receivables as an agent for the
related Trust, including collecting and posting all payments, making Advances,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, and overseeing the
collateral in cases of Obligor default. The Servicing Fee will also compensate
the Servicer for administering the related Receivables Pool, including
accounting for collections and furnishing monthly and annual statements to the
related Trustee with respect to distributions, and generating federal income
tax information for such Trust and for the related Certificateholders. The
Servicing Fee also will reimburse the Servicer for certain taxes, accounting
fees, outside auditor fees, data processing costs, and other costs incurred in
connection with administering the applicable Receivables Pool.
DISTRIBUTIONS
With respect to each Series of Certificates, beginning on the Distribution
Date specified in the related Prospectus Supplement, distributions of
principal and interest (or, where applicable, of interest only or principal
only) on each class of Certificates entitled thereto will be made by the
related Trustee to the related Certificateholders. The timing, calculation,
allocation, order, source and priorities of, and requirements for, all
distributions to the holders of each class of Certificates will be set forth
in the related Prospectus Supplement.
With respect to each Trust, collections on or with respect to the related
Receivables will be deposited into the related Certificate Account for
distribution to the related Certificateholders on each Distribution Date to
the extent and in the priority provided in the related Prospectus Supplement.
Credit enhancement, such as a Cash Collateral Account or yield supplement
account or other arrangement, may be available to cover shortfalls in the
amount available for distribution on such date to the extent specified in the
related Prospectus Supplement. As more fully described in the related
Prospectus Supplement, and unless otherwise specified therein, distributions
in respect of principal of a class of Certificates of a Series will be
subordinate to distributions in respect of interest on such class, and
distributions in respect of one or more classes of Certificates of a Series
may be subordinate to payments in respect of other classes of Certificates.
Distributions of principal on the Certificates of a Series may be based on the
amount of principal collected or due, or the amount of realized losses
incurred, in a Collection Period.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of any credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Certificates of a Series will be set forth in the related Prospectus
Supplement. To the extent provided in the related Prospectus Supplement,
credit or cash flow enhancement may be in the form of subordination of one or
more classes of Certificates, Cash Collateral Accounts, reserve accounts,
yield supplement accounts, spread accounts, letters of credit, surety bonds,
insurance policies, over-collateralization, credit or liquidity facilities,
guaranteed investment contracts, swaps or other interest rate
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protection agreements, repurchase obligations, other agreements with respect
to third-party payments or other support, cash deposits, or such other
arrangements as may be described in the related Prospectus Supplement, or any
combination of the foregoing. If specified in the applicable Prospectus
Supplement, credit or cash flow enhancement for a class of Certificates may
cover one or more other classes of Certificates of the same Series, and credit
enhancement for a Series of Certificates may cover one or more other Series of
Certificates.
The existence of a Cash Collateral Account or other form of credit
enhancement for the benefit of any class or Series of Certificates is intended
to enhance the likelihood of receipt by the Certificateholders of such class
or Series of the full amount of principal and interest due thereon and to
decrease the likelihood that such Certificateholders will experience losses.
Unless otherwise specified in the related Prospectus Supplement, the credit
enhancement for a class or Series of Certificates will not provide protection
against all risks of loss and will not guarantee repayment of all principal
and interest thereon. If losses occur which exceed the amount covered by such
credit enhancement or which are not covered by such credit enhancement,
Certificateholders will bear their allocable share of such losses, as
described in the related Prospectus Supplement. In addition, if a form of
credit enhancement covers more than one Series of Certificates,
Certificateholders of any such Series will be subject to the risk that such
credit enhancement may be exhausted by the claims of Certificateholders of
other Series.
Cash Collateral Account. If so provided in the related Prospectus
Supplement, pursuant to the related Pooling and Servicing Agreement the
Depositor will establish an account (a "Cash Collateral Account") for a Series
or class or classes of Certificates, which will be maintained with the related
Trustee. Unless otherwise provided in the related Prospectus Supplement, a
Cash Collateral Account will be funded by an initial deposit by the Depositor
on the Closing Date in the amount set forth in the related Prospectus
Supplement and, if the related Series has a Funding Period, may also be funded
on each Subsequent Transfer Date to the extent described in the related
Prospectus Supplement. As further described in the related Prospectus
Supplement, the amount on deposit in the Cash Collateral Account may be
increased or reinstated on each Distribution Date, to the extent described in
the related Prospectus Supplement, by the deposit thereto of the amount of
collections on the related Receivables remaining on such Distribution Date
after the payment of all other required payments and distributions on such
date. The related Prospectus Supplement will describe the circumstances under
which and the manner in which distributions may be made out of any such Cash
Collateral Account, either to holders of the Certificates covered thereby or
to the Depositor or to any other entity.
EVIDENCE AS TO COMPLIANCE
Each Pooling and Servicing Agreement will provide that a firm of independent
public accountants will furnish annually to the related Trustee a statement as
to compliance by the Servicer during the preceding twelve months with certain
standards relating to the servicing of the Receivables.
Each Pooling and Servicing Agreement will also provide for delivery to the
related Trustee each year of a certificate signed by an officer of the
Servicer stating that the Servicer has fulfilled its obligations under the
related Pooling and Servicing Agreement throughout the preceding twelve months
or, if there has been a default in the fulfillment of any such obligation,
describing each such default. The Servicer has agreed or will agree to give
each Trustee notice of Events of Defaults under the related Pooling and
Servicing Agreement. Copies of the foregoing statements and certificates may
be obtained by Certificateholders by a request in writing addressed to the
related Trustee at the Corporate Trust Office for such Trustee specified in
the related Prospectus Supplement.
CERTAIN MATTERS REGARDING THE SERVICER
Each Pooling and Servicing Agreement will provide that CTL may not resign
from its obligations and duties as Servicer thereunder, except upon
determination that CTL's performance of such duties is no longer permissible
under applicable law. Under certain circumstances, CTL may transfer its
obligations and duties as Servicer to a qualified affiliate of Bay View. No
such assignment or resignation will become effective until the
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related Trustee or a successor servicer has assumed CTL's servicing
obligations and duties under the related Pooling and Servicing Agreement.
Each Pooling and Servicing Agreement will further provide that neither the
Servicer nor any of its directors, officers, employees and agents will be
under any liability to the related Trust or Certificateholders for taking any
action or for refraining from taking any action pursuant to the related
Pooling and Servicing Agreement or for errors in judgment; provided, however,
that neither the Servicer nor any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of the Servicer's duties or by
reason of reckless disregard of its obligations and duties thereunder. In
addition, each Pooling and Servicing Agreement will provide that the Servicer
is under no obligation to appear in, prosecute or defend any legal action that
is not incidental to its servicing responsibilities under such Pooling and
Servicing Agreement and that, in its opinion, may cause it to incur any
expense or liability.
Under the circumstances specified in each Pooling and Servicing Agreement,
any entity into which CTL may be merged or consolidated, or any entity
resulting from any merger or consolidation to which CTL is a party, or any
entity succeeding to the indirect automobile financing or receivable servicing
business of CTL, which corporation or other entity assumes the obligations of
the Servicer, will be the successor to the Servicer under the related Pooling
and Servicing Agreement.
CTL has a contract with Norwest Financial Inc., pursuant to which Norwest
Financial Inc. will provide CTL data processing and communication system
services through October, 2001.
EVENTS OF DEFAULT
Unless otherwise provided in the related Prospectus Supplement, "Events of
Default" under each Pooling and Servicing Agreement will consist of: (i) any
failure by the Servicer or CTL to deliver to the related Trustee for
distribution to the related Certificateholders any required payment, which
failure continues unremedied for five business days after discovery by an
officer of the Servicer or after written notice to the Servicer of such
failure from the Trustee or holders of the related Certificates evidencing not
less than 25% of the aggregate Certificate Balance (or notional principal
amount, if applicable); (ii) any failure by the Servicer, CTL or the Depositor
duly to observe or perform in any material respect any covenant or agreement
in the related Pooling and Servicing Agreement, Certificates or Purchase
Agreement, which failure materially and adversely affects the rights of the
related Certificateholders and which continues unremedied for 60 days after
written notice of such failure is given (1) to the Servicer, CTL or the
Depositor, as the case may be, by the related Trustee or (2) to the Servicer,
CTL or the Depositor, as the case may be, and to the related Trustee by
holders of the related Certificates evidencing not less than 25% of the
related Certificate Balance (or notional principal amount, if applicable); and
(iii) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings with respect to the Servicer
and certain actions by the Servicer indicating its insolvency, reorganization
pursuant to bankruptcy proceedings or inability to pay its obligations.
RIGHTS UPON EVENT OF DEFAULT
Unless otherwise provided in the related Prospectus Supplement, as long as
an Event of Default under the related Pooling and Servicing Agreement remains
unremedied, the related Trustee or holders of Certificates of the related
Series evidencing not less than 25% of the Certificate Balance (or notional
principal amount, if applicable) may terminate all the rights and obligations
of the Servicer under such Pooling and Servicing Agreement, whereupon a
successor Servicer appointed by the related Trustee or such Trustee will
succeed to all the responsibilities, duties and liabilities of the Servicer
under such Pooling and Servicing Agreement and will be entitled to similar
compensation arrangements, provided, however, that if the Trustee becomes the
successor Servicer it will not be subject to all of the indemnification
obligations of the Servicer. In the event that the related Trustee is
unwilling or unable to act as successor to the Servicer, such Trustee may
appoint, or may petition a court of competent jurisdiction to appoint a
successor with assets of at least $50,000,000 and whose regular business
includes the servicing of automotive receivables. The related Trustee may
arrange for compensation to
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be paid to such successor Servicer, which in no event may be greater than the
servicing compensation paid to the Servicer under the related Pooling and
Servicing Agreement. See "Risk Factors--Insolvency Considerations."
WAIVER OF PAST DEFAULTS
Unless otherwise provided in the related Prospectus Supplement, holders of
Certificates evidencing not less than a majority of the related aggregate
Certificate Balance (or notional principal amount, if applicable) may, on
behalf of all such Certificateholders, waive any default by the Servicer in
the performance of its obligations under the related Pooling and Servicing
Agreement and its consequences, except a default in making any required
deposits to or payments from any Account in accordance with the Pooling and
Servicing Agreement. No such waiver will impair the Certificateholders' rights
with respect to subsequent Events of Default.
AMENDMENT
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement may be amended from time to time by the
Depositor, the Servicer and the related Trustee, without the consent of the
related Certificateholders, to cure any ambiguity, correct or supplement any
provision therein that may be inconsistent with other provisions therein, or
to make any other provisions with respect to matters or questions arising
under such Pooling and Servicing Agreement that are not inconsistent with the
provisions of the Pooling and Servicing Agreement; provided that such action
shall not, in the opinion of counsel satisfactory to the related Trustee,
materially and adversely affect the interests of any related
Certificateholder. Each Pooling and Servicing Agreement may also be amended by
the Depositor, the Servicer and the related Trustee with the consent of the
holders of the related Certificates evidencing not less than 51% of the
related aggregate Certificate Balance (and notional principal amount, if
applicable) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Pooling and Servicing
Agreement or of modifying in any manner the rights of such Certificateholders;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on or in respect of the related Receivables or distributions that are
required to be made for the benefit of such Certificateholders or (ii) reduce
the aforesaid percentage of the Certificate Balance of such Series that is
required to consent to any such amendment, without the consent of the holders
of all of the outstanding Certificates of such Series. Unless otherwise
provided in the related Prospectus Supplement, any provision in a Pooling and
Servicing Agreement that imposes unlimited liability on the holder of a Class
IC Certificate and provides for the termination of the related Trust upon the
occurrence of an "Insolvency Event" (as described in the related Prospectus
Supplement) with respect to such holder of the Class IC Certificate, shall not
be amended without the unanimous consent of the Trustee and all holders of
outstanding Certificates of such Series. No amendment of a Pooling and
Servicing Agreement shall be permitted unless an opinion of counsel is
delivered to the Trustee to the effect that such amendment will not adversely
affect the tax status of the Trust.
TERMINATION
Unless otherwise specified in the related Prospectus Supplement, the
obligations of the Servicer, the Depositor and the related Trustee pursuant to
the related Pooling and Servicing Agreement will terminate upon the earliest
to occur of (i) the maturity or other liquidation of the last Receivable in
the related Receivables Pool and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to the
related Certificateholders of all amounts required to be paid to them pursuant
to the Pooling and Servicing Agreement and (iii) the occurrence of certain
Insolvency Events, to the extent set forth in the related Prospectus
Supplement.
In order to avoid excessive administrative expenses, the Servicer will be
permitted subject to any conditions specified in the related Prospectus
Supplement and at its option, to purchase from each Trust or to cause such
Trust to sell all remaining Receivables in the related Receivables Pool as of
the end of any Collection Period, if the Certificate Balance as of the
Distribution Date following such Collection Period would be less than or equal
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to 10% of the initial aggregate Certificate Balance, at a purchase price equal
to the fair market value of such Receivables, but not less than the sum of (x)
the outstanding Pool Balance and (y) accrued and unpaid interest on such
amount computed at a rate equal to the weighted average Contract Rate, minus
any amount representing payments received on the Receivables and not yet
applied to reduce the principal balance thereof or interest related thereto.
If and to the extent provided in the related Prospectus Supplement, the
related Trustee may, within ten days following a Distribution Date as of which
the Pool Balance is equal to or less than 10% of the original Pool Balance,
solicit bids for the purchase of the Receivables remaining in such Trust, in
the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust
will be sold to the highest bidder at a purchase price equal to the fair
market value of such Receivables, but not less than the sum of (x) the
outstanding Pool Balance and (y) accrued and unpaid interest on such amount
computed at a rate equal to the weighted average Contract Rate, minus any
amount representing payments received on the Receivables and not yet applied
to reduce the principal balance thereof or interest related thereto.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTERESTS IN VEHICLES
Installment sale contracts such as those included in the Receivables
evidence the credit sale of automobiles, light trucks, motorcycles and vans by
dealers to obligors; the contracts and the installment loan and security
agreements also constitute personal property security agreements and include
grants of security interests in the vehicles under the UCC. Perfection of
security interests in the vehicles is generally governed by the motor vehicle
registration laws of the state in which the vehicle is located. In all of the
States where CTL currently acquires or originates Receivables, a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title. A majority of the Receivables are
currently originated in California and Texas. Unless otherwise specified in
the related Prospectus Supplement, with respect to the Receivables, the lien
is or will be perfected in the name of CTL. Each Receivable prohibits the sale
or transfer of the Financed Vehicle without the lienholder's consent.
Pursuant to each Purchase Agreement, CTL will assign its security interests
in the Financed Vehicles to the Depositor along with the Receivables. Pursuant
to each Pooling and Servicing Agreement, the Depositor will assign its
security interests in the Financed Vehicles to the related Trustee along with
the Receivables. Because of the administrative and quality control concerns
related to the retitling of a large amount of certificates of title and
related fees and expenses of each state's Department of Motor Vehicles,
neither the Depositor nor the related Trustee will amend any certificate of
title to identify itself as the secured party.
In most states, including California, an assignment such as that under a
Pooling and Servicing Agreement should be an effective conveyance of a
security interest without amendment of any lien noted on a vehicle's
certificate of title, and the assignee succeeds thereby to the assignor's
rights as secured party. In certain other states, the laws governing
certificates of title are silent on the question of the effect of an
assignment on the continued validity and perfection of a security interest in
vehicles. However, with respect to security interests perfected by a central
filing, the UCC in these states provides that a security interest continues to
be valid and perfected even though the security interest has been assigned to
a third party and no amendments or other filings are made to reflect the
assignment. An official comment to the UCC states that this rule should
control a security interest in a vehicle which is perfected by the notation of
the lien on the certificate of title. Although the comment does not have the
force of law, official comments are typically given substantial weight by the
courts.
Other states, including Texas, have statutory provisions that address or
could be interpreted as addressing assignments. However, nearly all of these
statutory provisions either do not require compliance with the procedure
outlined to insure the continued validity and perfection of the lien or are
ambiguous (including Texas) on the issue of whether the procedure must be
followed. Under the official comment noted above, if these procedures for
noting an assignee's name on a certificate of title are determined to be
merely permissive in nature, the procedures would not have to be followed as a
condition to the continued validity and perfection of the security interest.
By not identifying the Trust as the secured party on the certificate of
title, the security interest of the Trust in the vehicle could be defeated
through fraud or negligence. In the absence of fraud or forgery by the vehicle
owner or CTL, or administrative error by state or local agencies, the notation
of CTL's lien on the certificates should be sufficient to protect the Trust
against the right of subsequent purchasers of a vehicle or subsequent lenders
who take a security interest in a vehicle securing a Receivable. If there are
any vehicles as to which CTL failed to obtain a perfected security interest,
its security interest would be subordinate to, among others, subsequent
purchasers of the vehicles and holders of perfected security interests. Such a
failure, however, would constitute a breach of warranties under the related
Pooling and Servicing Agreement and Purchase Agreement and would create an
obligation of CTL to repurchase the related Receivable, unless such breach
were cured in a timely manner. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables."
Under the laws of most states, including California and Texas, the perfected
security interest in a vehicle continues for four months after a vehicle is
moved to a state other than the state which issued the certificate of title
and thereafter until the vehicle owner re-registers the vehicle in the new
state. A majority of states, including
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California and Texas, require surrender of a certificate of title to re-
register a vehicle. Since CTL will have its lien noted on the certificates of
title and the Servicer will retain possession of the certificates issued by
most states in which Receivables were or will be originated, the Servicer
would ordinarily learn of an attempt at re-registration through the request
from the obligor to surrender possession of the certificate of title or would
receive notice of surrender from the state of re-registration since the
security interest would be noted on the certificate of title. Thus, the
secured party would have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration
could defeat perfection.
In the ordinary course of servicing receivables, the Servicer takes steps to
effect re-perfection upon receipt of notice of re-registration or information
from the obligor as to relocation. Similarly, when an obligor sells a vehicle,
the Servicer must surrender possession of the certificate of title or will
receive notice as a result of CTL's lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related Receivable before
release of the lien. Under each Pooling and Servicing Agreement, the Servicer
is obligated to take appropriate steps, at its own expense, to maintain
perfection of security interests in the Financed Vehicles.
Under the laws of most states, including California and Texas, liens for
repairs performed on a motor vehicle and liens for unpaid taxes would take
priority over even a perfected security interest in a Financed Vehicle. In
some states, a perfected security interest in a Financed Vehicle may take
priority over liens for repairs.
CTL will represent and warrant in each Purchase Agreement and Pooling and
Servicing Agreement that, as of the date of issuance of the Certificates, each
security interest in a Financed Vehicle is or will be prior to all other
present liens (other than tax liens and liens that arise by operation of law)
upon and security interests in such Financed Vehicle. However, liens for
repairs or taxes could arise at any time during the term of a Receivable. No
notice will be given to the Trustee or Certificateholders in the event such a
lien arises.
REPOSSESSION
In the event of a default by vehicle purchasers, the holder of a retail
installment sale contract or an installment loan and security agreement has
all of the remedies of a secured party under the UCC, except where
specifically limited by other state laws. The remedy employed by the Servicer
in most cases of default is self-help repossession and is accomplished simply
by taking possession of the Financed Vehicle. The self-help repossession
remedy is available under the UCC in most of the states, including California
and Texas, in which Receivables have been or will be originated as long as the
repossession can be accomplished without a breach of the peace.
In cases where the obligor objects or raises a defense to repossession, or
if otherwise required by applicable state law, a court order must be obtained
from the appropriate state court. The vehicle must then be repossessed in
accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by an obligor, some jurisdictions (not including
California or Texas) require that the obligor be notified of the default and
be given a time period within which the obligor may cure the default prior to
repossession. The written terms of the Receivables, however, may require such
notice. Generally, this right of reinstatement may be exercised on a limited
number of occasions in any one-year period.
The UCC and other state laws require the secured party to provide an obligor
with reasonable notice of the date, time and place of any public sale and/or
the date after which any private sale of the collateral may be held. The
obligor generally has the right to redeem the collateral prior to actual sale
by paying the secured party the unpaid principal balance of the obligation
plus reasonable expenses for repossessing, holding, and preparing the
collateral for disposition and arranging for its sale, and, to the extent
provided in the related retail installment sale contract, and, as permitted by
law, reasonable attorneys' fees.
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DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. If the net proceeds from resale do not cover the full amount of
the indebtedness, a deficiency judgment may be sought. However, the deficiency
judgment would be a personal judgment against the obligor for the shortfall,
and a defaulting obligor can be expected to have very little capital or
sources of income available following repossession. Therefore, in many cases,
it may not be useful to seek a deficiency judgment or, if one is obtained, it
may be settled at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and all
indebtedness, there is a surplus of funds. In that case, the UCC requires the
lender to remit the surplus to any holder of a lien with respect to the
vehicle or if no such lienholder exists, the UCC requires the lender to remit
the surplus to the former owner of the vehicle.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in
consumer finance. These laws include the Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code and state motor vehicle retail installment sales acts,
and other similar laws. Also, state laws impose finance charge ceilings and
other restrictions on consumer transactions and require contract disclosures
in addition to those required under federal law. Those requirements impose
specific statutory liabilities upon creditors who fail to comply with their
provisions. In some cases, this liability could affect an assignee's ability
to enforce consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule"), the provisions of which are generally duplicated by the
Uniform Consumer Credit Code, other state statutes, or the common laws in
certain states, has the effect of subjecting a seller (and certain related
lenders and their assignees) in a consumer credit transaction and any assignee
of the seller to all claims and defenses that the obligor in the transaction
could assert against the seller of the goods. Liability under the FTC Rule is
limited to the amounts paid by the obligor under the contract, and the holder
of the contract may also be unable to collect any balance remaining due
thereunder from the obligor. Most of the Receivables will be subject to the
requirements of the FTC Rule. Accordingly, the Trustee, as holder of the
Receivables, will be subject to any claims or defenses that the purchaser of
the related financed vehicle may assert against the seller of the vehicle.
Such claims are limited to a maximum liability equal to the amounts paid by
the Obligor on the Receivable.
Under most state motor vehicle dealer licensing laws, including California
and Texas, dealers of motor vehicles are required to be licensed to sell motor
vehicles at retail sale. In addition, with respect to used vehicles, the
Federal Trade Commission's Rule on Sale of Used Vehicles requires that all
sellers of used vehicles prepare, complete and display a "Buyer's Guide" which
explains the warranty coverage for such vehicles. Furthermore, Federal
Odometer Regulations promulgated under the Motor Vehicle Information and Cost
Savings Act requires that all sellers of used vehicles furnish a written
statement signed by the seller certifying the accuracy of the odometer
reading. If a seller is not properly licensed or if either a Buyer's Guide or
Odometer Disclosure Statement was not provided to the purchaser of the related
financed vehicle, the obligor may be able to assert a defense against the
seller of the vehicle. If an Obligor were successful in asserting any such
claim or defense, such claim or defense would constitute a breach of CTL's
representations and warranties under each Purchase Agreement and Pooling and
Servicing Agreement and would create an obligation of CTL to make certain
indemnities and repurchase the Receivable unless such breach were cured in a
timely manner. See "Description of the Transfer and Servicing Agreements--Sale
and Assignment of Receivables."
Courts have applied general equitable principles to secured parties pursuing
repossession or litigation involving deficiency balances. These equitable
principles may have the effect of relieving an obligor from some or all of the
legal consequences of a default.
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In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and resale
by the creditor do not involve sufficient state action to afford
constitutional protection to consumers.
CTL will represent and warrant in each Purchase Agreement that each
Receivable complies with all requirements of law in all material respects.
Accordingly, if an Obligor has a claim against a Trust for violation of any
law and such claim materially and adversely affects the Trust's interest in a
Receivable, such violation would constitute a breach of CTL's representations
and warranties under the Purchase Agreement and would create an obligation of
CTL to repurchase such Receivable unless the breach were cured. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
lender from repossessing an automobile, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
automobile at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion of the anticipated material United States
federal income tax consequences of the purchase, ownership and disposition of
Certificates, to the extent it relates to matters of law or legal conclusions
with respect to the Trust being classified as a partnership represents the
opinion of Silver, Freedman & Taff, L.L.P., counsel to the Depositor, subject
to the assumptions or qualifications set forth herein. The discussion is
directed to investors who will hold the Certificates as "capital assets"
within the meaning of Section 1221 of the Internal Revenue Code of 1996, as
amended (the "Code") and does not purport to discuss all federal income taxes
that may be applicable to the individual circumstances of particular investors
which, or categories of holders (such as insurance companies, regulated
investment companies or dealers in securities) who, may be subject to special
rules under the Code. Further, the authorities on which this discussion, and
the opinion as to partnership classification referred to below, are based are
subject to change or potential differing interpretations which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service (the "IRS") with respect to
any of the United States federal income tax consequences discussed below and
no assurance can be given that the IRS will not take contrary positions.
Taxpayers and preparers of tax returns should be aware that under applicable
Treasury regulations a provider of advice on specific issues of law is not
considered an income tax return preparer unless the advice (i) is given with
respect to events that have occurred at the time the advice is rendered and is
not given with respect to the consequences of contemplated actions, and (ii)
is directly relevant to the determination of an entry on a tax return.
Accordingly, prospective investors should consult their tax advisors and tax
return preparers regarding the preparation of any item on a tax return, even
where the anticipated tax treatment is discussed herein. In addition to the
United States federal income tax consequences described herein, prospective
investors are advised to consider the state, local, foreign and other tax
consequences that may be applicable to them in connection with the purchase,
ownership and disposition of Certificates. Certificate Owners are advised to
consult their tax advisors concerning all tax consequences applicable to them
(including federal, state, local, foreign or other tax consequences) arising
from the purchase, ownership and disposition of Certificates.
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Prior to the issuance of any Certificates by each Trust, an opinion of
counsel to the Depositor will be delivered as to whether the Trust will be
classified as a partnership or as a grantor trust for United States federal
income tax purposes. The tax opinion as to partnership classification will be
the same or substantially the same as the Silver, Freedman & Taff, L.L.P.
opinion set forth under the heading "Tax Characterization of the Trust as a
Partnership" in this Prospectus. Silver, Freedman & Taff, L.L.P. has agreed to
deliver a tax opinion, based upon the assumption that current tax laws and
interpretations thereof shall continue in full force and effect without
modification, to the effect that if the Trust is not classified as a
partnership for tax purposes, it will be classified as a grantor trust for
United States federal income tax purposes. For purposes of the discussion set
forth herein, references to the Trust, the Certificates and related terms,
parties and documents shall be deemed to refer, unless otherwise specified
herein, to each Trust and Certificates and the related terms, parties and
documents applicable to such Trust.
As discussed below, the United States federal income tax consequences to
Certificate Owners will vary depending on whether the Trust is treated as a
partnership or whether the Trust will be treated as a grantor trust under the
Code. The Prospectus Supplement for each Series of Certificates will specify
whether the Trust will be treated as a partnership (not taxable as a
corporation) or a grantor trust. In addition, a copy of the tax opinion of
Silver, Freedman & Taff, L.L.P., counsel to the Depositor, with respect to
each Trust will be filed by the Depositor with the Commission on a Current
Report on Form 8-K within 15 days after the Closing Date for the Series of
Certificates issued by such Trust.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
In the opinion of Silver, Freedman & Taff, L.L.P., under current law, the
Trust will not be classified as an association (or publicly traded
partnership) taxable as a corporation for United States federal income tax
purposes. This opinion is based on the assumption that the terms of the
Pooling and Servicing Agreement and related documents will be complied with,
and that (i) the Trust will make a proper election not to be treated as an
association taxable as a corporation pursuant to the final "check-the-box"
regulations issued by the Department of the Treasury on December 17, 1996 and
effective as of January 1, 1997, by timely filing Form 8832--Entity
Classification Election, with the appropriate IRS service center as further
provided in the Pooling and Servicing Agreement, and (ii) the nature of the
income of the Trust will exempt it from the rule that certain publicly traded
partnerships are taxable as corporations.
As a result of the Trust's tax classification, each Certificate Owner will
be required to include in its gross income its pro rata share of the original
issue discount accrued with respect to the Receivables whether or not cash is
actually distributed to the Certificate Owner. See "--Discussion of Tax
Consequences to Holders of the Certificates--Discount and Premium" and "Trusts
Treated As Grantor Trusts--Stripped Bonds and Stripped Coupons--Original Issue
Discount."
DISCUSSION OF TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of the Trust as a Partnership. The Depositor and the Servicer will
agree, and the related Certificate Owners will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificate Owners (including
the holder of the Class IC Certificate). Although the proper characterization
of the arrangement involving the Trust, the Certificates, the Depositor and
the Servicer is not certain because there is no authority on transactions
closely comparable to that contemplated herein, the related Pooling and
Servicing Agreement will provide that an election to treat the Trust as a
partnership shall be made under the "check-the-box" procedure described above
under "Tax Characterization of the Trust as a Partnership."
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Partnership Taxation. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificate Owner will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the related Receivables
(including appropriate adjustments for market discount, original issue discount
("OID") and bond premium) and any gain upon collection or disposition of such
Receivables. The Trust's deductions will consist primarily of servicing and
other fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (i.e., the
Pooling and Servicing Agreement and related documents). The Pooling and
Servicing Agreement will provide, in general, that the Certificate Owners will
be allocated taxable income of the Trust for each month equal to the sum of:
(i) the interest that accrues on the Certificates in accordance with their
terms for such month, including interest accruing at the related Pass-Through
Rate for such month and interest, if any, on amounts previously due on the
Certificates but not yet distributed; (ii) any Trust income attributable to
discount on the related Receivables that corresponds to any excess of the
principal amount of the Certificates over their initial issue price; (iii) any
other amounts of income payable to the Certificate Owners for such month; and
(iv) in the case of an individual, such Certificate Owner's share of income
corresponding to the miscellaneous itemized deductions described in the next
paragraph. Such allocation will be reduced by any amortization by the Trust of
premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. Unless otherwise provided in the
related Prospectus Supplement, all remaining taxable income of the Trust will
be allocated to the Class IC Certificateholder. In the event the Trust issues
interest-only Class I Certificates, the amount allocated to such Certificate
Owners will equal the excess of (i) the Class I Pass-Through Rate times the
Notional Principal Amount for such month over (ii) the portion of the amount
distributed with respect to the Class I Certificates for such month that would
constitute a return of basis if the Class I Certificates constituted an
instrument described in Section 860G(a)(1)(B)(ii) of the Code, applying the
principles of Section 1272(a)(6) of the Code and employing the constant yield
method of accrual (utilizing the appropriate prepayment assumption); provided,
that no negative accruals shall be permitted, and, provided further, that other
deductions derived by the Trust equal to the aggregate remaining capital
account balances of the Class I Certificate Owners will be allocated to the
Class I Certificates in proportion to the respective capital account balances
immediately before the final redemption.
An individual taxpayer's share of expenses of the Trust (including fees to
the Servicer, but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or
in part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust. Any net loss of the Trust will be allocated first to the Class IC
Certificateholder to the extent of its adjusted capital account and then to the
other Certificate Owners in the priorities set forth in the Pooling and
Servicing Agreement to the extent of their respective adjusted capital
accounts, and thereafter to the Class IC Certificateholder.
The Trust intends to make all calculations relating to market discount income
and amortization of premium with respect to both Simple Interest Receivables
and Precomputed Receivables on an aggregate basis rather than a Receivable-by-
Receivable basis. If the IRS were to require that such calculations be made
separately for each Receivable, the Trust might be required to incur additional
expense, but it is believed that there would not be a material adverse effect
on Certificate Owners.
Discount and Premium. Except as otherwise provided in the related Prospectus
Supplement, it is believed that the Receivables were not issued with OID, and,
therefore, the Trust should not have OID income. However, the purchase price
paid by the Trust for the related Receivables may be greater or less than the
remaining principal balance of the Receivables at the time of purchase. If so,
the Receivables will have been acquired at a premium or discount, as the case
may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a Receivable-by-
Receivable basis.)
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If the Trust acquires the related Receivables at a market discount or
premium, it will elect to include any such discount in income currently as it
accrues over the life of such Receivables or to offset any such premium against
interest income on such Receivables. As indicated above, a portion of such
market discount income or premium deduction may be allocated to Certificate
Owners.
Section 708 Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a 12-
month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data. Under proposed Treasury regulations, the foregoing
treatment would be replaced by new rules under which a 50% or greater transfer,
as described above, would cause a deemed contribution of the assets of the
Trust to a new partnership in exchange for interests in the Trust. Such
interests in a new partnership would be deemed distributed to the partners of
the Trust in liquidation thereof, which would not constitute a sale or
exchange. It is not known when or whether such proposed Treasury regulations
will become effective.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificate Owner's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
Certificates and, upon sale or other disposition of some of the Certificates,
to allocate a portion of such aggregate tax basis to the Certificates sold
(rather than maintaining a separate tax basis in each Certificate for purposes
of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the related Receivables would generally
be treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificate Owner is required to recognize an aggregate amount of income
(not including income attributable to disallowed itemized deductions described
above) over the life of the Certificates that exceeds the aggregate cash
distributions with respect thereto, such excess will generally give rise to a
capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificate Owners in
proportion to the principal amount of Certificates (or notional principal
amount, in the case of any interest only Certificates) owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability
and tax basis) attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificate Owners. The Class IC
Certificateholder, acting as tax matters partner for the Trust, will be
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
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Section 754 Election. In the event that a Certificate Owner sells its
Certificates at a profit (loss), the purchasing Certificate Owner will have a
higher (lower) basis in the Certificates than the selling Certificate Owner
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would
be involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the Trust will not make such
election. As a result, Certificate Owners might be allocated a greater or
lesser amount of Trust income than would be appropriate based on their own
purchase price for Certificates.
Administrative Matters. The Trustee is required to keep or have kept complete
and accurate books of the Trust. Such books will be maintained for financial
reporting and tax purposes on an accrual basis, and the fiscal year of the
Trust is expected to be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificate Owner's allocable share of items of
Trust income and expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-l information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust
with a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. Such information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (a) the name, address and identification number of such
person, (b) whether such person is a United States person, a tax-exempt entity
or a foreign government, an international organization, or any wholly owned
agency or instrumentality of either of the foregoing, and (c) certain
information on Certificates that were held, bought or sold on behalf of such
person throughout the year. In addition, brokers and financial institutions
that hold Certificates through a nominee are required to furnish directly to
the Trust information as to themselves and their ownership of Certificates. A
clearing agency registered under Section 17A of the Exchange Act is not
required to furnish any such information statement to the Trust. The
information referred to above for any calendar year must be furnished to the
Trust on or before the following January 31. Nominees, brokers and financial
institutions that fail to provide the Trust with the information described
above may be subject to penalties.
Unless otherwise specified in the related Prospectus Supplement, the Class IC
Certificateholder will be designated as the tax matters partner for each Trust
in the related Pooling and Servicing Agreement and, as such, will be
responsible for representing the Certificate Owners in any dispute with the
IRS. The Code provides for administrative examination of a partnership as if
the partnership were a separate and distinct taxpayer. Generally, the statute
of limitations for partnership items does not expire before three years after
the date on which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the appropriate
taxing authorities could result in an adjustment of the returns of the
Certificate Owners, and, under certain circumstances, a Certificate Owner may
be precluded from separately litigating a proposed adjustment to the items of
the Trust. An adjustment could also result in an audit of a Certificate Owner's
returns and adjustments of items not related to the income and losses of the
Trust.
Tax Consequences to Foreign Certificate Owners. It is not clear whether the
Trust would be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust would be engaged in a trade or business in the United States for
such purposes, the Trust will withhold as if it were so engaged in order to
protect the Trust from possible adverse consequences of a failure to withhold.
The Trust expects to withhold on the portion of its taxable income that is
allocable to foreign Certificate Owners pursuant to Section 1446 of the Code,
as if such income were effectively connected to a U.S. trade or business, at a
rate of 35% for foreign holders that are
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taxable as corporations and 39.6% for all other foreign holders. Subsequent
adoption of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures. In
determining a holder's withholding status, the Trust may rely on IRS Form W-8,
IRS Form W-9 or the holder's certification of nonforeign status signed under
penalties of perjury.
Each foreign holder might be required to file a U.S. individual or corporate
income tax return (including, in the case of a corporation, the branch profits
tax) on its share of the Trust's income. Each foreign holder must obtain a
taxpayer identification number from the IRS and submit that number to the Trust
on Form W-8 in order to assure appropriate crediting of the taxes withheld. A
foreign holder generally would be entitled to file with the IRS a claim for
refund with respect to taxes withheld by the Trust, taking the position that no
taxes were due because the Trust was not engaged in a U.S. trade or business.
However, interest payments made (or accrued) to a Certificate Owner who is a
foreign person generally will be considered guaranteed payments to the extent
such payments are determined without regard to the income of the Trust. If
these interest payments are properly characterized as guaranteed payments, then
the interest will not be considered "portfolio interest". As a result,
Certificate Owners will be subject to United States federal income tax and
withholding tax at a rate of 30 percent, unless reduced or eliminated pursuant
to an applicable treaty. In such case, a foreign holder would only be entitled
to claim a refund for that portion of the taxes in excess of the taxes that
should be withheld with respect to the guaranteed payments.
Backup Withholding. Distributions made on the Certificates and proceeds from
the sale of the Certificates will be subject to a "backup" withholding tax of
31% if, in general, the Certificate Owner fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF GRANTOR TRUSTS
If specified in the related Prospectus Supplement, Silver, Freedman & Taff,
L.L.P. will deliver its opinion that the Trust will not be classified as an
association taxable as a corporation and that such Trust will be classified as
a grantor trust under subpart E, Part I of subchapter J of the Code. In this
case, beneficial owners of Certificates (referred to herein as "Grantor Trust
Certificateholders") will be treated for federal income tax purposes as owners
of a portion of the Trust's assets as described below. The Certificates issued
by a Trust that is treated as a grantor trust are referred to herein as
"Grantor Trust Certificates."
DISCUSSION OF TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Characterization. Each Grantor Trust Certificateholder will be treated as the
beneficial owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace. To the
extent a particular Series provides for a Yield Supplement Account, each
Grantor Trust Certificateholder will also be treated as the beneficial owner of
a pro rata undivided interest in a contractual obligation of the Depositor to
pay interest at the applicable Pass-Through Rates on the Grantor Trust
Certificateholders' respective undivided interests in the Receivables for which
the Note Rate is less than the sum of (i) the initial weighted average of the
applicable Pass-Through Rates and (ii) the per annum rate used to calculate the
Monthly Servicing Fee (such obligation, the "Yield Supplement Agreement"). In
such case, however the Service could assert that the Certificates represent
indebtedness of the Depositor either in their entirety or in an amount
corresponding to the principal amount of the Receivables that are covered by
the Yield Supplement Agreement for federal income tax purposes. The Depositor
believes that, except as noted below, such a determination would not have a
materially different effect on the timing or character of taxable income to
Grantor Trust Certificateholders.
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Each Grantor Trust Certificateholder must allocate the amount it pays for its
Grantor Trust Certificate between its interest in the Receivables and its
interest in the other assets of the Trust, including, in particular, the Yield
Supplement Agreement. Such allocation must be made based on the relative fair
market values of the Receivables and the Yield Supplement Agreement. Because
the Yield Supplement Deposit is not expected to be significant relative to the
Certificate Principal Balance as of the Cutoff Date and because of the expected
amortization method of reporting amounts received pursuant to the Yield
Supplement Agreement (described below under "Yield Supplement Agreement"), such
allocation will not be provided separately in reports to Grantor Trust
Certificateholders. As further described below, a Grantor Trust
Certificateholder would calculate separately its income realized with respect
to the Receivables and its income with respect to the Yield Supplement
Agreement.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire
income from the Receivables in the Trust represented by Grantor Trust
Certificates, including interest, OID, if any, prepayment fees, assumption
fees, any gain recognized upon an assumption and late payment charges received
by the Servicer, and its share of the income portion of payments on the Yield
Supplement Agreement (as discussed below under "Yield Supplement Agreement").
The portion of each monthly payment to a Grantor Trust Certificateholder that
is allocable to principal on the Receivables will represent a return of capital
(other than accrued market discount not yet reported as income), and there will
be a corresponding reduction in the tax basis of such Grantor Trust
Certificateholder's undivided interest in the Receivables. Grantor Trust
Certificateholders also will be entitled to amortize their basis in the Grantor
Trust Certificates allocated to the Yield Supplement Agreement under one of the
methods described below under "Yield Supplement Agreement."
Under Code Sections 162 or 212, each Grantor Trust Certificateholder will be
entitled to deduct, consistent with its method of accounting, its pro rata
share of servicing fees, prepayment fees, assumption fees and late payment
charges retained by the Servicer, provided that such amounts are reasonable
compensation for services rendered to the Trust. Code Section 67 provides,
however, that if a Grantor Trust Certificateholder is an individual, estate, or
trust, the deduction for its pro rata share of such fees will be allowed only
to the extent that all of its miscellaneous itemized deductions, including its
share of such fees will be allowed only to the extent that all of its
miscellaneous itemized deductions, including its share of such fees, exceed 2%
of its adjusted gross income. In addition, Code Section 68 provides that
itemized deductions otherwise allowable for a taxable year of an individual
taxpayer will be reduced by the lesser of (i) 3% of the excess, if any, of
adjusted gross income over $100,000 ($50,000 in the case of a married
individual filing a separate return) (subject to adjustment for inflation) or
(ii) 80% of the amount of itemized deductions otherwise allowable for such
year. To the extent either of such limitations apply, such Grantor Trust
Certificateholder may have gross income in excess of interest received in cash
without a corresponding deduction.
A Grantor Trust Certificateholder using the cash method of accounting must
take into account its pro rata share of income and deductions as and when
collected by or paid to the Servicer. A Grantor Trust Certificateholder using
an accrual method of accounting must take into account its pro rata share of
income and deductions as they become due or are paid to the Servicer, whichever
is earlier. If the servicing fees paid to the Servicer are deemed to exceed
reasonable servicing compensation, the amount of such excess could be
considered as an ownership interest retained by the Servicer (or any person to
whom the Servicer assigned for value all or a portion of the servicing fees) in
a portion of the interest payments on the Receivables. The Receivables would
then be subject to the "coupon stripping" rules of the Code discussed below.
For federal income tax purposes, the outstanding principal balance of each
Rule of 78's Receivable as of the Cutoff Date is based on the Rule of 78's (the
"Cutoff Date Scheduled Balance"). Because the Rule of 78's allocates a greater
portion of the early payments on a Rule of 78's Receivable to interest than the
actuarial method, the Cutoff Date Scheduled Balance of each Rule of 78's
Receivable exceeds the amount that would have been its principal balance as of
the Cutoff Date if each Rule of 78's Receivable had been amortized from
origination under the actuarial method (such amount, the "Cutoff Date Actuarial
Balance"). The purchase price paid by Grantor Trust Certificateholders for each
Rule of 78's Receivable will reflect the Cutoff Date Actuarial Balance.
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The proper tax method for accounting for the Rule of 78's Receivables is
uncertain. As described above, the Servicer and the Trustee intend to report
income to Grantor Trust Certificateholders based on the actuarial method.
However, prospective investors should consult their tax advisors as to whether
they may be required or permitted to use the Rule of 78's method to account for
interest on the Rule of 78's Receivables. A Grantor Trust Certificateholder
will be furnished information for federal income tax purposes enabling him to
report interest on the Rule of 78's Receivables, under the Rule of 78's method
of accounting only upon written request to the Trustee, and payment of the
costs of producing such information. In the event that a Grantor Trust
Certificateholder reports taxable income based on the Rule of 78's method, such
Grantor Trust Certificateholder should consult his or her tax advisor as to the
application of the original issue and market discount rules with respect to the
Rule of 78's Receivables.
If a Rule of 78's Receivable is prepaid in full, any amount collected from
the Obligor pursuant to the Rule of 78's Receivable in excess of the principal
balance thereof and accrued interest thereon, computed using an actuarial
method, will be paid to the Servicer. Such amount may be treated as additional
income in the nature of a prepayment penalty to a Grantor Trust
Certificateholder who had reported income with respect to the Rule of 78's
Receivables on the actuarial method, and would be deductible only to the extent
described above. Alternatively, such amount might be treated as an interest in
the Rule of 78's Receivables retained by the Servicer, in which event it would
not be included in a Grantor Trust Certificateholder's income.
STRIPPED BONDS AND STRIPPED COUPONS
Original Issue Discount. Although the tax treatment of stripped bonds is not
entirely clear, based on guidance by the IRS, it appears that each purchaser of
a Grantor Trust Certificate will be treated as the purchaser of a stripped
bond, which generally should be treated as a single debt instrument issued on
the day it is purchased for purposes of calculating any original issue
discount. Generally, under applicable Treasury regulations (the "Section 1286
Treasury Regulations"), if the discount on a stripped bond is larger than a de
minimis amount (as calculated for purposes of the OID rules of the Code) such
stripped bond will be considered to have been issued with OID. For these
purposes, OID is the excess of the "stated redemption price at maturity"
(generally, principal and any interest which is not "qualified stated
interest") of a debt instrument over its issue price. Based on the preamble to
the Section 1286 Treasury Regulations, although the matter is not entirely
clear, the interest income on the Certificates at the sum of the Pass-Through
Rate and the portion of the Servicing Fee Rate that does not constitute excess
servicing should be treated as "qualified stated interest" within the meaning
of the Section 1286 Treasury Regulations and such income will be so treated in
the Trustee's tax information reporting. It is possible that the treatment
described in this paragraph will apply only to that portion of the Receivables
in a particular trust as to which there is "excess servicing" and that the
remainder of such Receivables will not be treated as stripped bonds, but as
undivided interests as described above.
If the allocable purchase price paid by a Grantor Trust Certificateholder who
purchases a Grantor Trust Certificate in its original public offering equals
the portion of the principal balance of the Receivables that is allocable to
its Grantor Trust Certificate, or is less than such principal balance by a
statutorily defined de minimis amount, then there would be no original issue
discount with respect to its interest in the Receivables. Furthermore, the
allocation of a portion of the purchase price of a Grantor Trust Certificate to
a Grantor Trust Certificateholder's undivided interest in the Yield Supplement
Agreement will result in the Grantor Trust Certificateholder's acquisition of
the related Receivables at a greater discount, and the purchase price so
allocated may not be recovered at the same time or over the same period than if
it had been allocated to such Receivables. See "--The Yield Supplement
Agreement" below. Although the Service could assert that a Grantor Trust
Certificateholder's basis in the Receivables should be determined on a
Receivable-by-Receivable basis, a Grantor Trust Certificateholder will not have
sufficient information with respect to the Receivables to allocate its basis in
this manner. In addition, although the Service could assert that the income
derived by a Grantor Trust Certificateholder from the Receivables should be
determined on a Receivable-by-Receivable basis, income will be reported to
Grantor Trust Certificateholders on an aggregate basis. If the Service were to
require reporting on a Receivable-by-Receivable basis, a Grantor Trust
Certificateholder's recognition of income could be accelerated or decelerated.
Moreover, because the interest rates of the Receivables vary significantly, the
allocation of basis
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and computation of income on a Receivable-by-Receivable basis could have a more
significant effect on the income of a Grantor Trust Certificateholder than it
would if the Receivables had more uniform characteristics. Unless indicated
otherwise in the applicable Prospectus Supplement, it is not anticipated that
Grantor Trust Certificates will be issued with greater than de minimis OID.
To the extent the rules of the Code relating to OID (Sections 1271 though
1273 and 1275) are applicable to a person comparable to a Grantor Trust
Certificateholder that acquires an undivided interest in a stripped bond issued
or acquired with OID, such person must include in gross income the sum of the
"daily portions," as defined below, of the OID on such stripped bond for each
day on which it owns a Certificate, including the date of purchase but
excluding the date of disposition. It is not clear whether such OID will be
determined under Code Section 1272(a)(6), applicable to debt instruments whose
payments may be accelerated by prepayments on underlying obligations. Unless
indicated otherwise in the applicable Prospectus Supplement, it is anticipated
that such approach will be used, with OID accruals based on a constant interest
method and a prepayment assumption indicated in such Prospectus Supplement. In
the case of an original Grantor Trust Certificateholder, the daily portions of
OID generally would be determined as follows. A calculation will be made of the
portion of OID that accrues on the stripped bond during each successive monthly
accrual period (or shorter period in respect of the date of original issue or
the final Distribution Date). This will be done, in the case of each full
monthly accrual period, by adding (i) the present value of all remaining
payments to be received on the stripped bond under the prepayment assumption
used in respect of the Grantor Trust Certificates and (ii) any payments
received during such accrual period, and subtracting from the total the
"adjusted issue price" of the stripped bond at the beginning of such accrual
period. No representation is made that the Grantor Trust Certificates will
prepay at any prepayment assumption. The "adjusted issue price" of a stripped
bond at the beginning of the first accrual period is its issue price (as
determined for purposes of the OID rules of the Code) and the "adjusted issue
price" of a stripped bond at the beginning of a subsequent accrual period is
the "adjusted issue price" at the beginning of the immediately preceding
accrual period plus the amount of OID allocable to that accrual period and
reduced by the amount of any payment (other than "qualified stated interest")
made at the end of or during that accrual period. The OID accruing during such
accrual period will then be divided by the number of days in the period to
determine the daily portion of OID for each day in the period. A subsequent
Grantor Trust Certificateholder will be required to adjust its OID accrual to
reflect its purchase price, the remaining period to maturity and, possibly, a
new prepayment assumption. The Servicer will report to all Grantor Trust
Certificateholders as if they were original holders.
With respect to the Receivables, the method of calculating OID as described
above will cause the accrual of OID to either increase or decrease (but never
below zero) in any given accrual period to reflect the fact that prepayments
are occurring at a faster or slower rate than the prepayment assumption used in
respect of the Receivables. Subsequent purchasers that purchase Grantor Trust
Certificates at more than a de minimis discount should consult their tax
advisors with respect to the proper method to accrue such OID.
Market Discount. A Grantor Trust Certificateholder that acquires an undivided
interest in Receivables may be subject to the market discount rules of Sections
1276 though 1278 to the extent an undivided interest in a Receivable or
stripped bond is considered to have been purchased at a "market discount".
Generally, the amount of market discount is equal to the excess of the portion
of the principal amount of such Receivable or stripped bond allocable to such
holder's undivided interest over such holder's tax basis in such interest.
Market discount with respect to a Grantor Trust Certificate will be considered
to be zero if the amount allocable to the Grantor Trust Certificate is less
than 0.25% of the Grantor Trust Certificate's stated redemption price at
maturity multiplied by the weighted average maturity remaining after the date
of purchase. Treasury regulations implementing the market discount rules have
not yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Section 1276 and 1278.
The Code provides that any principal payment (whether a scheduled payment or
a prepayment) or any gain or disposition of a market discount bond shall be
treated as ordinary income to the extent that it does not exceed the accrued
market discount at the time of such payment. The amount of accrued market
discount for purposes
46
<PAGE>
of determining the tax treatment of subsequent principal payments or
dispositions of the market discount bond is to be reduced by the amount so
treated as ordinary income.
The Code also grants the Treasury Department authority to issue regulations
providing for the computation of accrued market discount on debt instruments,
the principal of which is payable in more than one installment. While the
Treasury Department has not yet issued regulations, rules described in the
relevant legislative history will apply. Under those rules, the holder of a
market discount bond may elect to accrue market discount either on the basis of
a constant interest rate or according to one of the following methods. If a
Grantor Trust Certificate is issued with OID, the amount of market discount
that accrues during any accrual period would be equal to the product of (i) the
total remaining market discount and (ii) a fraction, the numerator of which is
the OID accruing during the period and the denominator of which is the total
remaining OID at the beginning of the accrual period. For Grantor Trust
Certificates issued without OID, the amount of market discount that accrues
during a period is equal to the product of (i) the total remaining market
discount and (ii) a fraction, the numerator of which is the amount of stated
interest paid during the accrual period and the denominator of which is the
total amount of stated interest remaining to be paid at the beginning of the
accrual period. For purposes of calculating market discount under any of the
above methods in the case of instruments (such as the Grantor Trust
Certificates) that provide for payments that may be accelerated by reason of
prepayments of other obligations securing such instruments, the same prepayment
assumption applicable to calculating the accrual of OID will apply. Because the
regulations described above have not been issued, it is impossible to predict
what effect those regulations might have on the tax treatment of a Grantor
Trust Certificate purchased at a discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount also
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or
carry such Grantor Trust Certificate purchased with market discount. For these
purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market
discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. To the extent a Grantor Trust Certificateholder is considered to
have purchased an undivided interest in a Receivable or stripped bond for an
amount that is greater than its stated redemption price at maturity of such
Receivable or stripped bond, such Grantor Trust Certificateholder will be
considered to have purchased the Receivable with "amortizable bond premium"
equal in amount to such excess. A Grantor Trust Certificateholder (who does not
hold the Certificate for sale to customers or in inventory) may elect under
Section 171 of the Code to amortize such premium. Under the Code, the premium
is allocated among the interest payments on the Receivables or stripped bonds
to which it relates and is considered as an offset against (and thus a
reduction of) such interest payments. With certain exceptions, such an election
would apply to all debt instruments held or subsequently acquired by the
electing holder. Absent such an election, the premium will be deductible as an
ordinary loss only upon disposition of the Certificate or pro rata as principal
is paid on the Receivables or stripped bonds.
Election to Treat All Interest as OID. The OID regulations permit a Grantor
Trust Certificateholder to elect to accrue all interest, discount (including de
minimis market discount or original issue discount) and premium in income as
interest, based on a constant yield method. If such an election were to be made
with respect to a Grantor Trust Certificate with market discount, the
Certificate Owner would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust
Certificateholder that makes this election for a Grantor Trust Certificate that
is acquired at a premium will be deemed to have made an election to amortize
bond premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Certificateholder owns or acquires. See "--
Premium" herein. The election to accrue interest, discount and premium on a
constant yield method with respect to a Grantor Trust Certificate is
irrevocable.
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THE YIELD SUPPLEMENT AGREEMENT
The manner in which income with respect to the Yield Supplement Agreement
should be accrued is not clear. Moreover, the sum of the income and deductions
properly reportable by a Grantor Trust Certificateholder in any taxable year
may not equal the amounts that would be reportable if a Grantor Trust
Certificateholder held, instead of an interest in the Receivables and in the
Yield Supplement Agreement, either (i) a debt instrument bearing interest at
the related Pass-Through Rate or (ii) an interest in a trust holding
Receivables each of which bears interest at a rate at least equal to the sum of
the related Pass-Through Rate plus the rate equivalent to the Monthly Servicing
Fee. It is possible that a Grantor Trust Certificateholder will be required to
report as income on a current basis its pro rata share of all amounts received
by the Trust pursuant to the Yield Supplement Agreement. In such event, the
Grantor Trust Certificateholder should be entitled to amortize in some manner
the portion of the purchase price paid for its Grantor Trust Certificate that
is allocable to its pro rate interest in the Yield Supplement Agreement. It is
not clear whether such amortization deduction would be computed in a manner
reflecting a constant yield method, pro rata method, straight-line method, or
some other method of amortization. It is not clear whether, and to what extent,
the amounts includable in income or amortizable under any of these methods
would be adjusted to take account of prepayments on the Receivables. In
addition, to the extent that the amounts payable pursuant to the Yield
Supplement Agreement in respect of Receivables for which the Note Rate is less
than the sum of the initial weighted average of the applicable Pass-Through
Rates and the per annum rate used to calculate the Monthly Servicing Fee
decline during any period as a result of prepayments on such Receivables, it is
possible that a portion of the amount amortizable by the Grantor Trust
Certificateholder during such period would be treated as a capital loss (which
would not offset ordinary income) rather than as an ordinary deduction. It is
anticipated that the Servicer will employ an amortization method in reporting
to Grantor Trust Certificateholders that results in net income with respect to
the related Receivable at the applicable Pass-Through Rate. Grantor Trust
Certificateholders are advised to consult their own tax advisors regarding the
appropriate method of accounting for income attributable to the Yield
Supplement Agreement.
TREATMENT OF LOSSES
Grantor Trust Certificateholders on the accrual method of accounting will be
required to report income with respect to the Grantor Trust Certificates
without giving effect to delays or reductions in distributions attributable to
defaults or delinquencies on the Receivables, except to the extent it can be
established that such losses are uncollectible. Accordingly, the holder of a
Grantor Trust Certificate, particularly a subordinate Grantor Trust
Certificate, may have income or may incur a diminution in cash flow as a result
of a default or delinquency, but may not be able to take a deduction (subject
to the discussion below) for the corresponding loss until a subsequent taxable
year. To the extent the rules of Code Section 166 regarding bad debts are
applicable, it appears that Grantor Trust Certificateholders that are
corporations or that hold the Grantor Trust Certificates in connection with a
trade or business should in general be allowed to deduct as an ordinary loss
such loss with respect to principal sustained during the taxable year on
account of any such Grantor Trust Certificates becoming wholly or partially
worthless, and that, in general, Grantor Trust Certificateholders that are not
corporations and do not hold the Grantor Trust Certificates in connection with
a trade or business will be allowed to deduct as a short-term capital loss any
loss sustained during the taxable year on account of a portion of any such
Grantor Trust Certificates becoming wholly worthless. Although the matter is
not free from doubt, such non-corporate Grantor Trust Certificateholders should
be allowed a bad debt deduction at such time as the principal balance of such
Grantor Trust Certificates is reduced to reflect losses resulting from any
liquidated Receivables. The Service, however, could take the position that if
the "stripped bond" rules of the Code are applicable, non-corporate holders
will be allowed a bad debt deduction to reflect such losses only after all the
affected Receivables remaining in the Trust have been liquidated or the
applicable class of Grantor Trust Certificates has been otherwise retired
Grantor Trust Certificateholders are urged to consult their own tax advisors
regarding the appropriate timing, amount and character of any loss sustained
with respect to such Grantor Trust Certificates. Losses attributable to
interest previously reported as income should be deductible as ordinary losses
by both corporate and non-corporate holders. Special loss rules are applicable
to banks and thrift institutions, including rules regarding reserves for bad
debts. Such taxpayers are advised to consult their tax advisors regarding the
treatment of losses on Grantor Trust Certificates.
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SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE
Sale or exchange of a Grantor Trust Certificate prior to its maturity will
result in gain or loss equal to the difference, if any, between the amount
received and the owner's adjusted basis in the Grantor Trust Certificate. Such
adjusted basis generally will equal the seller's purchase price for the Grantor
Trust Certificate, increased by the OID and any market discount included in the
seller's gross income with respect to the Grantor Trust Certificate, and
reduced by any market premium amortized by the Depositor and by principal
payments on the Grantor Trust Certificate previously received by the seller.
Such gain or loss will be capital gain or loss to an owner for which a Grantor
Trust Certificate is a "capital asset" within the meaning of Section 1221
(except in the case of gain attributable to accrued market discount, as noted
above under "--Stripped Bonds and Stripped Coupons--Market Discount"), and will
be long-term or short-term depending on whether the Grantor Trust Certificate
has been owned for the long-term capital gain holding period (currently more
than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within the
meaning of Section 582(c)(1), so that gain or loss recognized from the sale of
a Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
FOREIGN GRANTOR TRUST CERTIFICATES
Non-U.S. Persons. Interest or OID paid to non-U.S. Owners of Grantor Trust
Certificates will be treated as "portfolio interest" for purposes of United
States withholding tax. Such interest (including OID, if any) attributable to
the underlying Receivables will not be subject to the normal 30% (or such lower
rate provided for by an applicable tax treaty) withholding tax imposed on such
amounts provided that (i) the Non-U.S. Certificate Owner is not a "10%
shareholder" (within the definition of Section 871(h)(3)) of any obligor on the
Receivables; and is not a controlled foreign corporation (within the definition
of Section 957) related to any Obligor on the Receivables and (ii) such
Certificate Owner fulfills certain certification requirements. Under these
requirements, the Certificate Owner must certify, under penalty of perjury,
that it is not a "United States person" and must provide its name and address.
For this purpose "United States person" means a citizen or resident of the
United States, a corporation, partnership other entity created or organized in
or under the laws of the United States or any political subdivision thereof, an
estate the income of which is includible in gross income for United States
federal income tax purposes, without regard to its source or a trust if (i) for
taxable years beginning after December 31, 1996 (or for taxable years ending
after August 20, 1996, if the trustee has made an applicable election), a court
within the United States is able to exercise primary supervision over the
administration of such trust, and one or more United States fiduciaries have
the authority to control all substantial decisions of such trust, or (ii) for
all other taxable years, such trust is subject to United States federal income
tax regardless of the source of its income. If, however, such interest or gain
is effectively connected to the conduct of a trade or business within the
United States by such Certificate Owner, such owner will be subject to United
States federal income tax thereon at graduated rates. Potential investors who
are not United States persons should consult their own tax advisors regarding
the specific tax consequences of owning a Certificate.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Servicer will furnish or make available, within a reasonable time after
the end of each calendar year, to each person who was a Grantor Trust
Certificateholder at any time during such year, such information as may be
deemed necessary or desirable to assist Grantor Trust Certificateholders in
preparing their federal income tax returns, or to enable holders to make such
information available to beneficial owners or financial intermediaries that
hold Grantor Trust Certificates as nominees on behalf of beneficial owners. If
a holder, beneficial owner, financial intermediary or other recipient of a
payment on behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that such
person has not reported all interest and dividend income required to be shown
on its federal income tax return, a 31% backup withholding may be required with
respect to any payments. Any amounts deducted and withheld from a distribution
to a recipient would be allowed as a credit against such recipient's federal
income tax liability.
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* * *
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A CERTIFICATE
OWNER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS OF CERTIFICATES
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL AND FOREIGN AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Sections 404 and 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), impose certain fiduciary and prohibited transaction
restrictions on employee pension and welfare benefit plans subject to ERISA
("ERISA Plans"). Section 4975 of the Code imposes essentially the same
prohibited transaction restrictions on tax-qualified retirement plans
described in Section 401(a) of the Code and on Individual Retirement Accounts
described in Section 408 of the Code (collectively, "Tax Favored Plan"). ERISA
and the Code prohibit a broad range of transactions involving assets of ERISA
Plans and Tax Favored Plans (collectively, "Plans") and persons who have
certain specified relationships to such Plans (so-called "parties in interest"
within the meaning of ERISA or "disqualified persons" within the meaning of
the Code) unless a statutory or administrative exemption is available. A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such persons.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA), and, if no election has been made under Section
410(d) of the Code, church plans (as defined in Section 3(33) of ERISA), are
not subject to the ERISA requirements discussed herein. Accordingly, assets of
such plans may be invested in Certificates without regard to the ERISA
considerations described herein, subject to the provisions of other applicable
federal, state and local law, and, before purchasing a Certificate, a
fiduciary of such a plan should itself confirm the compliance with such laws.
Any such plan that is qualified and exempt from taxation under Section 401(a)
and 501(a) of the Code, however, is subject to the prohibited transaction
rules set forth in Section 503 of the Code. Certain parties in interest or
disqualified persons that participate in a prohibited transaction may be
subject to a penalty or excise taxes, unless a statutory or administrative
exemption is available.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Plan that
purchased Certificates if assets of the Trust were deemed to be assets of the
Plan. Under a regulation issued by the United States Department of Labor (the
"Plan Assets Regulations"), the assets of a Trust would be treated as plan
assets of a Plan for the purposes of ERISA and the Code only if the Plan
acquired an "equity interest" in the Trust and none of the exceptions
contained in the Plan Assets Regulation was applicable. An equity interest is
defined under the Plan Assets Regulation as an interest other than an
instrument that is treated as indebtedness under applicable local law and
which has no substantial equity features. The likely treatment in this context
of Certificates of a given Series will be discussed in the related Prospectus
Supplement.
A plan fiduciary considering the purchase of Certificates of a given Series
should consult its legal advisors regarding whether the assets of the related
Trust would be considered plan assets, the possibility of exemptive relief
from the prohibited transaction rules and other issues and their potential
consequences.
The United States Department of Labor has granted to the underwriter (or in
the case of series offered by more than one underwriter, the lead underwriter)
named in each Prospectus Supplement an exemption (the "Exemption") from
certain of the prohibited transaction rules of ERISA with respect to the
initial purchase, the holding and the subsequent resale by Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of
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the Exemption. The receivables covered by the Exemption include motor vehicle
installment sales contracts such as the Receivables. The Exemption might apply
to the acquisition, holding and resale of nonsubordinated Certificates
(referred to herein as "Senior Certificates") by a Plan, provided that certain
conditions and requirements set forth therein (certain of which are described
below) are met.
Among the conditions that must be satisfied for the Exemption to apply to the
Senior Certificates are the following:
(1) The Trust is considered to consist solely of obligations which bear
interest or are purchased at a discount and which are secured by motor
vehicles or equipment, or "qualified motor vehicle leases" (as defined in
the Exemption), property that had secured such obligations or qualified
motor vehicle leases, cash or temporary investments maturing no later than
the next date on which distributions are to be made to the Senior
Certificate Owners, and rights of the Trustee under the Pooling and
Servicing Agreement and under credit support arrangements with respect to
such obligations or qualified motor vehicle leases.
(2) The acquisition of the Senior Certificates by a Plan is on terms
(including the price for the Senior Certificates) that are at least as
favorable to the Plan as they would be in an arm's length transaction with
an unrelated party;
(3) The rights and interests evidenced by the Senior Certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other certificates of the Trust;
(4) The Senior Certificates acquired by the Plan have received a rating
at the time of such acquisition that is in one of the three highest generic
rating categories from either Standard & Poor's Ratings Group, Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. or Fitch Investors
Service, L.P.;
(5) The related Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
(6) The sum of all payments made to the underwriters in connection with
the distribution of the Senior Certificates represents not more than
reasonable compensation for underwriting the Senior Certificates; the sum
of all payments made to and retained by the Depositor pursuant to the sale
of the Contracts to the related Trust represents not more than the fair
market value of such Contracts; and the sum of all payments made to and
retained by the Servicer represents not more than reasonable compensation
for the Servicer's services under the related Pooling and Servicing
Agreement and reimbursement of the Servicer's reasonable expenses in
connection therewith; and
(7) The Plan investing in the Senior Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Commission
under the Securities Act of 1933, as amended.
Moreover, the Exemption would provide relief from certain self-
dealing/conflict of interest or prohibited transactions only if, among other
requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least 50% of the Senior Certificates
are acquired by persons independent of the Restricted Group (as defined below),
(ii) the Benefit Plan's investment in Senior Certificates does not exceed 25%
of all of the Senior Certificates outstanding at the time of the acquisition
and (iii) immediately after the acquisition, no more than 25% of the assets of
the benefit Plan are invested in certificates representing an interest in one
or more trusts containing assets sold or serviced by the same entity. The
Exemption does not apply to Plans sponsored by the Depositor, any underwriter,
the related Trustee, the Servicer, any obligor with respect to Contracts
included in the related Trust constituting more than 5% of the aggregate
unamortized principal balance of the assets in the Trust, or any affiliate of
such parties (the "Restricted Group").
Before purchasing a Senior Certificate, a fiduciary of a Plan should itself
confirm that (i) the Trust constitutes a "trust" for purposes of the Exemption,
(ii) the Senior Certificates constitute "certificates" for purposes of the
Exemption and (iii) the conditions and the other requirements set forth in the
Exemption would be satisfied. A fiduciary of an ERISA Plan should also
determine whether the purchase of Senior Certificates is consistent with
certain general fiduciary requirements imposed under Section 404 of ERISA,
including those of investment prudence and diversification and the requirement
that an ERISA Plan's investments be made in
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accordance with the documents governing the ERISA Plan. The sale of Senior
Certificates to a Plan is in no way a representation by the Depositor or
underwriter that this investment meets all relevant legal requirements with
respect to investments by Plans generally or any particular Plan, or that this
investment is appropriate for Plans generally or any particular Plan.
Under current law, the purchase and holding of Certificates other than Senior
Certificates by or on behalf of a Plan may constitute or result in prohibited
transactions within the meaning of ERISA and the Code. Unless otherwise
provided in the related Prospectus Supplement, such Certificates may not be
acquired by Plans or by persons acting on behalf of or investing the assets of
Plans.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to a given Series (the "Underwriting Agreement"), the Depositor will
agree to cause the related Trust to sell to the underwriters named therein and
in the related Prospectus Supplement, and each of such underwriters will
severally agree to purchase, the principal amount of each class of Certificates
of the related Series set forth therein and in the related Prospectus
Supplement.
In each Underwriting Agreement, the underwriter or several underwriters will
agree, subject to the terms and conditions set forth therein, to purchase all
of the Certificates described therein that are offered hereby and by the
related Prospectus Supplement if any of such Certificates are purchased.
Each Prospectus Supplement will either (i) set forth the price at which each
class of Certificates being offered thereby will be offered to the public and
any concessions that may be offered to certain dealers participating in the
offering of such Certificates or (ii) specify that the related Certificates are
to be resold by the underwriters in negotiated transactions at varying prices
to be determined at the time of such sale. After the initial public offering of
any such Certificates, such public offering prices and such concessions may be
changed.
Each Underwriting Agreement will provide that CTL, the Depositor and Bay View
will indemnify the related underwriters against certain civil liabilities,
including liabilities under the Securities Act, or contribute to payments the
several underwriters may be required to make in respect thereof. Each Trust
may, from time to time, invest the funds in the related Accounts in Eligible
Investments acquired from such underwriters. Pursuant to each Underwriting
Agreement, the closing of the sale of any class of Certificates subject thereto
will be conditioned on the closing of the sale of all other classes of
Certificates of such Series. The place and time of delivery for the
Certificates in respect of which this Prospectus is delivered will be set forth
in the related Prospectus Supplement.
LEGAL MATTERS
Certain legal matters relating to the Certificates of any Series will be
passed upon for the related Trust, the Depositor and the Servicer by Silver,
Freedman & Taff, L.L.P., Washington, D.C., and for the underwriters by
Cadwalader, Wickersham & Taft, New York, New York or such other firm as shall
be identified in the related Prospectus Supplement. Certain federal income tax
and other matters will be passed upon for each Trust by Silver, Freedman &
Taff, L.L.P. or such other firm as shall be identified in the related
Prospectus Supplement.
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INDEX OF PRINCIPAL TERMS
Set forth below is a list of certain of the more significant terms used in
this Prospectus and the pages on which the definitions of such terms may be
found herein.
<TABLE>
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TERM PAGE
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<S> <C>
Actuarial Receivables.............................................. 19
Additional Vehicle Costs........................................... 18
Advance............................................................ 8
Approved Rating.................................................... 28
Bay View........................................................... 13
Cash Collateral Account............................................ 31
Cede............................................................... 16
Certificate Account................................................
Certificate Balance................................................ 6
Certificate Owners................................................. 23
Certificate Pool Factor............................................ 21
Certificateholders................................................. 7
Certificates....................................................... Prosp. Cover
Class Certificate Balance.......................................... 4
Closing Date....................................................... 6
Code............................................................... 11
Collection Period.................................................. 8
Commission......................................................... 3
Contracts.......................................................... 6
Contract Rate...................................................... 9
CTL................................................................ 4
Cutoff Date........................................................ 6
Cutoff Date Actuarial Balance...................................... 44
Cutoff Date Scheduled Balance...................................... 44
Dealers............................................................ 6
Definitive Certificates............................................ 24
Depositor.......................................................... 4
Distribution Date.................................................. 22
DTC................................................................ 16
Eligible Deposit Account........................................... 28
Eligible Institution............................................... 28
Eligible Investments............................................... 28
ERISA.............................................................. 11
ERISA Plans........................................................ 50
Events of Default.................................................. 32
Exchange Act....................................................... 3
Exemption.......................................................... 50
FDIC............................................................... 13
Federal Tax Counsel................................................
Final Scheduled Distribution Date..................................
Final Scheduled Maturity Date...................................... 9
Financed Vehicles.................................................. 6
FTC Rule........................................................... 37
Funding Period..................................................... 7
Grantor Trust Certificates......................................... 43
Grantor Trust Certificateholders................................... 43
</TABLE>
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<TABLE>
<CAPTION>
TERM PAGE
---- ------------
<S> <C>
Indirect Participants.............................................. 23
Insolvency Event................................................... 33
Insolvency Laws.................................................... 21
Interest Shortfall................................................. 8
Investment Income.................................................. 28
IRS................................................................ 38
Obligor............................................................ 9
OID................................................................ 40
Participants....................................................... 23
Pass-Through Rate.................................................. 4
Payaheads.......................................................... 19
Payahead Account................................................... 27
Plans.............................................................. 50
Plan Assets Regulations............................................ 50
Pooling and Servicing Agreement.................................... 4
Pool Balance....................................................... 9
Precomputed Receivables............................................ 19
Pre-Funded Amount.................................................. 6
Pre-Funding Account................................................ 6
Prospectus Supplement.............................................. Prosp. Cover
Purchase Agreement................................................. 6
Purchase Amount.................................................... 26
Purchased Receivable............................................... 26
Rating Agency...................................................... 11
Receivables........................................................ Prosp. Cover
Receivables Pool................................................... 16
Registration Statement............................................. 3
Restricted Group...................................................
Rules.............................................................. 23
Rule of 78's Receivables........................................... 19
Section 1286 Treasury Regulations.................................. 45
Senior Certificates................................................ 51
Series............................................................. Prosp. Cover
Servicer........................................................... Prosp. Cover
Servicing Fee...................................................... 30
Servicing Fee Rate................................................. 30
Simple Interest Receivables........................................ 19
Strip Certificates................................................. 4
Subsequent Receivables............................................. 7
Subsequent Transfer Date........................................... 26
Tax Favored Plans.................................................. 50
Transfer and Servicing Agreements.................................. 25
Trust.............................................................. Prosp. Cover
Trust Accounts..................................................... 28
Trustee............................................................ 4
UCC................................................................ 13
Underwriting Agreement............................................. 52
Yield Supplement Agreement......................................... 44
</TABLE>
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NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN CONNECTION WITH THE OFFER CON-
TAINED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DEPOSITOR, THE SERVICER OR
THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTI-
TUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURI-
TIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
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----
<S> <C>
Prospectus Supplement
Reports to Certificateholders.............................................. S-
Summary of Terms...........................................................
Formation of the Trust.....................................................
The Receivables Pool.......................................................
Yield and Prepayment Considerations........................................
The Depositor and CTL......................................................
The Surety Bond Issuer.....................................................
The Offered Certificates...................................................
ERISA Considerations.......................................................
Underwriting...............................................................
Legal Opinions.............................................................
Experts....................................................................
Index of Principal Terms...................................................
Financial Statements of the Surety Bond Issuer............................. F-1
Prospectus
Available Information...................................................... 3
Incorporation of Certain Documents by Reference............................ 3
Summary of Terms........................................................... 4
Risk Factors............................................................... 12
The Trusts................................................................. 16
The Receivables Pools...................................................... 18
Weighted Average Life of the Certificates.................................. 20
Pool Factors and Other Certificate Information............................. 21
Use of Proceeds............................................................ 21
California Thrift & Loan and Affiliates.................................... 21
Description of the Certificates............................................ 22
Description of the Transfer and Servicing Agreements....................... 25
Certain Legal Aspects of the Receivables................................... 35
Certain Federal Income Tax Consequences.................................... 38
ERISA Considerations....................................................... 50
Plan of Distribution....................................................... 52
Legal Matters.............................................................. 52
Index of Principal Terms................................................... 53
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$
BAY VIEW 199 -
AUTO TRUST
$
% CLASS A AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
CLASS I INTEREST ONLY AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
BAY VIEW SECURITIZATION
CORPORATION
DEPOSITOR
----------------
PROSPECTUS
----------------
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Certificates being
registered herein are estimated as follows:
<TABLE>
<S> <C>
SEC Registration.................................................. $ 151,516
Legal fees and expenses........................................... 600,000
Accounting fees and expenses...................................... 100,000
Rating agency fees................................................ 500,000
Trustee's fees and expenses....................................... 30,000
Printing.......................................................... 200,000
Miscellaneous..................................................... 700,000
---------
Total........................................................... 2,281,516
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Seventh of the Corporation's Certificate of Incorporation provides
for indemnification of directors and officers of the Corporation against any
and all liabilities, judgments, fines and reasonable settlements, costs,
expenses and attorneys' fees incurred in any actual, threatened or potential
proceeding, except to the extent that such indemnification is limited by
Delaware law and such law cannot be varied by contract or bylaw. Article
Seventh also provides for the authority to purchase insurance with respect
thereto.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation's Board of Directors to grant indemnity under certain
circumstances to directors and officers, when made, or threatened to be made,
parties to certain proceedings by reason of such status with the corporation,
against judgments, fines, settlements and expenses, including attorneys' fees.
In addition, under certain circumstances such persons may be indemnified
against expenses actually and reasonably incurred in defense of a proceeding
by or on behalf of the corporation. Similarly, the corporation, under certain
circumstances, is authorized to indemnify directors and officers of other
corporations or enterprises who are serving as such at the request of the
corporation, when such persons are made, or threatened to be made, parties to
certain proceedings by reason of such status, against judgments, fines,
settlements and expenses, including attorneys' fees; and under certain
circumstances, such persons may be indemnified against expenses actually and
reasonably incurred in connection with the defense or settlement of a
proceeding by or in the right of such other corporation or enterprise.
Indemnification is permitted where such person (i) was acting in good faith;
(ii) was acting in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation or other corporation or enterprise, as
appropriate; (iii) with respect to a criminal proceeding, has no reasonable
cause to believe his conduct was unlawful; and (iv) was not adjudged to be
liable to the corporation or other corporation or enterprise (unless the court
where the proceeding was brought determines that such person is fairly and
reasonably entitled to indemnity).
Unless ordered by a court, indemnification may be made only following a
determination that such indemnification is permissible because the person
being indemnified has met the requisite standard of conduct. Such
determination may be made (i) by a majority vote of the Board of Directors of
the Corporation who are not parties to such action, suit or proceeding, even
though such directors constitute less than a quorum, or (ii) if there are no
such directors, or if such directors so direct, by independent legal counsel
in a written opinion, or (iii) by the stockholders.
Section 145 also permits expenses incurred by directors and officers in
defending a proceeding to be paid by the corporation in advance of the final
disposition of such proceedings upon the receipt of an undertaking by the
director or officer to repay such amount if it is ultimately determined that
he is not entitled to be indemnified by the corporation against such expenses.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1 Underwriting Agreement.
3.1 Certificate of Incorporation of Bay View Securitization Corporation.
3.2 Bylaws of Bay View Securitization Corporation.*
4.1 Form of Pooling and Servicing Agreement for Grantor Trusts including
form of Certificates.
4.2 Form of Standard Terms and Conditions of Bay View Grantor Trusts.
4.3 Form of Pooling and Servicing Agreement for trusts other than Grantor
Trusts, including form of Certificates.
5.1 Opinion of Silver, Freedman & Taff, L.L.P. with respect to legality
of the Certificates.
5.2 Opinion of Robert J. Flax, Esq. with respect to legality of the
Certificates.
8 Opinion of Silver, Freedman & Taff, L.L.P. with respect to tax
matters.
10 Form of Purchase Agreement.
23.1 Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit 5.1).
23.2 Consent of Robert J. Flax, Esq. (included in Exhibit 5.2).
23.3 Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit 8).
24 Power of Attorney (set forth on signature page).*
</TABLE>
- --------
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) To file during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(d) For purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual reports pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(e) To provide to the Underwriters at the closing specified in the
Underwriting Agreements certificates in such denominations and registered in
such names as required by the Underwriters to provide prompt delivery to each
purchaser.
(f) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
(the "Commission") such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense
II-2
<PAGE>
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(g) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(h) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
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-3, AND REASONABLY BELIEVES THAT THE SECURITY
RATING REQUIREMENT CONTAINED IN TRANSACTION REQUIREMENT B.5. OF FORM S-3 WILL
BE MET BY THE TIME OF THE SALE OF THE SECURITIES REGISTERED HEREUNDER AND HAS
DULY CAUSED THIS PRE-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN
THE CITY OF SAN MATEO, STATE OF CALIFORNIA, ON JANUARY 2, 1997.
Bay View Securitization Corporation,
a Delaware corporation, as
Depositor (Registrant)
By: /s/ Edward H. Sondker*
---------------------------------
EDWARD H. SONDKER, Director,
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
BAY VIEW SECURITIZATION CORPORATION
Director and
/s/ Edward H. Sondker* President January 2, 1997
- ------------------------------------- (Principal
EDWARD H. SONDKER Executive Officer)
Director and
/s/ David A. Heaberlin* Treasurer January 2, 1997
- ------------------------------------- (Principal
DAVID A. HEABERLIN Financial and
Accounting Officer)
/s/ Robert J. Flax Director and
- ------------------------------------- Corporate Secretary January 2, 1997
ROBERT J. FLAX
* By:
/s/ Robert J. Flax Attorney-in-fact
---------------------------------
ROBERT J. FLAX
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
1 Underwriting Agreement.
3.1 Certificate of Incorporation of Bay View Securitization
Corporation.
3.2 Bylaws of Bay View Securitization Corporation.*
4.1 Form of Pooling and Servicing Agreement for Grantor Trusts
including form of Certificates.
4.2 Form of Standard Terms and Conditions of Bay View Grantor Trusts.
4.3 Form of Pooling and Servicing Agreement for trusts other than
Grantor Trusts, including form of Certificates.
5.1 Opinion of Silver, Freedman & Taff, L.L.P. with respect to
legality of the Certificates.
5.2 Opinion of Robert J. Flax, Esq. with respect to legality of the
Certificates.
8 Opinion of Silver, Freedman & Taff, L.L.P. with respect to tax
matters.
10 Form of Purchase Agreement.
23.1 Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit
5.1).
23.2 Consent of Robert J. Flax, Esq. (included in Exhibit 5.2).
23.3 Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit
8).
24 Power of Attorney.*
</TABLE>
- --------
* Previously Filed.
<PAGE>
Exhibit 1
BAY VIEW SECURITIZATION CORPORATION,
CALIFORNIA THRIFT & LOAN,
BAY VIEW CAPITAL CORPORATION
AND
PAINEWEBBER INCORPORATED
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
FOR
BAY VIEW AUTO TRUSTS
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
[December , 1996]
----
<PAGE>
BAY VIEW SECURITIZATION CORPORATION,
CALIFORNIA THRIFT & LOAN
BAY VIEW CAPITAL CORPORATION
2121 SOUTH EL CAMINO REAL
SAN MATEO, CALIFORNIA 94403
PaineWebber Incorporated, as
representative of the several
Underwriters named in the
respective Underwriting
Agreements hereinafter described
[December __, 1996]
Dear Sirs:
From time to time, Bay View Securitization Corporation ("BVSC"),
----
California Thrift & Loan ("CTL") and Bay View Capital Corporation ("BVCC") may
--- ----
enter into one or more underwriting agreements that provide for the sale of
Securities (as defined herein) to you and to such other underwriters as may be
named therein. The standard provisions set forth herein may be incorporated by
reference in any such underwriting agreement (each, an "Underwriting
------------
Agreement"). Any such Underwriting Agreement shall be in the form of Annex I
- ---------
hereto, with such additions and deletions as the parties thereto may determine.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings set forth in the Pooling and Servicing Agreement referred to below.
I.
BVSC proposes to sell to the several underwriters named in the
Underwriting Agreement automobile receivable pass-through certificates (the
"Securities") representing undivided interests in a trust fund including a pool
- -----------
of motor vehicle installment sale contracts and/or installment loan contracts
(the "Receivables") secured by new and used automobiles, light trucks,
-----------
motorcycles and vans (the "Financed Vehicles"). The Securities will be issued
-----------------
by a trust (the "Trust") pursuant to a pooling and servicing agreement (the
-----
"Pooling and Servicing Agreement") between BVSC, as depositor, CTL, as servicer
- --------------------------------
(in such capacity, the "Servicer") and the bank or trust company or other
--------
financial institution identified, as trustee (the "Trustee"). The Receivables
-------
will be sold to BVSC by CTL pursuant to a Receivables Purchase Agreement (the
"Purchase Agreement") between CTL, as seller and BVSC, as purchaser. The terms
- -------------------
and rights of any particular issuance of Securities shall be as specified in the
Underwriting Agreement relating thereto and in or pursuant to the Pooling and
Servicing Agreement identified in such Underwriting Agreement. The Securities
which are the subject of any particular Underwriting Agreement into which these
Standard Provisions are incorporated are herein referred to as the "Offered
-------
Securities." This Agreement, the
- ----------
<PAGE>
Underwriting Agreement, the Pooling and Servicing Agreement and the Purchase
Agreement [ADD ANY CREDIT ENHANCER DOCUMENTS] are hereinafter referred to as the
"Transaction Documents." The Securities will represent undivided interests in a
---------------------
trust fund consisting of a pool of the Receivables, all monies due thereunder
after a specified date, security interests in the Financed Vehicles, and other
instruments, funds, and accounts as may be specified in the Pooling and
Servicing Agreement (collectively, the "Trust Fund"). The Securities with
----------
respect to each Underwriting Agreement and the related Pooling and Servicing
Agreement shall be issued with the title and in the amount set forth in such
Underwriting Agreement.
Particular sales of Securities may be made from time to time to you,
or to the Underwriters named in the Underwriting Agreement, for whom you, or you
together with such other firm or firms specified in the Underwriting Agreement,
will act as representatives (the "Representatives"). The terms
---------------
"Representatives" and "Underwriters" shall mean you in such instances where you
act as sole Underwriter. The standard provisions set forth herein shall not be
construed as an obligation of BVSC to sell any of the Securities or as an
obligation of any of the Underwriters to purchase the Securities. The
obligation of BVSC to sell any of the Securities and the obligation of any of
the Underwriters to purchase any of the Securities shall be evidenced by the
Underwriting Agreement with respect to the Securities specified therein. Each
Underwriting Agreement shall specify the aggregate original principal amount of
such Securities or, if applicable, an indication that the offering will be an
at-the-market offering, the purchase by the Underwriters of such Securities, the
names of the Representatives of such Underwriters (if applicable), and the
aggregate original principal amount of such Securities to be purchased by each
Underwriter and shall set forth the date, time, and delivery of such Securities
and the manner of payment therefor. The Underwriting Agreement shall also
specify (to the extent not set forth in the Pooling and Servicing Agreement and
the registration statement and prospectus with respect thereto) the terms of
such Securities. An Underwriting Agreement shall be in the form of an executed
writing (which may be in counterparts), and may be evidenced by an exchange of
facsimile communications. The obligation of the Underwriters under an
Underwriting Agreement shall be several and not joint.
II.
Representations and Warranties. (1) BVSC represents and warrants to,
------------------------------
and agrees with, each Underwriter of any Offered Securities as of the date
hereof and as of the date of any Underwriting Agreement that:
(a) A registration statement on Form S-3, including a prospectus,
relating to the Securities has been filed with the Securities and Exchange
Commission (the "Commission"), pursuant to the Securities Act of 1933, as
----------
amended (the "Act"), which registration statement has become effective and
---
copies of which have been heretofore delivered to you. BVSC is eligible to
use Form S-3 in connection with the offer and sale of the Securities.
BVSC, as registrant, will file with the Commission either, prior to
effectiveness of such registration statement, an amendment thereto
-2-
<PAGE>
(including the form of final prospectus and prospectus supplement) or,
after effectiveness of such registration statement, a final prospectus
and/or prospectus supplement in accordance with Rules 430A and 424(b)(1) or
(4). As filed, such amendment and form of final prospectus and prospectus
supplement, or such final prospectus and/or prospectus supplement, shall
include all Rule 430A Information (as defined below) and, except to the
extent that the Underwriters shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to the
Underwriters prior to the Execution Time (as defined below) or, to the
extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest Preliminary Prospectus (as defined below)) as BVSC has advised
the Underwriters, prior to the Execution Time, will be included or made
therein.
As used herein, the term the "Effective Date" shall mean each
--------------
date that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean
--------------
the date and time that the Underwriting Agreement is executed and delivered
by the parties thereto. "Preliminary Prospectus" shall mean any
----------------------
preliminary prospectus and prospectus supplement which has been filed
pursuant to Rule 402(a), Rule 472(a) or Rule 424. "Prospectus" shall mean
----------
the prospectus and prospectus supplement relating to the Offered Securities
that is filed pursuant to Rule 424(b) in respect of the Offered Securities
including any documents incorporated by reference therein, or if no filing
pursuant to Rule 424(b) is required, shall mean the prospectus and the
prospectus supplement included in the Registration Statement at the
Effective Date. "Registration Statement" shall mean the registration
----------------------
statement referred to in the preceding paragraph, as it may be amended,
including incorporated documents, exhibits and financial statements, in the
form in which it was at the latest Effective Time prior to the Closing Date
(as hereinafter defined), inclusive of such incorporated documents,
exhibits, financial statements and any Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule 430A. "Rule 430A
---------
Information" means information with respect to the Offered Securities and
-----------
the offering thereof permitted to be omitted from the Registration
Statement, at the Effective Date, pursuant to Rule 430A.
(b) On the Effective Date, at the Execution Time, and, when the
Prospectus is first filed in accordance with Rule 424(b) and on the Closing
Date, the Registration Statement did or will and the Prospectus will,
comply as to form in all material respects with the applicable requirements
of the Act and the rules and regulations of the Commission; on each such
date the Prospectus did not and will not, include any untrue statement of a
material fact and did not and will not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading and at each such time the Registration Statement did not and
will not include any untrue statement of a material fact and did not and
will not omit to state a material fact necessary in order to make the
statements therein not misleading; provided, however,
-------- -------
-3-
<PAGE>
that the foregoing representations and warranties in this Article II(1)(b)
do not apply to any statements or omissions made in reliance on and in
conformity with information relating to any Underwriter furnished to BVSC
by or on behalf of the Underwriters specifically for inclusion in the
Registration Statement or the Prospectus. For purposes of this Agreement,
each party acknowledges that the amounts of the selling concession and
reallowance set forth in the Prospectus Supplement constitute the only
information relating to any Underwriter furnished to BVSC by or on behalf
of the Underwriters specifically for inclusion in the Registration
Statement or the Prospectus.
(c) The computer tape of the Receivables underlying the Offered
Securities made available to the Representatives by BVSC was complete and
accurate as of the date that it was delivered to the Representatives and
accurately reflects both the information appearing on the "Schedule of
Receivables" that will be an exhibit to the Pooling and Servicing Agreement
and the description of the Receivables in the related Prospectus
Supplement.
(d) BVSC has been duly incorporated and is validly existing as a
corporation under the laws of the State of Delaware and has corporate and
other power and authority to own its properties and conduct its business,
as now conducted by it, and to enter into and perform its obligations under
each Transaction Document to which it is a party.
(e) BVSC is not aware of (i) any request by the Commission for
any further amendment of the Registration Statement or the Prospectus or
for any additional information, (ii) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose or (iii)
any notification with respect to the suspension of the qualification of the
Offered Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(f) This Agreement has been duly authorized, executed, and
delivered by BVSC and the other Transaction Documents to which it is a
party, when delivered by BVSC, will each have been duly authorized,
executed, and delivered by BVSC, and each such Transaction Document will
constitute a legal, valid, and binding agreement of BVSC, enforceable
against BVSC in accordance with its terms, subject, as to the enforcement
of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium, receivership, and other similar laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
the enforcement of such remedies is considered in a proceeding in equity or
at law).
(g) The Offered Securities and Transaction Documents will conform
in all material respects to the description thereof contained in the
Prospectus and, assuming that the Offered Securities have been duly and
validly authorized, executed, and issued by the Trustee in accordance with
the Pooling and Servicing Agreement, will, when duly and validly
authenticated by the Trustee and delivered to and paid for
-4-
<PAGE>
by the Underwriters in accordance with this Agreement and the Underwriting
Agreement, be entitled to the benefits of the Pooling and Servicing
Agreement.
(h) As of the Closing Date, each of the Receivables will meet the
criteria for selection described in the Prospectus, and on such Closing
Date the representations and warranties of BVSC with respect to the
Receivables contained in the Pooling and Servicing Agreement will be true
and correct.
(i) Neither the sale of the Offered Securities, nor the
consummation of any other of the transactions contemplated by, nor the
fulfillment of the terms of, any Transaction Document to which it is a
party, (A) will constitute a breach of any term or provision of the
certificate of incorporation or by-laws of BVSC, or (B) conflict with or
constitute a breach, violation, or acceleration of or a default under the
terms of any indenture or other agreement or instrument to which BVSC is a
party or by which it is bound, or any statute, regulation, or order
applicable to BVSC of any governmental body, administrative agency,
regulatory body, or court having jurisdiction over BVSC or BVSC's material
properties, that materially and adversely affects or would in the future
materially and adversely affect (i) the ability of BVSC to perform its
obligations under any Transaction Document to which it is a party or (ii)
the business, operations, or financial condition, or the material
properties or assets of BVSC. BVSC is not a party to, bound by or in
breach or violation of any indenture or other material agreement or
instrument, or subject to or in violation of any statute, regulation, or
order of any governmental body, administrative agency, regulatory body, or
court having jurisdiction over it, that materially and adversely affects or
would in the future materially and adversely affect (i) the ability of BVSC
to perform its obligations under any Transaction Document to which it is a
party or (ii) the business, operations, or financial condition, or the
material properties or assets of BVSC.
(j) There are no actions or proceedings against, or
investigations of, BVSC pending or, to the knowledge of BVSC, threatened
before any court, administrative agency, or other tribunal (i) asserting
the invalidity of any Transaction Document or the Offered Securities, (ii)
seeking to prevent the issuance of the Offered Securities or the
consummation of any of the transactions contemplated by any Transaction
Document, (iii) that might materially and adversely affect the performance
by BVSC of its obligations under, or the validity or enforceability of, any
Transaction Document or the Offered Securities, (iv) seeking to affect
adversely the federal income tax attributes of the Offered Securities
described in the Prospectus, or (v) that if determined adversely as to BVSC
would have a material adverse effect on the business, operations, or
financial condition or the material properties or assets of BVSC.
(k) There has not been any material adverse change, or
development involving a material adverse prospective change, in the
business, operations, or financial condition or the material properties or
assets of BVSC, taken as a whole, since the formation of BVSC.
-5-
<PAGE>
(l) Any taxes, fees, and other governmental charges in connection
with the execution and delivery of any Transaction Document and the
execution, delivery, and sale of the Offered Securities have been or will
be paid at or before the Closing Date.
(m) BVSC is not an "investment company" or under the "control" of
an "investment company," as such terms are defined in the Investment
Company Act of 1940.
(2) BVCC represents and warrants to, and agrees with, each Underwriter
of any Offered Securities as of the date hereof and as of the date of any
Underwriting Agreement that:
(a) BVCC has been duly incorporated and is validly existing as a
corporation under the laws of the State of Delaware and has corporate and
other power and authority to own its properties and conduct its business,
as now conducted by it, and to enter into and perform its obligations under
this Agreement [NOTE: TO THE EXTENT THAT THE CREDIT ENHANCER REQUIRES BVCC
TO BE A PARTY TO OTHER DOCUMENTS, THEY WILL ALSO BE INCLUDED].
(b) This Agreement has been duly authorized, executed, and
delivered by BVCC and, when delivered by BVCC, will have been duly
authorized, executed, and delivered by BVCC, and will constitute a legal,
valid, and binding agreement of BVCC, enforceable against BVCC in
accordance with its terms, subject, as to the enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium,
receivership, and other similar laws affecting creditors' rights generally
and to general principles of equity (regardless of whether the enforcement
of such remedies is considered in a proceeding in equity or at law).
(c) The consummation of any of the transactions contemplated by,
or the fulfillment of the terms of, this Agreement (A) will not constitute
a breach of any term or provision of the certificate of incorporation or
by-laws of BVCC, or (B) conflict with or constitute a breach, violation, or
acceleration of or a default under the terms of any indenture or other
agreement or instrument to which BVCC is a party or by which it is bound,
or any statute, regulation, or order applicable to BVCC of any governmental
body, administrative agency, regulatory body, or court having jurisdiction
over BVCC or BVCC's material properties, that materially and adversely
affects or would in the future materially and adversely affect (i) the
ability of BVCC to perform its obligations under this Agreement or (ii) the
business, operations, or financial condition, or the material properties or
assets of BVCC. BVCC is not a party to, bound by or in breach or violation
of any indenture or other material agreement or instrument, or subject to
or in violation of any statute, regulation, or order of any governmental
body, administrative agency, regulatory body, or court having jurisdiction
over it, that materially and adversely affects or would in the future
materially and adversely affect (i) the ability of BVCC to perform its
obligations under
-6-
<PAGE>
this Agreement or (ii) the business, operations, or financial condition, or
the material properties or assets of BVCC.
(d) There are no actions or proceedings against, or
investigations of, BVCC pending or, to the knowledge of BVCC, threatened
before any court, administrative agency, or other tribunal (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement, (iii) that might
materially and adversely affect the performance by BVCC of its obligations
under, or the validity or enforceability of, this Agreement, or (iv) that
if determined adversely as to BVCC would have a material adverse effect on
the business, operations, or financial condition or the material properties
or assets of BVCC.
(e) There has not been any material adverse change, or
development involving a material adverse prospective change, in the
business, operations, or financial condition or the material properties or
assets of BVCC, taken as a whole, since the end of the most recent fiscal
quarter for which quarterly financial statements were delivered to the
Representatives prior to the date of the related Underwriting Agreement.
(f) Any taxes, fees, and other governmental charges in connection
with the execution and delivery of any Transaction Document have been or
will be paid at or before the Closing Date.
(3) CTL represents and warrants to, and agrees with, each Underwriter
of any Offered Securities as of the date hereof and as of the date of any
Underwriting Agreement that:
(a) The computer tape of the Receivables underlying the Offered
Securities made available to the Representatives by CTL was complete and
accurate as of the date that it was delivered to the Representatives and
accurately reflects both the information appearing on the "Schedule of
Receivables" that will be an exhibit to the Pooling and Servicing Agreement
and the description of the Receivables in the related Prospectus
Supplement.
(b) CTL has been duly incorporated as a corporation and is
validly existing under the laws of the State of California, and has
corporate and other power and authority to own its properties and conduct
its business, as now conducted by it, and to enter into and perform its
obligations under the Transaction Documents.
(c) This Agreement has been duly authorized, executed, and
delivered by CTL and the other Transaction Documents to which it is a
party, when delivered by CTL, will each have been duly authorized,
executed, and delivered by CTL, and each such Transaction Document will
constitute a legal, valid, and binding agreement of CTL, enforceable
against CTL in accordance with its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization,
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<PAGE>
moratorium, receivership, and other similar laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
the enforcement of such remedies is considered in a proceeding in equity or
at law).
(d) The Offered Securities and Transaction Documents will conform
in all material respects to the description thereof contained in the
Prospectus and, assuming that the Offered Securities have been duly and
validly authorized, executed, and issued by the Trustee in accordance with
the Pooling and Servicing Agreement, will, when duly and validly
authenticated by the Trustee and delivered to and paid for by the
Underwriters in accordance with this Agreement and the Underwriting
Agreement, be entitled to the benefits of the Pooling and Servicing
Agreement.
(e) As of the Closing Date, each of the Receivables will meet the
criteria for selection described in the Prospectus, and on such Closing
Date the representations and warranties of CTL with respect to the
Receivables contained in the Purchase Agreement will be true and correct.
(f) Neither the sale of the Offered Securities, nor the
consummation of any other of the transactions contemplated by, nor the
fulfillment of the terms of, any Transaction Document to which it is a
party, (A) will constitute a breach of any term or provision of the
certificate of incorporation or by-laws of CTL, or (B) conflict with or
constitute a breach, violation, or acceleration of or a default under the
terms of any indenture or other agreement or instrument to which CTL is a
party or by which it is bound, or any statute, regulation, or order
applicable to CTL of any governmental body, administrative agency,
regulatory body, or court having jurisdiction over CTL or CTL's material
properties, that materially and adversely affects or would in the future
materially and adversely affect (i) the ability of CTL to perform its
obligations under any Transaction Document to which it is a party or (ii)
the business, operations, or financial condition, or the material
properties or assets of CTL. CTL is not a party to, bound by or in breach
or violation of any indenture or other material agreement or instrument, or
subject to or in violation of any statute, regulation, or order of any
governmental body, administrative agency, regulatory body, or court having
jurisdiction over it, that materially and adversely affects or would in the
future materially and adversely affect (i) the ability of CTL to perform
its obligations under any Transaction Document to which it is a party or
(ii) the business, operations, or financial condition, or the material
properties or assets of CTL.
(g) There are no actions or proceedings against, or
investigations of, CTL pending or, to the knowledge of CTL, threatened
before any court, administrative agency, or other tribunal (i) asserting
the invalidity of any Transaction Document or the Offered Securities, (ii)
seeking to prevent the issuance of the Offered Securities or the
consummation of any of the transactions contemplated by any Transaction
Document, (iii) that might materially and adversely affect the performance
by CTL of its obligations under, or the validity or enforceability of, any
Transaction Document or the Offered Securities, (iv) seeking to affect
adversely the federal income tax attributes
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<PAGE>
of the Offered Securities described in the Prospectus, or (v) that if
determined adversely as to CTL would have a material adverse effect on the
business, operations, or financial condition or the material properties or
assets of CTL.
(h) There has not been any material adverse change, or
development involving a material adverse prospective change, in the
business, operations, or financial condition or the material properties or
assets of CTL, taken as a whole, since the end of the most recent fiscal
quarter for which [SPECIFY REPORTS/FINANCIAL STATEMENTS FILED WITH A
REGULATORY AGENCY] were delivered to the Representatives prior to the date
of the related Underwriting Agreement.
(i) Any taxes, fees, and other governmental charges in connection
with the execution and delivery of any Transaction Document and the
execution, delivery, and sale of the Offered Securities have been or will
be paid at or before the Closing Date.
III.
Purchase By the Underwriters. The Offered Securities to be purchased
----------------------------
by the Underwriters pursuant to the Underwriting Agreement relating thereto in
such authorized denominations and registered in such names as the Underwriters
may request upon three full Business Days prior notice to BVSC, shall be
delivered by or on behalf of BVSC to the Representatives for the account of such
Underwriters, against payment by such Underwriters or on such Underwriters'
behalf of the purchase price therefor (i) by wire transfer or by certified or
official bank check or checks, payable to the order of BVSC in immediately
available funds, or (ii) by such other means and in such form as is specified in
the Underwriting Agreement, all at the place, time, and date specified in the
Underwriting Agreement or at such other place, time, and date as the
Underwriters and BVSC may agree upon in writing, such time and date being herein
called the "Closing Date" for such Offered Securities.
------------
BVSC agrees to have the Offered Securities available for inspection,
checking, and packaging by the Representatives in New York, New York (or such
other location as may be specified by the Representatives) not later than 10:00
A.M. on the Business Day prior to the Closing Date.
IV.
Offering by the Underwriters. BVSC is advised by the Representatives
----------------------------
that upon the execution of the Underwriting Agreement and authorization by the
Representatives of the release of such Offered Securities, the Underwriters
propose to offer such Offered Securities for sale upon the terms and conditions
set forth in the Prospectus as amended or supplemented. BVSC agrees that the
Underwriters are not obligated to make a market in the Offered Securities and
any such market-making may be discontinued at any time in the Underwriters' sole
discretion.
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<PAGE>
V.
Agreements. BVSC agrees with each of the Underwriters of any Offered
----------
Securities that:
(a) BVSC will promptly advise each such Underwriter (i) when
any amendment to the Registration Statement shall have become effective,
(ii) of any request by the Commission for any amendment to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceeding for that purpose and (iv) of the receipt by BVSC of any
notification with respect to the suspension of the qualification of the
Offered Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. BVSC will not file any
amendment to the Registration Statement or supplement to the Prospectus
after the date of the Underwriting Agreement and prior to the Closing Date
for such Offered Securities unless BVSC has furnished each such Underwriter
a copy for its review prior to filing and will not file any such proposed
amendment or supplement to which any such Underwriter reasonably objects.
Subject to the foregoing sentence, if required under the Act, BVSC will
cause the Prospectus, as supplemented or amended, to be transmitted to the
Commission for filing pursuant to Rule 424(b) under the Act by means
reasonably calculated to result in timely filing with the Commission
pursuant to said rule. BVSC will use its best efforts to prevent the
issuance of any stop order suspending the effectiveness of the Registration
Statement and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered, any event
occurs as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the Act or
the rules under the Act, BVSC will promptly prepare and file with the
Commission, subject to paragraph (a) of this Article V, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance and, if such amendment or supplement is
required to be contained in a post-effective amendment to the Registration
Statement, will use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as possible.
(c) BVSC will furnish to the Underwriters, without charge,
executed copies of the Registration Statement (including exhibits thereto)
and, so long as delivery of a prospectus by the Underwriters or a dealer
may be required by the Act, as many copies of the Preliminary Prospectus
and Prospectus, as amended or supplemented, and any amendments and
supplements thereto as the Underwriters may
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<PAGE>
reasonably request. BVSC will pay the expenses of printing all offering
documents relating to the offering of the Offered Securities.
(d) BVSC agrees that, so long as the Offered Securities shall
be outstanding, promptly after the availability thereof, it will deliver or
cause to be delivered to the Representatives the annual statement as to
compliance delivered to the Trustee pursuant to the Pooling and Servicing
Agreement, the annual statement of a firm of independent public accountants
furnished to the Trustee pursuant to the Pooling and Servicing Agreement,
and the Servicer's Certificate and all monthly reports generated by the
Servicer under the Pooling and Servicing Agreement.
(e) As soon as practicable, but not later than sixteen months
after the effective date of the Registration Statement, BVSC will cause the
Trust to make generally available to securityholders of the Trust an
earnings statement of the Trust covering a period of at least 12 months
beginning after the effective date of the Registration Statement which will
satisfy the provisions of Section 11(a) of the Act and, at the option of
BVSC, will satisfy the requirements of Rule 158 under the Act.
(f) BVSC will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify the
Offered Securities for sale (including, but not limited to, such action as
may be required for the qualification or exemption of the sale of the
Offered Securities under state securities or Blue Sky laws) and to
determine their eligibility for investment under the laws of such
jurisdictions as the Underwriters may designate and will maintain such
qualification in effect so long as required for the distribution of the
Offered Securities. BVSC will furnish such information, execute such
instruments and take such action, if any, as the Underwriters may
reasonably request in connection with any filing with the National
Association of Securities Dealers, Inc. relating to the Offered Securities
should the Underwriters determine that such filing is required or
appropriate.
(g) Unless otherwise provided in the related Underwriting
Agreement, BVSC will pay all costs and expenses in connection with the
transactions herein contemplated, including, but not limited to, the fees
and disbursements of its counsel; the costs and expenses of preparation and
printing (or otherwise reproducing) and delivering each Transaction
Document, and printing or engraving and distributing the Offered
Securities; any transfer taxes relating to the transfer of the Offered
Securities to the Underwriters; accounting fees and disbursements; the
costs and expenses in connection with the qualification or exemption of the
sale of the Offered Securities under state securities or Blue Sky laws and
the determination of their eligibility for investment under state and
federal laws, including filing fees and reasonable fees and disbursements
of counsel in connection therewith; the costs and expenses of the Trustee,
including reasonable fees and disbursements of its counsel; the costs and
expenses of any credit enhancer, including reasonable fees and
disbursements of its counsel; fees and disbursements of the Underwriters'
counsel; the costs and expenses of preparing and distributing any memoranda
concerning the Offered
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<PAGE>
Securities' eligibility for investment; the costs and expenses in
connection with the preparation, printing, and filing of the Registration
Statement (including exhibits thereto), Preliminary Prospectus, and the
Prospectus and all amendments and supplements thereto, and the furnishing
to the Underwriters of such copies of each such documents thereto as the
Underwriters may reasonably request; the fees of the rating agency that
initially rates the Offered Securities; and any filing fees of the National
Association of Securities Dealers, Inc. relating to the Offered Securities
should the Underwriters determine that such filing is required or
appropriate.
(h) Each Underwriting Agreement will specify a period of days
beginning from each Effective Date during which neither BVSC nor any
affiliate of BVSC will, without the Underwriters' prior written consent,
enter into any agreement to offer or sell receivables or securities as
identified in such Underwriting Agreement.
(i) So long as any of the Offered Securities are outstanding,
BVSC will furnish to the Underwriters as soon as practicable after the end
of the fiscal year, (i) all documents required to be distributed to
securityholders of the Trust or filed with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
------------
order of the Commission thereunder and (ii) from time to time, any other
information concerning BVSC filed with any government or regulatory
authority that is otherwise publicly available.
(j) On or before the Closing Date, BVSC and CTL shall cause
their computer records relating to the Receivables to be marked in such a
manner as shall clearly indicate the Trust's absolute ownership of the
Receivables, and from and after the Closing Date BVSC and CTL shall not
take any action inconsistent with the Trust's ownership of such
Receivables, other than as permitted by the Pooling and Servicing
Agreement.
(k) To the extent, if any, that the rating provided with
respect to the Offered Securities by the rating agency that initially rates
the Offered Securities is conditional upon the furnishing of documents or
the taking of any other actions by BVSC, BVSC shall, as soon as
practicable, furnish such documents and take any such other actions.
VI.
Conditions to the Obligations of the Underwriters. The obligation of the
-------------------------------------------------
Underwriters of any Offered Securities under the Underwriting Agreement to
purchase the Offered Securities shall be subject to the accuracy of the
representations and warranties on the part of BVSC, BVCC and CTL contained
herein as of the date hereof and the Closing Date, to the accuracy of the
statements of BVSC made in any certificates pursuant to the provisions hereof,
to the performance by BVSC of its obligations hereunder and to the following
additional conditions with respect to the Offered Securities:
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<PAGE>
(a) The Registration Statement shall have become effective not
later than 4:00 p.m., New York City time, on the day following the
Effective Date; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened; and, if required, the
Prospectus shall have been timely filed with the Commission pursuant to
Rule 424(b) under the Act.
(b) The Underwriters shall have received from Silver, Freedman
& Taff, L.L.P., counsel for BVSC and CTL and such other counsels admitted
in the appropriate jurisdictions acceptable to the Representative,
favorable opinions, dated the Closing Date and satisfactory in form and
substance to counsel for the Underwriters, to the effect set forth in
Exhibit A. Such opinions (a) may express reliance as to factual matters on
the representations and warranties made by, and on certificates or other
documents furnished by, officers of the parties to the Transaction
Documents, (b) may assume the due authorization, execution, and delivery of
the instruments and documents referred to therein by the parties thereto
other than CTL, BVSC and their respective affiliates, and (c) to the extent
such opinion relates to law other than the laws of the State of New York
and the federal laws of the United States, may rely on a favorable opinion
of local counsel satisfactory to the Representatives, dated the Closing
Date, and satisfactory in form and substance to counsel for the
Underwriters.
(c) Silver, Freedman & Taff, L.L.P. and/or such other counsels
will also deliver opinions to the Underwriters, dated the Closing Date and
satisfactory in form and substance to counsel for the Underwriters with
respect to certain insolvency and Uniform Commercial Code matters
substantially to the following effect: (i) that if BVCC were to become a
debtor under the United States Bankruptcy Code (the "Bankruptcy Code"),
---------------
that a court would not disregard the separate corporate existence of BVSC
so as to order substantive consolidation of the assets and liabilities of
BVSC with those of BVCC, (ii) that if the FDIC were to be appointed
receiver or conservator for CTL, that a court would not disregard the
separate corporate existence of BVSC so as to include the assets and
liabilities of BVSC with those of the CTL receivership or conservatorship
estate or otherwise impair the enforceability of the Pooling and Servicing
Agreement by the Trustee, (iii) that if the FDIC were to be appointed
receiver or conservator for CTL, a court would hold that the Receivables
and proceeds thereof are not property of the receivership or
conservatorship estate of CTL and (iv) that (x) if BVSC were to become a
debtor under the Bankruptcy Code, a court would hold that the Receivables
and proceeds thereof are not property of the estate of BVSC under the
Bankruptcy Code and that the automatic stay provisions under the Bankruptcy
Code are not applicable to payments of the Offered Securities or (y)
notwithstanding clause (x), if a court were to so conclude that the
Receivables are property of the estate of BVSC, the Trustee has a first
perfected security interest in the Receivables and the proceeds thereof.
(d) For each State for which the Receivables constitute
________ or more of the initial principal balance of a Receivables included
in the Trust Fund, the
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<PAGE>
Underwriters shall have received from legal counsel to BVSC admitted in the
appropriate jurisdictions acceptable to the Representative, favorable
opinions, dated the Closing Date and satisfactory in form and substance to
the counsel for the Underwriters that (i) the Servicer is qualified (or
otherwise exempt from qualification) to transact business in such state and
holds all necessary licenses to transact its business in such state, (ii)
that BVSC and the Trust need not qualify to do business in such state and
need not obtain any licenses to transact its business in such state, (iii)
that the Receivables originated in such state are "chattel paper" under the
Uniform Commercial Code in such state, (iv) the procedures followed by CTL
in such state are sufficient to give CTL a first perfected security
interest in the Financed Vehicles originated in such state, (v) after
giving effect to the transactions contemplated by the Purchase Agreement
and the Pooling and Servicing Agreement, the Trustee will have a first
perfected security interest in the Financed Vehicles, (vi) that the forms
of receivables used in such state are enforceable under the laws of such
state and are otherwise in compliance with such state's consumer protection
laws and (vii) that the statements in the Prospectus under "Certain Legal
Aspects of the Receivables" insofar as they relate to the laws of such
state are true and correct in all material respects.
(e) The Underwriters shall have received from counsel for the
Underwriters, a favorable opinion, dated the Closing Date and satisfactory
in form and substance to the Underwriters, with respect to the issuance and
sale of the Securities, certain matters with respect to the Registration
Statement and the Prospectus and such other matters as the Underwriters may
require.
(f) The Underwriters shall have received on the Closing Date,
addressed to the Underwriters and dated the Closing Date, any opinion
delivered to the rating agency or credit enhancer in connection with its
rating of the Offered Securities.
(g) The Underwriters shall have received from counsel for the
Trustee, a favorable opinion dated the Closing Date and satisfactory in
form and substance to counsel for the Underwriters, to the effect set forth
in Exhibit B.
(h) The Underwriters shall have received a favorable opinion
addressed to the Underwriters from counsel for the third party credit
enhancer, if any, dated the Closing Date and satisfactory in form and
substance to counsel for the Underwriters.
(i) The Offered Securities shall be rated in the highest
category by a nationally recognized rating agency or such other category as
shall be designated in the Underwriting Agreement. Further, subsequent to
the execution and delivery of this Agreement and prior to the Closing Date,
there shall not have occurred any downgrading, nor shall any notice have
been given of (i) any intended or potential downgrading or (ii) any review
or possible change that does not indicate the direction of a possible
change, in the rating accorded (i) the Offered Securities by any nationally
recognized rating agency which rates the Offered Securities, (ii) any rated
debt
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<PAGE>
instrument issued by BVSC or (iii) any rated debt instrument issued by the
third party credit enhancer, if any.
(j) BVSC, CTL and BVCC will enter into each Transaction
Document to which it is a party at or before the Closing Date and, when
delivered by BVSC, CTL and BVCC as the case may be, each such Transaction
Document will have been duly authorized, executed, and delivered by such
entity and will constitute the legal, valid, and binding agreement of such
entity.
(k) Each of CTL and BVSC shall have delivered to the
Underwriters a certificate, dated the Closing Date, of the President or a
Vice President to the effect that the signer of such certificate has
carefully examined each Transaction Document and to the effect that: (i)
the representations and warranties of such entity contained in such
agreements are true and current in all material respects at and as of the
Closing Date with the same effect as if made at the Closing Date, (ii) such
entity has complied in all material respects with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date, (iii) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to such entity's knowledge threatened,
(iv) there shall have been no material adverse change in the condition of
such entity, from that set forth in the Registration Statement, (v) nothing
has come to his attention that would lead him to believe that the
Prospectus or Registration Statement contains any untrue statement of a
material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, (vi) such entity has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of its organization with corporate and other power and
authority to own its properties and conduct its business, as now conducted
by it, and to enter into and perform its obligations under each Transaction
Document, (vii) each Transaction Document has been duly authorized,
executed, and delivered by such entity, (viii) the fulfillment of the terms
of each Transaction Document will not constitute a material breach of any
term or provision of the charter or by-laws of such entity, or conflict
with or constitute a material breach, violation, or acceleration of or a
default under, the terms of any indenture or other material agreement or
instrument to which such entity is a party, and (ix) such entity is not a
party to, bound by, or in breach or violation of any indenture or other
material agreement or instrument, or subject to or in violation of any
statute, regulation, or order of any governmental body, administrative
agency, regulatory body, or court having jurisdiction over such entity,
that materially and adversely affects or would in the future materially and
adversely affect the business, operations, or financial condition or the
material properties or assets of such entity.
(l) The Underwriters shall have received from independent
accountants of BVSC, one or two letters, one such letter dated the date of
the Prospectus relating to such Offered Securities and satisfactory in form
and substance to the Underwriters and counsel for the Underwriters, and a
second letter, if necessary,
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<PAGE>
dated the Closing Date, as to such matters as the Underwriters may
reasonably request in form and substance satisfactory to the Underwriter
and counsel to the Underwriters, provided by BVSC.
(m) All proceedings in connection with the transactions
contemplated by the Offered Certificates, each Transaction Document and all
documents incident hereto or thereto shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters, and the
Underwriters and counsel for the Underwriters shall have received such
information, certificates, opinions, and documents as the Underwriters may
reasonably request.
VII.
Reimbursement of Underwriters' Expenses. If the sale of any Offered
---------------------------------------
Securities provided for in the Underwriting Agreement relating thereto is not
consummated because any condition to the obligations of the Underwriters set
forth in Article VI hereof is not satisfied or because of any refusal,
inability, or failure on the part of BVSC or CTL to perform any agreement herein
or therein or comply with any provision hereof, other than by reason of a
default by the Underwriters, BVSC, CTL and BVCC, jointly and severally will
reimburse the Underwriters upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by the Underwriters in connection with the proposed purchase and sale
of such Offered Securities.
VIII.
Indemnification and Contribution. (a) CTL, BVSC and BVCC, jointly and
--------------------------------
severally, agree to indemnify and hold harmless the Underwriters and each person
who controls any Underwriter within the meaning of the Act or the Exchange Act
from and against any and all losses, claims, damages, or liabilities, joint or
several, to which the Underwriters may become subject under the Act, the
Exchange Act, or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) (i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement as originally filed or in any amendment thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) arise out of or are based upon any untrue
statement of a material fact or omission or alleged omission to state a material
fact contained in the Prospectus (together with any supplement thereto)
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, on the Effective Date,
if not filed pursuant to Rule 424(b), and on the date of any filing pursuant to
Rule 424(b) and on the Closing Date; and agree to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action, as such expenses are incurred; provided, however, that
-------- -------
neither CTL, BVSC nor BVCC will be liable in any such case to the
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<PAGE>
extent that any such loss, claim, damage, or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance on and in conformity with information
furnished in writing to CTL, BVSC and/or BVCC as herein stated by or on behalf
of the Underwriters specifically for use in connection with the preparation
thereof. This indemnity agreement will be in addition to any liability that CTL,
BVSC and BVCC may otherwise have.
(b) The Underwriters agree, severally and not jointly, to
indemnify and hold harmless CTL, BVSC and BVCC, its directors, each of CTL's,
BVSC's and BVCC's officers who sign the Registration Statement, and each person,
if any, who controls CTL, BVSC and BVCC within the meaning of the Act, to the
same extent as the foregoing indemnity from CTL, BVSC and BVCC to the
Underwriters, but only insofar as such losses, claims, damages, or liabilities
arise out of or are based upon any untrue statement or omission or alleged
untrue statement or omission that was made in the Registration Statement, any
Preliminary Prospectus or the Prospectus, as amended or supplemented, or any
amendment or supplement thereto, in reliance on and in conformity with
information furnished in writing to CTL, BVSC and/or BVCC as herein stated by or
on behalf of the Underwriters specifically for use in the preparation of the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability that the Underwriters may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraphs (a) or (b), such person (the
"indemnified party") shall promptly notify the person against whom such
-----------------
indemnity may be sought (the "indemnifying party") in writing and the
------------------
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
in addition to any local counsel for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by PaineWebber Incorporated in the case of parties
indemnified pursuant to paragraph (a) of this Article VIII and by BVCC in the
case of parties indemnified pursuant to paragraph (b) of this Article VIII. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have
-17-
<PAGE>
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the third sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 calendar days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in this Article VIII is
unavailable to an indemnified party under paragraphs (a) or (b) of this Article
VIII or is insufficient in respect of any losses, claims, damages, or
liabilities referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by CTL, BVSC and/or BVCC on the one hand, and the Underwriters
on the other, from the offering of the Offered Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of CTL, BVSC and BVCC on
the one hand, and the Underwriters on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages, or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by CTL, BVSC and BVCC on the one hand, and the
Underwriters on the other, in connection with the offering of the Offered
Securities shall be deemed to be in the same proportion as the total net
proceeds from the offering of such Offered Securities (before deducting
expenses) received by CTL, BVSC and BVCC bear to the total underwriting
discounts and commissions received by the Underwriters in respect thereof. The
relative fault of CTL, BVSC and/or BVCC on the one hand, and the Underwriters on
the other, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by CTL, BVSC
and/or BVCC or the Underwriters and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission.
(e) CTL, BVSC, BVCC and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Article VIII were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating
-18-
<PAGE>
or defending any such action or claim. Notwithstanding the provisions of this
Article VIII, no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts received by it. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Article VIII are several, in proportion to the respective
principal amounts of Offered Securities purchased by each of such Underwriters
(as defined in the Agreement Among Underwriters), and not joint.
IX.
Termination. This Agreement and each Underwriting Agreement shall be
-----------
subject to termination in your absolute discretion, by notice given to BVSC, if
(a) after the execution and delivery of this Agreement and prior to the Closing
Date (i) trading generally shall have been suspended or materially limited on or
by, as the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (ii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities, or
(iii) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and (b) the events specified in clause (a) singly or
together with any other such event makes it, in your judgment, impracticable to
market the Offered Securities on the terms and in the manner contemplated in the
Prospectus.
X.
Substitution Of and Default By An Underwriter. If, on the Closing Date,
---------------------------------------------
any one or more of the Underwriters shall fail or refuse to purchase the Offered
Securities which it or they have agreed to purchase under the Underwriting
Agreement relating thereto, and the aggregate principal amount of the Offered
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Offered Securities to which such Underwriting Agreement relates,
the other Underwriters shall be obligated severally in the proportions which the
amounts of such Offered Securities set forth opposite their names in such
Underwriting Agreement bear to the aggregate principal amount of such Offered
Securities set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as the Representatives may specify, to purchase the
Offered Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase; provided that in no event shall the principal
amount of the Offered Securities which any Underwriter has agreed to purchase
hereunder be increased pursuant to this Article X by an amount in excess of one-
ninth of such principal amount of such Offered Securities without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase the Offered Securities which it or
they agreed to purchase hereunder and the aggregate principal amount of the
Offered Securities which such defaulting Underwriter or
-19-
<PAGE>
Underwriters agreed but failed or refused to purchase is more than one-tenth of
the aggregate principal amount of the Offered Securities to which such
Underwriting Agreement relates and arrangements satisfactory to the
Representatives and BVSC for the purchase of such Offered Securities are not
made within 36 hours after such default, such Underwriting Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or of
CTL, BVCC or BVSC. In any such case either the Representatives or BVSC shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
affected. Any action taken under this Article X or any such termination shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement or such Underwriting Agreement.
XI.
Representations and Indemnities to Survive. The respective agreements,
------------------------------------------
representations, warranties, indemnities, and other statements of CTL, BVSC or
BVCC or on their behalf by its officers and the Underwriters set forth in or
made pursuant to this Agreement and each Underwriting Agreement will remain in
full force and effect, regardless of any investigation made by the Underwriters
or on the Underwriters' behalf, CTL, BVSC or BVCC or any of the officers,
directors, or controlling persons referred to in Article VIII hereof, and will
survive delivery of and payment for the Offered Securities. The provisions of
Sections V(g), VII, and VIII hereof shall survive the termination or
cancellation of this Agreement or any Underwriting Agreement.
XII.
Notices. All communications hereunder or under any Underwriting
-------
Agreement will be in writing and effective only on receipt, mailed, delivered or
sent by facsimile and reconfirmed by telephone to the following parties at the
following addresses and telephone numbers:
Bay View Capital Corporation
2121 South El Camino Real
San Mateo, California 94403-1897
Attention: [______________]
Telephone: [______________]
Facsimile: [______________]
California Thrift & Loan
1818 Oakpark Road
Covina, California 91724
Attention: [______________]
Telephone: [______________]
Facsimile: [______________]
Bay View Securitization Corporation
2121 South El Camino Real
-20-
<PAGE>
San Mateo, California 94403
Attention: Robert J. Flax
Telephone: (415) 573-7300
Facsimile: (415)
-----------
PaineWebber Incorporated
1285 Avenue of the Americas
11th Floor
New York, New York 10019
Attention: Barbara Dawson
Telephone: (212) 713-8376
Facsimile: (212) 713-7999
XIII.
Successors. None of the obligations of CTL, BVSC or BVCC under this
----------
Agreement or any Underwriting Agreement may be assigned without the prior
consent of the Representatives. Subject to the foregoing, this Agreement and
each Underwriting Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers and directors
and controlling persons referred to in Article VIII hereof, and their successors
and assigns, and no other person will have any right or obligation hereunder.
XIV.
Applicable Law. This Agreement and each Underwriting Agreement will be
--------------
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed therein. This Agreement and
any Underwriting Agreement may be executed in any number of counterparts, each
of which shall for all purposes be deemed to be an original and all of which
shall together constitute but one and the same instrument.
XV.
Headings. The headings used in this Agreement are for convenience of
--------
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
-21-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement between CTL, BVSC
and BVCC and you.
Very truly yours,
BAY VIEW SECURITIZATION CORPORATION
By:
-------------------------------
Name:
Title:
BAY VIEW CAPITAL CORPORATION
By:
-------------------------------
Name:
Title:
CALIFORNIA THRIFT & LOAN
By:
-------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PAINEWEBBER INCORPORATED
By:
-------------------------------
Name:
Title:
-22-
<PAGE>
EXHIBIT A
OPINION OF COUNSEL FOR BAY VIEW SECURITIZATION CORPORATION
(i) BVSC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and Prospectus
and to enter into and perform its obligations under the Offered Securities and
each Transaction Document and had at all times relevant to each such agreement
and now has requisite power, authority and legal right to acquire, own and sell
the Receivables.
(ii) CTL has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of California with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and Prospectus
and to enter into and perform its obligations under each Transaction Document
and had at all times relevant to each such agreement and now has the power,
authority and legal right to originate, acquire, own, and sell the Receivables.
(iii) To such counsel's knowledge, each of BVSC and CTL is duly qualified
to do business and in good standing and has obtained all necessary licenses and
approvals in each jurisdiction in which failure to qualify or to obtain such
license or approval would have a material adverse effect on the transactions
contemplated by the Offered Securities and each Transaction Document or would
render any Receivable unenforceable by CTL, BVSC or the Trustee on behalf of any
holder of the Offered Securities.
(iv) The Registration Statement (which for purposes of such opinion shall
not be deemed to include any exhibits filed therewith) has become effective
under the Act and, to such counsel's knowledge, no proceedings for a stop order
have been instituted or are threatened therefor by the Commission.
(v) The Registration Statement, as of the Effective Date, and the
Prospectus, as of the date thereof complied as to form in all material respects
with the requirements of the Act and the rules thereunder.
(vi) The conditions to the use by BVSC of a registration statement on Form
S-3 under the Act, as set forth in the General Instructions to Form S-3, have
been satisfied with respect to the Registration Statement and the Prospectus.
(vii) Each Transaction Document has been duly authorized, executed, and
delivered by each of CTL and BVSC and each constitutes a legal, valid, and
binding agreement of each of CTL and BVSC, enforceable against each of CTL and
BVSC in accordance with its respective terms, except (i) as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, receivership,
or other similar laws affecting the enforcement of creditors' rights in general
and may be further limited by the
A-1
<PAGE>
exercise of judicial discretion in applying principles of equity, including (but
not limited to) the availability or effects of a preliminary injunction, a
restraining order, or specific performance (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and (ii) the
enforcement of certain provisions respecting indemnification and contribution
may be limited by applicable law or public policy.
(viii) To such counsel's knowledge, neither CTL nor BVSC is in violation of
its respective certificate of incorporation or bylaws or in default under any
agreement, indenture or instrument the effect of which violation or default
would have a material adverse effect on the transactions contemplated by the
Offered Securities and the Transaction Documents or would render any Receivable
unenforceable by CTL, BVSC or the Trustee on behalf of the Trust.
(ix) Neither BVSC nor the Trust Fund is an "investment company" or under
the "control" of an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
(x) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended, and the Trust Fund is not
required to be registered under the Investment Company Act of 1940, as amended.
(xi) No registration with or consent, approval, authorization or order of
any Federal court or governmental agency or body is required for the
consummation by each of CTL and BVSC of the transactions contemplated by the
Agreement or the Underwriting Agreement, except such as may be required under
the Securities Act of 1933, as amended, and the Blue Sky laws of any
jurisdiction in connection with the offer and sale of the Offered Securities.
(xii) The execution and delivery of each Transaction Document, sale of the
Offered Securities to the Underwriters pursuant to the Agreement and the
Underwriting Agreement, the transfer of the Receivables, the assignment of the
security interest in the Financed Vehicles, to BVSC and by BVSC to the Trustee
acting on behalf of the Trust, and the consummation of the other transactions
contemplated by the Offered Securities and each Transaction Document do not
constitute a breach or violation of any term or provision of, or a default
under, the Charter or Certificate of Incorporation or By-laws of BVSC or CTL, or
any State or Federal statute or regulation known to such counsel to be
applicable to BVSC or CTL or, to the best knowledge of such counsel, any order
of any State or Federal court, regulatory body, administrative agency or
governmental body having jurisdiction over BVSC or CTL, or, to the best
knowledge of such counsel, any indenture or other material agreement or
instrument to which BVSC or CTL is a party or by which either of them is bound.
(xiii) No filing or other action other than the filing of the Uniform
Commercial Code financing statements (i) naming CTL as seller and BVSC as buyer
and (ii) naming BVSC as seller and the Trustee as buyer, which have been
completed and filed in the appropriate filing office, is necessary to perfect
the sale and transfer of the Receivables (i) by CTL to BVSC and (ii) by BVSC to
the Trustee acting on behalf of the Trust; provided,
--------
A-2
<PAGE>
however, that any such transfer may be subject to the rights of purchasers who
- -------
take possession of any of the Receivables for value in the ordinary course of
business without knowledge of the transfer to the Trustee.
(xiv) The Offered Securities have been duly authorized by BVSC and
assuming that the Offered Securities are duly executed, authenticated, and
delivered by the Trustee as specified in the Pooling and Servicing Agreement and
are issued and delivered to, and paid for by, the Underwriters pursuant to this
Agreement and the Underwriting Agreement, will be validly issued and
outstanding, will evidence valid ownership interests in the Trust Fund, and will
be entitled to the benefits of the Pooling and Servicing Agreement.
(xv) BVSC has the corporate power and authority to assign and deliver the
Trust Fund to the Trustee under the Pooling and Servicing Agreement in exchange
for the Offered Securities, has duly authorized such assignment and delivery to
the Trustee by all necessary action on the part of BVSC, and the Trust Fund has
been duly and validly assigned and delivered by BVSC to the Trustee under the
Pooling and Servicing Agreement.
(xvi) The statements in the Prospectus under the captions "Summary of
Terms," "Risk Factors--Certain Legal Aspects--Security Interests in Financed
Vehicles," "Risk Factors--Certain Legal Aspects," "The Trusts," "The Receivables
Pools," "Pool Factors and Other Certificate Information" and "Description of the
Certificates," "Description of the Transfer and Servicing Agreements," and in
the Prospectus Supplement under the captions ["Summary of Terms," "Formation of
the Trust," "The Trust Property," "The Receivables Pool," "Yield
Considerations," "Certificate Factors and Other Certificate Information," "Use
of Proceeds," "Bay View Capital Corporation and Affiliates," "The Certificates,"
and "Certain Legal Aspects of the Receivables,"] insofar as such statements
constitute a summary of the Offered Securities and Transaction Documents or
other documents, and matters of law, summaries of legal matters or legal
conclusions, have been reviewed by such counsel and are accurate in all material
respects.
(xvii) The statements in the Prospectus under the captions "Certain Federal
Income Tax Consequences" (including the description of such counsel's opinion
expressed therein) and "ERISA Considerations" and in the Prospectus Supplement
under the captions ["Summary of Terms -- Tax Status," "Certain Federal Income
Tax Consequences" (including the description of such counsel's opinion expressed
therein) "Summary of Terms -- ERISA Considerations," and "ERISA Considerations"]
insofar as such statements constitute a summary of matters of law, summaries of
legal matters, or legal conclusions, have been reviewed by such counsel and are
accurate in all material respects.
(xviii) To such counsel's knowledge and other than as set forth or
contemplated in the Prospectus, there are no legal or governmental proceedings
pending, threatened, or contemplated to which BVSC or CTL is a party or by which
any property of BVSC or CTL is the subject (A) asserting the invalidity of the
Offered Securities or any Transaction Document, (B) seeking to prevent the
issuance of the Offered Securities or the consummation of any of the
transactions contemplated by the Offered Securities or any Transaction Document,
or (C)
A-3
<PAGE>
which, if determined adversely to BVSC or CTL, would individually or in
the aggregate have a material adverse effect on (1) the ability of BVSC or CTL
to perform its obligations under the Offered Securities or any Transaction
Document, or (2) the business, operations, financial condition, properties or
assets of BVSC or CTL.
(xix) Each of this Agreement and the Underwriting Agreement has been duly
authorized, executed, and delivered by BVCC and each such agreement constitutes
a legal, valid, and binding agreement of BVCC, enforceable against BVCC in
accordance with its respective terms, except (i) as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, receivership, or
other similar laws affecting the enforcement of creditors' rights in general and
may be further limited by the exercise of judicial discretion in applying
principles of equity, including (but not limited to) the availability or effects
of a preliminary injunction, a restraining order, or specific performance
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and (ii) the enforcement of certain provisions respecting
indemnification and contribution may be limited by applicable law or public
policy.
Such counsel shall also state that, during the preparation of the
Registration Statement and the Prospectus, including amendments and supplements
thereto, such counsel participated in conferences with officers and other
representatives of CTL, BVSC, their respective accountants, the Underwriters and
counsel for the Underwriters and that, while such counsel has not undertaken to
determine independently, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement the Prospectus (and amendments and supplements thereto)
on the basis of such conferences and such counsel's review of the documents
referenced in such counsel's opinion, no facts have come to the attention of
such counsel that have caused such counsel to believe that (1) the Registration
Statement contained, at the Effective Date, an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (2) the Prospectus
contained on the date thereof, at the Effective Time or contains, as amended or
supplemented, if applicable, on the Closing Date, an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and (3) there are any material contracts, indentures,
or other documents of a character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration Statement
other than those described therein or so filed.
A-4
<PAGE>
EXHIBIT B
OPINION OF COUNSEL FOR THE TRUSTEE
(i) the Trustee has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate or other) and to enter
into, and to take all action required of it under, the Pooling and Servicing
Agreement;
(ii) the Pooling and Servicing Agreement has been duly authorized,
executed, and delivered by the Trustee and constitutes a legal, valid and
binding obligation of the Trustee enforceable against the Trustee in accordance
with its terms, except as the enforceability thereof may be limited by (a)
bankruptcy, insolvency, reorganization, and other similar laws affecting the
enforcement of creditors' rights generally, as such laws would apply in the
event of a bankruptcy, insolvency or reorganization or similar occurrence
affecting the Trustee, and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
(iii) the Trustee has duly executed the Offered Securities on behalf of
the Trust;
(iv) the Trustee has duly authenticated and delivered the Offered
Securities;
(v) the execution and delivery of the Pooling and Servicing Agreement by
the Trustee and the performance by the Trustee of its terms do not conflict with
or result in a violation of (A) any law or regulation of the United States of
America or the State of [New York] governing the banking or trust powers of the
Trustee, or (B) the Charter or By-laws of the Trustee; and
(vi) no approval, authorization or other action by, or filing with, any
governmental authority of the United States of America or the State of [New
York] having jurisdiction over the banking or trust powers of the Trustee is
required in connection with the execution and delivery by the Trustee of the
Pooling and Servicing Agreement or the performance by the Trustee of the terms
of the Pooling and Servicing Agreement.
B-1
<PAGE>
ANNEX I
[FORM OF UNDERWRITING AGREEMENT]
BAY VIEW SECURITIZATION CORPORATION
CALIFORNIA THRIFT & LOAN
BAY VIEW CAPITAL CORPORATION
AND
PAINEWEBBER INCORPORATED
UNDERWRITING AGREEMENT
FOR
BAY VIEW 199_-_ AUTO TRUST
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
_________, 199_
<PAGE>
___________ ___, 199__
Bay View Capital Corporation
2121 South El Camino Real
San Mateo, California 94403-1897
California Thrift & Loan
1818 Oakpark Road
Covina, California 91723
Bay View Securitization Corporation
2121 South El Camino Real
San Mateo, California 94403
Dear Sirs:
We understand that Bay View Securitization Corporation, a Delaware corporation
("BVSC"), proposes to sell $_______________ aggregate amount of Certificates
----
designated "[ ] Automobile Receivable Pass-Through
Certificates, Series 199_-_" (the "Offered Securities"), issued by Bay View
------------------
199_-_ Auto Trust. Subject to the terms and conditions set forth in or
incorporated by reference in this Underwriting Agreement (this "Agreement"),
---------
[we] [the Underwriters named on page __ of the copy of the Prospectus attached
hereto as Annex A (such Underwriters being herein called the "Underwriters")]
hereby agree severally and not jointly to purchase all of the Offered
Securities. The price at which the Offered Securities are offered to the
public, the underwriting discount on the Offered Securities and the purchase
price at which [we] [the Underwriters] will purchase the Offered Securities are
set forth on the following grid. Accrued interest from _______________ to the
date of payment and delivery of the Offered Securities pursuant to the following
paragraph will be added to the purchase price.
<TABLE>
<CAPTION>
=====================================================================================
Price to Public Underwriting Discount Purchase Price
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
[Per Class A Certificate] % 0.275% %
- -------------------------------------------------------------------------------------
[Per Class I Certificate] 0.500%
- -------------------------------------------------------------------------------------
Total $ $ $
=====================================================================================
</TABLE>
I-1
<PAGE>
We [the Underwriters] will pay for the Offered Securities in immediately
available funds upon delivery of the Offered Securities to or at the offices of
__________________, or at such other location as shall be designated by [us]
[the Underwriters], at _____ A.M. (New York time) on ____________, 199_, or at
such other time, not later than ____________, 199_, as shall be designated by
[us] [the Underwriters] (such time, the "Closing Date").
Pursuant to Article V(h) of the Standard Provisions (as defined below),
during a period of ________ calendar days from ______________, neither BVSC nor
any affiliate of BVSC will, without [our] [the Underwriters'] prior written
consent, enter into any agreement to offer or sell the Offered Securities.
The Offered Securities shall have the terms set forth in the copy of the
Prospectus attached hereto as Annex A and shall conform in all material respects
to the description thereof contained in such Prospectus.
All the provisions contained in that certain Underwriting Agreement
Standard Provisions for Bay View Auto Trusts, Automobile Receivable Pass-Through
Certificates, dated [November __, 1996] (the "Standard Provisions"), by and
among Bay View Capital Corporation, California Thrift & Loan, Bay View
Securitization Corporation and PaineWebber Incorporated, a copy of which you
have previously received, are herein incorporated by reference in their entirety
and shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein. [All references to the
"Underwriters," the "several Underwriters" or the "Representative" in the
Standard Provisions shall be deemed to refer to [ ], the sole Underwriter
hereunder.]
I-2
<PAGE>
Please confirm your agreement by having authorized officers sign a copy of
this Agreement in the spaces set forth below and returning the signed copy to
us.
Very truly yours,
PAINEWEBBER INCORPORATED,
as Underwriter
By:
------------------------------
Name:
Title:
Accepted:____________, 199__
BAY VIEW SECURITIZATION CORPORATION
By:
------------------------------
Name:
Title:
BAY VIEW CAPITAL CORPORATION
By:
------------------------------
Name:
Title:
CALIFORNIA THRIFT & LOAN
By:
------------------------------
Name:
Title:
I-3
<PAGE>
ANNEX A
[Copy of Prospectus]
I-4
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION OF BAYVIEW
SECURITIZATION CORPORATION
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BAY VIEW SECURITIZATION CORPORATION
Bay View Securitization Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
hereby certifies as follows:
1. The name of the corporation is Bay View Securitization Corporation.
Bay View Securitization Corporation was originally incorporated under the same
name, and the original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on November 12, 1996.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Amended and Restated Certificate of Incorporation
restates and integrates and further amends the provisions of the Certificate of
Incorporation of this corporation.
3. The restated certificate of incorporation was duly adopted in
accordance with the applicable provisions of Sections 245 of the General
Corporation Law of the State of Delaware.
4. The text of the Amended and Restated Certificate of Incorporation is
hereby restated and further amended to read in its entirety as follows:
ARTICLE I
Name. The name of the Corporation is Bay View Securitization Corporation
(the "Corporation").
ARTICLE II
Registered Office and Agent. The address of the Corporation's registered
office in the State of Delaware is 1209 Orange Street, Wilmington, Delaware
19801, in the county of New Castle, Delaware. The name of its registered agent
at such address is The Corporation Trust Company.
ARTICLE III
Business and Purposes. The nature of the business or purposes to be
conducted or promoted by the Corporation is to engage exclusively in the
following activities:
(a) To purchase, acquire, own and hold installment sale and installment
loan contracts and security interests, secured by autos, light trucks, vans and
motorcycles (the
<PAGE>
"Receivables"), and in connection with the purchase or acquisition of the
Receivables, the Corporation may purchase and acquire property or assets related
to the Receivables, including the following (the "Related Property"):
(i) Security interests or collateral securing the Receivables;
(ii) Benefits of a letter of credit, surety bond or other credit
enhancement;
(iii) Any recourse rights related to the Receivables;
(iv) Any rights to proceeds from claims or refunds of premiums on physical
damage, lender's insurance of any type, credit life and disability
and hospitalization insurance policies; and
(v) Cash, investments or other deposits.
(b) To own, administer, hold, service or enter into agreements for
servicing of, sell, assign, pledge, collect amounts due on, and otherwise deal
with the Receivables and Related Property and any proceeds or rights associated
with the Receivables and the Related Property;
(c) To enter into any agreement (including, without limitation, any
agreement creating a trust) providing for the authorization, issuance, sale and
delivery of notes, certificates or other securities, whether directly or through
a trust, secured or supported by Receivables or Related Property (the agreements
authorized by paragraph (b) above and this paragraph (c) shall collectively be
referred to as the "Transaction Documents");
(d) To lend money to any trust or trustee for the purpose of funding cash
collateral accounts or credit enhancement accounts to secure or support any such
notes, certificates or other securities;
(e) To hold, sell, pledge or distribute any class of notes, certificates or
other securities issued by the Corporation either directly or through a trust;
(f) To lend or otherwise invest proceeds from Receivables and Related
Property, funds received in respect of any notes, certificates or other
securities, and any other income as determined by the Board of Directors of the
Corporation and not inconsistent with this Article III, including investing in
other Receivables and Related Property;
(g) To borrow money to facilitate any activity authorized herein;
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<PAGE>
(h) To engage in any activity and exercise any powers permitted
under the General Corporation Law of the State of Delaware that are
related to any necessary, suitable and advisable to accomplish the
business or purposes described in clauses (a) through (g) above.
ARTICLE IV
Independent Director. The Corporation shall have at least one
Independent Director. An "Independent Director" shall mean an individual who is
not and has never been:
(a) A director, officer or employee of (i) a shareholder of the
Corporation, (ii) Bay View Capital Corporation, or (iii) any Affiliate
(other than another direct or indirect finance subsidiary of Bay View
Capital Corporation), or
(b) A beneficial owner of more than 5% of the common stock of
(i) a shareholder of the Corporation; (ii) Bay View Capital Corporation,
or (iii) any Affiliate.
An "Affiliate" shall mean any Person other than the Corporation (x) that
owns beneficially, directly or indirectly, 5% or more of the outstanding shares
of the common stock of the Corporation, or (y) of which 5% or more of the
outstanding shares of its common stock is owned beneficially, directly or
indirectly, by any Person described in Clause (x) above, or (z) which otherwise
controls or is controlled by a Person described in Clause (x) above. The term
"Control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly and indirectly,
whether through the ownership of voting securities, by contract or otherwise.
The term "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization, or government or any agency or political
subdivision thereof.
ARTICLE V
Limitations. Notwithstanding any other provision of this Certificate of
Incorporation (any amendments thereto), the Bylaws of the Corporation, or any
provision of law that otherwise so empowers the Corporation, the Corporation
shall not, without (i) the affirmative vote of 100% of the members of the Board
of Directors of the Corporation, including the Independent Director on and after
the date on which the Independent Director required by Article IV has been
appointed and (ii) the affirmative vote of the holders of 100% of the issued and
outstanding common stock of the Corporation, do any of the following:
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<PAGE>
(a) Engage in any business or activity other than as set forth
in Article III;
(b) Dissolve, liquidate or lease or transfer all or
substantially all of its assets to any entity;
(c) Be a party to any merger or consolidation with any other
entity;
(d) Institute proceedings to be adjudicated a bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition or consent to a petition
seeking reorganization or relieve 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 a substantial part of its property, or make any
assignment for the benefit of creditors, or except as required by law,
admit in writing its inability to pay its debts generally as they become
due or take any corporate action in furtherance of any such action; or
(e) Amend, alter, change or repeal any of the following Articles
of this Certificate of Incorporation: Article III, Article IV, Article
VI, Article XII and this Article V.
ARTICLE VI
Affairs of the Corporation. The Corporation shall conduct its affairs in
accordance with the following provisions:
(a) The Corporation's funds and other assets shall not be
commingled with those of any other entity or Person and collections on
behalf of the Corporation by any agent of the Corporation shall be
identified as belonging to the Corporation and segregated as promptly as
practicable by such agent.
(b) The Corporation shall pay from its funds and assets all
lawful and just obligations and indebtedness incurred and owing.
(c) The Corporation shall maintain bank accounts in its own name
separate from any Affiliate.
(d) The Corporation shall maintain separate corporate records
and books of account from those of any other entity or Person.
(e) The Corporation shall establish an office separate and apart
from the offices of any of its shareholders or Affiliates, provided if
such office is leased from an Affiliate, such lease shall be on terms no
more or less favorable to the Corporation than would be obtained
elsewhere and such office shall be conspicuously identified as the
Corporation's office so it can be easily located by outsiders.
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<PAGE>
(f) The Corporation shall manage its business and affairs by or under
the direction of its Board of Directors.
(g) The Corporation shall hold appropriate meetings (or actions by written
consent) of its Board of Directors to authorize all of its corporate actions not
less frequently than once per year.
(h) The Corporation shall hold meetings (or actions by written consent) of
the stockholders of the Corporation not less frequently than once per year.
(i) The Corporation shall at all times ensure that its capitalization is
adequate in light of its business and purposes.
(j) The Corporation shall consider the interests of creditors of the
Corporation in connection with all corporate actions.
(k) The Corporation shall not incur any indebtedness, or guarantee loans or
other indebtedness to third parties, except as set forth in Article III or the
Transaction Documents.
(l) The Corporation shall not form or cause to be formed any subsidiaries
or acquire any interest in any partnership.
ARTICLE VII
Indemnification.
(a) Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a director or an officer of the
Corporation or is or was serving at the request of the Corporation as a director
or officer of another corporation, including, without limitation, any subsidiary
corporation in which a majority of any class of equity securities is owned,
directly or indirectly by the Corporation, partnership, joint venture, trust or
other enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than such law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; provided, however, that,
-------- -------
except as provided in Section (c) hereof with respect to proceedings to enforce
rights to indemnification, the
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<PAGE>
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
(b) The right to indemnification conferred in Section (b) of this Article
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
-------- -------
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication"), that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections (a) and (b) of this Article shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
director or officer and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
(c) If a claim under Section (a) or (b) of this Article is not paid in full
by the Corporation within sixty days after a written claim has been received by
the Corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be twenty days, the indemnitee may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in
a suit brought by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall also be entitled to be paid
the expense of prosecuting or defending such suit. In (i) any suit brought by
the indemnitee to enforce a right to indemnification hereunder (but not in a
suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) in any suit by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the
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<PAGE>
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article or otherwise shall be on the Corporation.
(d) The rights to indemnification and to the advancement of
expenses conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
the Corporation's Certificate of Incorporation, By-laws, agreement, vote
of stockholders or Disinterested Directors or otherwise.
(e) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation
Law.
(f) The Corporation may, to the extent authorized from time to
time by a majority vote of the disinterested directors, grant rights to
indemnification and to the advancement of expenses to any employee or
agent of the Corporation to the fullest extent of the provisions of this
Article with respect to the indemnification and advancement of expenses
of directors and officers of the Corporation.
ARTICLE VIII
Exculpation. A director of this 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 stockholders, (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 Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to further eliminate or limit the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE IX
Common Stock. The total number of shares of stock which the Corporation
has the authority to issue is 3,000 shares of Common Stock, par value one cent
($.01) per share.
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<PAGE>
ARTICLE X
Incorporator. The name and mailing address of the sole incorporator are as
follows:
Robert J. Flax
Bay View Securitization Corporation
2121 El Camino Real
San Mateo, California 94403
ARTICLE XI
Perpetual Existence. The Corporation is to have perpetual existence.
ARTICLE XII
The Corporation reserves the right to amend, alter or repeal the provisions
contained in this Certificate of Incorporation in the manner now or hereafter
prescribed by law, and all rights of shareholders are subject to this
reservation; provided, however, that this Article XII, and Article III, Article
IV, Article V and Article VI may be amended only in accordance with Article V of
this Certificate of Incorporation.
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<PAGE>
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
has been signed by Edward H. Sondker, its authorized officer this ___ day of
__________________.
BAY VIEW SECURITIZATION CORPORATION
--------------------------------------------
Edward H. Sondker
Director, President and Chief Executive Officer
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<PAGE>
EXHIBIT 4.1
FORM OF POOLING AND SERVICING AGREEMENT FOR GRANTOR TRUSTS
INCLUDING FORM OF CERTIFICATES
<PAGE>
EXHIBIT 4.1
BAY VIEW SECURITIZATION CORPORATION
Depositor
CALIFORNIA THRIFT & LOAN
Servicer
and
_____________________________
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of ________, 199_
$__________
BAY VIEW 199_-_ GRANTOR TRUST
$__________
_____% Class A Automobile Receivable Pass-Through Certificates
and
$__________
_____% Class B Automobile Receivable Pass-Through Certificates
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. Creation of Trust............................................. 1
ARTICLE II. Conveyance of Receivables..................................... 1
SECTION 2.01 Conveyance of Initial Receivables............................. 1
SECTION 2.02 Conveyance of Subsequent Receivables.......................... 2
SECTION 2.03 Acceptance by Trustee......................................... 5
ARTICLE III. [Reserved].................................................... 6
ARTICLE IV. Acceptance by Trustee......................................... 6
ARTICLE V. Incorporation of Standard Terms and Conditions of Agreement... 6
ARTICLE VI. Special Definitions and Terms................................. 6
ARTICLE VII. Additional Representations and Warranties of the Depositor.... 8
ARTICLE VIII. Information Delivered to the Rating Agency.................... 10
ARTICLE IX. Agent for Service............................................. 11
</TABLE>
Exhibit A - Form of Class A Automobile Receivable Pass-Through
Certificate
Exhibit B - Form of Class B Automobile Receivable Pass-Through
Certificate
Exhibit C - Form of Letter of Representations
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
Schedule C - Yield Supplement Amount
<PAGE>
This POOLING AND SERVICING AGREEMENT, dated as of _______, 199_, is made
with respect to the formation of the BAY VIEW 199_-_ Grantor Trust, among BAY
VIEW SECURITIZATION CORPORATION, a Delaware corporation as depositor (the
"Depositor"), CALIFORNIA THRIFT & LOAN, a California corporation as servicer
(the "Servicer"), and _____________________, a ________ corporation, as trustee
(the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Pooling and Servicing Agreement by the parties
hereto, there is hereby created the Bay View 199_-_ Grantor Trust.
The parties hereto intend that this Agreement be construed so as to create
an "investment trust" formed to facilitate the direct investment by
Certificateholders in the assets of the Trust (other than the portion of such
assets beneficially owned by the Servicer or Depositor for federal income tax
purposes), within the meaning of Section 301.7701-4(c) of the regulations of the
U.S. Department of the Treasury, and not as a partnership or association taxable
as a corporation, and that the Servicer be treated as the beneficial owner of
the Cash Collateral Account and the Yield Supplement Amount for federal income
tax purposes.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01 CONVEYANCE OF INITIAL RECEIVABLES. In consideration of the
Trustee's delivery on the Closing Date to or upon the order of the Sellers of
Class A Certificates in an initial aggregate principal amount of $_________ and
Class B Certificates in an initial aggregate principal amount of $_______, the
Depositor does hereby sell, transfer, assign, set over and otherwise convey to
the Trustee in trust for the benefit of the Certificateholders, without recourse
(subject to the obligations set forth herein), all right, title and interest of
the Depositor in and to:
(a) the Initial Receivables and all moneys due thereon on or after the
Initial Cutoff Date, in the case of Precomputed Receivables, or all moneys
received thereon on and after the Initial Cutoff Date, in the case of Simple
Interest Receivables (but excluding Accrued Interest paid or due prior to the
Closing Date);
(b) the security interest in the Financed Vehicles granted by Obligors
pursuant to the Initial Receivables and any other interest of each Seller in
such Financed Vehicles;
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<PAGE>
(c) any proceeds with respect to the Initial Receivables from claims on
any physical damage, lenders' collateral protection, theft, credit life or
disability insurance policies covering Financed Vehicles or Obligors;
(d) any Financed Vehicle that shall have secured any such Initial
Receivable and shall have been acquired by or on behalf of a Seller, the
Servicer or the Trust;
(e) the Pre-Funded Amount;
(f) all other assets comprising the estate of the Trust; and
(g) the proceeds of any and all of the foregoing.
SECTION 2.02. CONVEYANCE OF SUBSEQUENT RECEIVABLES.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Date
to or upon the order of the Sellers of the amount described in Section 14.11 of
the Standard Terms, the Depositor does hereby sell, transfer, assign, set over
and otherwise convey to the Trustee in trust for the benefit of the
Certificateholders, without recourse (subject to the obligations set forth
herein), all right, title and interest of the Depositor in and to:
(1) the Subsequent Receivables listed on Schedule I to the related
Subsequent Transfer Assignment and all moneys due thereon on or after the
related Subsequent Cutoff Date, in the case of Precomputed Receivables, or
all money received thereon on and after the related Subsequent Cutoff Date,
in the case of Simple Interest Receivables;
(2) the security interests in the Finance Vehicles granted by Obligors
pursuant to such Subsequent Receivables and any other interest of Depositor
in such Financed Vehicles;
(3) any proceeds with respect to such Subsequent Receivables from
claims on any physical damage, credit life or disability insurance policies
covering the related Financed Vehicles or Obligors;
(4) any Financed Vehicle that shall have secured any such Subsequent
Receivable and shall have been acquired by or on behalf of Depositor, the
Servicer or the Trust; and
(5) the proceeds of any and all of the foregoing.
(b) (1) The Depositor shall transfer to the Trustee for the benefit of
the Certificateholders the Subsequent Receivables and the other property and
rights related thereto described in paragraph (a) above only upon the
satisfaction of each of the following conditions precedent on or prior to the
related Subsequent Transfer Date:
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<PAGE>
(A) the Depositor shall have delivered to the Trustee a duly executed
Subsequent Transfer Assignment, which shall include supplements
to Schedule I listing the Subsequent Receivables conveyed to the
Trustee on such date;
(B) the Depositor shall have deposited in the Collection Account, to
the extent required by Section 5.01, all collections in respect
of the Subsequent Receivables;
(C) as of each Subsequent Transfer Date, (A) the Depositor shall not
be insolvent and shall not become insolvent as a result of the
transfer of Subsequent Receivables on such Subsequent Transfer
Date, (B) the Depositor shall not intend to incur or believe that
it will incur debts that would be beyond its ability to pay as
such debts mature, (C) such transfer shall not have been made
with actual intent to hinder, delay or defraud any Person and (D)
the assets of the Depositor shall not constitute reasonably small
capital to carry out its business as conducted;
(D) the applicable Reserve Account Initial Deposit for such
Subsequent Transfer Date shall have been made pursuant to Section
14.11 of the Standard Terms;
(E) the Funding Period shall not have terminated;
(F) the Subsequent Receivables transferred to the Trustee pursuant
hereto, including the Subsequent Receivables to be conveyed to
the Trustee on such Subsequent Transfer Date, shall meet the
following criteria (based on the characteristics of the Initial
Receivables on the Initial Cutoff Date and the Subsequent
Receivables on their respective Subsequent Cutoff Dates): (1) not
more than ___% of the Principal Balances of the Receivables
transferred to the Trustee shall represent used vehicles; (2) the
weighted average APR of the Receivables transferred to the
Trustee shall not be less than ___%; and (3) the weighted average
remaining term of the Receivables transferred to the Trustee,
including the Subsequent Receivables to be conveyed to the
Trustee on such Subsequent Transfer Date, shall not be greater
than ___ months;
(G) each of the representations and warranties made by the Sellers
pursuant to Section 12.01 of the Standard Terms shall be true and
correct with respect to the Subsequent Receivables as of the
related Subsequent Transfer Date, and the Depositor shall have
performed all obligations to be performed by them hereunder on or
prior to such Subsequent Transfer Date;
(H) the Depositor shall, at its own expense, on or prior to the
Subsequent Transfer Date, indicate in it its computer files that
the Subsequent Receivables identified in Schedule 1 to the
Subsequent Transfer Assignment have been sold to the Trustee
pursuant to this Agreement;
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<PAGE>
(I) the Depositor shall have taken any action required to maintain
the first perfected ownership interest of the Trustee in the
Trust property, other than causing the certificates of title with
respect to the Financed Vehicles to be endorsed or otherwise
amended to identify the Trustee as the new secured party;
(J) no selection procedures believed by the Depositor to be adverse
to the interests of the Certificateholders shall have been
utilized in selecting the Subsequent Receivables;
(K) the addition of any such Subsequent Receivables shall not result
in a material adverse federal tax consequence to the Trust or the
Certificateholders; and
(L) the Depositor shall have delivered to the Trustee an Officers'
Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b)(1).
(2) In addition, any such conveyance of Subsequent Receivables made
on one or more Subsequent Transfer Dates occurring during any Collection Period
shall also be subject to the satisfaction of the following conditions
subsequent:
(A) On or before the fifteenth day (or if such fifteenth day is not a
Business Day, the next succeeding Business Day) of the month
following the end of such Collection Period;
(i) the Depositor shall have delivered to the Trustee and
the Rating Agencies a statement listing the aggregate Principal
Balance of the Subsequent Receivables conveyed to the Trustee
during such Collection Period and any other information
reasonably requested by any of the foregoing with respect to such
Subsequent Receivables; and
(ii) the Depositor shall have delivered (x) to the Rating
Agencies and Opinion of Counsel with respect to the transfer of
such Subsequent Receivables substantially in the form of, or
confirming, the Opinion of Counsel, delivered to the Rating
Agencies on the Closing Date and (y) to the Trustee the Opinion
of Counsel required by Section 22.02(i).
(B) On or before the fifteenth day (or if such fifteenth day is not a
Business Day, the next succeeding Business Day) of the month
following the month in which the Funding Period ends:
(i) each of the Rating Agencies shall have notified the
Depositor in writing that, following the conveyance of all the
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<PAGE>
Subsequent Receivables to the Trustee, the Certificates continue
to be rated ________________ by such Rating Agency; and
(ii) the Depositor shall have delivered to the Trustee an
Officers' Certificate confirming the satisfaction of each
condition specified in this paragraph (b)(2).
The Depositor covenants that in the event any of the foregoing conditions
subsequent are not satisfied with respect to any Subsequent Receivable conveyed
by the Depositor to the Trustee on or prior to the date specified above, the
Depositor will immediately repurchase such Subsequent Receivable from the
Trustee, at a price equal to the Purchase Amount thereof, in the manner
specified in Section 12.02.
SECTION 2.03. ACCEPTANCE BY TRUSTEE. The Trustee hereby acknowledges the
sale, transfer and assignment of the Receivables, the Pre-Funded Amount and the
other assets of the Trust referred to in Section 2.01 and 2.02 and declares that
the Trustee holds and will hold the Receivables, the Pre-Funded Amount and such
other assets in trust, upon the terms herein set forth, for the use and benefit
of all present and future Certificateholders.
During the Funding Period, the Depositor shall sell to the Trust, and the
Trust shall purchase from the Depositor, Subsequent Receivables having an
aggregate principal balance equal to the Initial Pre-Funded Amount to the extent
that such Subsequent Receivables are available.
The Depositor covenants to transfer to the Trustee, pursuant to the
preceding paragraph, Subsequent Receivables with an aggregate Principal Balance
equal to the Initial Pre-Funded Amount. In the event that the Depositor shall
fail to deliver and sell to the trust any or all of such Subsequent Receivables,
any funds remaining in the Pre-Funding Account shall be distributed in
accordance with Section 14.11 to the Certificateholders as Monthly Principal on
the Distribution Date next following the end of the Funding Period; provided,
however, that the foregoing shall be the sole remedy of the Trustee or the
Certificateholders with respect to a failure of the Depositor to comply with
such covenant.
ARTICLE III
[RESERVED]
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<PAGE>
ARTICLE IV
ACCEPTANCE BY TRUSTEE
The Trustee does hereby accept all consideration conveyed by the Depositor
pursuant to Article II, and declares that the Trustee shall hold such
consideration upon the trusts herein set forth for the benefit of all present
and future Certificateholders, subject to the terms and provisions of this
Pooling and Servicing Agreement.
ARTICLE V
INCORPORATION OF STANDARD TERMS AND
CONDITIONS OF AGREEMENT
This Pooling and Servicing Agreement does hereby incorporate by reference
the Bay View Grantor Trusts Standard Terms and Conditions of Agreement dated as
of ___________, 199_ (the "Standard Terms"), in the form attached hereto.
ARTICLE VI
SPECIAL DEFINITIONS AND TERMS
Whenever used in the Standard Terms and in this Pooling and Servicing
Agreement, the following words and phrases shall have the following meanings:
"ACCRUED INTEREST" means all interest accrued on the Receivables prior to
the opening of business on the day following the Cutoff Date.
"ALTERNATIVE CASH COLLATERAL PERCENTAGE" shall mean, for any Distribution
Date, a percentage determined by deducting from [____]% the following fraction,
expressed as a percentage: (a) one minus (b) a fraction, the numerator of which
is the Class A Principal Balance with respect to such Distribution Date and the
denominator of which is the Pool Balance of the Receivables as of the last day
of the preceding Collection period.
"CLASS A PASS-THROUGH RATE" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
"CLASS B PASS-THROUGH RATE" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
"CLOSING DATE" means ________, 199_.
"CORPORATE TRUST OFFICE" at the date hereof is located at
_______________________, Attention: __________________________; the telecopy
number for the Corporate Trust Office on the date of the execution of this
Agreement is ( ) ___-____.
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<PAGE>
"DISTRIBUTION DATE" shall be ____________.
"FUNDING PERIOD" means the period beginning on and including the Closing
Date and ending on the first to occur of (i) (a) the date on which the amount on
deposit in the Pre-Funding Account (after giving effect to any transfers
therefrom in connection with the transfer of Subsequent Receivables to the Trust
on such Distribution Date) is less than $100,000, (b) the date on which an Event
of Default occurs, or (c) an Insolvency Event occurs with respect to the
Depositor or (ii) the close of business on ___________, 199_.
"INITIAL CASH COLLATERAL AMOUNT" shall be $_________.
"INITIAL CLASS A PRINCIPAL BALANCE" means $______.
"INITIAL CLASS B PRINCIPAL BALANCE" means $______.
"INITIAL PRE-FUNDED AMOUNT" shall be $______.
"INITIAL CUTOFF DATE" means _________, 199_.
"ORIGINAL POOL BALANCE" means $________.
"REQUIRED CASH COLLATERAL AMOUNT" means on each Distribution Date, ____% of
the Certificate Principal Balance (after giving effect to any payment of Monthly
Principal on such Distribution Date) but not less than $________; provided
--------
however, that the Required Cash Collateral Amount shall be calculated using the
- -------
Alternative Cash Collateral Percentage rather than ___%, (1) for each
Distribution Date on which either the average of the Net Loss Rates for the
three preceding Collection Periods exceeds [____]% or the average of the
Delinquency Rates for the three preceding Collection Periods exceeds [____]% and
(2) for each of the three Distribution Dates immediately following each
Distribution Date described in clause (1) above; provided further, that in no
----------------
event will the Required Cash Collateral Amount be greater than the Certificate
Principal Balance.
"SERVICING RATE" means 1.00% per annum, payable monthly at one-twelfth of
the annual rate, subject to adjustment with respect to a successor Servicer
pursuant to Section 19.02 of the Standard Terms.
"STATED FINAL DISTRIBUTION DATE" means ___________, 200_ in the case of the
Initial Receivables.
"TOTAL YIELD SUPPLEMENTAL DEPOSIT" means the amount specified as such in
Schedule C hereto.
"YIELD SUPPLEMENT AMOUNT" means, on any Distribution Date, the amount set
forth for such Distribution Date in Schedule C hereto.
-7-
<PAGE>
ARTICLE VII
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE DEPOSITOR
The Depositor does hereby make the following representations and warranties
on which the Trustee relies in accepting the Receivables in trust and executing
and authenticating the Certificates. Such representations and warranties speak
as of the execution and delivery of this Agreement and as of the Closing Date,
in the case of the Initial Receivables, and as of the applicable Subsequent
Transfer Date, in the case of the Subsequent Receivables, but shall survive the
sale, transfer and assignment of any Initial Receivables and Subsequent
Receivables to the Trustee.
(i) ORIGINAL NUMBER OF SCHEDULED PAYMENTS. Each Initial Receivable
shall have not less than 12 nor greater than __ monthly payments
scheduled at origination;
(ii) REMAINING MATURITY OF RECEIVABLES. Each Initial Receivable shall
have a remaining maturity of not more than __ months.
(iii) MINIMUM NOTE RATE. Each Initial Receivable shall have a contract
rate of interest (exclusive of prepaid finance charges) equal to
or greater than ___% (which, as supplemented by amounts available
from the Yield Supplement Account, is equal to or greater than
the sum of the weighted average of the Class A Pass-Through Rate
and the Class B Pass-Through Rate and the Servicing Rate) and
less than or equal to ___%;
(iv) WEIGHTED AVERAGE MATURITY. The Initial Receivables shall have a
scheduled weighted average maturity of not more than ___ months.
(v) SCHEDULED PAYMENTS. Each Initial Receivable shall be not more
than 30 days overdue as of the Cutoff Date;
(vi) INTEREST METHOD. Each Receivable shall provide for accrual of
interest according to the simple interest method or shall be a
Precomputed Receivable;
(vii) STATE OF ORIGINATION. Each Receivable shall have been originated
in the States of Arizona, California, Colorado, Illinois, New
Mexico, Nevada, Oregon or Texas.
(viii) LATEST FIRST PAYMENT DATE. No Initial Receivable shall have had a
first payment due after _____________.
(ix) LOCATION OF RECEIVABLE FILES. The Receivable Files shall be kept
at one or more of the locations listed in Schedule B hereto;
(x) COMPOSITION OF INITIAL RECEIVABLES. Each and every Initial
Receivable listed on Schedule A hereto shall arise from loans
originated only on automobiles, light
-8-
<PAGE>
trucks, motorcycles, vans or van conversions, at least ____% of
which (securing at least ___% of the Receivables by principal
balance) are new vehicles;
(xi) MARKING RECORDS. By the Closing Date, the Depositor will have
caused the portions of the electronic ledger or similar computer
records relating to the Initial Receivables conveyed by it to the
Trust hereunder to be clearly and unambiguously marked to show
that such Initial Receivables constitute part of the Trust in
accordance with the terms of the Trust created hereunder; and
(xii) PRECOMPUTED RECEIVABLES. Each Precomputed Receivable, in the
event of prepayment, provides for a prepayment amount that fully
pays the Principal Balance of such Receivables and includes a
full month's interest, in the month of prepayment, at the Note
Rate.
With respect to the Initial Receivables and the Subsequent Receivables, the
Depositor also makes the representations described in Section 12.01 of the
Standard Terms.
ARTICLE VIII
INFORMATION DELIVERED TO THE RATING AGENCY
(a) The Servicer hereby expresses its intention to deliver promptly to the
Rating Agency (i) a copy of each Servicer's Certificate that it delivers to the
Trustee pursuant to Section 13.09 of the Standard Terms, (ii) a copy of each
annual Officers' Certificate as to compliance and any notice of Default that it
delivers to the Trustee pursuant to Section 13.10 of the Standard Terms, (iii) a
statement for each Collection Period including delinquency and loss information
for the Receivables and the amount of Subsequent Receivables purchased from the
Depositor, (iv) written notice of any merger, consolidation, or other succession
of the Servicer, pursuant to Section 18.03 of the Standard Terms, or the
Depositor, pursuant to Section 17.03 of the Standard Terms, (v) a copy of each
amendment to the Agreement or the Standard Terms and (vi) any Opinion of Counsel
delivered to the Trustee pursuant to Section 22.02(i) of the Standard Terms.
(b) The Trustee hereby expresses its intention to deliver promptly to the
Rating Agency (i) a copy of each statement or notification to Certificateholders
delivered pursuant to Section 14.07, 19.03 or 20.10 of the Standard Terms, (ii)
a copy of each annual certified public accountant's report received by the
Trustee pursuant to Section 13.11 of the Standard Terms, (iii) a copy of each
amendment to the Agreement and (iv) a copy of the notice of termination of the
Trust provided to Certificateholders pursuant to Section 21.01 of the Standard
Terms.
-9-
<PAGE>
(c) For purposes of delivery pursuant to paragraphs (a) and (b) of this
Article VIII, the address for the Rating Agencies are:
Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
25 Broadway
New York, New York 10004
Moody's Investors Service, Inc.
Attention: ABS Monitoring Department
4th Floor
99 Church Street
New York, New York 10007
(d) The provisions of this Article VIII are included herein for
convenience of reference only and shall not be construed to be contractual
undertakings or obligations. The failure of the Servicer or the Trustee to
comply with any or all of the provisions of this Article VIII shall not
constitute an Event of Default or a default of any kind under this Pooling and
Servicing Agreement or make any remedy available to any Person.
ARTICLE IX
AGENT FOR SERVICE
The agent for service for the Depositor shall be Robert J. Flax, Secretary
of the Depositor. Any and all service on the agent for service of the Depositor
shall be sent to Bay View Securitization Corporation, 2121 South El Camino
Real, San Mateo, California 94403.
The agent for service for the Servicer shall be Michael Iachelli, President
of the Servicer. Any and all service on the agent for service of the Servicer
shall be sent to California Thrift & Loan, 818 Oakpark Road, Covina, California
91724.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
BAY VIEW SECURITIZATION CORPORATION
as Depositor
By:_____________________________________
Name:___________________________________
Title:__________________________________
CALIFORNIA THRIFT & LOAN
as Servicer
By:_____________________________________
Name:___________________________________
Title:__________________________________
[____________________]
as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
-11-
<PAGE>
EXHIBIT A
[FORM OF CLASS A CERTIFICATE]
PRINCIPAL IN RESPECT OF THIS CLASS A CERTIFICATE IS DISTRIBUTABLE MONTHLY AS SET
FORTH HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL
INTEREST EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL
AMOUNT SET FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
BAY VIEW 199_-_ GRANTOR TRUST
_____% CLASS A AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of simple and precomputed interest
installment loan and security agreements and installment sales contracts
secured by new and used automobiles, light trucks and vans. The contracts
were or will be sold to the Trustee by Bay View Securitization Corporation.
(This Certificate does not represent an interest in or obligation of Bay
View Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are insured
or guaranteed by any government agency).
NUMBER
R-___ CUSIP _________
$-------------
-12-
<PAGE>
THIS CERTIFIES THAT ____________ is the registered owner of a
_____________ dollars nonassessable, fully-paid, fractional undivided interest
in the Bay View 199_-_ Grantor Trust (the "Trust") formed by Bay View
Securitization Corporation, a Delaware corporation (the "Depositor"). The Trust
was created pursuant to a Pooling and Servicing Agreement dated as of
_____________, 199__ (the "Agreement") between Bay View Securitization
Corporation as Depositor, California Thrift & Loan, as Servicer and
_____________________ (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. A copy of the Agreement may be examined
during normal business hours at the Corporate Trust Office of the Trustee by any
Certificateholder upon request. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "____% Class A Automobile Receivable Pass-Through Certificates"
(the "Class A Certificates"). This Certificate is issued under and is subject
to the terms, provisions, and conditions of the Agreement, to which Agreement
the holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound. The property of the Trust includes a pool of simple
and precomputed interest loan and security agreements and installment sales
contracts for new and used automobiles, motorcycles, light trucks, vans and van
conversions (the "Receivables"), all monies paid thereon, and all monies due
thereon, including Accrued Interest, after _________, 199_ (but excluding
Accrued Interest paid or due prior to the Closing Date), security interests in
the vehicles financed thereby, certain bank accounts and the proceeds thereof,
all documents contained in the Receivable Files, any property that shall have
secured a Receivable and that shall have been acquired by or on behalf of the
Trust, any Liquidation Proceeds, any rights of the Depositor in proceeds from
claims or refunds of premiums on physical damage, collateral protection, credit
life, disability and hospitalization insurance policies, if any, covering
vehicles financed thereby and the obligors thereunder, the interest of the
Depositor in recourse to dealers relating to certain of the Receivables, the
proceeds of all of the foregoing and amounts on deposit from time to time in the
Pre-Funding Account, the Yield Supplement Account and the Cash Collateral
Account.
Under the Agreement, there will be distributed on the first Business
Day after the 10th day of each month (the "Distribution Date"), commencing
_____________, 199__, to the person in whose name this Class A Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), such
Certificateholder's fractional interest in Class A Monthly Interest and Class A
Monthly Principal. Each Class A Certificateholder's "fractional interest" is
equal to the original principal amount of such Class A Certificateholder's
Certificate, as set forth on the face thereof, divided by the aggregate original
principal amount of all of the Certificates.
Distributions on this Class A Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Class A Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class A
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Class A
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York.
-13-
<PAGE>
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class A Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose.
The Class A Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A
Certificates are limited in right of payment to funds on deposit in the Pre-
Funding Account, certain collections and recoveries respecting the Receivables
and certain amounts in the Yield Supplement Account, all as more specifically
set forth in the Agreement. The Agreement provides for certain amounts to be
deposited into the Cash Collateral Account. The limited amount available from
the Cash Collateral Account may not be sufficient to make required distributions
on the Class A Certificates.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Principal Balance.
Any such consent by the Holder of this Class A Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Class A Certificate
and of any Class A Certificate issued upon the transfer hereof or in exchange
heretofore or in lieu hereof whether or not notation of such consent is made
upon this Class A Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Class A Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Class A Certificate is registrable in
the Certificate Register upon surrender of this Class A Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Class A
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
The Class A Certificates are issuable only as registered Class A
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A Certificate may be issued in a
-----------------
denomination that represents any residual amount and that such Class A
Certificate shall be retained by the Depositor. As provided in the Agreement
and subject to certain limitations therein set forth, Class A Certificates are
exchangeable for new Class A Certificates of authorized denominations evidencing
the same aggregate denomination, as requested by the holder surrendering the
same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee
or the Certificate Registrar may treat the person in whose name this Class A
Certificate is registered as the owner
-14-
<PAGE>
hereof for all purposes, and neither the Trustee, the Certificate Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities to the Class A Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class A Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held as part of
the Trust. The Servicer of the Receivables may at its option purchase the corpus
of the Trust at a price specified in the Agreement, and such purchase of the
Receivables and other property will effect early retirement of the Class A
Certificates; however, such right of purchase is exercisable only as of a Record
Date as of which the Certificate Principal Balance is less than or equal to 10%
of the original aggregate principal balance of the Receivables.
No recourse shall be had for the payment of the principal of or
interest on this Certificate, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Agreement, against any
incorporator, stockholder, officer or director, as such, past, present, or
future, of the Depositor or Servicer or of any successor at law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
Although this Class A Certificate summarizes certain provisions of the
Agreement, this Class A Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and obligations of the Trustee. In the event of any
inconsistency or conflict between the terms of this Class A Certificate and the
terms of the Agreement, the terms of the Agreement shall control.
-15-
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A Certificate to be duly executed.
Dated: ____________, 199_ BAY VIEW 199_-_ GRANTOR TRUST
BY:_____________________________________
as Trustee
BY:_____________________________________
Responsible Officer
-16-
<PAGE>
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS A CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
[___________________]
AS TRUSTEE
DATED:_____________, 199_ BY:____________________________________
Responsible Officer
-17-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
________________________________________________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_________________________________________________________Attorney to transfer
said Class A Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
_______________________________________
Signature Guaranteed:
*
________________________________________
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
-18-
<PAGE>
EXHIBIT B
[FORM OF CLASS B CERTIFICATE]
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
PRINCIPAL IN RESPECT OF THIS CLASS B CERTIFICATE IS DISTRIBUTABLE MONTHLY AS SET
FORTH HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL
INTEREST EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL
AMOUNT SET FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
BAY VIEW 199_-_ GRANTOR TRUST
____% CLASS B AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of simple and precomputed interest
installment loan and security agreements and installment sales contracts
secured by new and used automobiles, motorcycles, light trucks and vans.
The contracts were sold to the Trustee by Bay View Securitization
Corporation.
(This Certificate does not represent an interest in or obligation of Bay
View Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are insured
or guaranteed by any government agency).
NUMBER CUSIP ______________
R-___ $--------------
EXA-2-1
<PAGE>
THIS CERTIFIES THAT ____________ is the registered owner of a _____________
dollars nonassessable, fully-paid, fractional undivided interest in the Bay View
199_-_ Grantor Trust (the "Trust") formed by Bay View Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of ______________, 199_
(the "Agreement") between Bay View Securitization Corporation as Depositor,
California Thrift & Loan, as Servicer and _______________ (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "____% Class B Automobile Receivable
Pass-Through Certificates" (the "Class B Certificates"). This Certificate is
issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, vans and van conversions (the "Receivables"), monies paid thereon, and
all monies due thereon, including Accrued Interest, after ___________, 199__
(but excluding Accrued Interest paid or due prior to the Closing Date), security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, all documents contained in the Receivable Files, any property
that shall have secured a Receivable and that shall have been acquired by or on
behalf of the Trust, any Liquidation Proceeds, any rights of the Depositor in
proceeds from claims or refunds of premiums on physical damage, lender's
collateral protection, credit life, disability and hospitalization insurance
policies covering vehicles financed thereby and the obligors thereunder, the
interest of the Depositor in recourse to dealers relating to certain of the
Receivables, the proceeds of all of the foregoing and amounts on deposit from
time to time in the Pre-Funding Account, the Yield Supplement Account and the
Cash Collateral Account.
Under the Agreement, there will be distributed on the first Business Day
after the 10th day of each month (the "Distribution Date"), commencing on
_____________, 199__, to the person in whose name this Class B Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), such
Certificateholder's fractional interest in Class B Monthly Interest and Class B
Monthly Principal to the extent of funds available therefor. Each Class B
Certificateholder's "fractional interest" is equal to the original principal
amount of such Class B Certificateholder's Certificate, as set forth on the face
thereof, divided by the aggregate original principal amount of all of the
Certificates. This Class B Certificate is subordinated in the right of payment
to the Class A Certificates as described in the Agreement.
Distributions on this Class B Certificate will be made by the Trustee by
check mailed to the Person entitled thereto without the presentation or
surrender of this Class B Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class B
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and
EXA-2-2
<PAGE>
surrender of this Class B Certificate at the office or agency maintained for
that purpose by the Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class B Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
The Class B Certificates do not represent an obligation of, or an interest
in, the Depositor or any affiliate of the Depositor. The Class B Certificates
are limited in right of payment to certain collections and recoveries respecting
the Receivables and certain amounts in the Yield Supplement Account, all as more
specifically set forth in the Agreement. The Agreement provides for certain
amounts to be deposited into the Cash Collateral Account. The limited amount
available from the Cash Collateral Account may not be sufficient to make
required distributions on the Class B Certificates.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class B Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Principal Balance.
Any such consent by the Holder of this Class B Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Class B Certificate
and of any Class B Certificate issued upon the transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent is made upon
this Class B Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Class B Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Class B Certificate is registrable in the
Certificate Register upon surrender of this Class B Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Class B
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
The Class B Certificates are issuable only as registered Class B
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class B Certificate may be issued in a
-----------------
denomination that represents any residual amount and that such Class B
Certificate shall be retained by the Depositor. As provided in the Agreement
and subject to certain limitations therein set forth, Class B Certificates are
exchangeable for new Class B Certificates of authorized denominations evidencing
the same aggregate denomination, as requested by the holder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
EXA-2-3
<PAGE>
The Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class B Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class B Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held as part of
the Trust. The Servicer of the Receivables may at its option purchase the
corpus of the Trust at a price specified in the Agreement, and such purchase of
the Receivables and other property of the Trust will effect early retirement of
the Class B Certificates; however, such right of purchase is exercisable only as
of a Record Date as of which the Certificate Principal Balance is less than or
equal to 10% of the original aggregate principal balance of the Receivables.
No recourse shall be had for the payment of the principal of or interest on
this Certificate, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Agreement, against any incorporator,
stockholder, officer or director, as such, past, present, or future, of the
Depositor or Servicer or of any successor at law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Although this Class B Certificate summarizes certain provisions of the
Agreement, this Class B Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and obligations of the Trustee. In the event of any
inconsistency or conflict between the terms of this Class B Certificate and the
terms of the Agreement, the terms of the Agreement shall control.
EXA-2-4
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly executed.
Dated: ____________, 199_ BAY VIEW 199_-_ GRANTOR TRUST
BY:_____________________________________
as Trustee
BY:_____________________________________
Responsible Officer
EXA-2-5
<PAGE>
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS B CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
[_____________________]
AS TRUSTEE
DATED:____________, 199_ BY:_____________________________________
Responsible Officer
EXA-2-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
________________________________________________________________________________
the within Class B Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_________________________________________________________Attorney to transfer
said Class B Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
________________________________
Signature Guaranteed:
_______________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class B Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
EXA-2-7
<PAGE>
EXHIBIT C
FORM OF LETTER OF REPRESENTATIONS
EXA-2-8
<PAGE>
SCHEDULE A
TO THE POOLING AND
SERVICING AGREEMENT
SCHEDULE OF RECEIVABLES
Depositor Name of
Account Number Obligor Amount Financed
- -------------- -------- ---------------
(as of the Cutoff Date)
$
A COPY OF THE SCHEDULE OF RECEIVABLES, INCLUDING THE
ABOVE CAPTIONED INFORMATION WITH RESPECT TO EACH
RECEIVABLE, WAS DELIVERED TO THE TRUSTEE WITH A
COUNTERPART OF THE POOLING AND SERVICING AGREEMENT.
EXA-3-1
<PAGE>
SCHEDULE B
TO THE POOLING AND
SERVICING AGREEMENT
The Receivables will be held at the following California Thrift & Loan
locations:
818 Oakpark Road
Covina, California 91724
4620 California Avenue
Bakersfield, California 93309-7017
170 E. 17th Street, #101
Costa Mesa, California 92627-3701
1320 E. Shaw Avenue, Suite 169
Fresno, California 93710-7905
1501 State Street
Santa Barbara, California 93101-2513
1730 Sepulveda Blvd., #4
Torrance, California 90501-5645
5995 Topanga Canyon Blvd.
Woodland Hills, California 91367-3623
<PAGE>
SCHEDULE C
TO THE POOLING AND
SERVICING AGREEMENT
YIELD SUPPLEMENT AMOUNT
Yield
Distribution Date Supplement Amount
----------------- -----------------
Total Yield
Supplement Deposit: $
EXA-3-3
<PAGE>
EXHIBIT 4.2
FORM OF STANDARD TERMS AND CONDITIONS OF
BAY VIEW GRANTOR TRUSTS
<PAGE>
BAY VIEW GRANTOR TRUSTS
STANDARD TERMS AND CONDITIONS OF AGREEMENT
DATED AS OF ____________, 199_
BAY VIEW SECURITIZATION CORPORATION,
DEPOSITOR
CALIFORNIA THRIFT & LOAN
SERVICER
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
INTRODUCTION........................................................................1
ARTICLE XI. Definitions............................................................1
SECTION 11.01. Definitions....................................................1
SECTION 11.02. Usage of Terms............................................... 13
SECTION 11.03. Cutoff Date and Record Date.................................. 13
SECTION 11.04. Section References........................................... 13
SECTION 11.05. Simple Interest Method....................................... 14
SECTION 11.06. Application of Collections on Precomputed Receivables........ 14
SECTION 11.07. Separate Agreements.......................................... 14
ARTICLE XII. The Receivables..................................................... 14
SECTION 12.01. Representations and Warranties of Depositor.................. 14
SECTION 12.02. Repurchase Upon Breach....................................... 17
SECTION 12.03. Custody of Receivable Files.................................. 17
SECTION 12.04. Duties of Servicer as Custodian.............................. 18
SECTION 12.05. Instructions: Authority to Act.............................. 18
SECTION 12.06. Custodian's Indemnification.................................. 18
SECTION 12.07. Effective Period and Termination............................. 19
SECTION 12.08. Conveyance of Subsequent Receivables......................... 19
ARTICLE XIII. Administration and Servicing of Receivables......................... 21
SECTION 13.01. Duties of Servicer........................................... 21
SECTION 13.02. Collection of Receivable Payments............................ 22
SECTION 13.03. Realization Upon Receivables................................. 22
SECTION 13.04. Physical Damage Insurance.................................... 23
SECTION 13.05. Maintenance of Security Interests in Financed Vehicles....... 23
SECTION 13.06. Covenants of Servicer........................................ 23
SECTION 13.07. Purchase of Receivables Upon Breach.......................... 23
SECTION 13.08. Servicing Fee................................................ 24
SECTION 13.09. Servicer's Certificate....................................... 24
SECTION 13.10. Annual Statement as to Compliance; Notice of Default......... 25
SECTION 13.11. Annual Independent Certified Public Account's Report......... 25
SECTION 13.12. Access to Certain Documentation and Information
Regarding Receivables........................................ 26
SECTION 13.13. Servicer Expenses............................................ 26
SECTION 13.14. Reports to Certificateholders................................ 26
</TABLE>
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<TABLE>
<S> <C>
ARTICLE XIV. Distributions: Statements to Certificateholders.................... 26
SECTION 14.01. Certificate Account.......................................... 26
SECTION 14.02. Collections.................................................. 26
SECTION 14.03. Purchase Amounts............................................. 27
SECTION 14.04. Distributions to Parties..................................... 27
SECTION 14.05 Advances..................................................... 29
SECTION 14.06. Net Deposits................................................. 29
SECTION 14.07. Statements to Certificateholders............................. 30
SECTION 14.08. Yield Supplement Agreement: Yield Supplement Account........ 31
SECTION 14.09. Payahead Account............................................. 31
SECTION 14.10. Pre-Funding Account.......................................... 32
ARTICLE XV. Credit Enhancement................................................... 33
SECTION 15.01. Subordination................................................ 33
SECTION 15.02. Cash Collateral Account...................................... 33
ARTICLE XVI. The Certificates.................................................... 34
SECTION 16.01. The Certificates............................................. 34
SECTION 16.02. Authentication of Certificates............................... 35
SECTION 16.03. Registration of Transfer and Exchange of Certificates........ 35
SECTION 16.04. Mutilated, Destroyed, Lost, or Stolen Certificates........... 35
SECTION 16.05. Persons Deemed Owners........................................ 36
SECTION 16.06. Access to Agreement and List of Certificateholders'
Names and Addresses.......................................... 36
SECTION 16.07. Maintenance of Office or Agency.............................. 36
SECTION 16.08. Book-Entry Certificates...................................... 36
SECTION 16.09. Notices to Clearing Agency................................... 37
SECTION 16.10. Definitive Certificates...................................... 37
ARTICLE XVII. The Depositor...................................................... 38
SECTION 17.01. Representations of Depositor................................. 38
SECTION 17.02. Liability Depository Indemnities............................. 39
SECTION 17.03. Merger or Consolidation of, or Assumption of the
Obligations of Depositor..................................... 40
SECTION 17.04. Limitation on Liability of Depositor and Others.............. 41
SECTION 17.05. Depositor May Own Certificates............................... 41
ARTICLE XVIII. The Servicer...................................................... 41
SECTION 18.01. Representations of the Servicer.............................. 41
SECTION 18.02. Indemnities of Servicer...................................... 43
SECTION 18.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer..................................... 44
</TABLE>
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<TABLE>
<S> <C>
SECTION 18.04. Limitation on Liability of Servicer and Others............... 44
SECTION 18.05. Servicer Not to Resign....................................... 45
SECTION 18.06. Delegation of Duties......................................... 45
ARTICLE XIX. Default............................................................. 45
SECTION 19.01. Events of Default............................................ 45
SECTION 19.02. Appointment of Successor..................................... 46
SECTION 19.03. Notification to Certificateholders........................... 47
SECTION 19.04. Waiver of Past Defaults...................................... 47
ARTICLE XX. The Trustee.......................................................... 48
SECTION 20.01. Duties of Trustee............................................ 48
SECTION 20.02. Trustee's Certificate........................................ 49
SECTION 20.03. Trustee's Assignment of Purchased Receivables................ 50
SECTION 20.04. Certain Matters Affecting the Trustee........................ 50
SECTION 20.05. Trustee Not Liable for Certificates or Receivables........... 52
SECTION 20.06. Trustee May Own Certificates................................. 52
SECTION 20.07. Trustee's Fees and Expenses.................................. 52
SECTION 20.08. Eligibility Requirements for Trustee......................... 53
SECTION 20.09. Resignation or Removal of Trustee............................ 53
SECTION 20.10. Successor Trustee............................................ 54
SECTION 20.11. Merger or Consolidation of Trustee........................... 54
SECTION 20.12. Appointment of Co-Trustee or Separate Trustee................ 54
SECTION 20.13. Representations and Warranties of Trustee.................... 56
ARTICLE XXI. Termination......................................................... 56
SECTION 21.01. Termination of the Trust..................................... 56
SECTION 21.02. Optional Purchase of All Receivables......................... 57
ARTICLE XXII. Miscellaneous Provisions........................................... 58
SECTION 22.01. Amendment.................................................... 58
SECTION 22.02. Protection of Title to Trust................................. 59
SECTION 22.03. Limitation on Rights of Certificateholders................... 60
SECTION 22.04. Governing Law................................................ 61
SECTION 22.05. Notices...................................................... 61
SECTION 22.06. Severability of Provisions................................... 62
SECTION 22.07. Assignment................................................... 62
SECTION 22.08. Certificates Nonassessable and Fully Paid.................... 62
SECTION 22.09. Counterparts................................................. 62
</TABLE>
-iii-
<PAGE>
BAY VIEW GRANTOR TRUSTS
STANDARD TERMS AND CONDITIONS OF AGREEMENT
DATED AS OF ___________, 199_
INTRODUCTION
This Bay View Grantor Trust Standard Terms and Conditions of Agreement
shall be applicable to Bay View Grantor Trust formed on or after the date
hereof, in each case that a Pooling and Servicing Agreement is executed relating
to such trust and incorporation by reference to this Bay View Grantor Trust
Standard Terms and Conditions of Agreement dated as of December 1, 1996 (these
"Standard Terms").
ARTICLE XI
DEFINITIONS
-----------
SECTION 11.01. DEFINITIONS. Whenever used in the Agreement (including
-----------
these Standard Terms, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
"ADVANCE" means, with respect to a Receivable and with respect to a
Collection Period, the amount that the Servicer is required to advance pursuant
to Section 14.05.
"AFFILIATE" - any wholly-owned subsidiary of Bay View Capital Corporation,
a Delaware corporation, excluding CTL.
"AGREEMENT" means the Pooling and Servicing Agreement executed by the
Depositor, the Servicer and the Trustee as of the day after the Cutoff Date,
into which these Standard Terms shall be incorporated by reference, and all
amendments and supplements thereto.
"AMOUNT FINANCED," with respect to a Receivable, means the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and any
related costs.
"APPROVED RATING" means a rating of P-1 by Moody's or A-1+ by Standard &
Poor's.
"AVAILABLE CASH COLLATERAL AMOUNT" means, on any Distribution Date, the
amount on deposit in the Cash Collateral Account, including any income or gain
from any investment of funds in the Cash Collateral Account, net of any losses
from such investment.
"AVAILABLE FUNDS" means the amount defined as such in Section 14.02.
"BANK" - Bay View Federal Bank, a Federal Savings Bank.
1
<PAGE>
"BOOK ENTRY CERTIFICATES" means certificates evidencing a beneficial
interest in the Certificates, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section 16.08;
provided, however, that after the occurrence of a condition whereupon book-entry
- -----------------
registration and transfer are no longer permitted and Definitive Certificates
are to be issued to the Certificate Owners, such Certificates shall no longer be
"Book-Entry Certificates."
"BUSINESS DAY" means, unless otherwise specified in the Agreement, any day
other than a Saturday, a Sunday or a day on which banking institutions in New
York, New York, or San Francisco, California, shall be authorized or obligated
by law, executive order, or governmental decree to be closed.
"CASH COLLATERAL ACCOUNT" means, the account designated as such,
established and maintained pursuant to Section 15.02.
"CASH COLLATERAL ACCOUNT FACILITY" means any liquidity facility or similar
arrangement established pursuant to Section 15.02.
"CASH COLLATERAL ACCOUNT SURPLUS" means, on any Distribution Date, the
excess, if any, of the Available Cash Collateral Amount on such Distribution
Date, after giving effect to deposits into and withdrawals from the Cash
Collateral Account pursuant to Article 14 on such Distribution Date, over the
Required Cash Collateral Amount for the next succeeding Distribution Date.
"CERTIFICATE" means either a Class A Certificate or a Class B Certificate.
"CERTIFICATEHOLDER" or "HOLDER" means either a Class A Certificate holder
or a Class B Certificateholder.
"CERTIFICATE ACCOUNT" means the account designated as such, established and
maintained pursuant to Section 14.01.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"CERTIFICATE PRINCIPAL BALANCE" means, at any time, the sum of the Class A
Principal Balance and the Class B Principal Balance.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" mean, respectively, the
register maintained and the registrar appointed pursuant to Section 16.03.
2
<PAGE>
"CLASS A CERTIFICATE" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached as Exhibit A
to the Agreement.
"CLASS A CERTIFICATE FACTOR" means a seven digit decimal number computed by
the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A Principal Balance (after giving effect to any distribution
of Class A Monthly Principal required to be made on such Distribution Date) by
the Initial Class A Principal Balance.
"CLASS A CERTIFICATEHOLDER" means the Person in whose name the respective
Class A Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A Certificate
registered in the name of the Depositor or the Servicer, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"CLASS A MONTHLY INTEREST" means, (i) for the first Distribution Date, the
product of the following: (one twelfth of the Class A Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
from the Closing Dated divided by 30) multiplied by the Class A Principal
Balance at the Closing Date and (ii) for any subsequent Distribution Date, one-
twelfth of the product of the Class A Pass-Through Rate and the Class A
Principal Balance as of the immediately preceding Distribution Date (after
giving the effect to any distribution of Class A Monthly Principal made on such
immediately preceding Distribution Date).
"CLASS A MONTHLY PRINCIPAL" means, for any Distribution Date, the amount
necessary to reduce the Class A Principal Balance to ___% (or such other
percentage stated in the Agreement) of the Pool Balance at the close of business
on the last day of the preceding Collection Period (or, in the case of the first
Collection Date, the Original Pool Balance); provided, however, that for the
-------- -------
final scheduled Distribution Date, Class A Monthly Principal will be equal to
the remaining outstanding principal balance of the Class A Certificates. Class
A Monthly Principal will not exceed the Class A Principal Balance.
"CLASS A PASS-THROUGH RATE" means the interest rate payable to Class A
Certificateholders, as specified in the Agreement.
"CLASS A PRINCIPAL BALANCE" means, at any time, the Initial Class A
Principal Balance minus all distributions of Class A Monthly Principal made up
to such time.
"CLASS B CERTIFICATE" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached as Exhibit B
to this Agreement.
"CLASS B CERTIFICATE FACTOR" means a seven digit decimal number computed by
the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class B
3
<PAGE>
Principal Balance (after giving effect to any distribution of Class B Monthly
Principal required to be made on such Distribution Date) by the Initial Class B
Principal Balance.
"CLASS B CERTIFICATEHOLDER" means the Person in whose name the respective
Class B Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class B Certificate
registered in the name of the Depositor or the Servicer, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"CLASS B MONTHLY INTEREST" means, (i) for the First Distribution Date, the
product of the following: (one-twelfth of the Class B Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
from the Closing Date divided by 30) multiplied by the Class B Principal Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class B Pass-Through Rate and the Class B Principal
Balance as of the immediately preceding Distribution Date (after giving effect
to any distribution of Class B Monthly Principal made on such immediately
preceding Distribution Date).
"CLASS B MONTHLY PRINCIPAL" means, for any Distribution Date, the amount
necessary to reduce the Class B Principal Balance to ___% (or such other
percentage stated in the Agreement) of the Pool Balance at the close of business
on the last day of the preceding Collection Period (or, in the case of the first
Collection Date, the Original Pool Balance); provided, however, that for the
-------- -------
final scheduled Distribution Date, Class B Monthly Principal will be equal to
the remaining outstanding principal balance of the Class B Certificates. Class
B Monthly Principal will not exceed the Class B Principal Balance.
"CLASS B PASS-THROUGH RATE" means the interest rate payable to Class B
Certificateholders, as specified in the Agreement.
CLASS B PRINCIPAL BALANCE" means, at any time, the Initial Class B
Principal Balance minus all distributions of Class B Monthly Principal made up
to such time.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"COLLECTED INTEREST" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
interest relating to such Collection Period.
4
<PAGE>
"COLLECTED PRINCIPAL" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
principal relating to such Collection Period.
"COLLECTION PERIOD" means (i) initially, the period from the day after the
Cutoff Date to the end of the calendar month after that in which the Cutoff Date
occurs and (ii) thereafter, each calendar month, until the Trust shall terminate
pursuant to Article XXI.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which its
corporate trust business shall, at any particular time, be administered, which
office at the date of the execution of the Agreement shall be specified therein
or at such other address as the Trustee may designate from time to time by
notice to the Certificateholders, the Depositor and the Servicer. Such office
at the date of the execution of this Agreement is at Four Albany Street, New
York, NY 10006 Attention: Corporate Trust and Agency Group, telephone (212)
250-6227 and facsimile (212) 250-1393.
"CTL" means California Thrift & Loan, a California corporation, and its
successors and assigns, other than in its capacity as Servicer.
"CUTOFF DATE" means, individually, the Initial Cutoff Date or a particular
Subsequent Cutoff Date specified as such in the Agreement.
"DEALER" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to CTL under an existing agreement with the
Depositor or who arranged for a loan from CTL to the purchaser of a Financed
Vehicle under an existing agreement with CTL.
"DEFAULTED RECEIVABLE" means, for any Collection Period, a Receivable as to
which any of the following has occurred: (i) any payment was delinquent 90 days
or more as of the last day of such Collection Period, (ii) the Financed Vehicle
that secures the Receivable has been repossessed, or (iii) the Servicer has
determined that the Receivable is uncollectible in accordance with the
Servicer's customary practices on or before the last day of such Collection
Period; provided, however, that "Defaulted Receivable" shall not include any
-------- -------
Receivable that is to be repurchased pursuant to Section 12.02.
"DEFINITIVE CERTIFICATE" means a Certificate defined as such in Section
16.08.
"DELINQUENCY RATE" means, for any Collection Period, the fraction,
expressed as a percentage, of which (i) the numerator is equal to the sum of the
Principal Balances of all Receivables (including Receivables payable by bankrupt
Obligors unless a reaffirmation or reorganization has been approved by a
bankruptcy court with respect to such delinquencies on any such Receivable)
other than Defaulted Receivables which are delinquent more than 60 days (as of
the last day of such Collection Period) and (ii) the denominator is equal to the
Pool Balance (determined as of the last day of such Collection Period).
5
<PAGE>
"DEPOSITOR" means Bay View Securitization Corporation, a Delaware
corporation, in its capacity as the depositor of the Receivables under the
Agreement, and each successor to Bay View Securitization Corporation (in the
same capacity) pursuant to Section 17.03.
"DEPOSITORY AGREEMENT" means the agreement among the Depositor, the Trustee
and the initial Clearing Agency in the form attached as an Exhibit to the
Agreement.
"DETERMINATION DATE" has the meaning set forth in Section 14.02.
"DISTRIBUTION DATE" means, for each Collection Period, the first Business
Day on or after the 10th day of the following month.
"ELIGIBLE BANK" means any depository institution with trust powers
(including the Trustee), organized under the laws of the United States or any
State having a net worth in excess of $50,000,000, the deposits of which are
insured to the full extent permitted by law by the Federal Deposit Insurance
Corporation, which is subject to supervision and examination by Federal or State
authorities and which (i) has a long-term unsecured debt rating of at least Baa3
from Moody's or (ii) is approved by each Rating Agency.
"ELIGIBLE INVESTMENT" means any of the following:
(i) direct obligations of, and obligations the full and timely payment
of principal and interest on which is fully guaranteed by, the
United States of America, the Federal National Mortgage Association,
or any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(ii) (A) demand and time deposits in, certificates of deposits of,
bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee or
any agent of the Trustee, acting in their respective commercial
capacities) incorporated under the laws of the United States of
America, any State thereof or the District of Columbia or any
foreign depository institution with a branch or agency licensed
under the laws of the United States of America or any State, in each
case subject to supervision and examination by Federal and/or State
banking authorities and having an Approved Rating at the time of
such investment or contractual commitment providing for such
investment or (B) any other demand or time deposit or certificate of
deposit which is fully insured by the Federal Deposit Insurance
Corporation;
(iii) repurchase obligations with respect to (A) any security described in
clause (i) above or (B) any other security issued or guaranteed by
an agency or instrumentality of the United States of America, in
either case entered into with a depository institution or trust
company (acting as principal) described in clause (ii) (A) above;
6
<PAGE>
(iv) short-term securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States
of America or any State the short-term unsecured obligations of
which have an Approved Rating, or higher, at the time of such
investment; provided, however, that securities issued by any
-------- -------
particular corporation will not be Eligible Investments to the
extent that investment therein will cause the then outstanding
principal amount of securities issued by such corporation and held
as part of the corpus of the Trust to exceed 10% of amounts held in
the Certificate Account;
(v) commercial paper having an Approved Rating at the time of such
investment;
(vi) a guaranteed investment contract issued by any insurance company or
other corporation acceptable to the Rating Agency, provided that the
--------
Trustee shall have received written notice from the Rating Agency to
the effect that the investment of funds in such a contract will not
result in the reduction or withdrawal of any rating on the
Certificates; and
(vii) interests in any money market fund having a rating of Aaa by Moody's
or AAAm by Standard & Poor's.
"EVENT OF DEFAULT" means an event specified in Section 19.01.
"EXCESS YIELD" means, for any Collection Period, the amount, expressed as
an annualized percentage, of the aggregate Collected Interest on the last day of
such Collection Period, minus (a) the aggregate principal amount of the
Receivables that became Defaulted Receivables during such Collection Period, (b)
the Monthly Interest for such Distribution Date and (c) the Monthly Servicing
Fee for such Distribution Date.
"FINANCED VEHICLE" means a new or used automobile, light truck, motorcycle
or van, together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"FUNDING PERIOD" means the period specified as such in the Agreement.
"HOLDER" -- see "Certificateholder."
"INITIAL CASH COLLATERAL AMOUNT" shall mean the dollar amount defined as
such in the Agreement.
"INITIAL CLASS A PRINCIPAL BALANCE" means the dollar amount defined as such
in the Agreement.
"INITIAL CLASS B PRINCIPAL BALANCE" means the dollar amount defined as such
in the Agreement.
7
<PAGE>
"INITIAL CERTIFICATE PRINCIPAL BALANCE" means the sum of the Initial Class
A Principal Balance and the Initial Class B Principal Balance.
"INITIAL PRE-FUNDED AMOUNT" means the amount specified as such in the
Agreement.
"INITIAL RECEIVABLES" means the Receivables which have been acquired by CTL
and ultimately sold to the Trust by the Depositor as of the date of the
Agreement, and excluding the Subsequent Receivables (as defined herein).
"INSOLVENCY EVENT" with respect to a party means (i) the entry of a decree
or order by a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a conservator, receiver, or liquidator for
such party in any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation of
their respective affairs, and the continuance of any such decree or order
unstated and in effect for a period of 60 consecutive days; or (ii) the consent
by such party to the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings of or relating to such party or of or relating to
substantially all of its property; or such party shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"INTEREST SHORTFALL" means, as to any Receivable for any Collection Period,
the amount, if any, by which (a) the interest payment due on such Receivable
during such Collection Period exceeds (b) the Collected Interest on such
Receivable. "Interest Shortfall" with respect to a Precomputed Receivable for
any Collection Period means the amount, if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method) exceeds the Collected Interest on such
Receivable (computed using the same method and after giving effect to the
withdrawal of any previously received Scheduled Payments in respect of such
Receivable from the Payahead Account in accordance with Section 11.06 hereof).
"LIEN" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable by operation of law.
"LIQUIDATION PROCEEDS" means the monies collected from whatever source,
including insurance proceeds, on Defaulted Receivables, net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be remitted to the Obligor. "Liquidation Proceeds" with
respect to a Distribution Date means such monies collected during the preceding
Collection Period.
"MONTHLY INTEREST" means the sum of Class A Monthly Interest and Class B
Monthly Interest.
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"MONTHLY PRINCIPAL" means the sum of Class A Monthly Principal and Class B
Monthly Principal.
"MONTHLY SERVICING FEE" means, for any Distribution Date, one-twelfth of
the product of (a) either (i) the Certificate Principal Balance on such
Distribution Date (after giving effect to any distribution of Monthly Principal
made on such Distribution Date) or (ii) with respect to the first Distribution
Date, the Initial Certificate Principal Balance and (b) the Servicing Rate.
"MOODY'S" means Moody's Investors Service, Inc.
"NET LOSS RATE" means, for any Collection Period, the fraction, expressed
as an annualized percentage, of which (i) the numerator is equal to (A) the sum
of the Principal Balances of all Receivables that became Defaulted Receivables
during such Collection Period minus (B) the Liquidation Proceeds received by the
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Trust during the same Collection Period, and (ii) the denominator is equal to
the average of the Pool Balances determined on the last day of such Collection
Period and on the last day of the immediately preceding Collection Period (or,
in the case of the first Collection Period, the average of the Pool Balance
determined on the last day of such Collection Period and the Original Pool
Balance).
"NOTE RATE" means, with respect to a Receivable, the contract rate of
interest on such Receivable, exclusive of prepaid finance charges.
"OBLIGOR" on, a Receivable means the purchaser or the co-purchasers of the
Financed Vehicle or any other Person who owes payments under the Receivable.
The phrase "payment made on behalf of an Obligor" shall mean all payments made
with respect to a Receivable except payments made by the Depositor or the
Servicer.
"OFFICERS' CERTIFICATE" means a certificate signed by any two of the
chairman of the board, the president, any vice chairman of the board, any vice
president, the treasurer, or the controller of the Depositor or the Servicer, as
the case may be: provided that no individual shall sign in a dual capacity.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel
to the Depositor and/or Servicer, which counsel shall be acceptable to the
Trustee.
"ORIGINAL PURCHASE PRICE" means the amount specified as such in Section
21.02.
"ORIGINAL POOL BALANCE" means the Pool Balance of the Initial Receivables
plus the Initial Pre-Funded Amount as of the Cutoff Date, as specified in the
Agreement.
"OUTSTANDING ADVANCES" as of any date, with respect to a Receivable, means
the total amount of Advances made on such Receivable for which the Servicer has
not been reimbursed.
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"PAYAHEAD" on a Precomputed Receivable means the amount, as of the close of
business on the last day of a Collection Period, computed in accordance with
Section 11.06 with respect to such Receivable.
"PAYAHEAD ACCOUNT" means the account designated as such, established and
maintained pursuant to Section 14.09.
"PAYAHEAD BALANCE" on a Precomputed Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Precomputed Receivable, as
reduced by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 11.06 and 14.09.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"POOL BALANCE" as of any date means the aggregate Principal Balance of the
Receivables as of such date; provided, however, that for the purpose of
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determining the Alternative Cash Collateral Percentage, Class A Monthly
Principal and Class B Monthly Principal, the Principal Balance of a Defaulted
Receivable or a Purchased Receivable (if actually purchased by the Servicer or
repurchased by the Depositor) shall be deemed to be zero on and after the close
of business on the last day of the Collection Period in which the Receivable
becomes a Defaulted Receivable or a Purchased Receivable subject to repurchase
pursuant to Section 12.02 or 13.07, provided such repurchase or purchase is
actually made pursuant to Section 12.02 or 13.07.
"PRE-FUNDED AMOUNT" means, the amount of deposit from time to time in the
Pre-Funded Account.
"PRE-FUNDING ACCOUNT" means the account designated as such, established and
maintained pursuant to Section 14.10.
"PRINCIPAL BALANCE" of a simple interest Receivable, as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable. "Principal Balance" with
respect to a precomputed Receivable, as of the close of business on the Cutoff
Date or the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable using the actuarial or
constant yield method.
"PRINCIPAL AGREEMENT" means the Purchase Agreement, dated as of __________,
1996, by and between the Depositor and CTL, as amended, supplemented or modified
from time to time.
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"PURCHASE AMOUNT" of any Receivable, as of the close of business on the
last day of any Collection Period, means the amount equal to the sum of the
Principal Balance of such Receivable plus, if an Interest Shortfall would
otherwise occur that would require a withdrawal from the Cash Collateral Account
in connection with the purchase or repurchase of such Receivable on such day,
any unpaid interest accrued and due during or prior to such Collection Period on
such Receivable.
"PURCHASED RECEIVABLE" means a Receivable purchased not later than the 8th
day of the month immediately following the respective Collection Period by the
Servicer pursuant to Section 13.07 or repurchased not later than the
Determination Date of the month immediately following the respective Collection
Period by the Depositor pursuant to Section 12.02.
"RATING AGENCY" means Moody's or Standard & Poor's and its successors and
assigns.
"RECEIVABLE" means any simple interest or pre-computed (add-on) interest
installment sales contract or installment loan and security agreement which
shall appear on Schedule A to the Agreement.
"RECEIVABLE FILES" means the documents specified in Section 12.03.
"RECEIVABLES" or "RECEIVABLES POOL" means, collectively, those Receivables
conveyed to the Trust by the Depositor as of the Cutoff Date as listed in
Schedule A to the Agreement and the Subsequent Receivables.
"RECORD DATE" means, for any Distribution Date, the last day of the
preceding calendar month.
"RECOVERIES" means Liquidation Proceeds received by the Servicer during the
preceding calendar month on Defaulted Receivables.
"RECOVERIES OF ADVANCES" means, for any Collection Period, all payments
received by the Servicer by or on behalf of Obligors (other than Obligors with
respect to Defaulted Receivables and excluding reimbursements of Outstanding
Advances on Defaulted Receivables pursuant to Sections 14.04(a)(i) and 14.05)
during such Collection Period representing recoveries of Interest Shortfalls for
which Advances were made for prior Collection periods.
"REQUIRED CASH COLLATERAL AMOUNT" means the amount specified as such in the
Agreement.
"RESPONSIBLE OFFICER" means, when used with respect to the trustee, any
officer within the Corporate Trust Office (or any successor group of the
Trustee) including any vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
shall
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be such officers, respectively, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
"SCHEDULED PAYMENT" on a Receivable means that portion of the payment
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principal Balance and to provide interest at the Note
Rate.
"SERVICER" means California Thrift & Loan, a California corporation, in its
capacity as the servicer of the Receivables and each successor to California
Thrift & Loan (in the same capacity) pursuant to Sections 18.03 or 19.02.
"SERVICER'S CERTIFICATE" means a certificate completed and executed by the
Servicer by its chairman of the board, its president, any vice chairman of its
board, any vice president, the treasurer, or the controller of the Servicer
pursuant to Section 13.09.
"SERVICING RATE" means the rate specified in the Agreement.
"SPREAD AMOUNT" means, with respect to any Receivable on any Distribution
Date, to the extent collected from the Obligor, one-twelfth of the product of
(a) the excess of the Note Rate over the sum of (i) the weighted average, on the
Closing Date, of the Class A Pass-Through Rate and the Class B Pass-Through Rate
and (ii) the rate at which the Monthly Servicing Fee is computed and (b) the
unpaid principal balance on the Receivable as of the first day of the preceding
Collection Period.
"STANDARD & POOR'S" means Standard & Poor's Ratings group, a division of
McGraw-Hill, Inc.
"STATE" mean (i) any state of the United States of America or (ii) the
District of Columbia.
"STATED FINAL DISTRIBUTION DATE" means the date specified as such in the
Agreement.
"SUBSEQUENT CUTOFF DATE" means the date designated by the Depositor as of
which particular Subsequent Receivables are conveyed to the Trust.
"SUBSEQUENT RECEIVABLES" means additional Receivables which the Depositor
will convey to the Trustee from time to time during the Funding Period having an
aggregate value approximately equal to the Pre-Funded Amount.
"SUBSEQUENT TRANSFER DATE" means a date during the Funding Period to be
specified by the Depositor on which Subsequent Receivables are conveyed to the
Trust.
"TOTAL YIELD SUPPLEMENT DEPOSIT" means the amount specified as such in the
Agreement.
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"TRUST" means the trust created by the Agreement, the estate of which shall
comprise the Receivables (other than Purchased Receivables) and all monies paid
thereon, and all monies due thereon, including Accrued Interest, after the
Cutoff Date; security interests in the Financed Vehicles; funds deposited in the
Certificate Account; funds on deposit in the Pre-Funding Account; all documents
contained in the Receivable Files; any property that shall have secured a
Receivable and that shall have been acquired by or on behalf of the Trust; any
Liquidation Proceeds and any rights of the Depositor in proceeds from claims or
refunds of premiums on any physical damage, lender's partial deductibility,
credit life, disability, and hospitalization insurance policies covering
Financed Vehicles or Obligors; the interest of the Depositor in recourse to
Dealers relating to certain of the Receivables; the proceeds of the foregoing;
and amounts on deposit from time to time in the Cash Collateral Account and the
Yield Supplement Account.
"TRUSTEE" means Bankers Trust Company, a banking corporation organized
under the laws of the State of New York and its successors or any corporation
resulting from or surviving any merger or consolidation to which it or its
successors may be a party or any successor trustee at the time serving as
successor trustee hereunder.
"TRUSTEE'S CERTIFICATE" means a certificate completed and executed by the
Trustee by a Responsible Officer pursuant to Section 20.02, substantially in the
form of in the case of an assignment to the Depositor, Exhibit 1, and in the
case of an assignment to the Servicer, Exhibit 2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"YIELD SUPPLEMENT ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 14.08.
"YIELD SUPPLEMENT AMOUNT" means, on any Distribution Date, the amount
specified as such in the Agreement.
SECTION 11.02. USAGE OF TERMS. With respect to all terms in the
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by the Agreement; references to
Persons include their permitted successors and assigns and the term "including
means "including without limitation."
SECTION 11.03. CUTOFF DATE AND RECORD DATE. All references to the Record
Date prior to the first Record Date in the life of the Trust shall be to the
Cutoff Date.
SECTION 11.04. SECTION REFERENCES. All section references in these
Standard Terms shall be to Sections in these Standard Terms.
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SECTION 11.05. SIMPLE INTEREST METHOD. All allocations of payments with
respect to a Receivable to principal and interest and determinations of periodic
charges and the like shall be made using the simple interest method, based on
either the actual number of days elapsed and the actual number of days in the
calendar year or on the basis of a thirty-day month and a 360-day calendar year,
as specified in the related installment sales contract or installment loan and
security agreement. Each payment on a Receivable shall be applied first to
collection fees, if any; second, to late charges, if any, accrued on such
Receivable; third to the amount of interest accrued on such Receivable to the
date of receipt; fourth, to principal due on such Receivable; and last, to
reduce the remaining principal amount outstanding on such Receivable.
SECTION 11.06. APPLICATION OF COLLECTIONS ON PRECOMPUTED RECEIVABLES.
Notwithstanding Section 11.05, payments made by or on behalf of an Obligor with
respect to a Precomputed Receivable shall be applied first to overdue Scheduled
Payments (including reduction of Outstanding Advances as provided in Section
14.04). Next any excess shall be applied to the Scheduled Payment and any
remaining excess shall be added to the Payahead Balance, and shall be applied to
prepay the Precomputed Receivable, but only if the sum of such excess and the
previous Payahead Balance shall be sufficient to prepay the Receivable in full.
Otherwise, any such remaining excess payments shall constitute a Payahead and
shall increase the Payahead Balance.
SECTION 11.07. SEPARATE AGREEMENTS. Each Agreement that incorporates by
reference these Standard Terms shall be separate and distinct from each other
such Agreement, no provision of any such Agreement shall be applicable to any
other such Agreement, and all references to "the Agreement" and to provisions
thereof shall be references to a particular Agreement that incorporates these
Standard Terms.
ARTICLE XII
THE RECEIVABLES
SECTION 12.01. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. The
Depositor makes the following representations and warranties as to the
Receivables on which the Trustee relies in accepting the Receivables in trust
and executing and authenticating the Certificates. Such representations and
warranties speak as of the execution and delivery of the Agreement and the
Closing Date in the case of the initial Receivables, and as of the applicable
Subsequent Transfer Date in the case of the Subsequent Receivables, but shall
survive the sale, transfer, and assignment of the Initial and Subsequent
Receivables to the Trustee.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall have been
either (1) originated by a Dealer for the retail sale of a Financed
Vehicle in the ordinary course of such Dealer's business, shall have
been purchased by CTL from such Dealer and shall have been validly
assigned by such Dealer to CTL in accordance with its terms or (2)
shall have been originated by CTL, (b) shall have been fully
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and properly executed by the parties thereto, (c) shall have created
or shall create a valid, subsisting, and enforceable first priority
perfected security interest in favor of CTL in the Financed Vehicle,
which security interest shall be assignable and shall have been
validly assigned to the Depositor and by the Depositor to the
Trustee in trust for the benefit of the Certificateholders, and (d)
shall contain customary and enforceable provisions such that the
rights and remedies of the holder thereof shall be adequate for
realization against the collateral of the benefits of the security.
(ii) SCHEDULE OF RECEIVABLES. The information set forth in Schedule A to
the Agreement with respect to the Initial Receivables shall be true
and correct in all material respects as of the closing of business
on the Cutoff Date, and no selection procedures believed to be
adverse to the Certificateholders shall have been utilized in
selecting the Receivables.
(iii) COMPLIANCE WITH LAW. Each Receivable and each sale of the related
Financed Vehicle shall have complied at the time it was originated
or made and at the execution of the Agreement shall comply in all
material respects with all requirements of applicable federal,
State, and local laws, and regulations thereunder, including,
without limitation, usury laws, the Federal Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act,
the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
the Federal Reserve Board's Regulations B and Z, and State
adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, and other applicable consumer credit laws and equal
credit opportunity and disclosure laws.
(iv) BINDING OBLIGATION. Each Receivable shall represent the genuine,
legal, valid, and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its
terms.
(v) NO GOVERNMENT OBLIGOR. None of the Receivables shall be due from
the United States of America or any State or from any agency,
department, or instrumentality of the United States of America, any
State or any local government.
(vi) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof, each Receivable shall be
secured by a validly perfected first security interest in the
Financed Vehicle in favor of CTL, as secured party or all necessary
and appropriate actions with respect to such Receivable shall have
been taken to perfect a first security interest in the Financed
Vehicle in favor of CTL as secured party.
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(vii) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been
released from the lien granted by the related Receivable in whole or
in part.
(viii) NO WAIVER. No provision of a Receivable shall have been waived.
(ix) NO DEFENSES. No right or rescission, setoff, counterclaim, or
defense shall have been asserted or threatened with respect to any
Receivable.
(x) NO LIENS. No liens or claims shall have been filed, including liens
for work, labor, or materials relating to a Financed Vehicle that
shall be liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by the Receivable.
(xi) NO DEFAULT. Except for payment defaults continuing for a period of
not more than 30 days as of the Cutoff Date, no default, breach,
violation, or event permitting acceleration under the terms of any
Receivable shall have occurred; and no continuing condition that
with notice or the lapse of time would constitute a default, breach,
violation, or event permitting acceleration under the terms of any
Receivable shall have arisen; and the Depositor shall not have
waived any of the foregoing.
(xii) INSURANCE. Each Obligor has agreed to obtain physical damage
insurance covering the Financed Vehicle and the Servicer has
obtained lender's collateral protection insurance covering each
Financed Vehicle.
(xiii) TITLE. It is the intention of the depositor that the transfer and
assignment herein contemplated, taken as a whole, constitute a sale
of the Receivables from the Depositor to the Trust and that the
beneficial interest in and title to the Receivables not be part of
the receivership estate in the event of the appointment of a
receiver for the Depositor. No Receivable has been sold,
transferred, assigned, or pledged by the Depositor to any person
other than the Trustee. Immediately prior to the transfer and
assignment herein contemplated, the depositor had good and
marketable title to each Receivable free and clear of all liens,
and, immediately upon the transfer thereof, the Trustee for the
benefit of the Certificateholders shall have good and marketable
title to each Receivable, free and clear of all liens and rights of
others, except for the rights of the Certificateholders; and the
transfer has been perfected under the UCC.
(xiv) LAWFUL ASSIGNMENT. No Receivable shall have been originated in, or
shall be subject to the laws of, any jurisdiction under which the
sale, transfer, and assignment of such Receivable under the
Agreement or transfers of the Certificates would be unlawful, void,
or voidable.
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(xv) ALL FILINGS MADE. All filings (including, without limitation, UCC
filings) necessary in any jurisdiction to give the Trustee a first
perfected ownership interest in the Receivables shall have been
made.
(xvi) ONE ORIGINAL. There shall be only one original executed copy of
each Receivable.
(xvii) AGREEMENT. The additional representations and warranties in the
Agreement shall be true and correct as of the date of the Agreement,
and with respect to the Subsequent Receivables as of the Subsequent
Transfer Date.
SECTION 12.02. REPURCHASE UPON BREACH. The Depositor, the Servicer, or
the Trustee, as the case may be, shall inform the other parties promptly, in
writing, upon the discovery of any breach of the Depositor's representations and
warranties contained in Section 12.01 or the Depositor's additional
representations and warranties contained in the Agreement. Unless the breach
shall have been cured by the second Record Date following the discovery, the
Depositor shall repurchase (or, pursuant to the Purchase Agreement, shall cause
CTL to repurchase) any Receivables materially and adversely affected by the
breach as of such Record Date (or, at the Depositor's option, the first Record
Date following the discovery). In consideration of the purchase of the
Receivable, the Depositor shall remit the Purchase Amount, in the manner
specified in Section 14.03. The sole remedy of the Trustee, the Trust, or the
Certificate holders with respect to a breach of the Depositor's representations
and warranties contained in Section 12.01 or the Depositor's additional
representations and warranties contained in the Agreement shall be to require
the Depositor to repurchase Receivables pursuant to this Section 12.02.
SECTION 12.03. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trustee, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the agent
of the Trustee as custodian of the following documents or instruments which are
hereby constructively delivered to the Trustee with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the Obligor.
(iii) The original certificate of title or such documents that the
Depositor or Servicer shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the
Depositor in the Financed Vehicle.
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(iv) Any and all other documents that the Servicer or the Depositor shall
keep on file, in accordance with its customary procedures, relating
to a Receivable, an Obligor, or a Financed Vehicle.
SECTION 12.04. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall hold
the Receivable Files on behalf of the Trustee for the use and benefit of all
present and future Certificateholders, and maintain such accurate and complete
accounts, records, and computer systems pertaining to each Receivable File as
shall enable the Trustee to comply with these Standard Terms. In performing its
duties as custodian the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to the
receivable files relating to all comparable automotive receivables that the
Servicer services for itself. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivables Files held by it under the
Agreement, and of the related accounts, records, and computer systems, in such a
manner as shall enable the Trustee to verify the accuracy of the Servicer's
record keeping. The Servicer shall promptly report to the Trustee any failure
on its part to hold the Receivable Files and maintain its accounts, records, and
computer systems as herein provided and promptly take appropriate action to
remedy any such failure; provided, however, notwithstanding anything to the
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contrary in Section 12.03 or this Section 12.04, the Servicer shall not be
required to possess the original of Receivables representing less than 2% of the
Original Pool Balance until 30 days following the Closing Date.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to the
Agreement, or at such other office as shall be specified to the Trustee by prior
written notice. The Servicer shall make available to the Trustee or its duly
authorized representatives, attorneys, or auditors a list of locations of the
Receivable Files, the Receivable Files, and the related accounts, records, and
computer systems maintained by the Servicer at such times as the Trustee shall
instruct.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Trustee, the
servicer shall release any document in a Receivable File to the Trustee, the
Trustee's agent, or the Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon as practicable.
SECTION 12.05. INSTRUCTIONS: AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivables
Files upon its receipt of written instructions signed by a Responsible Officer
of the Trustee.
SECTION 12.06. CUSTODIAN'S INDEMNIFICATION. The Servicer, in its
capacity as custodian, shall indemnify the Trust and the Trustee for any and all
liabilities, obligations, losses, compensatory damages, payments, costs, or
expenses of any kind whatsoever that may be imposed on, incurred, or asserted
against the Trust or the Trustee as the result of any improper act or omission
in any way relating to the maintenance and custody by the Servicer of the
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Receivable Files; provided, however, that the Servicer shall not be liable for
any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of the Trustee.
SECTION 12.07. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
12.07. If the Servicer shall resign in accordance with the provisions of the
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under Section 19.01, the appointment of the Servicer as
custodian may be terminated by the Trustee or by the Holders of Certificates
evidencing not less than 25% of the Certificate Principal Balance. The Trustee
may terminate the Servicer's appointment as custodian with cause at anytime upon
written notification to the Servicer. As soon as practicable after any
termination of such appointment, the Servicer shall deliver the Receivable Files
to the Trustee or the Trustee's agent at such place or places as the Trustee may
reasonably designate.
SECTION 12.08. CONVEYANCE OF SUBSEQUENT RECEIVABLES.
(a) During the Funding Period, the depositor shall sell to the Trust,
and the Trust shall purchase from the Depositor, Subsequent Receivables having
an aggregate principal balance equal to the Initial Pre-Funded Amount to the
extent that such Subsequent Receivables are available. During the Funding
Period, on each Subsequent Transfer Date, subject to the conditions described
below, the Depositor will sell and assign to the Trust, without recourse the
Depositor's entire interest in the Subsequent Receivables designated by the
Depositor as of the related Subsequent Cutoff Date and identified in a schedule
attached to an assignment related to such Subsequent Receivables executed on
such date by the Depositor. Upon the conveyance of Subsequent Receivables to the
Trust on a Subsequent Transfer Date, (i) the aggregate principal balance of the
Receivables in the Trust will increase in an amount equal to the aggregate
principal balances of the Subsequent Receivables and (ii) an amount equal to the
aggregate principal balance of such Subsequent Receivables will be withdrawn
from the Pre-Funding Account and paid to the Depositor.
(b) Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of the
following conditions precedent:
(i) the Depositor shall have delivered to the Trustee a duly executed
written assignment in substantially the form of Exhibit 4 (the
"Subsequent Transfer Assignment"), which shall include supplements
to Schedule A of the Agreement listing the Subsequent Receivables;
(ii) the Depositor shall have deposited in the Collection Account all
collections received in respect of each of the Subsequent
Receivables after the applicable Subsequent Cutoff Date;
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(iii) as of each Subsequent Transfer Date, the Depositor was not insolvent
nor will it have been made insolvent by such transfer nor is it
aware of any pending insolvency;
(iv) the Funding Period shall not have terminated;
(v) the Receivables in the Trust, including the Subsequent Receivables
to be conveyed to the Trust on the Subsequent Transfer Date, shall
meet the following criteria: (I) not more than ___% of the Principal
Balances of the Subsequent Receivables in the Trust will represent
financing of used vehicles; (II) the weighted average Note Rate of
the Subsequent Receivables will not be less than ___% (iii) no
Subsequent Receivable shall have a Note Rate of less than the sum of
the Class A Pass-Through Rate and the Servicing Rate; (IV) the
weighted average remaining term (as of the Subsequent Cutoff Date of
the Subsequent Receivables shall not be greater than __ months; and
(V) no Subsequent Receivable will have a final Scheduled Payment due
later than ____________;
(vi) each of the representations and warranties made by the Depositor
pursuant to Section 12.02 with respect to the Subsequent Receivables
shall be true and correct as of the related Subsequent Transfer Date
with the same effect as if then made, and the Depositor shall have
performed all obligations to be performed by it hereunder on or
prior to such Subsequent Transfer Date;
(vii) the Depositor shall, at its own expense, on or prior to the
Subsequent Transfer Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Transfer
Assignment have been sold to the Trust pursuant to this Agreement
and the Subsequent Transfer Assignment;
(viii) the Depositor shall have taken any action required to maintain the
first perfected ownership interest of the Trust in the Trust Estate
and the first perfected security interest of the Trustee in the
Collateral;
(ix) no selection procedures believed by the Depositor to be adverse to
the interests of the Certificateholders shall have been utilized in
selecting the Subsequent Receivables; and
(x) the Depositor shall have delivered to the Trustee an Officers'
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b).
(xi) in addition, any such conveyance of Subsequent Receivables made on
one or more Subsequent Transfer Dates occurring during any given
Collection Period will also be subject to the satisfaction, on or
before the Determination Date following the end of such Collection
Period, of the following conditions subsequent;
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(xii) the Depositor shall have provided the Trustee as listing of each
such Subsequent Receivable and its corresponding Subsequent Transfer
Date and the aggregate Principal Balance of such Subsequent
Receivables so transferred and any other information reasonably
requested by any of the foregoing with respect to such Subsequent
Receivables;
(xiii) the addition of any such Subsequent Receivable will not result in a
material adverse tax consequence to the Trust or the
certificateholders;
(xiv) the Depositor shall have delivered (A) to the Rating Agencies an
Opinion of Counsel with respect to the transfer of such Subsequent
Receivables substantially in the form of the Opinion of Counsel
delivered to the Rating Agencies on the Closing Date;
(xv) the Depositor shall have delivered to the Trustee a letter of a firm
of independent certified public accountants confirming that the
conditions set forth in Section 12.08(b)(v) were satisfied with
respect to those Subsequent Receivables conveyed on each such
Subsequent Transfer Date.
The Depositor covenants that in the event any of the foregoing conditions
subsequent are not satisfied with respect to any Subsequent Receivable, the
Depositor will immediately repurchase such Subsequent Receivable at a price
equal to the Purchase Amount thereof, in the manner specified in Section 14.03.
The Depositor covenants to transfer to the Trustee, pursuant to paragraph
(a) above, Subsequent Receivables with an aggregate Principal Balance equal to
the Initial Pre-Funded Amount. In the event that the Depositor shall fail to
deliver and sell to the Trust any or all of such Subsequent Receivables, any
funds remaining in the Pre-Funding Account shall be distributed in accordance
with Section 14.10 to the Certificateholders as Monthly Principal on the
Distribution Date next following the end of the Funding Period; provided,
however, that the foregoing shall be the sole remedy of the Trustee or the
Certificateholders with respect to a failure of the Depositor to comply with
such covenant.
ARTICLE XIII
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 13.01. DUTIES OF SERVICER. The Servicer as agent for the Trustee
shall manage, service, administer, and make collections on the Receivables with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable motor vehicle receivables that it
services for itself. The Servicer's duties shall include collection and posting
of all payments, making Advances (in the Servicer's sole discretion), responding
to inquiries to Obligors or of federal, state or local governmental authorities
with respect to the
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Receivables, investigating delinquencies, sending payment coupons to Obligors,
accounting for collections, and furnishing monthly and annual statements to the
Trustee with respect to distributions. The Servicer shall follow its customary
standards, policies, and procedures in performing its duties as Servicer.
Without limiting the generality of the foregoing, the Servicer is authorized and
empowered by the Trustee to execute and deliver, on behalf of itself, the Trust,
the Certificateholders, or the Trustee of any of them, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable or a Defaulted Receivable, the Trustee
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection, such Receivable to the Servicer. The Trustee shall execute any
documents prepared by the Servicer and delivered to the Trustee for execution
that are necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 13.02. COLLECTION OF RECEIVABLE PAYMENTS. The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the sum shall become due and shall
follow such collection procedures as it follows with respect to all comparable
automotive receivables that it services for itself. If payments are extended in
the ordinary course of the Servicer's collection procedures, and, as a result,
any Receivable would be outstanding at the Stated Final Distribution Date, then
the Servicer shall be obligated to purchase such Receivable pursuant to Section
13.07 (unless such Receivable is otherwise being purchased pursuant to Section
21.02) as of the last day of the Collection Period immediately preceding the
Stated Final Distribution Date. The Servicer may in its discretion waive any
late payment charge or any other fees that may be collected in the ordinary
course of servicing a Receivable.
SECTION 13.03. REALIZATION UPON RECEIVABLES. (a) On behalf of the Trust
the Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise convert the ownership of the Financed
Vehicle securing any Receivable as to which the Servicer shall have determined
that eventual payment in full is unlikely. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of motor vehicle receivables which may include
reasonable efforts to realize upon any recourse to Dealers and selling the
Financed Vehicle at public or private sale. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such motor vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds of the related Receivable by an amount equal to or greater
than the amount of such expenses.
(b) Unless otherwise stated in the Agreement, the Servicer shall either
purchase or liquidate each Financed Vehicle that has not previously been
liquidated and that secures, or previously secured, a Defaulted Receivable
either (i) by the end of the Collection Period preceding the final scheduled
Distribution Date during the life of the Trust or (ii) if earlier, by the end of
the ninth Collection Period following the Collection Period during which such
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Receivable became a Defaulted Receivable. Any purchase of a Financed Vehicle by
the Servicer shall be made at a price equal to the fair market value of the
financed Vehicle as determined by the Servicer in accordance with the Servicer's
normal servicing standards.
The Servicer shall remit within two Business days of receipt thereof to the
Certificate Account all payments by or on behalf of the Obligors with respect to
the Receivables (other than Purchased Receivables) and all Liquidation Proceeds.
Notwithstanding the foregoing, for so long as (a) CTL or an Affiliate remains
the Servicer, (b) no Event of Default shall have occurred and the be continuing
and (c)(1) CTL (or an Affiliate succeeding CTL as Servicer) maintains a short-
term rating of at least A-1 by Standard & Poor's and P-1 by Moody's (and for
five Business Days following a reduction in either such rating) or (2) prior to
ceasing daily remittances, the Rating Agency Condition shall have been satisfied
(and any conditions or limitations imposed by the Rating Agencies in connection
therewith are complied with), the Servicer may remit all such payments and
Liquidation Proceeds with respect to any Collection Period to the Certificate
Account on a less frequent basis, but in no event later than the Determination
Date immediately preceding each Distribution Date. For purposes of this Article
V, the phrase "payments by or on behalf of Obligors" shall mean payments made
with respect to the Receivables by Persons other than the Servicer or the
Sellers.
SECTION 13.04. PHYSICAL DAMAGE INSURANCE. The Servicer, in accordance
with its customary servicing procedures, and underwriting standards shall
require that each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle and that the Servicer has obtained and
shall maintain lender's collateral protection insurance coverage, each as of the
execution of the Receivable.
SECTION 13.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to ensure that perfection of the security interest
created by each Receivable in the related Financed Vehicle has been obtained,
and to maintain such security interest. The Trustee hereby authorizes the
Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Trust in the event of the relocation of a Financed
Vehicle or for any other reason.
SECTION 13.06. COVENANTS OF SERVICER. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholders in the Receivables, nor shall the Servicer change the
amount of the Scheduled Payment under a Receivable or change the Amount Financed
under a Receivable or reduce the Note Rate of a Receivable (except if so ordered
by a bankruptcy court in a proceeding concerning the Obligor).
SECTION 13.07. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or the
Trustee shall inform the other party promptly, in writing, upon the discovery of
any breach by the servicer of its obligations under Section 13.06. Unless the
breach shall have been cured by the
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last day of the Collection Period following the Collection Period during which
such breach was discovered, the Servicer shall purchase any Receivable
materially and adversely affected by such breach as of such day (or, at the
Servicer's election, as of the last day of the Collection Period during which
such breach was discovered). In consideration of the purchase of such
Receivable, the Servicer shall remit the Purchase Amount with respect to such
Receivable in the manner specified in Section 14.03. The sole remedy of the
Trustee, the Trust, or the Certificateholders with respect to a breach pursuant
to Section 13.06 shall be to require the Servicer to purchase Receivables
pursuant to this Section 13.07.
SECTION 13.08. SERVICING FEE. The servicing fee for a Collection Period
shall equal the Monthly Servicing Fee (except that in the case of a successor
Servicer, the servicing fee shall equal such amount as is arranged in accordance
with Section 19.02). The Servicer shall be entitled to retain from payments of
principal and interest on the Receivables collected during a Collection Period
an amount equal to the Monthly Servicing Fee due the Servicer in respect of the
Collection Period and need not deposit such amount in the Certificate Account.
The Servicer shall also be entitled to retain, and need not deposit in the
Certificate Account, all late fees, prepayment charges, other administrative or
collection fees or similar charges allowed by applicable law with respect to
Receivables, if any, collected (from whatever source) on the Receivables. The
Monthly Servicing Fee will be paid only out of the funds of the Trust and not
from the Trustee's own funds. So long as California Thrift & Loan or an
Affiliate is the Servicer, if the Servicer fails to pay the Trustee's fees and
expenses pursuant to Section 20.07, the Trustee shall be entitled to receive
such amount from the Monthly Servicing Fee prior to payment thereof to the
Servicer. Pursuant to Section 14.04 hereof, the Servicer may also receive the
Spread Amounts to the extent there are funds available therefor after taking
into account losses on Defaulted Receivables as provided in Article XV.
SECTION 13.09. SERVICER'S CERTIFICATE. On the fifth day of each calendar
month; the Servicer shall deliver to the Trustee a Servicer's Certificate in the
form of Exhibit 3 attached hereto containing all information necessary to make
the distributions pursuant to Section 14.04 for the Collection Period preceding
the date of such Servicer's Certificate and all information necessary for the
Trustee to send statements to Certificateholders pursuant to Section 14.07,
including (A) the amount of aggregate collections on the Receivables, (B) the
aggregate Purchase Amount of the Receivables repurchased by the Depositor and
purchased by the servicer, (C) with respect to Precomputed Receivables the net
deposit from the Collection account to the Payahead Account or the net
withdrawal from the Payahead Account to the Collection Account required for the
Collection Period in accordance with Section 14.09, and in the case of a net
withdrawal, the Monthly Interest and Monthly Principal reported on such
Servicer's Certificate shall reflect the portions of such withdrawal allocable
to interest and principal, respectively, in accordance with these Standard Terms
(D) and each other item listed in Section 14.04 hereof or to provide to the
Rating Agency such information as the Rating Agency reasonably requests in order
to monitor the performance of the Receivables. Receivables purchased by the
Servicer or repurchased by the Depositor (as the case may be) as of the last day
of such Collection Period shall be identified by the Depositor account number
with respect to such Receivable (as specified in Schedule A to the Agreement).
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SECTION 13.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Trustee, on or before April 30 of each
year, beginning on the first April 30 that is at least six months after the
Closing Date, an Officers' Certificate, dated as of December 31 of the preceding
year, stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or in case of the initial such Officer's Certificate,
the period from the Closing Date to and including the date of such Officer's
Certificate) and of its performance under the Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under the Agreement
throughout such year, or, if there has ben a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. A copy of such certificate and the Report referred
to in Section 13.11 may be obtained by any Certificateholder at its own expense
by a request in writing to the Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Trustee,
promptly after having obtained knowledge thereof, but in no event later than 5
Business Days thereafter, written notice in an Officers' Certificate of any
event which with the giving of notice or lapse of time, or both, would become an
event of Default under clause (i) or (ii) of Section 19.01. The Depositor shall
deliver to a Responsible Officer of the trustee, promptly after having obtained
knowledge thereof, but in no event later than 5 Business Days thereafter,
written notice in an Officers' Certificate of any event which with the giving of
notice or lapse of time, or both, would become an Event of Default under clause
(ii) of Section 19.01.
SECTION 13.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNT'S REPORT. The
Servicer shall cause a firm of independent certified public accountants, who may
also render other services to the Servicer, to deliver to the Trustee on or
before April 30 of each year concerning the 12-month period ended December 31 of
such year (or shorter period since the date of Agreement), beginning on the
first April 30 that is at least six months after the Closing Date, a report
addressed to the Board of Directors of the Servicer and to the Trustee, to the
effect that such firm has reviewed the servicing of the Receivables by the
Servicer and that such review (1) included tests relating to new or used
automobile, motorcycle, van and light truck loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, to the extent the procedures in such program are applicable to
the servicing obligations set forth in the Agreement, and (2) except as
described in the report, disclosed no exceptions or errors in the records
relating to automobile, motorcycle, van or light truck loans serviced for others
that, in the firm's opinion, paragraph four of such program requires such firm
to report.
The report will also indicate that the firm is independent of the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
SECTION 13.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to the Certificateholders access to the
Receivables Files
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in such cases where the Certificateholder shall be required by applicable
statutes or regulations to review such documentation. Access shall be afforded
without charge, but only upon reasonable request and during the normal business
hours at the respective offices of the Servicer. Nothing in this Section shall
affect the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access to information as a result of such obligation shall
not constitute a breach of this Section 13.12.
SECTION 13.13. SERVICER EXPENSES. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with distributions and reports
to Certificateholders.
SECTION 13.14. REPORTS TO CERTIFICATEHOLDERS. The Trustee shall provide
to any Certificateholder who so requests in writing (addressed to the Corporate
Trust Office) a copy of any certificate described in Section 13.09, or the
annual statement described in Section 13.10, or the annual report described in
Section 13.11. The Trustee may require the Certificateholder to pay a
reasonable sum to cover the cost of the Trustee's complying with such request.
ARTICLE XIV
DISTRIBUTIONS: STATEMENTS TO CERTIFICATEHOLDERS
SECTION 14.01. CERTIFICATE ACCOUNT. The Servicer, on behalf of the
Trust, shall establish the Certificate Account with the Bank or an Eligible Bank
as a segregated trust account in the name of the Trust for the benefit of
Certificateholders with the Corporate Trust Office of the Trustee. The Servicer
shall direct the Trustee to invest the amounts in the Certificate Account in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Distribution Date and to hold such Eligible Investments to
maturity. The Trustee shall (i) maintain possession of any negotiable
instruments or securities evidencing Eligible Investments until the time of sale
or maturity and each certificated security or negotiable instrument evidencing
an Eligible Investment shall be endorsed in blank or to the Trustee or
registered in the name of the Trustee and (ii) cause any Eligible Investment
represented by an uncertificated security to be registered in the name of the
Trustee.
SECTION 14.02. COLLECTIONS. The Servicer shall remit to the Certificate
Account all payments by or on behalf of the Obligors on the Receivables and all
Liquidation proceeds, both as collected during the Collection Period net of
Monthly Servicing Fees and administrative fees allowed to be retained by the
Servicer pursuant to Section 13.08 and net of charge backs (attributable to
errors in posting, returned checks, or rights of offset for amounts that should
not have been paid or that must be refunded as the result of a successful claim
or defense under bankruptcy or similar laws) not later than the second Business
Day following the Business Day on which such amounts are received by the
Servicer. The Servicer shall remit any Advances
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with respect to a Collection Period to the Certificate Account by the fifth day
of the calendar month following such Collection Period (the "Determination
Date").
On each Determination Date, the Servicer shall determine (a) the amount of
payments on all Receivables and all Liquidation Proceeds received during such
Collection Period, the Yield Supplement Amount for the related Distribution
Date, the amount of Advances for such Collection Period, and the Purchase Amount
for all Receivables purchased or repurchased with respect to such Collection
Period which have been deposited in the Certificate Account (net of amounts
required to be paid pursuant to Section 14.04(d), excluding investment income on
all such amounts, and not including amounts required to be paid pursuant to
Sections 12.02, 13.07, and 14.05 but not so paid) all investments earnings
during such Collection Period on amounts on deposit in the Pre-Funding account
(the "Available Funds"), and (b) the amount of funds necessary to make the
distributions required pursuant to Sections 14.04(a) (i), (ii), (iii), (iv), (v)
and (vi) on the next Distribution Date. The Servicer shall by a Servicer's
Certificate notify the Trustee of such amounts by telecopy to the Corporate
Trust Office at the number specified in the Agreement (or such other number as
the Trustee may from time to time provide), followed promptly by mailing such
notice to the Trustee at the Corporate Trust Office. The Trustee, or the
Servicer on its behalf, shall (x) on each Distribution Date withdraw from the
Yield Supplement Account the Yield Supplement Amount for such Distribution Date,
(y) on any Distribution Date on which there are not sufficient Available Funds
to make the distributions required pursuant to Sections 14.04(a)(i), (ii),
(iii), (iv), (v) and (vi), withdraw from the Cash Collateral Account, to the
extent of the Available Cash Collateral Amount, an amount equal to such
deficiency and (z) promptly deposit such amount in the Certificate Account.
SECTION 14.03. PURCHASE AMOUNTS. Not later than the fifth day of the
calendar month, the Servicer or the Depositor, as the case may be, shall remit
to the Certificate Account the aggregate Purchase Amount for such Collection
Period pursuant to Sections 12.02 and 13.07.
SECTION 14.04. DISTRIBUTIONS TO PARTIES.
(a) On each Distribution Date, the Trustee shall apply or cause to be
applied the Available Funds in the Certificate Account for the prior Collection
Period, plus any amounts withdrawn from the Cash Collateral Account and Pre-
Funding Account pursuant to Section 14.02, to make the following distributions
in the listed order of priority:
(i) The aggregate amount of Outstanding Advances on all
Receivables that became Defaulted Receivables during the
prior Collection Period, to the Servicer;
(ii) To the extent not previously distributed to the Servicer, the
Monthly Servicing Fee, including any overdue Monthly
Servicing Fee, to the Servicer;
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(iii) Class A Monthly Interest, including any overdue Class A
Monthly Interest, to the Class A Certificateholders;
(iv) Class B Monthly Interest, including any overdue Class B
Monthly Interest, to the Class B Certificateholders;
(v) Class A Monthly Principal, to the Class A Certificateholders;
(vi) Class B Monthly Principal, to the Class B Certificateholders;
(vii) The amount of recoveries of Advances, to the Servicer (to the
extent not applied pursuant to (i) above on or prior to such
Distribution Date);
(viii) The amount of Liquidation Proceeds on Purchased Receivables
purchased by the Servicer, to the Servicer;
(ix) The amount of Liquidation Proceeds on Purchased Receivables
repurchased by the Depositor, to the Depositor; and
(x) The balance, including the Spread Amount (to the extent not
applied above), for deposit into the Cash Collateral Account.
Notwithstanding the foregoing, if the Servicer exercises the purchase
option on any Distribution Date pursuant to Section 21.02, the Optional Purchase
Price (and any additional amounts due in respect of accrued interest through the
date of such purchase) shall be distributed to Certificateholders on such
Distribution Date.
In making such distributions the Trustee shall be entitled to rely upon
(without investigation, confirmation or recalculation) all information and
calculations contained in the Servicer's Certificate delivered to the Trustee
pursuant to Section 13.09 hereof.
(b) All monthly distributions shall be made by check mailed to each
Certificateholder or record on the preceding Record Date at its address
appearing on the Certificate Register, except that with respect to Certificates
registered in the name of CEDE & Co., the nominee registrant for The Depository
Trust Company, payments will be made in the form of immediately available funds.
Notwithstanding the foregoing, the final payment on each Certificate shall be
made only against presentation and surrender of the Certificate at the office or
agency then maintained by the Trustee in accordance with Section 16.07.
(c) On each Distribution Date, the Trustee shall remit to the Servicer
all investment income earned through the last day of the preceding Collection
Period on amounts held from time to time in the Certificate Account.
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(d) On each Distribution Date, if the Servicer has reported to the
Trustee in the Servicer's Certificate for any Collection Period that an Obligor
or an obligor's representative or successor successfully shall have asserted a
claim or defense under bankruptcy law or similar laws for the protection of
creditors generally (including the avoidance of a preferential transfer under
bankruptcy law) that results in a liability of the Trust to such Obligor for
monies previously collected and remitted to the Trustee and not otherwise netted
against collections pursuant to Section 14.02, the Trustee shall make all
payments in respect of such claims or defenses out of the amounts on deposit in
the Certificate Account with respect to such Collection Period before making the
distributions required by paragraph (a) of this Section 14.04.
(e) If the Servicer has failed to provide the Trustee with the notice
required pursuant to Sections 13.09 and 14.02, the Trustee may calculate Monthly
Interest and apply funds, if any, in the Certificate Account as of the last day
of the Collection Period, to make a distribution of Monthly Interest to the
Certificateholders.
(f) To the extent (i) Monthly Principal should have been paid on a prior
Distribution Date but was not so paid, and (ii) such unpaid Monthly Principal
has been deposited into the Certificate Account during a subsequent Collection
Period, the Trustee shall distribute such unpaid Monthly Principal on the next
succeeding Distribution Date as an addition to the amounts to be distributed to
Certificateholders on such Distribution Date pursuant to Section 14.04(a)(iv) or
(v), as the case may be.
SECTION 14.05 ADVANCES. (a) As of the last day of each Collection
Period, the Servicer shall advance funds in the amount of any Interest Shortfall
with respect to each Receivable, to the extent that the Servicer, at its sole
discretion, determines that the Advance will be recoverable from payments by or
on behalf of the Obligor, the Purchase Amount, or Liquidation Proceeds. With
respect to each receivable, the advance shall increase Outstanding Advances.
Outstanding Advances shall be reduced by subsequent payments by or on behalf of
the Obligor, collections of Liquidation Proceeds, or payments of the Purchase
Amount. The Servicer shall remit any Advances with respect to a Collection
Period to the Certificate Account by the related Determination Date.
If the Servicer shall determine that an Outstanding Advance with respect to
any receivable shall not be recoverable, the Servicer shall be reimbursed from
any collections made on other Receivables in the Trust, and Outstanding Advances
with respect to such Receivables shall be reduced accordingly.
SECTION 14.06. NET DEPOSITS. For so long as CTL or an Affiliate is the
Servicer, CTL (or an Affiliate succeeding CTL as Servicer) (in whatever
capacity) may make the remittances with respect to any Distribution Date
pursuant to Section 14.02 above, net of amounts to be distributed to itself or
its delegee under Section 18.06 (also in whatever capacity) pursuant to Section
14.04, if it determines pursuant to Section 14.02 that there is no deficiency in
Available Funds for such Distribution Date. Nonetheless, the Servicer shall
account for all of the above described amounts as if such amounts were deposited
and distributed.
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SECTION 14.07. STATEMENTS TO CERTIFICATEHOLDERS. On each Distribution
Date, the Trustee shall include with each distribution to the certificateholders
and shall mail to the rating agency a statement, based on information in the
Servicer's Certificate furnished to the Trustee by the Servicer pursuant to
Section 13.09, setting forth for the Collection Period relating to such
Distribution Date the following information (which in the case of items (i),
(ii), (iii), (iv) and (x) shall be based on a Certificate in a principal amount
of $1,000):
(i) the amount of the aggregate distribution that constitutes Class
A Monthly Interest;
(ii) the amount of the aggregate distribution that constitutes Class
B Monthly Interest;
(iii) the amount of the aggregate distribution that constitutes Class
A Monthly Principal;
(iv) the amount of the aggregate distribution that constitutes Class
B Monthly Principal;
(v) the Class A Principal Balance (after giving effect to any
distribution of Monthly Principal made on such Distribution
Date) on which Class A Monthly Interest will be calculated on
the next succeeding Distribution Date;
(vi) the Class B Principal Balance (after giving effect to any
distribution of Monthly Principal made on such Distribution
Date) on which Class A Monthly Interest will be calculated on
the next succeeding Distribution Date;
(vii) the Class A Certificate Factor;
(viii) the Class B Certificate Factor;
(ix) the remaining Available Cash Collateral Amount;
(x) the sum of the Monthly Servicing Fee and the Spread Amounts;
(xi) for Distribution Dates during the Funding Period, the remaining
Pre-Funded Amount; and
(xii) for the Distribution Date on which (or immediately following
the date on which) the Funding Period ends, the amount, if any,
remaining in the Pre-Funded Account after the purchase of all
Subsequent Receivables.
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Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the agreement, the Trustee shall
mail, to each Person who at any time during such calendar year shall have been a
Certificateholder, a statement containing the sum of the amounts determined in
clauses (i), (ii), (iii), (iv), and (x) for such calendar year, as applicable to
such Person, or, in the event such Person shall have been a Certificateholder
during a portion of such calendar year, for the applicable portion of such year,
unless substantially comparable information has been provided to such
certificateholder, for the purposes of such certificateholder's preparation of
federal income tax returns. To the extent required by applicable law, the
Servicer shall prepare or cause to be prepared and the Trustee shall sign the
tax returns of the Trust Fund and shall file such returns and such of the above
information with the Internal Revenue Service and furnish such information to
Certificateholders as may be required by such returns.
SECTION 14.08. YIELD SUPPLEMENT AGREEMENT: YIELD SUPPLEMENT ACCOUNT. On
or before the Closing Date, the Trustee shall establish and maintain a
segregated trust account in the corporate trust department of the Bank or an
Eligible Bank referred to herein as the "Yield Supplement Account." The
Depositor shall deposit an amount equal to the Total Yield Supplement Account on
or before the Closing Date. The Yield Supplement Account shall be maintained in
the name of the Trustee as Trustee for the Certificateholders. The Yield
Supplement Account and any amounts on deposit therein shall be part of the Trust
and shall be for the benefit of the Certificateholders and the Servicer, as
their respective interest may appear herein; provided, however, that the
-------- -------
interest of the Servicer shall be subordinated to the interest of the
Certificateholders as provided herein. On each Distribution Date, the Trustee
shall distribute to the Servicer any investment earnings on amounts in the Yield
Supplement Account received by the Trustee prior to such day and withdraw and
apply the Yield Supplement Amount as provided in Section 14.02. Upon the
termination of the Trust, the Trustee shall distribute any amounts remaining in
the Yield Supplement Account to the Servicer. Funds on deposit in the Yield
Supplement Account shall be invested in Eligible Investments in the same manner
and subject to the same requirements and limitations as the investment of funds
in the Certificate Account pursuant to Section 14.01, including the limitation
that Eligible Investments mature not later than the Business Day prior to the
next succeeding Distribution Date; provided, however, that such limitation shall
-------- -------
apply only with respect to Eligible Investments in an amount equal to the Yield
Supplemental Amount for such Distribution Date. For purposes of determining the
availability of funds or the balance in the Yield Supplement Account for any
reason, investment earnings on such funds shall not be deemed to be available or
on deposit in the Yield Supplement Account.
SECTION 14.09. PAYAHEAD ACCOUNT. The Servicer shall establish the
Payahead Account in the name of the Trustee on behalf of the Obligors. The
Payahead Account shall be a segregated interest bearing trust account
established with the Trustee, an Eligible Bank or the Bank. Amounts in the
Payahead Account shall be invested in Eligible Investments that mature not later
than the Distribution Date next succeeding such investment. The Payahead
Account is not property of the Trust. Investment income or interest earned on
the Payahead Account shall be remitted to the Servicer at least monthly, or as
frequently as the Servicer may reasonably
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request. On or prior to each Distribution Date, the Servicer shall transfer or
the Trustee (as instructed in the Servicer's Certificate) shall transfer (a)
from the Collection Account to the Payahead Account, in immediately available
funds, all Payaheads received by the Servicer during the Collection Period as
described in Section 11.06; and (b) from the Payahead Account to the Collection
Account, in immediately available funds, the aggregate amount of previously
deposited Payaheads to be applied to Scheduled Payments on Precomputed
Receivables for the related Collection Period or prepayments for the related
Collection Period, pursuant to Section 11.06, each in the amounts set forth in
the Servicer's Certificate delivered on the related Determination Date. A
single, net transfer between the Payahead Account and the Collection Account may
be made. Any amount deposited in the Payahead Account shall not constitute
Available Funds under Section 14.02.
SECTION 14.10. PRE-FUNDING ACCOUNT. (a) On or before the Closing Date,
the Trustee shall establish and maintain a segregated trust account in the
corporate trust department of the Bank or of an Eligible Bank referred to herein
as the "Pre-Funding Account." The Depositor shall deposit an amount equal to
the Initial Pre-Funded Amount into the Pre-Funding Account on or before the
Closing Date. The Pre-Funding Account shall be maintained in the name of the
Trustee as trustee for the Certificateholders.
Funds on deposit in the Pre-Funding Account shall be invested in Eligible
Investments in the same manner and subject to the same limitation as the
investment of funds in the Certificate Account pursuant to Section 14.01,
including the limitation that Eligible Investments mature not later than the
Business Day prior to the next succeeding Distribution Date; provided, however,
that such limitation shall apply only with respect to Eligible Investments in an
amount equal to the amount required to be distributed from such Pre-Funding
Account on such Distribution Date.
The Pre-Funding Account and any amounts on deposit therein shall be part of
the Trust and shall be for the benefit of the Certificateholders and the
Servicer, as their respective interests may appear herein; provided, however,
that the interest of the Servicer shall be subordinated to the interests of the
Certificateholders as provided herein.
(b) On the Closing Date, the Sellers will deposit the Initial Pre-Funded
Amount in the Pre-Funding Account. On each Subsequent Transfer Date, the
Servicer shall instruct the Trustee to withdraw from the Pre-Funding Account an
amount equal to the Principal Balance of the Subsequent Receivables transferred
to the Trust on such Subsequent Transfer Date and to distribute such amount to
or upon the order of the Depositors upon satisfaction of the conditions set
forth in this Agreement with respect to such transfer.
(c) If (1) the Pre-Funded Amount has not been reduced to zero on the
Distribution Date on which the Funding Period ends (or, if the Funding Period
does not end on a Distribution Date, on the first Distribution Date following
the end of the Funding Period) or (2) the Pre-Funded Amount has been reduced to
$100,000 or less on any Determination Date, in either case after giving effect
to any reductions in the Pre-Funded Amount on such Distribution Date or
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Determination Date pursuant to paragraph (b) above, the Servicer shall instruct
the Trustee to withdraw any remaining amounts from the Pre-Funding Account and
to deposit such amounts to the Distribution Account for distribution as
principal of the Receivables on such Distribution Date.
(d) The Class A Certificateholders will be redeemed in part on the
Distribution Date on or immediately following the last day of the Funding Period
in the event that any amount remains on deposit in the Pre-Funding Account after
giving effect to the purchase on such date. The aggregate principal amount of
the Class A Certificates to be redeemed will be an amount equal to the amount on
deposit in the Pre-Funding Account.
ARTICLE XV
CREDIT ENHANCEMENT
SECTION 15.01. SUBORDINATION. The rights of the Class B
Certificateholders to receive distributions in respect to the Class B
Certificates on any Distribution Date shall be subordinated to the rights of the
Class A Certificateholders to receive distributions in respect of the Class A
Certificates to the extent described in Section 14.04.
SECTION 15.02. CASH COLLATERAL ACCOUNT.
(a) On or prior to the Closing Date, the Trustee shall establish and
maintain a segregated trust account in the corporate trust department of either
the Bank or of an Eligible Bank referred to herein as the "Cash Collateral
Account." The Depositor shall deposit an amount equal to the Initial Cash
Collateral Amount, if any, into the Cash Collateral Account on or before the
Closing Date. The Cash Collateral Account shall be maintained in the name of
the Trustee as trustee for the Certificateholders. The Cash Collateral Account
and any amounts on deposit therein shall be part of the Trust and shall be for
the benefit of the Certificateholders and CTL, as their respective interests may
appear herein; provided, however, that the interest of CTL shall be subordinated
-------- -------
to the interests of the Certificateholders as provided herein.
(b) Funds on deposit in the Cash Collateral Account shall be invested in
Eligible Investments in the same manner and subject to the same requirements and
limitations as the investment of funds in the Certificate Account pursuant to
Section 14.01, including the limitation that Eligible Investments mature not
later than the Business Day prior to the next succeeding Distribution Date;
provided, however, no such limitation on the maturity of Eligible Investments
- -------- -------
shall apply if the Trust obtains the benefit of a liquidity facility or similar
arrangement with respect to funds in the Cash Collateral Account (a "Cash
Collateral Account Facility") and Standard & Poor's and Moody's confirm in
writing that the rating of the Certificates will not be lowered or withdrawn as
a result of eliminating or modifying the limitation on the maturity of Permitted
Investments in respect of the Cash Collateral Account. For purposes of
determining the availability of funds or the balance in the Cash Collateral
Account for any reason under this
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Agreement, investment earnings on such funds shall be deemed to be available or
on deposit only to the extent that the aggregate of such amounts, plus the funds
on deposit in the Cash Collateral Account, do not exceed the Required Cash
Collateral Account.
(c) If on any Distribution Date the amount of Available Funds is
insufficient to make the distributions required by Section 14.04(a)(i), (ii),
(iii), (iv), (v), (vi) and (vii), the Trustee shall withdraw or cause to be
withdrawn from the Cash Collateral Account and deposited in the Certificate
Account the lesser of (i) the entire Available Cash Collateral Amount and (ii)
the amount necessary to make up such deficiency.
(d) On each Distribution Date, all distributions made pursuant to
Section 14.04(a) (x) shall be deposited into the Cash Collateral Account.
(e) If the amount on deposit in the Cash Collateral Account, after
giving effect to the distributions set forth in Section 14.04 is greater than
the Required Cash Collateral Amount on such Distribution Date, the amount of
such excess shall be distributed to CTL. Amounts properly distributed to CTL
pursuant to this Section, either directly without deposit in the Cash Collateral
Account or from excess amounts in the Cash Collateral Account shall be deemed
released from the security interest of the Trustee.
(f) Upon the termination of this Agreement, amounts remaining in the
Cash Collateral Account shall be distributed to CTL and such amounts shall not
be subject to any claims or rights of the Certificateholders.
ARTICLE XVI
THE CERTIFICATES
SECTION 16.01. THE CERTIFICATES. The Certificates shall be issued in
denominations of $1,000 and integral multiples thereof; provided, however, that
-------- -------
one of each Class A Certificate and Class B Certificate may be issued in a
denomination that represents any residual amount and that such Certificate shall
be retained by the Depositor. The Certificates shall be executed on behalf of
the Trust by manual or facsimile signature of a Responsible Officer of the
Trustee. Certificates bearing the manual or facsimile signatures of individuals
who were, at the time when such signatures shall have been affixed, authorized
to sign on behalf of the Trust, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased to
be so authorized prior to the authentication and deliver of such Certificates or
did not hold such offices at the date of such Certificates.
SECTION 16.02. AUTHENTICATION OF CERTIFICATES. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its chairman
of the board, its president, or any vice president, without further corporate
action by the Depositor, in authorized denominations,
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pursuant to the Agreement. No Certificate shall entitle its holder to any
benefit under the Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication, substantially
as set forth in the forms of Certificate attached as Exhibits to the Agreement,
executed by a Responsible Officer of the Trustee by manual signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
SECTION 16.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 16.07, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, authenticate, and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Trustee. At the option of a Holder, Certificates
may be exchanged for other Certificates of authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder or his attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer and exchange shall be cancelled and subsequently
destroyed by the Trustee.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 16.04. MUTILATED, DESTROYED, LOST, OR STOLEN CERTIFICATES. If
(a) any mutilated Certificate shall be surrendered to the Certificate Registrar,
or if the Certificate Registrant shall receive evidence to its satisfaction of
the destruction, loss, or theft of any Certificate and (b) there shall be
delivered to the Certificate Registrar or the Trustee such security or indemnity
as may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Trustee on behalf of the Trust shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost, or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 16.04, the Trustee and the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection
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therewith. Any duplicate Certificate issued pursuant to this Section 16.04
shall constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen, or destroyed Certificate shall be found
at any time.
SECTION 16.05. PERSONS DEEMED OWNERS. Prior to registration of transfer,
the Trustee or the Certificate Registrar may treat the Person in whose name any
Certificate shall be registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 14.04 and for all other purposes
whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound
by any notice to the contrary.
SECTION 16.06. ACCESS TO AGREEMENT AND LIST OF CERTIFICATEHOLDERS' NAMES
AND ADDRESSES. The Trustee shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Trustee of a request therefor from
the Servicer in writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Certificateholders, or one or more Holders
of Certificates aggregating not less than 25% of the Certificate Principal
Balance, apply in writing to the Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under the Agreement or under the Certificates and such application
shall be accompanied by a copy of the communication that such applicants propose
to transmit, then the Trustee shall, within five Business Days after the receipt
of such applications, afford such applicants access during normal business hours
to the current list of Certificateholders. The Trustee shall also allow any
Certificateholder, upon request, to examine a copy of the Agreement at its
Corporate Trust Office during regular business hours. Each Holder, by receiving
and holding a Certificate, shall be deemed to have agreed to hold neither the
Servicer nor the Trustee accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 16.07. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and the Agreement may be served. The Trustee
initially designates the Corporate Trust Office as specified in the agreement as
its office for such purposes. The Trustee shall give prompt written notice to
the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 16.08. BOOK-ENTRY CERTIFICATES. The Certificates, upon original
issuance, shall be issued in the form of one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to The Depository
Trust Company, the initial Clearing Agency, by, or on behalf of, the Depositor.
The Certificates shall initially be registered on the Certificate Register in
the name of CEDE & Co., the nominee of the Clearing Agency, and no Certificate
Owner will receive a definitive Certificate representing such Certificate
interest in the Certificates, except as provided in Section 16.10. Unless and
until definitive, fully registered
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Certificates ("Definitive Certificates") have been issued to Certificate Owners
pursuant to Section 16:10:
(i) the provisions of this Section 16.08 shall be in full force
and effect;
(ii) the Depositor, the Servicer and the Trustee may deal with
the Clearing Agency and the Clearing Agency Participants for
all purposes (including the making of distributions on the
Certificates) as the authorized representatives of the
Certificate Owners (requests and directions from, and votes
of, such representatives shall not be considered
inconsistent if they are made with respect to different
Certificate Owners);
(iii) to the extent that the provisions of this Section 16.08
conflict with any other provisions of this Agreement, the
provisions of this Section 16.08 shall control; and
(iv) The rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency
Participants and shall be limited to those established by
law and agreements between such Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section
16.10, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive
and transmit distributions of principal and interest on the
Certificates to such Clearing Agency Participants.
SECTION 16.09. NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 16.10, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency.
SECTION 16.10. DEFINITIVE CERTIFICATES. If (i)(A) the Depositor advises
the Trustee in writing that the Clearing agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement, and (B)
the Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Certificate Principal Balance
advise the Trustee and the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners, the Trustee shall notify the Clearing Agency of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing
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Agency for registration, the Trustee shall issue the Definitive Certificates.
Neither the Depositor nor the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed on or to be performed by the Clearing
Agency shall be deemed to be imposed upon and performed by the Trustee, to the
extent applicable with respect to such Definitive Certificates and the Trustee
shall recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
ARTICLE XVII
THE DEPOSITOR
SECTION 17.01. REPRESENTATIONS OF DEPOSITOR. The Depositor makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trustee and any subsequent
assignment or transfer pursuant to Article XIV.
(i) ORGANIZATION AND GOOD STANDING. The Depositor shall have
been duly organized and shall be validly existing as a
corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and
to conduct its business as such properties shall be
currently owned and such business is presently conducted,
and had at all relevant times, and shall have, power,
authority, and legal right to acquire and own the
Receivables.
(ii) DUE QUALIFICATION. The Depositor shall be duly qualified to
do business as a foreign corporation in good standing, and
shall have obtained all necessary licenses and approvals in
all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications, except when the failure to so qualify would
not materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates.
(iii) POWER AND AUTHORITY. The Depositor shall have the power and
authority to execute and deliver the agreement and to carry
out its terms, the Depositor shall have full power and
authority to sell and assign the property to be sold and
assigned to and deposited with the Trustee as part of the
Trust and shall have duly authorized such sale and
assignment to the Trustee by all necessary corporate action;
and the execution, delivery, and performance of the
Agreement shall have been duly authorized by the Depositor
by all necessary corporate action.
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(iv) VALID SALE: BINDING OBLIGATIONS. The Agreement shall
evidence a valid sale, transfer, and assignment of the
Receivables, enforceable against creditors of and purchasers
from the Depositor; and shall evidence a legal, valid, and
binding obligation of the Depositor enforceable in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
in general and by general principles of equity, regardless
of whether such enforceability shall be considered in a
proceeding in equity or at law.
(v) NO VIOLATION. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the
terms hereof shall not conflict with, result in any breach
of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Depositor, or
any indenture, agreement, or other instrument to which the
Depositor is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture,
agreement, or other instrument (other than the Agreement);
nor violate any law or, to the best of the Depositor's
knowledge, any order, rule, or regulation applicable to the
Depositor of any court or of any federal or State regulatory
body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or
its properties.
(vi) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the Depositor's best knowledge, threatened,
before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over
the Depositor or its properties: (A) asserting the
invalidity of the Agreement or the Certificates, (B) seeking
to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by the
Agreement, (C) seeking any determination or ruling that
might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates, or (D)
which might adversely affect the federal income tax
attributes of the Certificates.
SECTION 17.02. LIABILITY DEPOSITORY INDEMNITIES. The Depositor shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Depositor under the Agreement.
(i) The Depositor shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents and
the Trust from and against any taxes that may at any time be
asserted against the Trustee, its officers, directors,
employees or agents or the Trust with respect to, and as of
the
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date of, the sale of the Receivables to the Trustee or the
issuance and original sale of the Certificates, including
any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege, or license taxes
(but, in the case of the Trust, not including any taxes
asserted with respect to ownership of the Receivables or
federal or other income taxes arising out of distributions
on the Certificates) and costs and expenses in defending
against the same.
(iii) The Depositor shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents from
and against any loss, liability, or expense incurred by
reason of (a) the Depositor's willful misfeasance, bad
faith, or negligence in the performance of its duties under
the Agreement, or by reason of reckless disregard of its
obligations and duties under the Agreement and (b) the
Depositor's violation of federal or State securities laws in
connection with the registration of the sale of the
Certificates.
Indemnification under this Section 17.02 shall include, without limitation,
reasonable fees and expenses of not more than one counsel and expenses of
litigation. If the Depositor shall have made any indemnity payments to the
Trustee pursuant to this Section and the Trustee thereafter shall collect any of
such amounts from others, the Trustee, as the case may be, shall repay such
amounts to the Depositor, without interest. This indemnification shall survive
the termination of this Agreement.
SECTION 17.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF DEPOSITOR. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party, or (c) which may succeed to all or substantially
all of the properties and assets of the Depositor's business, which Person in
any of the foregoing cases executes an agreement of assumption to perform every
obligation of the Depositor under the Agreement, shall be the successor to the
Depositor hereunder without the execution or filing of any document or any
further act by any of the parties to the Agreement; provided, however, that (i)
-------- -------
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 12.01 shall have been breached and no Event of
Default, and no event that, after notice or lapse of time, or both, would become
an Event of Default shall have happened and be continuing, (ii) the Depositor
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger, or succession and such
agreement of assumption comply with this Section 17.03 and that all conditions
precedent, if any, provided for in the Agreement relating to such transaction
have been complied with and (iii) the Depositor shall have delivered an Opinion
of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trustee in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such Counsel, no such action
shall be necessary to preserve and protect such interest.
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SECTION 17.04. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear
in, prosecute, or defend any legal action that shall not be incidental to its
obligations under the Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 17.05. DEPOSITOR MAY OWN CERTIFICATES. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder", "Class A Certificateholder" and "Class B Certificateholder"
specified in Section 11.01. Certificates so owned by or pledged to the
Depositor or such controlling or commonly controlled Person shall have an equal
and proportionate benefit under the provisions of the Agreement, without
preference, priority, or distinction as among all of the Certificates.
ARTICLE XVIII
THE SERVICER
SECTION 18.01. REPRESENTATIONS OF THE SERVICER. The Servicer makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) ORGANIZATION AND GOOD STANDING. The Servicer shall have been duly
organized and shall be validly existing as a corporation under the
laws of the State of California, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at
all relevant times, and shall have, power, authority, and legal
right to acquire, own, sell, and service the Receivables and to hold
the Receivable Files as custodian on behalf of the Trustee.
(ii) DUE QUALIFICATION. The Servicer shall be duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals in all jurisdictions
in which the ownership or lease of property or the conduct of its
business (including the servicing of the Receivables as required by
the Agreement) shall require such qualifications, except when the
failure to so qualify would not materially and adversely affect the
performance by the Servicer of its obligations under, or the
validity or enforceability of, the Agreement or the Certificates.
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(iii) POWER AND AUTHORITY. The Servicer shall have the power and authority
to execute and deliver the Agreement and to carry out its terms; and
the execution, delivery, and performance of the Agreement shall have
been duly authorized by the Servicer by all necessary corporate
action.
(iv) BINDING OBLIGATIONS. The Agreement shall constitute a legal, valid,
and binding obligation of the Servicer enforceable in accordance
with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general and by
general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at
law.
(v) NO VIOLATION. The consummation of the transactions contemplated by
the Agreement and the fulfillment of the terms hereof shall not
conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or by-laws of
the Servicer, or any indenture, agreement, or other instrument to
which the Servicer is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
or other instrument (other than the Agreement); nor violate any law
or, to the best of the Servicer's knowledge, any order, rule, or
regulation applicable to the Servicer of any court or of any federal
or State regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer
or its properties.
(vi) NO PROCEEDINGS. There are no proceedings or investigations pending,
or, to the Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its
properties: (A) asserting the invalidity of the Agreement or the
Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by the Agreement, (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Servicer of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates, or (D) which
might adversely affect the federal income tax attributes of the
Certificates.
SECTION 18.02. INDEMNITIES OF SERVICER. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under the Agreement.
(i) The Servicer shall defend, indemnify, and hold harmless the Trustee,
its officers, directors, employees and agents, the Trust and the
Certificateholders from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising
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out of or resulting from the use, ownership, or operation by the
Servicer or any affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless the Trustee,
its officers, directors, employees and agents and the Trust from and
against any taxes that may at any time be asserted against the
Trustee, its officers, directors, employees or agents, or the Trust
with respect to the transactions contemplated herein, including,
without limitation, any sales, gross receipts, general corporation,
tangible or intangible personal property, privilege, or license
taxes (but, in the case of the Trust, not including any taxes
asserted with respect to, and as of the date of, the sale of the
Receivables to the Trust or the issuance and original sale of the
Certificates, or asserted with respect to ownership of the
Receivables, or federal or other income taxes arising out of
distributions on the Certificates) and costs and expenses in
defending against the same.
(iii) The Servicer shall indemnify, and hold harmless the Trustee, its
officers, directors, employees and agents, the Trust and the
Certificateholders from and against any and all costs, expenses,
losses, claims, damages, and liabilities to the extent that such
cost, expense, loss, claim, damage, or liability arose out of, or
was imposed upon the Trustee, the Trust or the Certificateholders
through, the negligence, willful misfeasance, or bad faith of the
Servicer in the performance of its duties under the Agreement, or by
reason of reckless disregard of its obligations and duties under the
Agreement.
(iv) The Servicer shall indemnify, defend, and hold harmless the Trustee,
its officers, directors, employees and agents, and the Trust from
and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein contained,
except to the extent that such cost, expense, loss, claim, damage or
liability: (a) shall be due to the willful misfeasance, bad faith,
or negligence of the Trustee; (b) relates to any tax other than the
taxes with respect to which either the Depositor or Servicer shall
be required to indemnify the Trustee; (c) shall arise from the
Trustee's breach of any of its representations or warranties set
forth in Section 20.13; (d) shall be one as to which the Depositor
is required to indemnify the Trustee; or (e) shall arise out of or
be incurred in connection with the acceptance or performance by the
Trustee of the duties of successor Servicer hereunder.
Indemnification under this Section 18.02 shall include reasonable fees and
expenses of not more than one counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts to the Servicer, without interest. This
indemnification shall survive the termination of this Agreement an the removal
of the Servicer.
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SECTION 18.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party, (c) which may succeed to all or substantially all
of the properties and assets of the Servicer's indirect automobile financing or
receivables servicing business or (d) that is an Affiliate, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer hereunder, shall be the successor to the Servicer
under the Agreement without further act on the part of any of the parties to the
Agreement; provided, however, that (i) immediately after giving effect to such
-------- -------
transaction, no Event of Default, and no event which, after notice or lapse of
time, or both, would become an Event of Default shall have happened and be
continuing, (ii) the Servicer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
18.03 and that all conditions precedent provided for in the Agreement relating
to such transaction have been complied with and (iii) the Servicer shall have
delivered an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interests of the Trustee in the Receivables, and reciting the
details of such filings, or (B) stating that, in the opinion of such Counsel, no
such action shall be necessary to preserve and protect such interest.
SECTION 18.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under the Agreement, for any action taken or for refraining
from the taking of any action pursuant to the Agreement; provided, however, that
-------- -------
this provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith, or negligence in the performance of duties or by reasons of reckless
disregard of obligations and duties under the Agreement. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on any Person respecting any matters arising under the Agreement.
Except as provided in the Agreement, the Servicer shall not be under any
obligation to appear in, prosecute, or defend any legal action that shall not be
incidental to its duties to service the Receivables in accordance with the
Agreement (collection actions with respect to Defaulted Receivables are
understood to be incidental to the Servicer's duties to service the
Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 18.05. SERVICER NOT TO RESIGN. The Servicer shall not resign
from its obligations and duties under the Agreement except upon determination
that the performance of its duties shall no longer be permissible under
applicable law or otherwise with the consent of the Trustee. Any determination
described above permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a successor Servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 19.02.
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SECTION 18.06. DELEGATION OF DUTIES. Except as provided in Section 18.03
hereof, it is understood and agreed by the parties hereto that the Servicer or
the Depositor may at any time delegate any duties including duties as custodian
to any Person willing to accept such delegation and to perform such duties
(including any affiliate of the Servicer) in accordance with the customary
procedures of the Servicer. In connection with such delegation, the Servicer or
the Depositor may assign rights to the delegee or direct the payment to the
delegee of benefits or amounts otherwise inuring to the benefit of, or payable
to, the Depositor or the Servicer hereunder. Any such delegation shall not
relieve the Servicer or the Depositor of their respective liability and
responsibility with respect to such duties, and shall not constitute a
resignation within Section 18.05 hereof. The Servicer shall give written notice
to the Rating Agency and the Trustee of any such delegation.
ARTICLE XIX
DEFAULT
SECTION 19.01. EVENTS OF DEFAULT. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Service to deliver to the Trustee for
distribution to Certificateholders any proceeds or payment required
to be so delivered under the terms of the Certificates and the
Agreement or any failure by the Servicer to deliver any Servicer's
Certificates pursuant to Section 13.09 that, in either case, shall
continue unremedied for a period of five Business Days (A) after
written notice from either the Trustee or the Holders of
Certificates evidencing not less than 25% of the Certificate
Principal Balance is received by the Servicer as specified in the
Agreement or (B) after discovery by an officer of the Servicer; or
(ii) Failure on the part of the Servicer or the Depositor duly to observe
or perform in any material respect any other covenants or agreements
of the Servicer or the Depositor, as the case may be, set forth in
the Certificates or in the Agreement, which failure shall (a)
materially and adversely affect the rights of Certificateholders and
(b) continue unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given (1) to the Servicer or the
Depositor, as the case may be, by the Trustee, or (2) to the
Servicer or the Depositor, as the case may be, and to the Trustee,
by the Holders of Certificates evidencing not less than 25% of the
Certificate Principal Balance; or
(iii) The occurrence of an Insolvency Event with respect to the Servicer;
then, and in each and every case, so long as an Event of Default
shall not have been remedied, either the Trustee, or the Holders of
Certificates evidencing not less than 25% of the Certificate
Principal Balance, by notice then given in writing to the Servicer
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(and to the Trustee if given by the Certificateholders) may
terminate all of the rights and obligations of the Servicer under
the Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under the
Agreement, whether with respect to the Certificates or the
Receivables or otherwise, shall, without further action, pass to and
be vested in the Trustee (except that the Trustee may but shall not
be required to make Advances) or such successor Servicer as may be
appointed under Section 19.02 pursuant to and under this Section
19.01; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise.
The predecessor Servicer shall cooperate with the successor Servicer
and the Trustee in effecting the termination of the responsibilities
and rights of the predecessor Servicer under the Agreement,
including the transfer to the successor Servicer of electronic
records related to the Receivables in such form as the successor
Servicer may reasonably request and the transfer to the successor
Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or shall
thereafter be received with respect to a Receivable. All reasonable
costs and expenses (including attorneys' fees) incurred in
connection with transferring the Receivable Files to the successor
Servicer and amending the Agreement to reflect such succession as
Servicer pursuant to this Section 19.01 shall be paid by the
predecessor Servicer upon presentation of reasonable documentation
of such costs and expenses.
SECTION 19.02. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 19.01 or the Servicer's resignation
in accordance with the terms of the Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under the Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the later of (x) the date 45 days
from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of the
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's resignation or
termination hereunder, the Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section 19.02, the Trustee without further
action shall automatically be appointed the successor Servicer. Notwithstanding
the above, the Trustee shall, if it shall be legally unable so to act, appoint,
or petition a court of competent jurisdiction to appoint, any established
financial institution, having a net worth of not less than $50,000,000 and whose
regular business shall include the servicing of automotive receivables, as the
successor to
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the Servicer under the Agreement and which financial institution is, in the case
of appointment by the Trustee.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of the Agreement.
(c) In connection with such appointment, the Trustee may make such
arrangements for successor Servicer out of payments on Receivables it and such
successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of that permitted the original Servicer under the Agreement.
The Trustee and such successor Servicer shall take such action, consistent with
the Agreement, as shall be necessary to effectuate any such succession.
SECTION 19.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any notice of an
Event of Default or upon any termination of, or appointment of a successor to,
the Servicer pursuant to this Article XIX, the Trustee shall give prompt written
notice thereof to Certificateholders at their respective addresses appearing in
the Certificate Register.
SECTION 19.04. WAIVER OF PAST DEFAULTS. The Holders of Certificates
evidencing not less than 51% of the Certificate Principal Balance may, on behalf
of all Holders of Certificates, waive any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required deposits to or payments from the Certificate Amount in
accordance with the Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of the Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
ARTICLE XX
THE TRUSTEE
SECTION 20.01. DUTIES OF TRUSTEE. The Trustee, both prior to and after
the occurrence of an Event of Default, shall undertake to perform such duties as
are specifically set forth in the Agreement. If an Event of Default shall have
occurred and shall not have been cured and, in the case of an Event of Default
described in clause (i) of Section 19.01, the Trustee has received notice of
such Event of Default pursuant to Section 13.10(b), the Trustee shall exercise
such of the rights and powers vested in it by the Agreement, and shall use the
same degree of care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs; provided,
--------
however, that if the Trustee shall assume the duties of the Servicer pursuant to
- -------
Section 19.02, the Trustee in performing such duties shall use the degree of
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skill and attention customarily exercised by a servicer with respect to motor
vehicle receivables that it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of the Agreement, shall examine them to determine whether they conform
to the requirements of the Agreement.
No provision of the Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own bad faith; provided, however, that:
-------- -------
(i) Prior to the occurrence of an Event of Default, and after the curing
of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall not be liable except for the
performance of such duties and obligations as shall be specifically
set forth in the Agreement, no implied covenants or obligations
shall be read into the Agreement against the Trustee and, in the
absence of bad faith on the part of the Trustee, or manifest error,
the Trustee may conclusively rely on the truth of the statements and
the correctness of the opinions expressed in any certificates or
opinions furnished to the Trustee and conforming to the requirements
of the Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that
the Trustee shall have been negligent in ascertaining the pertinent
facts;
(iii) The Trustee shall not be liable with respect to any action taken,
suffered, or omitted to be taken in good faith in accordance with
the Agreement or at the direction of the Holders of Certificates
evidencing not less than 25% of the Certificate Principal Balance
relating to the time, method, and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under the Agreement;
(iv) The Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred
to in clauses (i) or (ii) of Section 19.01, or of any failure by the
Depositor to comply with the obligations of the Depositor referred
to in clause (ii) of Section 19.01, unless a Responsible Officer of
the Trustee receives written notice of such failure (it being
understood that knowledge of the Servicer or the Servicer as
custodian, in its capacity as agent for the Trustee, is not
attributable to the Trustee) from the Servicer of the Depositor, as
the case may be, or the Holders of Certificates evidencing not less
than 25% of the Certificate Principal Balance; and
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(v) Without limiting the generality of this Section or Section 20.04,
the Trustee shall have no duty (A) to see to any recording, filing,
or depositing of the Agreement or any agreement referred to therein
or any financing statement evidencing a security interest in the
Receivables or the Financed Vehicles, or to see to the maintenance
of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any insurance
of the Financed Vehicles or Obligors or to effect or maintain any
such insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any Lien or encumbrance
of any kind owing with respect to, assessed, or levied against, any
part of the Trust, (D) to confirm or verify the contents of any
reports or certificates of the Servicer delivered to the Trustee
pursuant to the Agreement believed by the Trustee to be genuine and
to have been signed or presented by the proper party or parties, or
(E) to inspect the Financed Vehicles at any time or ascertain or
inquire as to the performance or observance of any of the
Depositor's or the Servicer's representations, warranties or
covenants or the Servicer's duties and obligations as Servicer and
as custodian of the Receivable Files under the Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in the Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under the Agreement except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers, and privileges of, the Servicer in accordance with the terms of
the Agreement.
SECTION 20.02. TRUSTEE'S CERTIFICATE. On or as soon as practicable after
each Distribution Date on which Receivables shall be (i) assigned to the
Depositor pursuant to Section 12.02 or deemed to be assigned to the Depositor as
a result of the application of Available Funds in respect of Defaulted
Receivables pursuant to Section 14.02 or (ii) assigned to the Servicer pursuant
to Section 13.07 or 21.02, the Trustee shall execute a Trustee's Certificate,
substantially in the form of, in the case of an assignment to the Depositor,
Exhibit 1, or, in the case of an assignment to the Servicer, Exhibit 2, based on
the information contained in the Servicer's Certificate for the related
Collection Period, amounts deposited to the Certificate Account, and notices
received pursuant to the Agreement, identifying the Receivables repurchased or
deemed to be repurchased by the Depositor pursuant to Section 12.02 or 14.02 or
purchased by the Servicer pursuant to Section 13.07 or 21.02 during such
Collection Period, and shall deliver such Trustee's Certificate, accompanied by
a copy of the Servicer's Certificate for such Collection Period to the Depositor
or the Servicer, as the case may be. The Trustee's Certificate shall be an
assignment pursuant to Section 20.03.
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SECTION 20.03. TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES. With
respect to each Receivable repurchased by the Depositor pursuant to Section
12.02, or deemed to be so repurchased pursuant to Section 14.02 or purchased by
the Servicer pursuant to Section 13.07 or 21.02, the Trustee shall assign, as of
the last day of the Collection Period during which such Receivable became a
Defaulted Receivable or became subject to repurchase by the Depositor or
purchase by the Servicer, without recourse, representation, or warranty, to the
Depositor or the Servicer (as the case may be) all the Trustee's right, title,
and interest in and to such Receivables, and all security and documents relating
thereto, such assignment being an assignment outright and not for security. If
in any enforcement suit or legal proceeding it shall be held that the Servicer
may not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce the Receivable, the Trustee shall, at
the Servicer's expense, take such steps as the Trustee deems necessary to
enforce the Receivable, including bringing suit in its name or the name of the
Certificateholders.
SECTION 20.04. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise
provided in Section 20.01:
(i) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, Servicer's
Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal bond, or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party
or parties.
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under the Agreement
in good faith and in accordance with such Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by the Agreement, or to institute,
conduct, or defend any litigation under the Agreement or in relation
to the Agreement, at the request, order, or direction of any of the
Certificateholders pursuant to the provisions of the Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses, and
liabilities that may be incurred therein or thereby, nothing
contained in the Agreement, however, shall relieve the Trustee of
the obligations, upon the occurrence of an Event of Default (that
shall not have been cured), to exercise such of the rights and
powers vested in it by the Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
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(iv) The Trustee shall not be liable for any action taken, suffered, or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by the
Agreement.
(v) Prior to the occurrence of an Event of Default and after the curing
of all Events of Default that may have occurred, the Trustee shall
not be bound to make any investigation into the facts of matters
stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, or
other paper or document, unless requested in writing so to do by
Holders of Certificates evidencing not less than 25% of the
Certificate Principal Balance; provided, however, that if the
-------- -------
payment within a reasonable time to the Trustee of the costs,
expenses, or liabilities likely to be incurred by it in the making
of such investigation shall be, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by
the terms of the Agreement, the Trustee may require reasonable
indemnity against such cost, expense, or liability as a condition to
so proceeding. The reasonable expense of every such examination
shall be paid by the Servicer or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand. Nothing in this clause (v)
shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Obligors.
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties under the Agreement either directly or by or
through agents or attorneys or a custodian. The Trustee shall not be
responsible for any misconduct or negligence solely attributable to
the acts or omissions of the Servicer in its capacity as Servicer or
custodian.
(vii) Subsequent to the sale of the Receivables by the Depositor to the
Trustee, the Trustee shall have no duty of independent inquiry,
except as may be required by Section 20.01, and the Trustee may rely
upon the representations and warranties and covenants of the
Depositor and the Servicer contained in the Agreement with respect
to the Receivables and the Receivable Files.
SECTION 20.05. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of the Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related documents. The Trustee shall at no time have
any responsibility or liability for or with respect to the legality, validity,
and enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under the Agreement, including,
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without limitation; the existence, condition, location, and ownership of any
Financed Vehicle; the existence and enforceability of any physical damage
insurance, lender's collateral protection insurance, or credit life or
disability and hospitalization insurance with respect to any Receivable; the
existence and contents of any Receivable or any computer or other record
thereof; the validity of the assignment of any Receivable; the performance or
enforcement of any Receivable; the compliance by the Depositor or the Servicer
with any warranty or representation made under the Agreement or in any related
document and the accuracy of any such warranty or representation prior to the
Trustee's receipt of notice or other discovery of any noncompliance therewith or
any breach thereof; any investment of monies by the Servicer or any loss
resulting therefrom (it being understood that the Trustee shall remain
responsible for any Trust property that it may hold); the acts or omissions of
the Depositor, the Servicer, or any Obligor; an action of the Servicer taken in
the name of the Trustee; or any action by the Trustee taken at the instruction
of the Servicer; provided, however, that the foregoing shall not relieve the
-------- -------
Trustee of its obligation to perform its duties under the Agreement. Except
with respect to a claim based on the failure of the Trustee to perform its
duties under the Agreement or based on the Trustee's negligence or willful
misconduct, no recourse shall be had for any claim based on any provision of the
Agreement, the Certificates, or any Receivable or assignment thereof against the
Trustee in its individual capacity, the Trustee shall not have any personal
obligation, liability, or duty whatsoever to any Certificateholder or any other
Person with respect to any such claim, and any such claim shall be asserted
solely against the Trust or any indemnitor who shall furnish indemnity as
provided in the Agreement. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Receivables.
SECTION 20.06. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
SECTION 20.07. TRUSTEE'S FEES AND EXPENSES. The Depositor shall pay to
the Trustee, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by the Agreement and in the exercise and
performance of any of the Trustee's powers and duties under the Agreement, and
the Depositor shall pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements, and advances (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) incurred or made by the Trustee in
accordance with any provisions of the Agreement, except any such expense,
disbursement, or advance as may be attributable to its willful misfeasance,
negligence, or bad faith, and the Depositor shall indemnify the Trustee for and
hold it harmless against any loss, liability, or expense incurred without
willful misfeasance, negligence, or bad faith on its part, arising out of or in
connection with the acceptance or administration of the Trust, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties under
the Agreement. Additionally, the Depositor, pursuant to Section 17.02, and the
Servicer, pursuant to Section 18.02, respectively, shall
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indemnify the Trustee with respect to certain matters, and Certificateholders,
pursuant to Section 20.04, shall, upon the circumstances therein set forth,
indemnify the Trustee under certain circumstances.
SECTION 20.08. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under
the Agreement shall at all times be a corporation having an office in the same
State as the location of the Corporate Trust Office as specified in the
Agreement; and organized and doing business under the laws of such State or the
United States of America; authorized under such laws to exercise corporate trust
powers; and having a net worth of at least $50,000,000 and subject to
supervision or examination by federal or State authorities and the long-term
unsecured debt of which is rated at least Baa3 or which is approved by each
Rating Agency. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section 20.08, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 20.08, the Trustee shall resign
immediately in the manner and with the effect specified in Section 20.09.
SECTION 20.09. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer. Upon receiving such notice of resignation, the
Servicer shall promptly appoint a successor Trustee, by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 20.08 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation, or liquidation, then the Servicer may remove
the Trustee. If it shall remove the Trustee under the authority of the
immediately preceding sentence, the Servicer shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 20.09 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 20.10.
SECTION 20.10. SUCCESSOR TRUSTEE. Any successor Trustee appointed
pursuant to Section 20.09 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such appointment
under the Agreement, and thereupon the
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resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed, or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under the Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall deliver to the successor Trustee all
documents and statements held by it under the Agreement; and the Servicer and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties, and
obligations.
No successor Trustee shall accept appointment as provided in this Section
20.10 unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 20.08.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 20.10, the Servicer shall mail notice of the successor of such Trustee
under the Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register. If the Servicer shall fail to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
SECTION 20.11. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 20.08, without the execution
or filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
SECTION 20.12. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of the Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 20.12,
such powers, duties, obligations, rights, and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under the Agreement shall be required to meet the
terms of eligibility as a successor Trustee pursuant to Section 20.08 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 20.10.
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Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or imposed
upon the Trustee shall be conferred upon and exercised or performed
by the Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether as
Trustee under the Agreement or as successor to the Servicer under
the Agreement), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers,
duties, and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) No trustee under the Agreement shall be personally liable by reason
of any act or omission of any other trustee under the Agreement; and
(iii) The Servicer and the Trustee acting jointly may at any time accept
the resignation of or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to the Agreement and the conditions
of this Article XX. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of the Agreement,
specifically including every provision of the Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee, its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of the Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign, or be removed, all of its estates,
properties, rights, remedies, and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 20.13. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee
shall make the following representations and warranties on which the Depositor
and Certificateholders may rely:
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(i) ORGANIZATION AND EXISTENCE. The Trustee is a New York banking
corporation duly organized and validly existing under the laws of
the State of New York and authorized to engage in a banking and
trust business under such laws.
(ii) POWER AND AUTHORITY. The Trustee has full power, authority, and
legal right to execute, deliver, and perform the Agreement, and
shall have taken all necessary action to authorize the execution,
delivery, and performance by it of the Agreement.
(iii) DULY EXECUTED. The Agreement shall have been duly executed and
delivered by the Trustee and shall constitute the legal, valid, and
binding agreement of the Trustee, enforceable in accordance with its
terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or other similar laws now or
hereinafter in effect relating to the enforcement of creditors'
rights in general, as such laws would apply in the event of a
bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or similar occurrence affecting the
Trustee, and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law) as well as concepts of reasonableness, good faith and
fair dealing.
ARTICLE XXI
TERMINATION
SECTION 21.01. TERMINATION OF THE TRUST. The respective obligations and
responsibilities of the Depositor, the Servicer and the Trustee created hereby
and the Trust created by the Agreement shall terminate upon (i) the purchase as
of the last day of any Collection Period by the Servicer at its option, pursuant
to Section 21.02, of the corpus of the Trust or (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust;
provided, however, that in no event shall the trust created by the Agreement
- -------- -------
continue beyond the expiration of 21 years from the date as of which the
Agreement is executed. The Servicer shall promptly notify the Trustee of any
prospective termination pursuant to this Section 21.01.
Notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not earlier than the 10th day and
not later than the 20th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, that the Record
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Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Trustee therein specified. The Trustee shall give such notice to
the Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 14.04.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid of the funds and other assets that shall remain subject to
the Agreement. Any funds remaining in the Trust after exhaustion of such
remedies shall, upon notice to the Trustee, be distributed by the Trustee to the
_____________ [BAY VIEW TO COMPLETE] or its successor, and upon such
distribution the Certificateholders' rights to any amounts so distributed will
be extinguished.
SECTION 21.02. OPTIONAL PURCHASE OF ALL RECEIVABLES. On the last day of
any Collection Period following which the Certificate Principal Balance as of
the related Distribution Date is less than or equal to 10% of the Original Pool
Balance, the Servicer shall have the option to purchase the corpus of the Trust.
To exercise such option, the Servicer shall deposit in the Certificate Account
an amount equal to the Certificate Principal Balance on the preceding
Distribution Date (after giving effect to any payment of Monthly Principal made
on such Distribution Date) (the "Optional Purchase Price"). In addition, the
Servicer shall deposit any amount necessary in order to provide for the payment
to Certificateholders of accrued interest (at the applicable Pass-Through Rate)
on the Certificate Principal Balance through the date of such purchase.
Notwithstanding the foregoing provisions of this Section 21.02, the Servicer may
not effect any such purchase unless the Trustee shall have received an Opinion
of Counsel acceptable to it that such purchase does not constitute a fraudulent
conveyance. Such price shall be deposited to the Certificate Account in
immediately available funds by 12:00 noon, New York City time, on the
Distribution Date and, upon notice to the Trustee of such deposit, the Trustee
shall release the Receivables and the Receivable Files to the Servicer,
whereupon the Certificates shall no longer evidence any right or interest in the
Receivables or any proceeds thereof. The Servicer may assign its purchase
option under this Section 21.02 to any Person prior to the exercise thereof;
provided that written notice of any such assignment shall be provided to the
- --------
Trustee.
ARTICLE XXII
MISCELLANEOUS PROVISIONS
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SECTION 22.01. AMENDMENT. The Agreement may be amended by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in the Agreement, or to add any other provisions with respect to
matters or questions arising under the Agreement that shall not be inconsistent
with the provisions of the Agreement; provided, however, that such action shall
-------- -------
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer, and the Trustee with the consent of the Holders of Certificates
evidencing not less than 51% of the Certificate Principal Balance for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Agreement, or of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment shall,
-------- -------
without the consent of the Holders of all Certificates then outstanding, reduce
the aforesaid percentage required to consent to any such amendment. In no case
may any such amendment increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made on any Certificate.
Notwithstanding anything to the contrary in this Agreement, no Opinion of
Counsel or consent of Certificateholders shall be required in connection with
any amendment of the Agreement to provide for a Cash Collateral Account
Facility; provided that prior to the effectiveness of any such amendment S&P and
Moody's shall confirm in writing that the rating of the Certificates will not be
lowered or withdrawn as a result of such amendment.
Promptly after the execution of any amendment or consent, the Trustee shall
furnish written notification of the substance of such amendment or consent to
each Certificateholder.
It shall not be necessary for the consent of Certificateholders pursuant to
this Section 22.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of an amendment to the Agreement, the Trustee shall
be entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by the Agreement and the
Opinion of Counsel referred to in Section 22.02(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties, or immunities under the Agreement.
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SECTION 22.02. PROTECTION OF TITLE TO TRUST.
(a) The Depositor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Certificateholders and the Trustee under the
Agreement in the Receivables and in the proceeds thereof. The Depositor shall
deliver (or cause to be delivered) to the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Depositor nor the Servicer shall change its name, identity,
or corporate structure in any manner that would, could, or might make any
financing statement or continuation statement filed by the Depositor in
accordance with paragraph (a) above seriously misleading within the meaning of
(S) 9-402(7) of the UCC, unless it shall have given the Trustee at least 60
days' prior written notice thereof.
(c) The Depositor and the Servicer shall give the Trustee at least 60 days'
prior written notice of any relocation of its principal executive office if, as
a result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement (in which case the Servicer shall
file or cause to be filed such amendment or continuation statement or new
financing statement). The Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal executive office, within
the United States of America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Certificate Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under the Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly with reference to the particular
grantor trust that such Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the Receivable shall have been
paid in full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender, or other transferee,
the Servicer shall give to such prospective purchaser, lender, or other
transferee computer tapes, records, or print-outs (including any restored from
back-up archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Trustee.
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(g) The Servicer shall permit the Trustee and its agents at any time during
normal business hours to inspect, audit, and make copies of and abstracts from
the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of the Agreement
and of each amendment thereto, and after the delivery of Subsequent
Receivables, an Opinion of Counsel either (a) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Initial
Receivables or Subsequent Receivables as the case may be and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (b) stating that, in the opinion
of such counsel, no such action shall be necessary to preserve and
protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 90-day period, either (a) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating
that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
SECTION 22.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder shall not operate to terminate the Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations, and liabilities of the parties to the Agreement or any of
them.
No Certificateholder shall have any right to vote (except as provided in
Section 19.04, 22.01 or 22.07) or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties to the Agreement,
nor shall anything in the Agreement set forth,
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or contained in the terms of the Certificates, be construed so as to constitute
the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of the Agreement.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of the Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to the Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing not less than 25% of the Certificate
Principal Balance shall have made written request upon the Trustee to institute
such action, suit, or proceeding in its own name as Trustee under the Agreement
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for 30 days after its receipt of such notice, request,
and offer of indemnity, shall have neglected or refused to institute any such
action, suit, or proceeding and during such 30-day period no direction
inconsistent with such written request has been given to the Trustee pursuant to
Section 19.04; no one or more Holders of Certificates shall have any right in
any manner whatever by virtue or by availing itself or themselves of any
provisions of the Agreement to affect, disturb, or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any such Holder, or to enforce any right, under
the Agreement except in the manner provided in the Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 22.03, each Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 22.04. GOVERNING LAW. The Agreement shall be construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within the State of New York, and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws.
SECTION 22.05. NOTICES. All demands, notices, and communications under
the Agreement shall be in writing, personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given unless otherwise provided herein, upon
receipt (a) in the case of the Depositor to the agent for service as specified
in the Agreement, at the following address: Bay View Securitization Corporation,
2121 South El Camino Real, San Mateo, California 94403, or at such other address
as shall be designated by the Depositor in a written notice to the Servicer or
Trustee; (b) in the case of the Servicer to the agent for service as specified
in the Agreement, at the following address, California Thrift & Loan, 818
Oakpark Road, Covina, California 91724, (c) in the case of the Trustee, at the
Corporate Trust Office. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register unless otherwise
provided herein. Unless otherwise provided herein, any notice so mailed within
the time prescribed in the Agreement shall be
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conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
SECTION 22.06. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of the Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of the Agreement and shall in no way affect the validity or
enforceability of the other provisions of the Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 22.07. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided below or in Sections 17.03 and 18.03 and as
provided in the provisions of the Agreement concerning the resignation of the
Servicer, the Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Trustee, and the Holders of
Certificates not less than 66% of the Certificate Principal Balance; provided,
--------
that, notwithstanding the foregoing, CTL may direct or irrevocably assign
payments to which it is entitled under Article XV hereof to Depositor or another
wholly-owned subsidiary of Bay View Capital Corporation, upon written notice to
the Trustee.
SECTION 22.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 16.02, Certificates
shall be deemed fully paid.
SECTION 22.09. COUNTERPARTS. For the purpose of facilitating the
execution of the Agreement and for other purposes, the Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
* * * *
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EXHIBIT 1
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 20.03
OF THE POOLING AND SERVICING
AGREEMENT
_____________________, as trustee (the "Trustee") of the Bay View 199_
Grantor Trust created pursuant to the Pooling and Servicing Agreement (including
the Standard Terms and Conditions of Agreement incorporated by reference
therein, the "Pooling and Servicing Agreement") dated as of __________________,
199_ among Bay View Securitization Corporation, as depositor (the "Depositor"),
California Thrift & Loan, as servicer (the "Servicer") and the Trustee, does
hereby sell, transfer, assign, and otherwise convey to the Depositor, without
recourse, representation, or warranty, all of the Trustee's right, title, and
interest in and to all of the Receivables (as defined in the Pooling and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which are to be repurchased by the Depositor pursuant
to Section 12.02 and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
____________.
BANKERS TRUST COMPANY
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
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EXHIBIT 2
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 20.03
OF THE POOLING AND SERVICING
AGREEMENT
Bankers Trust Company, as trustee (the "Trustee") of the Bay View 199__-__
Grantor Trust created pursuant to the Pooling and Servicing Agreement (including
the Standard Terms and Conditions of Agreement incorporated by reference
therein, the "Pooling and Servicing Agreement") dated as of __________________,
199_ among Bay View Securitization Corporation, as depositor (the "Depositor"),
California Thrift & Loan, as servicer (the "Servicer") and the Trustee, does
hereby sell, transfer, assign, and otherwise convey to the Servicer, without
recourse, representation, or warranty, all of the Trustee's right, title, and
interest in and to all of the Receivables (as defined in the Pooling and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which are to be repurchased by the Servicer pursuant to
Section 13.07 or 21.02, and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of
________________.
BANKERS TRUST COMPANY
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
64
<PAGE>
EXHIBIT 3
FORM OF SERVICER'S CERTIFICATE
TO THE TRUSTEE PURSUANT TO
SECTIONS 13.09 AND 14.02
OF THE POOLING AND SERVICING
AGREEMENT
SERVICER'S CERTIFICATE TO THE TRUSTEE
California Thrift & Loan, as Servicer (the "Servicer") pursuant to Sections
13.09 and 14.02 of the Pooling and Servicing Agreement dated
____________________, (the "Agreement") for the Bay View 199__-__ Grantor Trust
certifies the following for the purpose of the distributions to be made to the
Certificateholders for the Collection Period preceding the date of this
Servicer's Certificate:
1. The amount of aggregate collections on the Receivables is
$____________.
2. The aggregate Purchase Amount of the Receivables repurchased by the
Depositor and purchased by the Servicer is $____________.
3. The net deposit from the Collection Account to the Payahead Account is
$____________ or net withdrawal from the Payahead Account is $____________.
4. In the case of a net withdrawal from the Payahead Account, the amount
of such withdrawal which constitutes Monthly Interest is $____________, and the
amount with constitutes Monthly Principal is $____________.
5. The amount to be withdrawn from the Cash Collateral Account is
$____________.
6. The aggregate amount of Outstanding Advances on all Receivables that
became Defaulted Receivables is $____________.
7. The amount of Class A Monthly Interest, including any overdue Class A
Monthly Interest, is $____________.
8. The amount of Class B Monthly Interest, including any overdue Class B
Monthly Interest, is $____________.
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<PAGE>
9. The amount of Class A Monthly Principal is $____________.
10. The amount of Class B Monthly Principal is $____________.
11. The amount of Monthly Servicing Fee, including overdue Monthly
Servicing Fee, is $____________.
12. The amount of Recoveries of Advances is $____________.
13. The amount of Liquidation Proceeds on Purchased Receivables purchased
by the Servicer is $____________.
14. The amount of Liquidation Proceeds on Purchased Receivables
repurchased by the Depositor is $____________.
15. The Class A Principal Balance (after giving effect to Monthly
Principal distributions to be made) will be $____________.
16. The Class B Principal Balance (after giving effect to Monthly
Principal distributions to be made) will be $____________.
17. The Certificate Factor for the Class A Certificates is ____________%.
18. The Certificate Factor for the Class B Certificates is ____________%.
19. The remaining Available Cash Collateral Amount is $____________.
20. The sum of the Monthly Servicing Fee and the Spread Amount is
$____________.
21. The amount of Advances made by the Servicer is $____________.
22. The amount of Spread Amount to be deposited in the Cash Collateral
Account is $____________.
23. The amount to be withdrawn from the Cash Collateral Account and paid
to the Servicer is $____________.
24. The Required Cash Collateral Amount is $____________.
25. The remaining Pre-Funded Amount in the Pre-Funding Account is
$____________.
26. For the Distribution Date on which (or immediately following the date
on which) the Funding Period ends, the amount, if any, remaining in the Pre-
Funding Account after the purchase of all Subsequent Receivables.
66
<PAGE>
EXHIBIT 4
FORM OF SUBSEQUENT TRANSFER ASSIGNMENT
For value received, in accordance with the Pooling and Servicing Agreement
(including the Standard Terms and Conditions of Agreement incorporated by
reference therein, the "Pooling and Servicing Agreement") dated as of ___
____________, 199__ between Bay View Securitization Corporation, as depositor
(the "Depositor"), California Thrift & Loan, as servicer (the "Servicer") and
Bankers Trust Company, a New York banking corporation, as trustee (the
"Trustee"), the Depositor does hereby sell, assign, transfer and otherwise
convey unto the Trust, without recourse (except as expressly provided in the
Pooling and Servicing Agreement), all right, title and interest of the Depositor
in and to (i) the Subsequent Receivables, having an aggregate Principal Balance
equal to $___________, set forth in Schedule A hereto (which shall supplement
Schedule A to the Pooling and Servicing Agreement) and all monies due thereon on
or after ____________, 199__ (the "Subsequent Cutoff Date"), in the case of
Subsequent Receivables and certain monies received thereon on the after the
Subsequent Cutoff Date; (ii) the security interests in the Financed Vehicles
granted by the Obligors pursuant to the Subsequent Receivables; (iii) any
Liquidation Proceeds and any proceeds from claims or refunds of premiums on any
physical damage, lender's partial deductibility, credit life, disability and
hospitalization insurance policies covering Financed Vehicles or Obligors; (iv)
the interest of the Depositor in any proceeds from recourse to Dealers relating
to the Receivables; and (v) all proceeds of the foregoing. The foregoing sale
does not constitute and is not intended to result in any assumption by the Trust
of any obligation of the Depositor to the Obligors, insurers or any other person
in connection with the Subsequent Receivables, Receivable Files, any insurance
policies or any agreement or instrument relating to any of them.
The Depositor does not convey to the Trustee any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the Depositor contained in the Pooling
and Servicing Agreement (including the Officers' Certificate of the Depositor
accompanying this Assignment, in the form of Annex A hereto) and is to be
governed in all respects by the Pooling and Servicing Agreement.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement.
67
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as of ____________________, 199_.
BAY VIEW SECURITIZATION CORPORATION,
as Depositor
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
68
<PAGE>
SCHEDULE A
SCHEDULE OF SUBSEQUENT RECEIVABLES
69
<PAGE>
ANNEX A
BAY VIEW SECURITIZATION CORPORATION
OFFICER'S CERTIFICATE
The undersigned, ___________________, duly qualified and elected
_______________ of Bay View Securitization Corporation, in connection with the
conveyance of Subsequent Receivables to Bay View 199__-__ Grantor Trust (the
"Trust") pursuant to Section 12.08 of the Pooling and Servicing Agreement
(including the Standard Terms and Conditions of Agreement incorporated by
reference therein, the "Pooling and Servicing Agreement") dated as of _________,
199_ between Bay View Securitization Corporation, as depositor (the
"Depositor"), California Thrift & Loan, as servicer (the "Servicer") and Bankers
Trust Company, a New York banking corporation, as trustee (the "Trustee"), and
the Subsequent Transfer Assignment dated as of the date hereof from the
Depositor, hereby certifies that:
The Depositor shall have deposited in the Collection Account all
collections in respect of the Subsequent Receivables.
As of each Subsequent Transfer date, the Depositor was not insolvent nor
will it have been made insolvent by such transfer nor is it aware of any pending
insolvency.
The Funding Period shall not have terminated.
The Subsequent Receivables to be conveyed to the Trust on the Subsequent
Transfer Date, shall meet the following criteria: (I) not more than _____% of
the Principal Balances of the Subsequent Receivables in the Trust will represent
financing of used vehicles; (II) the weighted average Note Rate of the
Subsequent Receivables will not be less than _____%; (III) no Subsequent
Receivable shall have a Note Rate of less than the sum of the Class A Pass-
Through Rate and the Servicing Rate; (IV) the weighted average remaining term
(as of the Subsequent Cutoff Date) of the Subsequent Receivables shall not be
greater than ____ months; and (V) no Subsequent Receivable will have a final
Schedule Payment due later than __________________.
Each of the representations and warranties made by the Depositor pursuant
to Section 12.01 with respect to the Subsequent Receivables shall be true and
correct as of the related Subsequent Transfer Date with the same effect as if
then made, and the Depositor shall have performed all obligations to be
performed by it hereunder on or prior to such Subsequent Transfer Date.
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<PAGE>
The Depositor shall, at its own expense, on or prior to the Subsequent
Transfer Date indicate in its computer files that the Subsequent Receivables
identified in the Subsequent Transfer Assignment have been sold to the Trust
pursuant to this Agreement and the Subsequent Transfer Assignment.
The Depositor shall have taken any action required to maintain the first
perfected ownership interest of the Trust in the Trust Estate and the first
perfected security interest of the Trustee in the collateral.
No selection procedures believed by the Depositor to be adverse to the
interest of the Certificateholders shall have been utilized in selecting the
Subsequent Receivables.
All capitalized terms used but not otherwise defined herein shall have
meanings assigned to them in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
________________.
BAY VIEW SECURITIZATION CORPORATION,
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
71
<PAGE>
EXHIBIT 4.3
FORM OF POOLING AND SERVICING AGREEMENT FOR TRUSTS
OTHER THAN GRANTOR TRUSTS, INCLUDING FORM OF CERTIFICATES
<PAGE>
BAY VIEW SECURITIZATION CORPORATION
DEPOSITOR
CALIFORNIA THRIFT AND LOAN
SERVICER
AND
BANKERS TRUST COMPANY,
TRUSTEE
POOLING AND SERVICING AGREEMENT,
DATED AS OF _______ _, 1996
$_______________
BAY VIEW 1996 RA-1 AUTO TRUST
$ _____________ ____% CLASS A-1 AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
$ _____________ ____% CLASS A-2 AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
CLASS I INTEREST ONLY AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
AND
CLASS IC AUTOMOBILE RECEIVABLE BACKED CERTIFICATE
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I Creation of Trust............................................. 1
ARTICLE II Definitions................................................... 1
SECTION 2.01. Definitions.................................... 1
SECTION 2.02. Usage of Terms................................. 17
SECTION 2.03. Cutoff Date and Record Date.................... 17
SECTION 2.04. Section References............................. 17
ARTICLE III Conveyance of Receivables..................................... 18
ARTICLE IV Acceptance by Trustee......................................... 19
ARTICLE V Information Delivered to the Rating Agency.................... 19
ARTICLE VI Agent for Service............................................. 20
ARTICLE VII The Receivables............................................... 20
SECTION 7.01. Representations and Warranties of Depositor.... 20
SECTION 7.02. Repurchase Upon Breach......................... 21
SECTION 7.03. Custody of Receivable Files.................... 21
SECTION 7.04. Duties of Servicer as Custodian................ 22
SECTION 7.05. Instructions; Authority to Act................. 22
SECTION 7.06. Custodian's Indemnification.................... 23
SECTION 7.07. Effective Period and Termination............... 23
SECTION 7.08. Liability of the holder of the Class IC
Certificate and the Certificateholders......... 23
ARTICLE VIII Administration and Servicing of Receivables................... 24
SECTION 8.01. Duties of Servicer............................. 24
SECTION 8.02. Collection of Receivable Payments.............. 24
SECTION 8.03. Realization Upon Receivables................... 25
SECTION 8.04. Physical Damage Insurance...................... 26
SECTION 8.05. Maintenance of Security Interests in
Financed Vehicles.............................. 26
SECTION 8.06. Covenants of Servicer.......................... 26
SECTION 8.07. Purchase of Receivables Upon Breach............ 26
SECTION 8.08. Servicing Fee.................................. 26
SECTION 8.09. Servicer's Certificate......................... 27
SECTION 8.10. Annual Statement as to Compliance; Notice
of Default..................................... 27
SECTION 8.11. Annual Independent Certified Public
Accountant's Report............................ 28
</TABLE>
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<TABLE>
<S> <C>
SECTION 8.12. Access to Certain Documentation and
Information Regarding Receivables............... 28
SECTION 8.13. Servicer Expenses............................... 29
SECTION 8.14. Reports to Certificateholders................... 29
ARTICLE IX Distributions; Statements to Certificateholders................ 29
SECTION 9.01. Certificate Account............................. 29
SECTION 9.02. Collections..................................... 29
SECTION 9.03. Purchase Amounts................................ 31
SECTION 9.04. Distributions to Parties........................ 31
SECTION 9.05. Advances........................................ 33
SECTION 9.06. Net Deposits.................................... 33
SECTION 9.07. Statements to Certificateholders................ 34
SECTION 9.08. Intentionally Blank............................. 35
SECTION 9.09. Payahead Account................................ 35
SECTION 9.10. Calculation of Notional Principal Amount........ 35
ARTICLE X Credit Enhancement............................................. 36
SECTION 10.01. Subordination................................... 36
SECTION 10.02. Spread Account.................................. 36
ARTICLE XI The Certificates............................................... 38
SECTION 11.01. The Certificates................................ 38
SECTION 11.02. Authentication of Certificates.................. 38
SECTION 11.03. Registration of Transfer and
Exchange of Certificates........................ 38
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen
Certificates.................................... 39
SECTION 11.05. Persons Deemed Owners........................... 39
SECTION 11.06. Access to Agreement and List of
Certificateholders' Names and Addresses......... 39
SECTION 11.07. Maintenance of Office or Agency................. 40
SECTION 11.08. Book-Entry Certificates......................... 40
SECTION 11.09. Notices to Clearing Agency...................... 41
SECTION 11.10. Definitive Certificates......................... 41
SECTION 11.11. The Tax Partnership Agreement................... 41
ARTICLE XII The Depositor.................................................. 42
SECTION 12.01. Representations and Undertakings
of Depositor.................................... 42
SECTION 12.02. Liability of Depositor; Indemnities............. 44
SECTION 12.03. Merger or Consolidation of, or Assumption
of the Obligations of Depositor................. 44
SECTION 12.04. Limitation on Liability of Depositor and
Others.......................................... 45
SECTION 12.05. Depositor May Own Certificates.................. 45
</TABLE>
iii
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<TABLE>
<S> <C>
ARTICLE XIII The Servicer................................................... 45
SECTION 13.01. Representations of Servicer..................... 45
SECTION 13.02. Indemnities of Servicer......................... 47
SECTION 13.03. Merger or Consolidation of, or Assumption
of the Obligations of Servicer.................. 48
SECTION 13.04. Limitation on Liability of Servicer and
Others.......................................... 48
SECTION 13.05. Servicer Not to Resign.......................... 49
SECTION 13.06. Delegation of Duties............................ 49
ARTICLE XIV Default........................................................ 49
SECTION 14.01. Events of Default............................... 49
SECTION 14.02. Appointment of Successor........................ 51
SECTION 14.03. Notification to Certificateholders.............. 52
SECTION 14.04. Waiver of Past Defaults......................... 52
ARTICLE XV The Trustee.................................................... 52
SECTION 15.01. Duties of Trustee............................... 52
SECTION 15.02. Trustee's Certificate........................... 54
SECTION 15.03. Trustee's Assignment of Purchased
Receivables..................................... 54
SECTION 15.04. Certain Matters Affecting the Trustee........... 55
SECTION 15.05. Trustee Not Liable for Certificates or
Receivables..................................... 56
SECTION 15.06. Trustee May Own Certificates.................... 57
SECTION 15.07. Trustee's Fees and Expenses..................... 57
SECTION 15.08. Eligibility Requirements for Trustee............ 57
SECTION 15.09. Resignation or Removal of Trustee............... 58
SECTION 15.10. Successor Trustee............................... 58
SECTION 15.11. Merger or Consolidation of Trustee.............. 59
SECTION 15.12. Appointment of Co-Trustee or Separate
Trustee......................................... 59
SECTION 15.13. Representations and Warranties of Trustee....... 60
ARTICLE XVI Termination.................................................... 61
SECTION 16.01. Termination of the Trust........................ 61
SECTION 16.02. Optional Disposition of All Receivables......... 62
SECTION 16.03. Termination upon the Bankruptcy of
the Class IC Certificateholder.................. 62
ARTICLE XVII Miscellaneous Provisions....................................... 63
SECTION 17.01. Amendment....................................... 63
SECTION 17.02. Protection of Title to Trust.................... 65
SECTION 17.03. Limitation on Rights of Certificateholders...... 66
SECTION 17.04. Governing Law................................... 67
SECTION 17.05. Notices......................................... 67
SECTION 17.06. Severability of Provisions...................... 68
</TABLE>
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<TABLE>
<S> <C>
SECTION 17.07. Assignment...................................... 68
SECTION 17.08. Certificates Nonassessable and Fully Paid....... 68
SECTION 17.09. Nonpetition Covenant............................ 68
SECTION 17.10. Counterparts.................................... 68
SECTION 17.11. Third Party Beneficiary......................... 68
</TABLE>
EXHIBIT 1 - Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2 - Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 3 - Servicer's Certificate
EXHIBIT A-1 - Form of Class A-1 Automobile Receivable Backed
Certificate
EXHIBIT A-2 - Form of Class A-2 Automobile Receivable Backed
Certificate
EXHIBIT B - Form of Class I Automobile Receivable Backed
Certificate
EXHIBIT C - Form of Class IC Automobile Receivable Backed
Certificate
EXHIBIT D - Form of Depository Trust Co. Letter of Representations
SCHEDULE A - Schedule of Receivables
SCHEDULE B - Location of Receivables
SCHEDULE C - Planned Notional Principal Amount Schedule
ANNEX A - Tax Partnership Agreement
v
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of ______ _, 1996, is made with
respect to the formation of the Bay View 1996-A Auto Trust, among BAY VIEW
SECURITIZATION CORPORATION, a Delaware corporation as depositor (the
"Depositor"), CALIFORNIA THRIFT AND LOAN, a California corporation as servicer
(the "Servicer"), and Bankers Trust Company, a New York banking corporation, as
trustee (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Agreement by the parties hereto, there is hereby
created the Bay View 1996 RA-1 Auto Trust.
The parties hereto intend that this Agreement be construed so as to create a
partnership formed to facilitate the direct investment by Certificateholders in
the assets of the Trust.
ARTICLE II
DEFINITIONS
SECTION 2.01. DEFINITIONS. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Accrued Interest" means all interest accrued on the Receivables prior to the
opening of business on the day following the Cutoff Date.
"Advance" means, with respect to a Receivable and with respect to a Collection
Period, the amount that the Servicer is required to advance pursuant to Section
9.05.
"Affiliate" means any wholly-owned subsidiary of BVCC, a Delaware corporation,
excluding CTL.
"Agreement" means this Pooling and Servicing Agreement executed by the
Depositor, the Servicer and the Trustee, and all amendments and supplements
thereto.
"Amount Financed", with respect to a Receivable, means the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and any
related costs.
"Approved Rating" means a rating of P-1 by Moody's or A-l+ by Standard &
Poor's.
"Authorized Newspaper" means a newspaper of general circulation in the Borough
of Manhattan, the City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
<PAGE>
"Available Spread Amount" means, on any Distribution Date, the amount on
deposit in the Spread Account, including any income or gain from any investment
of funds in the Spread Account, net of any losses from such investment before
giving effect to deposits into or withdrawals from the Spread Account pursuant
to Article IX.
"Available Funds" means the amount defined as such in Section 9.02.
"Bank" means Bay View Federal Bank, a Federal Savings Bank.
"Book-Entry Certificates" means certificates evidencing a beneficial interest
in the Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 11.08; provided, however,
that after the occurrence of a condition whereupon book-entry registration and
transfer are no longer permitted and Definitive Certificates are to be issued to
the Certificate Owners, such Certificates shall no longer be "Book-Entry
Certificates".
"Business Day" means, unless otherwise specified, any day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New York,
(or, if the Servicer has previously provided notice to the Trustee that such day
is not a Business Day, San Francisco, California), shall be authorized or
obligated by law, executive order, or governmental decree to be closed.
"BVCC" means Bay View Capital Corporation, a Delaware corporation holding 100%
of the Depositor's outstanding Common Stock.
"Certificate" means a Class A Certificate, a Class I Certificate or a Class IC
Certificate.
"Certificateholder" or "Holder" means the Person in whose name the respective
Certificate shall be registered in the Certificate Register, except that, solely
for the purposes of giving any consent, waiver, request, or demand pursuant to
the Agreement, the interest evidenced by any Certificate registered in the name
of the Depositor, the Servicer or CTL, or any Person controlling, controlled by,
or under common control with the Depositor or the Servicer, shall not be taken
into account in determining whether the requisite percentage of Certificates
(except the Class IC Certificate) necessary to effect any such consent, waiver,
request, or demand shall have been obtained.
"Certificate Account" means the account designated as such, established and
maintained pursuant to Section 9.01.
"Certificate Balance" means, at any time, the Initial Certificate Balance
minus all distributions of Monthly Principal made up to such time.
"Certificate Factor" means a seven digit decimal number computed by the
Servicer and stated in the Servicer's Certificate which is computed by dividing
the Certificate Balance (after giving effect to any prior distribution of
Monthly Principal) by the Initial Certificate Balance.
2
<PAGE>
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" mean, respectively, the
register maintained and the registrar appointed pursuant to Section 11.03.
"Class A Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-1 or Exhibit A-2.
"Class A Certificateholder" means the Person in whose name the respective
Class A Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class A Monthly Interest" means, for any Distribution Date, the sum of Class
A-1 Monthly Interest, Class A-2 Monthly Interest and Class A-3 Monthly Interest.
"Class A-1 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-1.
"Class A-1 Certificate Balance" means, at any time, the Initial Class A-1
Certificate Balance minus all distributions of Monthly Principal to Class A-1
Certificateholders made up to such time.
"Class A-1 Certificate Factor" means a seven digit decimal number computed by
the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-1 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-1 Certificate Balance.
"Class A-1 Certificateholder" means the Person in whose name the respective
Class A-1 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-1 Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class A-1 Monthly Interest" means, (i) for the first Distribution Date, the
product of the following: (one twelfth of the Class A-1 Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
assuming a 30-day month from and including the Closing Date divided by 30)
multiplied by the Class A-1 Certificate Balance at the Closing Date and (ii) for
any subsequent Distribution Date, one-twelfth of the product of the Class A-1
3
<PAGE>
Pass-Through Rate and the Class A-1 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class A-1 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-1 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-1 Pass-Through Rate" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
"Class A-1 Stated Final Distribution Date" means _______ _, 200_.
"Class A-2 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-2.
"Class A-2 Certificate Balance" means, at any time, the Initial Class A-2
Certificate Balance minus all distributions of Monthly Principal to Class A-2
Certificateholders made up to such time.
"Class A-2 Certificate Factor" means a seven digit decimal number computed by
the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-2 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-2 Certificate Balance.
"Class A-2 Certificateholder" means the Person in whose name the respective
Class A-2 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-2 Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class A-2 Monthly Interest" means, (i) for the first Distribution Date, the
product of the following: (one twelfth of the Class A-2 Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
assuming a 30-day month from and including the Closing Date divided by 30)
multiplied by the Class A-2 Certificate Balance at the Closing Date and (ii) for
any subsequent Distribution Date, one-twelfth of the product of the Class A-2
Pass-Through Rate and the Class A-2 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class A-2 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-2 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-2 Pass-Through Rate" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
4
<PAGE>
"Class A-2 Stated Final Distribution Date" means ________ _, 200_.
"Class I Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit B.
"Class I Certificateholder" means the Person in whose name the respective
Class I Certificate shall be registered in the Certificate Register, except that
solely for the purposes of giving any consent, waiver, request, or demand
pursuant to the Agreement, the interest evidenced by any Class I Certificate
registered in the name of the Depositor, the Servicer or CTL, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request, or demand
shall have been obtained.
"Class I Monthly Interest" means (i) for the first Distribution Date, the
product of the following: (one-twelfth of the Class I Pass-Through Rate)
multiplied by (the number of days remaining in the month of the Closing Date
assuming a 30-day month from and including the Closing Date divided by 30)
multiplied by the Notional Principal Amount of the Class I Certificates at the
Closing Date, and (ii) for any subsequent Distribution Date, one-twelfth of the
product of the Class I Pass-Through Rate and the Notional Principal Amount as of
the immediately preceding Distribution Date (after giving effect to any
application of Monthly Principal on such preceding Distribution Date); provided,
however, that after the Stated Final Class I Distribution Date, the Class I
Monthly Interest shall be zero.
"Class I Pass-Through Rate" means ____% per annum, payable monthly at one-
twelfth of the annual rate.
"Class IC Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit C.
"Class IC Certificateholder" means the Depositor or any Person in whose name
the Class IC Certificate shall be registered in the Certificate Register.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means ______ __, 1996.
"Collected Interest" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
interest relating to such Collection Period.
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"Collected Principal" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
principal relating to such Collection Period.
"Collection Period" means (i) initially, the period from the day after the
Cutoff Date to the end of the calendar month of December, 1996 and (ii)
thereafter, each calendar month, until the Trust shall terminate pursuant to
Article 16.
"Companion Component" means, for each respective Distribution Date, the
difference between the Certificate Balance and the PAC Component.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall, at any particular time, be administered, which
office at the date of the execution of this Agreement is located at Four Albany
Street, New York, NY 10006; Attention: Corporate Trust and Agency Group;
Telecopy (212) 250-1393 or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor and the
Servicer.
"CTL" means California Thrift & Loan, a California corporation, and its
successors and assigns, other than in its capacity as Servicer.
"Cutoff Date" means _____ __, 1996.
"Dealer" means the seller of a Financed Vehicle, who originated and assigned
the related Receivable to CTL or under an existing agreement with CTL or who
arranged for a loan from CTL or to the purchaser of a Financed Vehicle under an
existing agreement with CTL.
"Defaulted Receivable" means, for any Collection Period, a Receivable as to
which any of the following has occurred: (i) any payment was delinquent 120
days or more as of the last day of such Collection Period, (ii) the Financed
Vehicle that secures the Receivable has been repossessed, or (iii) the Servicer
has determined that the Receivable is uncollectible in accordance with the
Servicer's customary practices on or before the last day of such Collection
Period; provided, however, that "Defaulted Receivable" shall not include any
Receivable that is to be repurchased pursuant to Section 7.02.
"Definitive Certificate" means a Certificate defined as such in Section 11.08.
"Depositor" means Bay View Securitization Corporation, a Delaware corporation,
in its capacity as the depositor of the Receivables under this Agreement, and
each successor to Bay View Securitization Corporation (in the same capacity)
pursuant to Section 12.03.
"Depository Agreement" means the agreement among the Depositor, the Trustee
and the initial Clearing Agency in the form attached hereto as Exhibit D.
"Determination Date" means, for each Collection Period, the fifth day of the
following month.
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"Dissolution Distribution Date" means the Distribution Date following the
liquidation of the trust corpus pursuant to Section 16.02 or Section 16.03.
"Distribution Date" means, for each Collection Period, the 15th calendar day
of each month (or, in the event such day is not a Business Day, the next
succeeding Business Day). The first Distribution Date shall be ___________,
199_.
"Eligible Bank" means any depository institution with trust powers (including
the Trustee), organized under the laws of the United States or any State having
a net worth in excess of $50,000,000, the deposits of which are insured to the
full extent permitted by law by the Federal Deposit Insurance Corporation, which
is subject to supervision and examination by Federal or State authorities and
which (i) has a long-term unsecured debt rating of at least Baa3 from Moody's or
(ii) is approved by each Rating Agency.
"Eligible Investment" means any of the following:
(i) direct obligations of, and obligations the full and timely payment of
principal and interest on which is fully guaranteed by, the United States of
America, the Federal National Mortgage Association, or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposits of, bankers'
acceptances issued by, or federal funds sold by any depository institution or
trust company (including the Trustee or any agent of the Trustee, acting in
their respective commercial capacities) incorporated under the laws of the
United States of America, any State thereof or the District of Columbia or any
foreign depository institution with a branch or agency licensed under the laws
of the United States of America or any State, in each case subject to
supervision and examination by Federal and/or State banking authorities and
having an Approved Rating at the time of such investment or contractual
commitment providing for such investment or (B) any other demand or time deposit
or certificate of deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(iii) repurchase obligations with respect to (A) any security described in
clause (i) above or (B) any other security issued or guaranteed by an agency or
instrumentality of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal) described
in clause (ii) (A) above;
(iv) short-term securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any State the short-term unsecured obligations of which have an Approved Rating,
or higher, at the time of such investment; provided, however, that securities
issued by any particular corporation will not be Eligible Investments to the
extent that investment therein will cause the then outstanding principal amount
of securities issued by such corporation and held as part of the corpus of the
Trust to exceed 10% of amounts held in the Certificate Account;
(v) commercial paper having an Approved Rating at the time of such investment;
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(vi) a guaranteed investment contract issued by any insurance company or other
corporation acceptable to the Rating Agency, provided that the Trustee shall
have received written notice from the Rating Agency to the effect that the
investment of funds in such a contract will not result in the reduction or
withdrawal of any rating on the Certificates;
(vii) interests in any money market fund having a rating of Aaa by
Moody's or AAAm by Standard & Poor's; and
(viii) any other investment approved in advance in writing by the Rating
Agencies and the Surety Bond Issuer.
"Event of Default" means an event specified in Section 14.01.
"Excess Yield Requirement" has the meaning specified in Section [1.01] of the
Insurance Agreement.
"Financed Vehicle" means a new or used automobile, light truck, motorcycle, or
van, together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"Holder" -- see "Certificateholder."
"Initial Certificate Balance" means $________________.
"Initial Class A-1 Certificate Balance" means $__________________.
"Initial Class A-2 Certificate Balance" means $___________________.
"Insolvency Event" with respect to a party means (i) the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee-in-bankruptcy or similar official for
such party in any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation of
their respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or (ii) the consent
by such party to the appointment of a trustee-in-bankruptcy or similar official
in any insolvency, readjustment of debt, marshalling of assets and liabilities,
or similar proceedings of or relating to such party or of or relating to
substantially all of its property; or (iii) such party shall admit in writing
its inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"Interest Advance Amount" with respect to a simple interest Receivable as to
which an Advance is required to be made on the last day of a Collection Period,
shall mean an amount equal to 30 days of interest upon the Principal Balance of
such Receivable as of such date; and, with respect to a Precomputed Receivable
as to which an Advance is required to be made on the last day of a Collection
Period, shall mean an amount equal to that portion of the earliest delinquent
Scheduled Payment allocable to interest (using the actuarial or constant yield
method).
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"Insurance Agreement" means the Insurance and Reimbursement Agreement, dated
as of ___________, 1996, among the Depositor, CTL individually and as Servicer,
and the Surety Bond Issuer pursuant to which the Surety Bond Issuer issued the
Surety Bond.
"Interest Shortfall" means, as to any simple interest Receivable as of the
last day of any Collection Period, the amount, if any, by which (a) interest due
on such Receivable exceeds (b) the Collected Interest on such Receivable.
"Interest Shortfall" with respect to a Precomputed Receivable as of the last day
of any Collection Period means the amount, if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method) exceeds the Collected Interest on such
Receivable (computed using the same method and after giving effect to the
withdrawal of any previously received Scheduled Payments in respect of such
Receivable from the Payahead Account in accordance with Sections 8.02(b) and
9.09 hereof).
"Lien" means a security interest, lien, charge, pledge, equity, or encumbrance
of any kind other than tax liens, mechanics' liens, and any liens which attach
to the respective Receivable or related Financed Vehicle by operation of law.
"Liquidation Proceeds" means the monies collected from whatever source,
including insurance proceeds, on Defaulted Receivables, net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be remitted to the Obligor. "Liquidation Proceeds" with
respect to a Distribution Date means such monies collected during the preceding
Collection Period.
"Monthly Interest" means the sum of Class A Monthly Interest and Class I
Monthly Interest.
"Monthly Principal" means, for any Distribution Date, an amount equal to (i)
the Pool Balance at the close of business on the last day of the second
preceding Collection Period (or, in the case of the first Distribution Date, the
Original Pool Balance), less (ii) the Pool Balance at the close of business on
the last day of the preceding Collection Period; provided, however, that: (i)
Monthly Principal will be increased by the amount, if any, which is necessary to
reduce the Class A-1 Certificate Balance to zero on the Class A-1 Stated Final
Distribution Date; and (ii) Monthly Principal will be increased by the amount,
if any, which is necessary to reduce the Class A-2 Certificate Balance to zero
on the Class A-2 Stated Final Distribution Date. Monthly Principal will not
exceed the Certificate Balance.
"Monthly Servicing Fee" means, (i) for the first Distribution Date, the
product of the following: (one-twelfth of the Servicing Rate) multiplied by
(the number of days remaining in the month of the Closing Date from and
including the Closing Date, assuming a 30-day month, divided by 30) multiplied
by the Initial Certificate Balance and (ii) for any subsequent Distribution
Date, one-twelfth of the product of (a) the Certificate Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly Principal
made on that such Distribution Date) and (b) the Servicing Rate.
"Moody's" means Moody's Investors Service, Inc.
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"Net Principal Surety Bond Amount" means the Certificate Balance as of the
first Distribution Date minus all amounts previously drawn on the Surety Bond or
from the Spread Account with respect to Monthly Principal.
"Note Rate" means, with respect to a Receivable, the contract rate of interest
on such Receivable, exclusive of prepaid finance charges.
"Notional Principal Amount" or "PAC Component" means, for the purpose of
calculating the Class I Monthly Interest at any time, the Original Notional
Principal Amount minus all allocations of Monthly Principal to the PAC Component
made up to such time pursuant to Section 9.10 of this Agreement.
"Obligor" on a Receivable means the purchaser or the co-purchasers of the
Financed Vehicle who owes payments under the Receivable. The phrase payment
made on behalf of an Obligor" shall mean all payments made with respect to a
Receivable except payments made by CTL, the Depositor or the Servicer.
"Officers' Certificate" means a certificate signed by any two of the chairman
of the board, the president, any vice chairman of the board, any vice president,
the treasurer, or the controller of CTL, the Depositor or the Servicer, as the
case may be; provided that no individual shall sign in a dual capacity.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel to
the Depositor and/or Servicer, which counsel shall be acceptable to the Trustee.
"Optional Disposition Price" means the amount specified as such in Section
16.02.
"Original Notional Principal Amount" shall be $______________.
"Original Pool Balance" means $__________________.
"Outstanding Advances" as of any date, with respect to a Receivable, means the
total amount of Advances made on such Receivable for which the Servicer has not
been reimbursed.
"PAC Component" has the meaning set forth in Section 9.10.
"Payahead" on a Precomputed Receivable means the amount, as of the close of
business on the last day of a Collection Period, computed in accordance with
Section 8.02(b) with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 9.09.
"Payahead Balance" on a Precomputed Receivable means the sum, as of the close
of business on the last day of a Collection Period, of all Payaheads made by or
on behalf of the Obligor with respect to such Precomputed Receivable, as reduced
by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 8.02(b) and 9.09.
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"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Planned Notional Principal Amount" means, for each respective Distribution
Date, the corresponding amount specified in the Planned Notional Principal
Amount Schedule.
"Planned Notional Principal Amount Schedule" means, the amortization Schedule
of Planned Notional Principal Amount for each respective Distribution Date,
attached hereto as Schedule C.
"Pool Balance" as of any date means the aggregate Principal Balance of the
Receivables as of such date; provided, however, that for purposes of determining
Monthly Principal, the Principal Balance of a Defaulted Receivable or a
Purchased Receivable (if actually purchased by the Servicer or repurchased by
CTL) shall be deemed to be zero on and after the close of business on the last
day of the Collection Period in which the Receivable becomes a Defaulted
Receivable or a Purchased Receivable is actually repurchased.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the related
contract as an add-on finance charge) and the portion allocable to the Amount
Financed is determined according to the sum of periodic balances, the sum of
monthly balances, the rule of 78's or any equivalent method.
"Premium Side Letter Agreement" means the letter dated the Closing Date as
defined in the Insurance Agreement.
"Prepayment Charges," as used in the Agreement, shall be interpreted to
include, without limitation, in the case of a Precomputed Receivable that is
prepaid in full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the Principal Balance of
such Receivable computed in accordance with the method provided for in the
contract governing such Receivable, such as the rule of 78's.
"Principal Balance" of a simple interest Receivable, as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable. "Principal Balance" with
respect to a Precomputed Receivable, as of the close of business on the Cutoff
Date, means the gross principal balance of such Receivable on the records of the
Servicer, net of unearned or accrued interest reflected therein, and as of the
close of business on the last day of a Collection Period, means the Principal
Balance as of the Cutoff Date minus that portion of all Scheduled Payments
received with respect to such Receivable in respect of such Collection Period
and all prior Collection Periods allocable to principal of such Receivable using
the actuarial or constant yield method.
"Principal Distribution Sequence" means that Monthly Principal shall be
distributed among the Class A Certificateholders in the following sequence: (i)
to the Class A-1 Certificateholders until the Class A-1 Certificate Balance has
been reduced to zero; and (ii) to the Class A-2 Certificateholders until the
Class A-2 Certificate Balance has been reduced to zero.
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"Purchase Agreement" means the Purchase Agreement, dated as of __________,
1996, by and between the Depositor and CTL, as amended, supplemented or modified
from time to time.
"Purchase Amount" of any Receivable, as of the close of business on the last
day of any Collection Period, means the amount equal to the sum of the Principal
Balance of such Receivable plus any unpaid interest accrued and due during or
prior to such Collection Period on such Receivable.
"Purchased Receivable" means a Receivable purchased not later than the
Determination Date of the month immediately following the respective Collection
Period by the Servicer pursuant to Section 8.07 or repurchased not later than
the Determination Date of the month immediately following the respective
Collection Period by CTL pursuant to Section 7.02.
"Rating Agency" means each of Moody's and Standard & Poor's and their
successors and assigns.
"Rating Agency Condition" means, with respect to any action, that each Rating
Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that, within 7 days
of receipt of such notice, none of the Rating Agencies shall have notified the
Depositor, the Servicer or the Trustee in writing that such action will result
in a reduction or withdrawal of the then current ratings of the Certificates.
"Receivable" means any simple interest or pre-computed (add-on) interest
installment sales contract or installment loan and security agreement which
shall appear on Schedule A to the Agreement.
"Receivable Files" means the documents specified in Section 7.03.
"Receivables" or "Receivables Pool" means those Receivables conveyed to the
Trust by the Depositor listed as of the Cutoff Date in Schedule A.
"Record Date" means, for any Distribution Date, the last day of the preceding
Collection Period.
"Recoveries" means Liquidation Proceeds received by the Servicer during the
preceding calendar month on Defaulted Receivables.
"Recoveries of Advances" means, for any Collection Period, all payments
received by the Servicer by or on behalf of Obligors (other than Obligors with
respect to Defaulted Receivables and excluding reimbursements of Outstanding
Advances on Defaulted Receivables pursuant to Sections 9.04(a) (i) and 9.05)
during such Collection Period representing recoveries of Interest Shortfalls for
which Advances were made for prior Collection Periods.
"Required Spread Amount" means on each Distribution Date, ____% of the Initial
Certificate Balance (after giving effect to any payment of Monthly Principal on
such Distribution Date); provided, that on any Distribution Date on which (or
after the first Distribution Date on
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which) the Excess Yield Requirement is not met, the Required Spread Amount shall
be equal to _% of the Certificate Balance (after giving effect to any payment of
Monthly Principal on such Distribution Date); and provided further that upon and
during the continuance of an Event of Default or a Trigger Event, the Required
Spread Amount shall be equal to the Surety Bond Amount as of such Distribution
Date after giving effect to any draws on the Surety Bonds, draws on the Spread
Account and other distributions pursuant to Section 9.04 on such Distribution
Date.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office (or any successor group of the
Trustee) including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Scheduled Payment" on a Receivable means that portion of the payment required
to be made by the Obligor during the respective Collection Period sufficient to
amortize the Principal Balance and to provide interest at the Note Rate.
"Servicer" means California Thrift & Loan, a California corporation, in its
capacity as the servicer of the Receivables and each successor to California
Thrift & Loan (in the same capacity) pursuant to Section 13.03 or 14.02.
"Servicer's Certificate" means a certificate completed and executed by an
officer of the Servicer pursuant to Section 8.09.
"Servicing Rate" means 1.00% per annum, payable monthly at one-twelfth of the
annual rate, subject to adjustment with respect to a successor Servicer pursuant
to Section 14.02.
"Spread Account" means, the account designated as such, established and
maintained pursuant to Section 10.02.
"Spread Account Facility" means any liquidity facility or similar arrangement
established pursuant to Section 10.02.
"Spread Account Surplus" means, on any Distribution Date, the excess, if any,
of the Available Spread Amount on such Distribution Date, after giving effect to
deposits into and withdrawals from the Spread Account pursuant to Article 9 on
such Distribution Date, over the Required Spread Amount on such Distribution
Date (after giving effect to any payments of Monthly Principal and Monthly
Interest and all amounts owing to the Surety Bond Issuer on such Distribution
Date).
"Standard & Poor's" means Standard & Poors Ratings Services, a division of
McGraw-Hill Companies, Inc.
"State" means (i) any state of the United States of America or (ii) the
District of Columbia.
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"Stated Final Distribution Date" means _________, 200_.
"Stated Final Class I Distribution Date" means ________, 200_.
"Surety Bond" means the irrevocable Principal/Interest Surety Bond dated
________, 1996 issued by the Surety Bond Issuer to the Trustee for the benefit
of the Class A and Class I Certificateholders and having a maximum amount
available to be drawn in respect of Class A Monthly Interest, Class I Monthly
Interest and Monthly Principal equal to the Surety Bond Amount.
"Surety Bond Amount" means with respect to any Distribution Date:
(x) the sum of (A) the lesser of (i) the Certificate Balance (after giving
effect to any distribution of Available Funds and any funds withdrawn from the
Spread Account to pay Monthly Principal on such Distribution Date) and (ii) the
Net Principal Surety Bond Amount, plus (B) Class A Monthly Interest, plus (C)
Class I Monthly Interest, plus (D) the Monthly Servicing Fee; less
(y) all amounts on deposit in the Spread Account on such Distribution
Date.
"Surety Bond Fee" means for any Distribution Date, an amount equal to the
product of (i) the Surety Bond per annum fee rate set forth in the Premium Side
Letter Agreement calculated for the actual number of days elapsed during the
Collection Period on the basis of a 360 day year and (ii) the Certificate
Balance calculated as of the Record Date to which such Distribution Date
relates, payable monthly in arrears.
"Surety Bond Issuer" means Capital Markets Assurance Corporation, a New York
domiciled monoline stock insurance company.
"Trigger Event" means any of the events identified as such in Section [6.02]
of the Insurance Agreement.
"Trust" means the trust created by the Agreement, the estate of which shall
generally comprise the Receivables (other than Purchased Receivables) and all
monies paid thereon, and all monies due thereon, including Accrued Interest, as
of and after the Cutoff Date (but excluding Accrued Interest paid on or prior to
the Closing Date); security interests in the Financed Vehicles; funds deposited
in the Certificate Account; all documents contained in the Receivable Files; any
property that shall have secured a Receivable and that shall have been acquired
by or on behalf of the Trust; any Liquidation Proceeds and any rights of the
Depositor in proceeds from claims or refunds of premiums on any physical damage,
lender's collateral protection, credit life, disability, and hospitalization
insurance policies covering Financed Vehicles or Obligors; the interest of the
Depositor in recourse to Dealers relating to certain of the Receivables; the
proceeds of the foregoing; amounts on deposit from time to time in the Spread
Account; and certain rights of the Depositor under the Purchase Agreement,
including, without limitation, Section 3.03 thereof.
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"Trustee" means Bankers Trust Company, a banking corporation organized under
the laws of the State of New York and its successors or any corporation
resulting from or surviving any merger or consolidation to which it or its
successors may be a party or any successor trustee at the time serving as
successor trustee hereunder.
"Trustee's Certificate" means a certificate completed and executed by the
Trustee by a Responsible Officer pursuant to Section 15.02, substantially in the
form of, in the case of an assignment to CTL, Exhibit 1, and in the case of an
assignment to the Servicer, Exhibit 2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
SECTION 2.02. USAGE OF TERMS. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 2.03. CUTOFF DATE AND RECORD DATE. All references to the Record Date
prior to the first Record Date in the life of the Trust shall be to the Cutoff
Date.
SECTION 2.04. SECTION REFERENCES. All section references in this Agreement
shall be to Sections in this Agreement unless otherwise specified.
ARTICLE III
CONVEYANCE OF RECEIVABLES
In consideration of the Trustee's delivery to or upon the order of the
Depositor of Class A Certificates with a Certificate Balance equal to the
Original Pool Balance, Class I Certificates representing in the aggregate the
Original Notional Principal Amount and the Class IC Certificate the Depositor
does hereby sell, transfer, assign, and otherwise convey to the Trustee, in
trust for the benefit of the Certificateholders and the Surety Bond Issuer,
without recourse (subject to the obligations herein):
(i) all right, title, and interest of the Depositor in and to the Receivables
listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims or refunds of
premiums on any physical damage, lender's collateral protection, credit life,
disability and hospitalization insurance policies covering Financed Vehicles or
Obligors;
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(iv) funds deposited in the Certificate Account;
(v) the interest of the Depositor in any proceeds from recourse to
Dealers relating to the Receivables;
(vi) all documents contained in the Receivable Files;
(vii) all monies paid and all monies due, including Accrued Interest,
after the Cutoff Date, with respect to the Receivables held by the Servicer or
Depositor (but excluding Accrued Interest paid prior to the Closing Date);
(viii) the rights of the Depositor pursuant to the Purchase Agreement to
require CTL to repurchase any Receivables as to which there has been a breach of
the representations and warranties contained therein;
(ix) the benefits of the Surety Bond; and
(x) all proceeds of the foregoing.
The Depositor does hereby further assign, convey, pledge and grant a
security interest in (i) the funds on deposit from time to time in the Spread
Account; (ii) all Eligible Investments purchased with funds deposited in the
Spread Account; (iii) any and all other right, title and interest, including any
beneficial interest the Depositor may have in the Certificate Account, the
Spread Account and the funds deposited therein, and (iv) any proceeds of any of
the foregoing, to the Trustee and for the benefit of the Certificateholders to
secure amounts payable to Certificateholders as provided under this Agreement.
The Depositor does not convey to the Trustee any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
ARTICLE IV
ACCEPTANCE BY TRUSTEE
The Trustee does hereby accept all consideration conveyed by the Depositor
pursuant to Article III, and declares that the Trustee shall hold such
consideration upon the trusts herein set forth for the benefit of all present
and future Certificateholders and the Surety Bond Issuer, subject to the terms
and provisions of this Agreement.
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ARTICLE V
INFORMATION DELIVERED TO THE RATING AGENCY
(a) The Servicer hereby expresses its intention to deliver promptly to the
Rating Agency (i) a copy of each Servicer's Certificate that it delivers to the
Trustee and the Surety Bond Issuer pursuant to Section 8.09, (ii) a copy of each
annual Officers' Certificate as to compliance and any notice of Default that it
delivers to the Trustee pursuant to Section 8.10, (iii) a statement for each
Collection Period including delinquency and loss information for the
Receivables, the amount of any draws on the Surety Bond, (iv) written notice of
any merger, consolidation, or other succession of the Servicer, pursuant to
Section 13.03, or the Depositor, pursuant to Section 12.03, (v) a copy of each
amendment to this Agreement and (vi) any Opinion of Counsel delivered to the
Trustee pursuant to Section 17.02(i).
(b) The Trustee hereby expresses its intention to deliver promptly to
the Rating Agency (i) a copy of each statement or notification to
Certificateholders delivered pursuant to Section 9.07, 14.03 or 15.10, (ii) a
copy of each annual certified public accountant's report received by the Trustee
pursuant to Section 8.11, (iii) a copy of each amendment to this Agreement and
(iv) a copy of the notice of termination of the Trust provided to
Certificateholders pursuant to Section 16.01.
(c) For purposes of delivery pursuant to paragraphs (a) and (b) of this
Article VIII, the addresses for the Rating Agencies are:
Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
26 Broadway, 15th Floor
New York, New York 10004
Moody's Investors Service, Inc.
Attention: ABS Monitoring Department
4th Floor
99 Church Street
New York, New York 10007
(d) The provisions of this Article V are included herein for convenience
of reference only and shall not be construed to be contractual undertakings or
obligations. The failure of the Servicer or the Trustee to comply with any or
all of the provisions of this Article V shall not constitute an Event of Default
or a default of any kind under this Agreement or make any remedy available to
any Person.
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ARTICLE VI
AGENT FOR SERVICE
The agent for service for the Depositor shall be Robert J. Flax, Secretary
of the Depositor. Any and all service on the agent for service of the Depositor
shall be sent to Bay View Securitization Corporation, 2121 South El Camino Real,
San Mateo, California 94403.
The agent for service for the Servicer shall be Michael Iachelli, President
of the Servicer. Any and all service on the agent for service of the Servicer
shall be sent to California Thrift & Loan, 818 Oakpark Road, Covina, California
91724.
ARTICLE VII
THE RECEIVABLES
SECTION 7.01. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. Pursuant to
Article III, the Depositor has assigned to the Trust the benefit of, and its
rights respecting, the representations and warranties made to the Depositor in
the Purchase Agreement as to the Receivables on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. Such representations and warranties speak as of the execution and
delivery of the Purchase Agreement but shall survive the sale, transfer, and
assignment of the Receivables to the Trustee.
(a) The Depositor hereby represents and warrants to the Trustee that it
has entered into the Purchase Agreement with CTL, that CTL has made the
representations and warranties set forth therein, that such representations and
warranties run to and are for the benefit of the Depositor, and that pursuant to
Article III of this Agreement the Depositor has transferred and assigned to the
Trustee all rights of the Depositor to cause CTL under the Purchase Agreement to
repurchase Receivables in the event of a breach of such representations and
warranties.
(b) It is the intention of the Depositor that the transfer and assignment
herein contemplated, taken as a whole, constitute a sale of the Receivables from
the Depositor to the Trust and that the beneficial interest in and title to the
Receivables not be part of the receivership estate in the event of the
appointment of a receiver for the Depositor. No Receivable has been sold,
transferred, assigned, or pledged by the Depositor to any Person other than the
Trustee. Immediately prior to the transfer and assignment herein contemplated,
the Depositor had good and marketable title to each Receivable free and clear of
all liens, and, immediately upon the transfer thereof, the Trustee (for the
benefit of the Certificateholders and the Surety Bond Issuer) shall have good
and marketable title to each Receivable, free and clear of all liens and rights
of others, except for the rights of the Certificateholders and the Surety Bond
Issuer; and the transfer has been perfected under the UCC. On or prior to the
Closing Date, all filings (including, without limitation, UCC filings) necessary
in any jurisdiction to give the Trustee a first perfected ownership interest in
the Receivables shall have been made.
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SECTION 7.02. REPURCHASE UPON BREACH. The Depositor, CTL, the Servicer,
or the Trustee, as the case may be, shall inform the Surety Bond Issuer and the
other parties promptly, in writing, upon the discovery of any breach of the
representations and warranties contained in the Purchase Agreement. This
obligation shall not constitute an obligation on the part of the Trustee to
actively seek to discover any such breaches. Unless the breach shall have been
cured by the second Record Date following the discovery, CTL, pursuant to its
obligations under the Purchase Agreement, shall repurchase any Receivable
materially and adversely affected by the breach as of such Record Date (or, at
CTL's option, the first Record Date following the discovery). In consideration
of the purchase of the Receivable, CTL shall remit the Purchase Amount, in the
manner specified in Section 9.03. The sole remedy of the Trustee, the Trust, or
the Certificateholders with respect to a breach of the representations and
warranties referred to in Section 7.01 shall be to require CTL to repurchase
Receivables pursuant to the Purchase Agreement and this Section 7.02.
SECTION 7.03. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trustee, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, for the benefit of
the Trust and the Certificateholders, to act as the agent of the Trustee as
custodian of the following documents or instruments which are hereby
constructively delivered to the Trustee with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the Obligor.
(iii) The original certificate of title or such documents that the
Depositor or Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of CTL in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the Depositor
shall keep on file, in accordance with its customary procedures, relating to a
Receivable, an Obligor, or a Financed Vehicle.
SECTION 7.04. DUTIES OF SERVICER AS CUSTODIAN.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall
hold the Receivable Files on behalf of the Trustee for the use and benefit of
all present and future Certificateholders, and maintain such accurate and
complete accounts, records, and computer systems pertaining to each Receivable
File as shall enable the Trustee to comply with this Agreement. In performing
its duties as custodian the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to the
receivable files relating to all comparable motor vehicle receivables that the
Servicer services for itself. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivable Files held by it under this
Agreement, and of the related accounts, records, and computer systems, in such a
manner as shall enable the Trustee to verify the accuracy of the Servicer's
record keeping. The Servicer shall promptly report to the Trustee any failure
on its part to hold the Receivable Files and maintain its accounts, records, and
computer systems as herein provided and shall promptly take appropriate action
to
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remedy any such failure; provided, however, notwithstanding anything to the
contrary in Section 7.03 or this Section 7.04, the Servicer shall not be
required to possess the original of Receivables representing less than 2% of the
Original Pool Balance until 30 days following the Closing Date.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Trustee by prior
written notice. The Servicer shall make available to the Trustee or its duly
authorized representatives, attorneys, or auditors a list of locations of the
Receivable Files, the Receivable Files, and the related accounts, records, and
computer systems maintained by the Servicer at such times as the Trustee shall
instruct.
(c) Release of Documents. Upon instruction from the Trustee, the
Servicer shall release any document in a Receivable File to the Trustee, the
Trustee's agent, or the Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon as practicable.
SECTION 7.05. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible Officer of the
Trustee.
SECTION 7.06. CUSTODIAN'S INDEMNIFICATION. The Servicer, in its capacity
as custodian, shall indemnify the Trust and the Trustee (which shall include,
for purposes of this Section 7.06, its directors, officers, employees and
agents) for any and all liabilities, obligations, losses, compensatory damages,
payments, costs, or expenses of any kind whatsoever that may be imposed on,
incurred, or asserted against the Trust or the Trustee as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Servicer of the Receivable Files; provided, however, that the Servicer shall
not be liable for any portion of any such amount resulting from the willful
misfeasance, bad faith, or negligence of the Trustee. This indemnity shall
survive the termination of this Agreement and the resignation or removal of the
Trustee.
SECTION 7.07. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
7.07. If the Servicer shall resign in accordance with the provisions of this
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under Section 14.01, the appointment of the Servicer as
custodian may be terminated (i) by the Trustee with the consent of the Surety
Bond Issuer, which consent shall not be unreasonably withheld, (ii) by the
Holders of Certificates evidencing not less than 25% of the Certificate Balance
and 25% of the Notional Principal Amount of the Class I Certificates with the
consent of the Surety Bond Issuer, which consent shall not be unreasonably
withheld, or (iii) by the Surety Bond Issuer, without the consent of the Holders
of the Certificates (and, as to the rights of the Surety Bond Issuer under (i),
(ii) or (iii), so long as the Surety Bond Issuer is not in default of its
obligations under the Surety Bond). The Trustee may terminate the Servicer's
appointment as custodian with cause at any time upon written notification to the
Servicer. As soon as practicable after any termination of such appointment, the
Servicer shall deliver the
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Receivable Files to the Trustee or the Trustee's agent at such place or places
as the Trustee, with the consent of the Surety Bond Issuer, may reasonably
designate.
SECTION 7.08. LIABILITY OF THE HOLDER OF THE CLASS IC CERTIFICATE AND THE
CERTIFICATEHOLDERS.
(a) The holder of the Class IC Certificate shall be liable directly to
and shall indemnify any creditor of the Trust, including any injured party, for
all losses, claims, damages, liabilities and expenses of the Trust, to the
extent not paid out of the assets of the Trust, to the extent that the holder of
the IC Certificate would be liable if the Trust were a partnership under the
Uniform Limited Partnership Act in which the holder of the IC Certificate was a
general partner; provided, however, that the holder of the IC Certificate shall
not be liable for (i) any losses incurred by a Certificateholder or a
Certificate Owner in its capacity as an investor in the Certificates or (ii) any
losses, claims, damages, liabilities and expenses arising out of the imposition
by any taxing authority of any federal, state or local income or franchise taxes
or any other taxes imposed on or measured by gross or net income, gross or net
receipts, capital, net worth and similar items (including any interest,
penalties or additions with respect thereto) upon the Certificateholders, the
Certificate Owners, or the Trustee (including any liabilities, costs or expenses
with respect thereto) with respect to the Receivables not specifically
indemnified against or represented to hereunder. In addition, any third party
creditors of the Trust (other than in connection with the obligations described
in the preceding sentence for which the holder of the Class IC Certificate shall
not be liable) shall be deemed third party beneficiaries of this section
7.08(a). The obligations of the holder of the Class IC Certificate under this
Section 7.08(a) shall be evidenced by the Class IC Certificate.
(b) No Certificate Owner or Certificateholder, other than to the extent
set forth in Section 7.08(a) with respect to the Class IC Certificateholder,
shall have any personal liability for any liability or obligation of the Trust.
(c) The Depositor shall not, without the consent of the Surety Bond Issuer
(not to be unreasonably withheld), sell, assign, pledge or otherwise transfer,
in whole, or in part or in any series of related or unrelated transactions any
of its right, title or interest in or to the IC Certificate.
ARTICLE VIII
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 8.01. DUTIES OF SERVICER. The Servicer, for the benefit of the
Trust and the Certificateholders, shall manage, service, administer, and make
collections on the Receivables with reasonable care, using that degree of skill
and attention that the Servicer exercises with respect to all comparable motor
vehicle receivables that it services for itself. The Servicer's duties shall
include collection and posting of all payments, making Advances (in accordance
with Section 9.05), responding to inquiries of Obligors or of federal, state or
local governmental authorities with respect to the Receivables, investigating
delinquencies, sending payment coupons
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to Obligors, accounting for collections, and furnishing monthly and annual
statements to the Trustee with respect to distributions. The Servicer shall
follow its customary standards, policies, and procedures in performing its
duties as Servicer. Without limiting the generality of the foregoing, the
Servicer is authorized and empowered by the Trustee to execute and deliver, on
behalf of itself, the Trust, the Certificateholders, or the Trustee or any of
them, any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Vehicles securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable or a
Defaulted Receivable, the Trustee shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable to
the Servicer. The Trustee shall execute any documents prepared by the Servicer
and delivered to the Trustee for execution that are necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder.
SECTION 8.02. COLLECTION OF RECEIVABLE PAYMENTS. (a) The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
motor vehicle receivables that it services for itself. If payments are extended
in the ordinary course of the Servicer's collection procedures, and, as a
result, any Receivable would be outstanding at the Stated Final Distribution
Date, then the Servicer shall be obligated to purchase such Receivable pursuant
to Section 8.07 (unless such Receivable is otherwise being purchased pursuant to
Section 16.02) as of the last day of the Collection Period immediately preceding
the Stated Final Distribution Date. The Servicer may in its discretion waive any
late payment charge or any other fees that it is entitled to retain under
Section 8.08, or other fee (to the extent consistent with its credit and
collection policy on the Closing Date) that may be collected in the ordinary
course of servicing a Receivable.
Each payment on a simple interest Receivable shall be applied first to
collection fees, if any, second, to late charges, if any accrued on such
Receivable, third to the amount of interest accrued on such Receivable to the
date of receipt; fourth, to principal due on such Receivable; and last, to
reduce the remaining principal amount outstanding on such Receivable.
(b) All allocations of payments with respect to a simple-interest
Receivable to principal and interest and determinations of periodic charges and
the like shall be made using the simple interest method, based on either the
actual number of days elapsed and the actual number of days in the calendar year
or on the basis of a thirty-day month and a 360- day calendar year, as specified
in the related installment sales contract or installment loan and security
agreement. Each payment on a simple interest Receivable shall be applied first
to collection fees, if any; second, to late charges, if any, accrued on such
Receivable; third to the amount of interest accrued on such Receivable to the
date of receipt; fourth to principal due on such Receivable; and, last, to
reduce the remaining principal amount outstanding on such Receivable. Payments
made by or on behalf of an Obligor with respect to a Precomputed Receivable
shall be applied first to overdue Scheduled Payments (including reduction of
Outstanding Advances as provided in Section 9.04). Next, any excess shall be
applied to the Scheduled Payment and any remaining excess shall be added to the
Payahead Balance, and shall be applied to prepay the Precomputed Receivable, but
only if the sum of such excess and the previous Payahead Balance shall be
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sufficient to prepay the Receivable in full. Otherwise, any such remaining
excess payments shall constitute a Payahead and shall increase the Payahead
Balance.
SECTION 8.03. REALIZATION UPON RECEIVABLES. (a) On behalf of the Trust
the Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise convert the ownership of the Financed
Vehicle securing any Receivable as to which the Servicer shall have determined
that eventual payment in full is unlikely. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize upon any recourse to Dealers and selling the
Financed Vehicle at public or private sale. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds of the related Receivable by an amount equal to or greater
than the amount of such expenses.
(b) Unless otherwise stated in this Agreement, the Servicer shall either
purchase or liquidate each Financed Vehicle that has not previously been
liquidated and that secures, or previously secured, a Defaulted Receivable
either (i) by the end of the Collection Period preceding the Stated Final
Distribution Date or (ii) if earlier, by the end of the ninth Collection Period
following the Collection Period during which such Receivable became a Defaulted
Receivable. Any purchase of a Financed Vehicle by the Servicer shall be made at
a price equal to the fair market value of the Financed Vehicle as determined by
the Servicer in accordance with the Servicer's normal servicing standards.
SECTION 8.04. PHYSICAL DAMAGE INSURANCE. The Servicer, in accordance with
its customary servicing procedures, and underwriting standards shall require
that each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle.
SECTION 8.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES. The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are necessary to ensure that perfection of the security interest
created by each Receivable in the related Financed Vehicle has been obtained,
and to maintain such security interest. The Trustee hereby authorizes the
Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Trust in the event of the relocation of a Financed
Vehicle or for any other reason.
SECTION 8.06. COVENANTS OF SERVICER. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholders in the Receivables, nor shall the Servicer change the
amount of the Scheduled Payment under a Receivable or change the Amount Financed
under a Receivable or reduce the Note Rate of a Receivable (except if so ordered
by a bankruptcy court in a proceeding concerning the Obligor).
SECTION 8.07. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or the
Trustee shall inform the other party and the Surety Bond Issuer promptly, in
writing, upon the discovery
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of any breach by the Servicer of its obligations under Section 8.06. This
obligation shall not constitute an obligation on the part of the Trustee to
discover any such breaches. Unless the breach shall have been cured by the last
day of the Collection Period following the Collection Period during which such
breach was discovered, the Servicer shall purchase any Receivable materially and
adversely affected by such breach as of such day (or, at the Servicer's
election, as of the last day of the Collection Period during which such breach
was discovered). In consideration of the purchase of such Receivable, the
Servicer shall remit the Purchase Amount with respect to such Receivable in the
manner specified in Section 9.03. The sole remedy of the Trustee, the Trust, or
the Certificateholders with respect to a breach pursuant to Section 8.06 shall
be to require the Servicer to purchase Receivables pursuant to this Section
8.07, except as provided in Section 13.02.
SECTION 8.08. SERVICING FEE. The servicing fee for a Collection Period
shall equal the Monthly Servicing Fee (except that in the case of a successor
Servicer, the servicing fee shall equal such amount as is arranged in accordance
with Section 14.02). The Servicer shall be entitled to retain from payments of
interest on the Receivables collected during a Collection Period an amount equal
to the Monthly Servicing Fee due the Servicer in respect of such Collection
Period and need not deposit such amount in the Certificate Account. The Servicer
shall also be entitled to retain, and need not deposit in the Certificate
Account, all late fees, prepayment charges, other administrative fees or similar
charges allowed by applicable law with respect to Receivables, if any, collected
(from whatever source) on the Receivables. The Monthly Servicing Fee will be
paid only out of the funds of the Trust and not from the Trustee's own funds. So
long as California Thrift & Loan or an Affiliate is the Servicer, if the
Servicer fails to pay the Trustee's fees and expenses pursuant to Section 15.07,
the Trustee shall be entitled to receive such amount from the Monthly Servicing
Fee prior to payment thereof to the Servicer and the Servicer shall not retain
from collections that portion of the Monthly Servicing Fee equal to any fees of
the Trustee that are due and payable and any unpaid amount that the Servicer has
received notice is due the Trustee as reimbursement for expenses.
SECTION 8.09. SERVICER'S CERTIFICATE. On or before the Determination Date
following each Collection Period, the Servicer shall deliver to the Trustee and
the Surety Bond Issuer a Servicer's Certificate in substantially the form of
Exhibit 3 attached hereto containing all information necessary to make the
distributions pursuant to Section 9.04 for the Collection Period preceding the
date of such Servicer's Certificate and all information necessary for the
Trustee to send statements to Certificateholders pursuant to Section 9.07,
including (A) the amount of aggregate collections on the Receivables, (B) the
aggregate Purchase Amount of the Receivables repurchased by CTL and purchased by
the Servicer, (C) with respect to Precomputed Receivables the net deposit from
the Certificate Account to the Payahead Account or the net withdrawal from the
Payahead Account to the Certificate Account required for the Collection Period
in accordance with Section 9.09, and in the case of a net withdrawal, the
Monthly Interest and Monthly Principal reported on such Servicer's Certificate
shall reflect the portions of such withdrawal allocable to interest and
principal, respectively, in accordance with this Agreement, (D) current and
cumulative information respecting (i) delinquent Receivables that are 30, 60 and
90 days past due, and (ii) charge-offs, the number of repossessions of Financed
Vehicles during the preceding Collection Period, number of unliquidated
repossessed Financed Vehicles, gross and net losses on the Receivables, and
recoveries on charged off Receivables; and (E) each other item listed in Section
9.04 hereof reasonably requested by the Rating Agency or the Surety Bond Issuer
in
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order to monitor the performance of the Receivables. Receivables purchased by
CTL as of the last day of such Collection Period shall be identified by the CTL
account number with respect to such Receivable (as specified in Schedule A to
this Agreement).
SECTION 8.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. (a)
The Servicer shall deliver to the Trustee and the Surety Bond Issuer, on or
before April 30 of each year, beginning on the first April 30 that is at least
six months after the Closing Date, an Officers' Certificate, dated as of
December 31 of the preceding year, stating that (i) a review of the activities
of the Servicer during the preceding 12-month period (or in the case of the
initial Officer's Certificate, the period from the Closing Date to and including
the date of such Officer's Certificate) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of such
certificate and the Report referred to in Section 8.11 may be obtained by any
Certificateholder at its own expense by a request in writing to the Trustee
addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Trustee and
the Surety Bond Issuer, promptly after having obtained knowledge thereof, but in
no event later than 5 Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 14.01. The Depositor or the
Servicer shall deliver to a Responsible Officer of the Trustee and the Surety
Bond Issuer, promptly after having obtained knowledge thereof, but in no event
later than 5 Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under clause (ii) of Section 14.01.
SECTION 8.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT. The
Servicer shall cause a firm of independent certified public accountants, who may
also render other services to the Servicer, to deliver to the Trustee and the
Surety Bond Issuer on or before March 31 of each year concerning the 12-month
period ended December 31 of the preceding year (or shorter period since the date
of this Agreement), beginning on the first December 31 following the first March
31 after the Closing Date, a report addressed to the Board of Directors of the
Servicer and to the Trustee, to the effect that such firm has reviewed the
servicing of the Receivables by the Servicer and that such review (1) included
tests relating to new or used automobile, motorcycle, van and light truck loans
serviced for others in accordance with the requirements of the Uniform Single
Audit Program for Mortgage Bankers, to the extent the procedures in such program
are applicable to the servicing obligations set forth in the Agreement, and (2)
except as described in the report, disclosed no exceptions or errors in the
records relating to automobile, van or light truck loans serviced for others
that, in the firm's opinion, paragraph four of such program requires such firm
to report.
The report will also indicate that the firm is independent of the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
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SECTION 8.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to the Certificateholders access to the
Receivables Files in such cases where the Certificateholder shall be required by
applicable statutes or regulations to review such documentation. Access shall be
afforded without charge, but only upon reasonable request and during the normal
business hours at the respective offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors, and the
failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 8.12.
SECTION 8.13. SERVICER EXPENSES. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of its agents, independent accountants, taxes
imposed on the Servicer, and expenses incurred in connection with distributions
and reports to Certificateholders.
SECTION 8.14. REPORTS TO CERTIFICATEHOLDERS. The Trustee shall provide to
any Certificateholder who so requests in writing (addressed to the Corporate
Trust Office) a copy of any certificate described in Section 8.09, or the annual
statement described in Section 8.10, or the annual report described in Section
8.11. The Trustee may require the Certificateholder to pay a reasonable sum to
cover the cost of the Trustee's complying with such request.
ARTICLE IX
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
SECTION 9.01. CERTIFICATE ACCOUNT. The Servicer, on behalf of the Trust,
shall establish the Certificate Account with the Bank or an Eligible Bank as a
segregated trust account in the name of the Trust for the benefit of
Certificateholders with the Corporate Trust Office of the Trustee. The Servicer
shall direct the Trustee to invest the amounts in the Certificate Account in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Distribution Date and to hold such Eligible Investments to
maturity. The Trustee (or its custodian) shall (i) maintain possession of any
negotiable instruments or securities evidencing Eligible Investments until the
time of sale or maturity and each certificated security or negotiable instrument
evidencing an Eligible Investment shall be endorsed in blank or to the Trustee
or registered in the name of the Trustee and (ii) cause any Eligible Investment
represented by an uncertificated security to be registered in the name of the
Trustee.
SECTION 9.02. COLLECTIONS. The Servicer shall remit to the Certificate
Account all payments by or on behalf of the Obligors on the Receivables and all
Liquidation Proceeds, both as collected during the Collection Period net of
Monthly Servicing Fees and administrative fees allowed to be retained by the
Servicer pursuant to Section 8.08 and net of charge backs (attributable to
errors in posting, returned checks, or rights of offset for amounts that should
not have been paid or that must be refunded as the result of a successful claim
or defense under bankruptcy or similar laws) not later than the second Business
Day following the Business Day on which such amounts are received by the
Servicer. Notwithstanding the foregoing, for so long as (a) CTL or an Affiliate
remains the Servicer, (b) no Event of Default shall have occurred and
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be continuing and (c)(1) CTL (or an Affiliate succeeding CTL as Servicer)
maintains a short-term rating of at least A-1 by Standard & Poor's and P-l by
Moody's (and for five Business Days following a reduction in either such rating)
or (2) prior to ceasing daily remittances, the Rating Agency Condition shall
have been satisfied (and any conditions or limitations imposed by the Rating
Agencies in connection therewith are complied with) and the prior written
consent of the Surety Bond Issuer (not to be unreasonably withheld) shall have
been obtained, the Servicer may remit all such payments and Liquidation Proceeds
with respect to any Collection Period to the Certificate Account on a less
frequent basis, but in no event later than the Determination Date immediately
preceding each Distribution Date. The Servicer shall remit any Advances with
respect to a Collection Period to the Certificate Account on or before the
Determination Date.
On each Determination Date, the Servicer shall determine (a) the amount of
payments on all Receivables and all Liquidation Proceeds received during such
Collection Period, the amount of Advances for such Collection Period, and the
Purchase Amount for all Receivables purchased or repurchased with respect to
such Collection Period which have been deposited in the Certificate Account (net
of amounts required to be paid pursuant to Section 9.04(d), excluding investment
income on all such amounts, and not including amounts required to be paid
pursuant to Sections 7.02, 8.07, and 9.05 but not so paid) after giving effect
to the net transfer from the Certificate Account to the Payahead Account or from
the Payahead Account to the Certificate Account as provided in Section 9.09,
(the "Available Funds"), and (b) the amount of funds necessary to make the
distributions required pursuant to Sections 9.04(a) (i) through (vii),
inclusive, on the next Distribution Date. The Servicer shall by a Servicer's
Certificate notify the Trustee of such amounts by telecopy to the Corporate
Trust Office at the number specified in the Agreement (or such other number as
the Trustee may from time to time provide), followed promptly by mailing such
notice to the Trustee at the Corporate Trust Office and to the Surety Bond
Issuer. On each Distribution Date, the Trustee, or the Servicer on its behalf,
shall effect the net transfer between the Certificate Account and the Payahead
Account as required by Section 9.09 for such Distribution Date.
On any Distribution Date on which there are not sufficient Available Funds
to make the distributions required pursuant to Sections 9.04(a)(i) through (iii)
the Trustee, or the Servicer on its behalf, shall withdraw from the Spread
Account, to the extent of the Available Spread Amount, an amount equal to such
deficiency and promptly deposit such amount in the Certificate Account. If such
deficiency exceeds the Available Spread Amount, the Servicer shall
simultaneously and in the same manner also notify the Trustee and the Surety
Bond Issuer of the amount of such excess deficiency. The Trustee shall promptly
(and in any event not later than 1:00 p.m. New York City time on the Business
Day preceding the Distribution Date) deliver a Notice for Payment as defined in
the Surety Bond (appropriately completed) to the Surety Bond Issuer with respect
to the Surety Bond. The Surety Bond Issuer is required pursuant to Section 10.03
and the terms of the Surety Bond to pay the amount of such excess deficiency of
Class I Monthly Interest, Class A Monthly Interest and Monthly Principal, up to
the Surety Bond Amount.
The Trustee shall deposit in the Certificate Account any funds received by
the Trustee in respect of funds drawn under the Surety Bond from the Surety Bond
Issuer.
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If the Available Funds for a Distribution Date are insufficient to pay
current and past due Surety Bond Fees, or any amounts owing to the Surety Bond
Issuer pursuant to the Insurance Agreement including, without limitation,
reimbursements, indemnities, fees and expenses, plus accrued interest thereon,
to the Surety Bond Issuer, the Servicer shall notify the Trustee of such
deficiency, and the Available Spread Amount, if any, then on deposit in the
Spread Account (after giving effect to any withdrawal to satisfy a deficiency in
Monthly Interest or Monthly Principal) shall be available to cover such
deficiency.
SECTION 9.03. PURCHASE AMOUNTS. Not later than the Determination Date,
the CTL or the Servicer, as the case may be, shall remit to the Certificate
Account the aggregate Purchase Amount for such Collection Period pursuant to
Sections 7.02 and 8.07.
SECTION 9.04. DISTRIBUTIONS TO PARTIES.
(a) On each Distribution Date, the Trustee shall apply or cause to be
applied the Available Funds in the Certificate Account for the prior Collection
Period, (plus any amounts withdrawn from the Spread Account or drawn on the
Surety Bond pursuant to Section 9.02), to make the following distributions in
the listed order of priority:
(i) The aggregate amount of (y) Outstanding Advances on all Receivables
that became Defaulted Receivables during the prior Collection Period, and (z)
Outstanding Advances which the Servicer determines to be unrecoverable pursuant
to Section 9.05, to the Servicer;
(ii) To the extent not previously distributed to the Servicer, the
Monthly Servicing Fee, including any overdue Monthly Servicing Fee, to the
Servicer;
(iii) Pro rata, (in accordance with Section 9.04(b)(i)), (y) the Monthly
Principal (in accordance with the Principal Distribution Sequence) and Class A
Monthly Interest, including any overdue Monthly Principal and Class A Monthly
Interest, to the Class A Certificateholders, and (z) Class I Monthly Interest,
including any overdue Class I Monthly Interest, to the Class I
Certificateholders;
(iv) The Surety Bond Fee, including any overdue Surety Bond Fee, plus
accrued interest thereon at the rate provided in the Insurance Agreement, to the
Surety Bond Issuer;
(v) The amount of Recoveries of Advances, to the Servicer (to the
extent not applied pursuant to (i) above on or prior to such Distribution Date);
(vi) The aggregate amount of all unreimbursed draws made on the Surety
Bond in respect of Class A Monthly Interest, Class I Monthly Interest and
Monthly Principal and any other amounts payable to the Surety Bond Issuer under
the Insurance Agreement, plus accrued interest thereon at the rate provided in
the Insurance Agreement, to the Surety Bond Issuer;
(vii) The balance for deposit in the Spread Account. The rights of the
Class IC Certificateholder to receive distributions from the Spread Account are
described in Sections 10.02(e) and (f).
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(b) (i) If on any Distribution Date there are not sufficient Available
Funds (together with amounts withdrawn from the Spread Account and/or the Surety
Bond) to pay the distribution required by Section 9.04(a)(iii), the Available
Funds distributable under Section 9.04(a)(iii) shall be distributed
proportionately on the basis of the ratio of the required distribution due each
of the Class A and Class I Certificateholders, respectively, to the sum of the
distributions required by Section 9.04(a)(iii) to the Class A Certificateholders
and the Class I Certificateholders. The amount so distributed to the Class A
Certificateholders hereunder shall be allocated first to Class A Monthly
Interest, and second to Monthly Principal and shall be distributed pro rata
among the Class A Certificateholders.
(ii) Notwithstanding the foregoing, the Class I Certificateholders will
not be entitled to any distributions after the Notional Principal Amount of the
Class I Certificates has been reduced to zero.
(iii) Notwithstanding the foregoing, if either (A) the Class IC
Certificateholder exercises its option to cause a disposition of the remaining
corpus of the Trust on any Distribution Date pursuant to Section 16.02, or (B)
the Receivables are liquidated in any Collection Period after the occurrence of
an Insolvency Event with respect to the Class IC Certificateholder which causes
a termination of the Trust pursuant to Section 16.03, the following shall apply:
(a) the Available Funds and amounts withdrawn from the Spread Account or drawn
on the Surety Bond in respect only of Monthly Interest and Monthly Principal
with respect to the immediately preceding Distribution Date as determined in
accordance with Section 9.02 and 9.04 shall be distributed to Certificateholders
on such Distribution Date; (b) the Surety Bond will not be available to pay any
shortfall of Monthly Interest or Monthly Principal after a disposition of the
Receivables pursuant to Section 16.02 or after liquidation of the trust assets
pursuant to Section 16.03; and (c) the Optional Disposition Price (in the case
of clause (A) of this paragraph) and the proceeds of any liquidation of
Receivables (in the case of clause (B) of this paragraph) and any remaining
assets of the Trust (including the remaining Available Spread Amount) shall be
distributed to Certificateholders on such Distribution Date based on their
Adjusted Capital Accounts (as defined in Section 6(c)(iv) of Annex A attached
hereto) in accordance with Section 6(b)(iii) and Section 9 of Annex A attached
hereto.
(iv) In making such distributions the Trustee shall be entitled to rely
upon (without investigation, confirmation or recalculation) all information and
calculations contained in the Servicer's Certificate delivered to the Trustee
pursuant to Section 8.09 hereof.
(v) All monthly distributions shall be made by wire transfer of
immediately available funds to each Certificateholder of record on the preceding
Record Date. Notwithstanding the foregoing, the final payment on each
Certificate shall be made only against presentation and surrender of the
Certificate at the office or agency then maintained by the Trustee in accordance
with Section 11.07.
(c) On each Distribution Date, the Trustee shall remit to the Servicer
all investment income earned through the last day of the preceding Collection
Period on amounts held from time to time in the Certificate Account.
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(d) On each Distribution Date, if the Servicer has reported to the
Trustee in the Servicer's Certificate for any Collection Period that an Obligor
or an Obligor's representative or successor successfully shall have asserted a
claim or defense under bankruptcy law or similar laws for the protection of
creditors generally (including the avoidance of a preferential transfer under
bankruptcy law) that results in a liability of the Trust to such Obligor for
monies previously collected and remitted to the Trustee and not otherwise netted
against collections pursuant to Section 9.02, the Trustee shall make all
payments in respect of such claims or defenses out of the amounts on deposit in
the Certificate Account with respect to such Collection Period before making the
distributions required by paragraph (a) of this Section 9.04.
(e) If the Servicer has failed to provide the Trustee with the notice
required pursuant to Section 9.02, the Trustee may calculate Monthly Interest
and Monthly Principal and apply funds, if any, in the Certificate Account as of
the last day of the Collection Period, to make a distribution of Monthly
Interest and Monthly Principal to the Certificateholders.
SECTION 9.05. ADVANCES. (a) As of the last day of the initial Collection
Period, the Servicer shall advance funds equal to the excess, if any, of Monthly
Interest due in respect of the initial Collection Period, over the Collected
Interest for such Collection Period; and (b) as of the last day of each
Collection Period, the Servicer shall advance funds in the amount of the
Interest Advance Amount (or such other amount as the Servicer shall reasonably
determine to cover an Interest Shortfall) with respect to each Receivable that
is delinquent for more than 30 days, in each such case, to the extent that the
Servicer, in its sole discretion, determines that the Advance will be
recoverable from payments by or on behalf of the Obligor, the Purchase Amount,
or Liquidation Proceeds. With respect to each Receivable, the Advance paid
pursuant to this Section 9.05 shall increase Outstanding Advances. Outstanding
Advances shall be reduced by subsequent payments by or on behalf of the Obligor,
collections of Liquidation Proceeds, or payments of the Purchase Amount. The
Servicer shall remit any Advances with respect to a Collection Period to the
Certificate Account by the related Determination Date.
If the Servicer shall determine that an Outstanding Advance with respect to
any Receivable shall not be recoverable, the Servicer shall be reimbursed from
any collections made on other Receivables in the Trust, and Outstanding Advances
with respect to such Receivable shall be reduced accordingly.
SECTION 9.06. NET DEPOSITS. For so long as CTL or an Affiliate is the
Servicer, CTL (or an Affiliate succeeding CTL as Servicer) (in whatever
capacity) may make the remittances with respect to any Distribution Date
pursuant to Section 9.02 above, net of amounts to be distributed to itself or
its delegee under Section 13.06 (also in whatever capacity) pursuant to Section
9.04, if it determines pursuant to Section 9.02 that there is no deficiency in
Available Funds for such Distribution Date. Nonetheless, the Servicer shall
account for all of the above described amounts as if such amounts were deposited
and distributed.
SECTION 9.07. STATEMENTS TO CERTIFICATEHOLDERS. On each Distribution
Date, the Trustee shall include with each distribution to the Certificateholders
and shall mail to the Rating Agency a statement, based on information in the
Servicer's Certificate furnished to the Trustee by the Servicer pursuant to
Section 8.09, setting forth for the Collection Period relating to such
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Distribution Date the following information (which in the case of items (i)
through (v), inclusive, shall be based on a Certificate in a principal amount of
$1,000):
(i) the amount of the aggregate distribution that constitutes Class A
Monthly Interest (including the amount thereof which constitutes Class A-1
Monthly Interest and Class A-2 Monthly Interest);
(ii) the amount of the aggregate distribution that constitutes Class I
Monthly Interest and the Notional Principal Amount (after giving effect to any
application of Monthly Principal required to be made on such date) on which
Class I Monthly Interest will be calculated on that next succeeding Distribution
Date;
(iii) the amount of the aggregate distribution that constitutes Monthly
Principal (including the amount thereof which constitutes Class A-1 Monthly
Principal and Class A-2 Monthly Principal);
(iv) the Certificate Balance (after giving effect to any distribution
of Monthly Principal made on such Distribution Date) and the Class A-1
Certificate Balance, and the Class A-2 Certificate Balance comprising the
Certificate Balance on which Class A-1 Monthly Interest and Class A-2 Monthly
Interest will be calculated on the next succeeding Distribution Date;
(v) the Certificate Factor (after giving effect to any distribution of
Monthly Principal made on such Distribution Date) and the Class A-1 Certificate
Factor and the Class A-2 Certificate Factor;
(vi) the amount on deposit in the Spread Account after giving effect to
distributions made on such Distribution Date;
(vii) the Monthly Servicing Fee for such Distribution Date.
(viii) the Surety Bond Fee for such Distribution Date;
(ix) the Surety Bond Amount (after giving effect to any draw on the
Surety Bond or the Spread Account on such Distribution Date).
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Agreement, the Trustee shall
mail, to each Person who at any time during such calendar year shall have been a
Certificateholder, a statement containing the annual sum of the respective
amounts determined in clauses (i) through (v) for such calendar year, as
applicable to such Person, or, in the event such Person shall have been a
Certificateholder during a portion of such calendar year, for the applicable
portion of such year, unless substantially comparable information has been
provided to such Certificateholder, for the purposes of such Certificateholder's
preparation of federal income tax returns pursuant to Section 5(b) of Annex A
hereto. To the extent required by applicable law, the Servicer shall prepare or
cause to be prepared and the Class IC Certificateholder or the Trustee shall
sign the tax returns of the Trust and shall file such returns and such of the
above information with the Internal Revenue Service.
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SECTION 9.08. INTENTIONALLY BLANK.
SECTION 9.09. PAYAHEAD ACCOUNT. The Servicer shall establish the Payahead
Account in the name of the Trustee on behalf of the Obligors and the
Certificateholders as their interests may appear. The Payahead Account shall be
a segregated interest bearing trust account established with the Trustee, the
Bank or an Eligible Bank. Amounts in the Payahead Account shall be invested in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Distribution Date. The Payahead Account is not property of the
Trust. Investment income or interest earned on the Payahead Account shall be
remitted to the Servicer at least monthly, or as frequently as the Servicer may
reasonably request. On or prior to each Distribution Date, the Servicer shall
transfer or the Trustee (as instructed in the Servicer's Certificate) shall
transfer (a) from the Certificate Account to the Payahead Account, in
immediately available funds, all Payaheads received by the Servicer and
previously deposited to the Certificate Account during the Collection Period as
described in Section 8.02(b); and (b) from the Payahead Account to the
Certificate Account, in immediately available funds, the aggregate amount of
previously deposited Payaheads to be applied to Scheduled Payments on
Precomputed Receivables for the related Collection Period or prepayments for the
related Collection Period, pursuant to Section 8.02(b), each in the amounts set
forth in the Servicer's Certificate delivered on the related Determination Date.
A single, net transfer between the Payahead Account and the Certificate Account
may be made. Any amount deposited in the Payahead Account shall not constitute
Available Funds under Section 9.02. Any amount deposited to the Certificate
Account from the Payahead Account pursuant to Section 9.09(b) shall be included
in Available Funds under Section 9.02.
SECTION 9.10. CALCULATION OF NOTIONAL PRINCIPAL AMOUNT.
(a) Solely for the purpose of calculating the Class I Monthly Interest,
the Certificate Balance will be divided into, and equal the sum of, two
principal components: (i) the "PAC Component" and (ii) the "Companion
Component." The PAC Component shall initially equal the Original Notional
Principal Amount.
(b) On each Distribution Date, solely for the purposes of calculating the
Notional Principal Amount, the Monthly Principal will be allocated (i) first, to
the PAC Component up to the amount necessary to reduce the PAC Component to its
Planned Notional Principal Amount for such Distribution Date, (ii) second, to
the Companion Component until the balance thereof is reduced to zero, and (iii)
third, to the PAC Component without regard to the Planned Notional Principal
Amount for such Distribution Date.
ARTICLE X
CREDIT ENHANCEMENT
SECTION 10.01. SUBORDINATION. The rights of the Class IC
Certificateholder shall be subordinated to the rights of the Class A and Class I
Certificateholders to the extent described in Section 9.04.
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SECTION 10.02. SPREAD ACCOUNT.
(a) On or prior to the Closing Date, the Trustee shall establish and
maintain a segregated trust account in the corporate trust department of either
the Bank or of an Eligible Bank referred to herein as the "Spread Account." The
Spread Account shall be maintained in the name of the Trustee. The Spread
Account and any amounts on deposit therein shall be part of the Trust and shall
be for the benefit of the Certificateholders and the Surety Bond Issuer, as
their respective interests may appear herein; provided, however, that the
interest of the Surety Bond Issuer and the Class IC Certificateholder shall be
subordinated to the interests of the other Certificateholders as provided
herein.
(b) Funds on deposit in the Spread Account shall be invested in Eligible
Investments in the same manner and subject to the same requirements and
limitations as the investment of funds in the Certificate Account pursuant to
Section 9.01, including the limitation that Eligible Investments mature not
later than the Business Day prior to the next succeeding Distribution Date;
provided, however, no such limitation on the maturity of Eligible Investments
shall apply if the Trust obtains the benefit of a liquidity facility or similar
arrangement from a commercial bank with an Approved Rating or other provider
approved in advance in writing by the Surety Bond Issuer, with respect to funds
in the Spread Account (a "Spread Account Facility") and Standard & Poor's and
Moody's confirm in writing that the rating of the Certificates will not be
lowered or withdrawn as a result of eliminating or modifying the limitation on
the maturity of Permitted Investments in respect of the Spread Account. For
purposes of determining the availability of funds or the balance in the Spread
Account for any reason under this Agreement, investment earnings on such funds
shall be deemed to be available or on deposit only to the extent that the
aggregate of such amounts, plus the funds on deposit in the Spread Account, do
not exceed the Required Spread Amount.
(c) If on any Distribution Date the amount of Available Funds is
insufficient to make the distributions required by Section 9.04(a) (iii) the
Trustee shall withdraw or cause to be withdrawn from the Spread Account and
deposited in the Certificate Account the lesser of (i) the entire Available
Spread Amount and (ii) the amount necessary to make up such deficiency to pay
any deficiency in Class I Monthly Interest, Class A Monthly Interest and Monthly
Principal (prior to making any draw on the Surety Bond), all as provided in
Sections 9.02 and 9.04 and the Surety Bond.
(d) On each Distribution Date, all distributions made pursuant to Section
9.04(a) (vii) shall be deposited into the Spread Account.
(e) If the amount on deposit in the Spread Account, after giving effect to
the distributions set forth in Section 9.04 (including, without limitation,
payment of amounts due and owing to the Surety Bond Issuer) is greater than the
Required Spread Amount on such Distribution Date, the amount of such excess
shall be distributed to the Class IC Certificateholder. Amounts properly
distributed to the Class IC Certificateholder pursuant to this Section, either
directly without deposit in the Spread Account or from excess amounts in the
Spread Account shall be deemed released from the Trust and from any security
interest of the Trustee or the Surety Bond Issuer.
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(f) Upon the termination of this Agreement, amounts remaining in the
Spread Account, after payment of any amounts due and owing to the Class A and
Class I Certificates and to the Surety Bond Issuer, shall be distributed to the
Class IC Certificateholder and such amounts shall not be subject to any claims
or rights of the other Certificateholders to the extent that such action is not
inconsistent with Section 6(b)(ii) and Section 9 of Annex A hereto.
SECTION 10.03. SURETY BOND. The Surety Bond Issuer is required under the
terms of the Surety Bond to pay Class I Monthly Interest, Class A Monthly
Interest and Monthly Principal up to the Surety Bond Amount in the event of any
deficiency of Available Funds to pay such amounts (after payment of the Monthly
Servicing Fee) not covered by amounts withdrawn from the Spread Account, as
determined pursuant to Section 9.02 to the Trustee for credit to the Certificate
Account on the later of (a) 11:00 a.m., New York City time, on the Business Day
immediately preceding a Distribution Date and (b) 11:00 a.m., New York City
time, on the Business Day immediately succeeding presentation to the Surety Bond
Issuer of the Trustee's demand therefor. Any demand for payment pursuant to
Section 9.02 to the Surety Bond Issuer received by the Surety Bond Issuer on a
Business Day after 1:00 p.m., New York City time, or on any day that is not a
Business Day, will be deemed to be received by the Surety Bond Issuer at 9:00
a.m., New York City time, on the next Business Day. Notwithstanding the
forgoing, on a Dissolution Distribution Date, the obligations of the Surety Bond
Issuer under the Surety Bond shall be limited in accordance with Section
9.04(b)(iii).
ARTICLE XI
THE CERTIFICATES
SECTION 11.01. THE CERTIFICATES. The Class A and Class I Certificates
shall be issued in denominations of $1,000 ($1,000 Notional Principal Amount in
the case of the Class I Certificates) and integral multiples thereof; provided,
however, that one Class A-1 Certificate, one Class A-2 Certificate and one Class
A-3 Certificate may be issued in a denomination that represents any residual
amount of such class and that such residual amount Certificates shall be
retained by the Depositor. The Class IC Certificate shall be issued in the form
of one or more Certificates and shall initially be issued to the Depositor. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Responsible Officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be valid and binding obligations of the Trust, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
SECTION 11.02. AUTHENTICATION OF CERTIFICATES. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its chairman
of the board, its president, or any vice president, without further corporate
action by the Depositor, in authorized denominations, pursuant to this
Agreement. No Certificate shall entitle its holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a
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certificate of authentication, substantially as set forth in the forms of
Certificate attached as Exhibits to this Agreement, executed by a Responsible
Officer of the Trustee by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
SECTION 11.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 11.07, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, authenticate, and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Trustee, provided, however, that registration of
transfer of the Class IC Certificate may not be effected unless (A) the Trustee
receives an Opinion of Counsel, satisfactory to it, to the effect that (i) such
transfer may be made in reliance upon an exemption from the registration
requirements of the Securities Act of 1933, as amended, and (ii) such transfer
will not adversely affect the tax treatment of the Trust or the Certificates;
and (B) the Surety Bond Issuer has consented to such transfer. At the option of
a Holder, Certificates may be exchanged for other Certificates of authorized
denominations of a like aggregate amount upon surrender of the Certificates to
be exchanged at the Corporate Trust Office.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder or his attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer and exchange shall be cancelled and subsequently
destroyed by the Trustee.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 11.04. MUTILATED, DESTROYED, LOST, OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar or the Trustee such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a bona fide purchaser, the
Trustee on behalf of the Trust shall execute and the Trustee shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost,
or stolen Certificate, a new Certificate of like tenor and denomination. In
connection with the issuance of any new Certificate under this Section 11.04,
the Trustee and the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection
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therewith. Any duplicate Certificate issued pursuant to this Section 11.04
shall constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen, or destroyed Certificate shall be found
at any time.
SECTION 11.05. PERSONS DEEMED OWNERS. Prior to registration of transfer,
the Trustee or the Certificate Registrar may treat the Person in whose name any
Certificate shall be registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 9.04 and for all other purposes
whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound
by any notice to the contrary.
SECTION 11.06. ACCESS TO AGREEMENT AND LIST OF CERTIFICATEHOLDERS' NAMES
AND ADDRESSES. The Trustee shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Trustee of a request therefor from
the Servicer in writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Certificateholders, or one or more Holders
of Certificates aggregating not less than 25% of the Certificate Balance or not
less than 25% of the Notional Principal Amount of the Class I Certificates,
apply in writing to the Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application shall be
accompanied by a copy of the communication that such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such applicants access during normal business hours to
the current list of Certificateholders. The Trustee shall also allow any
Certificateholder, upon request, to examine a copy of this Agreement at its
Corporate Trust Office during regular business hours. Each Holder, by receiving
and holding a Certificate, shall be deemed to have agreed to hold neither the
Servicer nor the Trustee accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 11.07. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and this Agreement may be served. The Trustee
initially designates the Corporate Trust Office as specified in this Agreement
as its office for such purposes. The Trustee shall give prompt written notice to
the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 11.08. BOOK-ENTRY CERTIFICATES. The Class A Certificates and
Class I Certificates, upon original issuance, shall be issued in the form of one
or more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor, except for the residual amount Certificates
described in Section 11.01. The Class A Certificates and Class I Certificates
shall initially be registered on the Certificate Register in the name of CEDE &
Co., the nominee of the Clearing Agency, and no Certificate Owner will receive a
definitive Certificate representing such Certificate Owner's interest in the
Certificates, except as provided in Section 11.10. Unless and until definitive,
fully registered Certificates ("Definitive Certificates") have been issued to
Certificate Owners pursuant to Section 11.10:
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(i) the provisions of this Section 11.08 shall be in full force and
effect;
(ii) the Depositor, the Servicer and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes (including
the making of distributions on the Certificates) as the authorized
representatives of the Certificate Owners (requests and directions from, and
votes of, such representatives shall not be considered inconsistent if they are
made with respect to different Certificate Owners);
(iii) to the extent that the provisions of this Section 11.08 conflict
with any other provisions of this Agreement, the provisions of this Section
11.08 shall control; and
(iv) the rights of Certificate Owners shall be exercised only through the
Clearing Agency and the Clearing Agency Participants and shall be limited to
those established by law and agreements between such Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, unless and until Definitive Certificates are issued
pursuant to Section 11.10, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Certificates to such Clearing
Agency Participants.
SECTION 11.09. NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Class A Certificateholders or Class I Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 11.10, the Trustee
shall give all such notices and communications specified herein to be given to
such Certificateholders to the Clearing Agency.
SECTION 11.10. DEFINITIVE CERTIFICATES. The Class IC Certificate and any
residual amount Certificates described in Section 11.01 will be issued initially
in fully registered, certificated form. If (i)(A) the Depositor advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement, and (B)
the Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Certificate Balance advise the
Trustee and the Clearing Agency in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Certificate Owners, the Trustee shall notify the Clearing Agency of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates. Neither the Depositor nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed on or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
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SECTION 11.11. THE TAX PARTNERSHIP AGREEMENT. Each of the Class A and
Class I Certificateholders and the Class IC Certificateholder agrees to be bound
by the terms of the Tax Partnership Agreement attached hereto as Annex A.
ARTICLE XII
THE DEPOSITOR
SECTION 12.01. REPRESENTATIONS AND UNDERTAKINGS OF DEPOSITOR. (a) The
Depositor makes the following representations on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Depositor shall have been duly
organized and shall be validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire and own the
Receivables.
(ii) Due Qualification. The Depositor shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications, except where the failure to so qualify would not materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of this Agreement or the Certificates.
(iii) Power and Authority. The Depositor shall have the power and
authority to execute and deliver this Agreement and to carry out its terms, the
Depositor shall have full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Trustee as part of the Trust and
shall have duly authorized such sale and assignment to the Trustee by all
necessary corporate action; and the execution, delivery, and performance of the
Agreement shall have been duly authorized by the Depositor by all necessary
corporate action.
(iv) Valid Sale; Binding Obligations. This Agreement shall evidence a
valid sale, transfer, and assignment of the Receivables, enforceable against
creditors of and purchasers from the Depositor; and shall evidence a legal,
valid, and binding obligation of the Depositor enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions contemplated by
the Agreement and the fulfillment of the terms hereof shall not conflict with,
result in any breach
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of any of the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or by-laws of
the Depositor, or any indenture, agreement, or other instrument to which the
Depositor is a party or by which it shall be bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, or other instrument (other than this Agreement);
nor violate any law or, to the best of the Depositor's knowledge, any order,
rule, or regulation applicable to the Depositor of any court or of any federal
or State regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(vi) No Proceedings. There are no proceedings or investigations pending,
or, to the Depositor's best knowledge, threatened, before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (A) asserting the invalidity
of this Agreement or the Certificates, (B) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions contemplated by
this Agreement, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Depositor of its obligations under,
or the validity or enforceability of, this Agreement or the Certificates, or (D)
which might adversely affect the federal income tax attributes of the
Certificates.
(b) The Depositor further covenants that, prior to termination of the
Trust:
(i) It will not engage at any time in any business or business activity
other than such activities expressly set forth in its Certificate of
Incorporation delivered to the Surety Bond Issuer on or prior to the Closing
Date, and will not amend its Certificate of Incorporation without the prior
written consent of the Surety Bond Issuer.
(ii) It will not:
(A) Fail to do all things necessary to maintain its corporate existence
separate and apart from BVCC and any other Person, including, without
limitation, holding regular meetings of its stockholders and board of directors
and maintaining appropriate corporate books and records (including a current
minute book);
(B) Suffer any limitation on the authority of its own directors and
officers to conduct its business and affairs in accordance with their
independent business judgment or authorize or suffer any Person other than its
own officers and directors to customarily delegated to others under powers of
attorney) for which a corporation's own Officers and directors would customarily
be responsible;
(C) Fail to (I) maintain or cause to be maintained by an agent of the
Depositor under the Depositor's control physical possession of all its books and
records, (II) maintain capitalization adequate for the conduct of its business,
(III) account for and manage all its liabilities separately from those of any
other Person, including payment by it of all payroll, administrative expenses
and taxes, if any, from its own assets, (IV) segregate and identify separately
all of its assets from those of any other Person, (V) to the extent any such
payments
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are made, pay its employees, officers and agents for services performed for the
Depositor or (VI) maintain a separate telephone number from those of BVCC or any
other affiliate thereof; or
(D) Except as may be provided in this Agreement, or a similar agreement
relating to other securitizations in which the Depositor has similar rights
and/or obligations, commingle its funds with those of BVCC or any affiliate
thereof or use its funds for other than the Depositor's uses.
SECTION 12.02. LIABILITY OF DEPOSITOR; INDEMNITIES. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement.
(i) The Depositor shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents and the Trust from and
against any taxes that may at any time be asserted against the Trustee, its
officers, directors, employees or agents or the Trust with respect to, and as of
the date of, the sale of the Receivables to the Trustee or the issuance and
original sale of the Certificates, including any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes (but, in the case of the Trust, not including any taxes asserted with
respect to ownership of the Receivables or federal or other income taxes arising
out of distributions on the Certificates) and costs and expenses in defending
against the same.
(ii) The Depositor shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents and the Trust from and
against any loss, liability, or expense incurred by reason of (a) the
Depositor's willful misfeasance, bad faith, or negligence in the performance of
its duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (b) the Depositor's violation of
federal or State securities laws in connection with the registration of the sale
of the Certificates.
Indemnification under this Section 12.02 shall include, without limitation,
reasonable fees and expenses of not more than one counsel and expenses of
litigation. If the Depositor shall have made any indemnity payments to the
Trustee or the Trust pursuant to this Section and the Trustee or the Trust
thereafter shall collect any of such amounts from others, the Trustee or the
Trust, as the case may be, shall repay such amounts to the Depositor, without
interest. This indemnification shall survive the termination of this Agreement
and the resignation or removal of the Trustee.
SECTION 12.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF DEPOSITOR. Any Person (a) into which the Depositor may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Depositor shall be a party, or (c) which may succeed to all or substantially all
of the properties and assets of the Depositor's business, which Person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Depositor under this Agreement, shall be the successor to the
Depositor hereunder without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, that (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.01 shall have been breached and no Event of
Default, and no event that, after notice or lapse of time, or both, would become
an
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Event of Default shall have happened and be continuing, (ii) the Depositor shall
have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel
each stating that such consolidation, merger, or succession and such agreement
of assumption comply with this Section 12.03 and that all conditions precedent,
if any, provided for in this Agreement relating to such transaction have been
complied with and (iii) the Depositor shall have delivered an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables, and reciting the details of such filings, or (B)
stating that, in the opinion of such Counsel, no such action shall be necessary
to preserve and protect such interest. Notwithstanding the forgoing, the
Depositor shall not engage in any merger or consolidation with any Person, or a
disposition of all or substantially all of its assets without the prior written
consent of the Surety Bond Issuer, not to be unreasonably withheld.
SECTION 12.04. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear
in, prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 12.05. DEPOSITOR MAY OWN CERTIFICATES. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder", "Class A Certificateholder" and "Class I
Certificateholder." Certificates so owned by or pledged to the Depositor or such
controlling or commonly controlled Person shall have an equal and proportionate
benefit under the provisions of this Agreement, without preference, priority, or
distinction as among all of the Certificates.
ARTICLE XIII
THE SERVICER
SECTION 13.01. REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of this Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer shall have been duly
organized and shall be validly existing as a corporation under the laws of the
State of California, with power and authority to own its properties and to
conduct its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and shall
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have, power, authority, and legal right to acquire, own, sell, and service the
Receivables and to hold the Receivable Files as custodian on behalf of the
Trustee.
(ii) Due Qualification. The Servicer shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications,
except where the failure to so qualify would not materially and adversely affect
the performance by the Depositor of its obligations under, or the validity or
enforceability of this Agreement or the Certificates.
(iii) Power and Authority. The Servicer shall have the power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery, and performance of this Agreement shall have been duly
authorized by the Servicer by all necessary corporate action.
(iv) Binding Obligations. This Agreement shall constitute a legal,
valid, and binding obligation of the Servicer enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not conflict
with, result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or by-laws of the Servicer, or any indenture, agreement, or other
instrument to which the Servicer is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, or other instrument
(other than this Agreement); nor violate any law or, to the best of the
Servicer's knowledge, any order, rule, or regulation applicable to the Servicer
of any court or of any federal or State regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the Servicer or
its properties.
(vi) No Proceedings. There are no proceedings or investigations pending,
or, to the Servicer's knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over the Servicer or its properties: (A) asserting the invalidity of this
Agreement or the Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement or the Certificates, or (D)
which might adversely affect the federal income tax attributes of the
Certificates.
SECTION 13.02. INDEMNITIES OF SERVICER. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
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(i) The Servicer shall defend, indemnify, and hold harmless the Trustee,
its officers, directors, employees and agents, the Trust and the
Certificateholders from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the use,
ownership, or operation by the Servicer or any affiliate thereof of a Financed
Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless the Trustee,
its officers, directors, employees and agents and the Trust from and against any
taxes that may at any time be asserted against the Trustee, its officers,
directors, employees or agents or the Trust with respect to the transactions
contemplated herein, including, without limitation, any sales, gross receipts,
general corporation, tangible or intangible personal property, privilege, or
license taxes (but, in the case of the Trust, not including any taxes asserted
with respect to, and as of the date of, the sale of the Receivables to the Trust
or the issuance and original sale of the Certificates, or asserted with respect
to ownership of the Receivables, or federal or other income taxes arising out of
distributions on the Certificates) and costs and expenses in defending against
the same.
(iii) The Servicer shall indemnify, defend, and hold harmless the Trustee,
its officers, directors, employees and agents, the Trust and the
Certificateholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trustee, the Trust or
the Certificateholders through, the negligence, willful misfeasance, or bad
faith of the Servicer in the performance of its duties under this Agreement, or
by reason of reckless disregard of its obligations and duties under this
Agreement. This indemnity shall survive the termination of this Agreement or the
Trust and the resignation or removal of the Trustee
(iv) The Servicer shall indemnify, defend, and hold harmless the Trustee,
its officers, directors, employees and agents, and the Trust from and against
all costs, expenses, losses, claims, damages, and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties herein contained, except to the extent that such cost, expense, loss,
claim, damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence of the Trustee; (b) relates to any tax other than the taxes
with respect to which either the Depositor or Servicer shall be required to
indemnify the Trustee; (c) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 15.13; (d) shall be one as to
which the Depositor is required to indemnify the Trustee; or (e) shall arise out
of or be incurred in connection with the acceptance or performance by the
Trustee of the duties of successor Servicer hereunder.
Indemnification under this Section 13.02 shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer shall have made
any indemnity payments pursuant to this Section and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer, without interest. This indemnification shall
survive the termination of this Agreement and the removal of the Servicer.
SECTION 13.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF SERVICER. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party, (c) which may succeed to all or substantially all
of the properties and assets of the Servicer's indirect automobile financing and
receivables servicing business or (d) that is an Affiliate, which Person in any
of
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the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer hereunder, shall be the successor to the Servicer
under this Agreement without further act on the part of any of the parties to
this Agreement; provided, however, that (i) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time, or both, would become an Event of Default shall have happened and be
continuing, (ii) the Servicer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
13.03 and that all conditions precedent provided for in this Agreement relating
to such transaction have been complied with and (iii) the Servicer shall have
delivered an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee and the Surety Bond Issuer in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such Counsel, no such action shall be necessary to preserve and
protect such interest. Notwithstanding the forgoing, the Servicer shall not
engage in any merger or consolidation in which it is not the surviving
corporation without the prior written consent of the Surety Bond Issuer, not to
be unreasonably withheld.
SECTION 13.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith, or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute, or defend any legal action that shall not be
incidental to its duties to service the Receivables in accordance with this
Agreement (collection actions with respect to Defaulted Receivables are
understood to be incidental to the Servicer's duties to service the
Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 13.05. SERVICER NOT TO RESIGN. The Servicer shall not resign from
its obligations and duties under this Agreement except upon determination that
the performance of its duties shall no longer be permissible under applicable
law or otherwise with the consent of the Trustee and the Surety Bond Issuer. Any
determination described above permitting the resignation of the Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
No such resignation shall become effective until the Trustee or a successor
servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 14.02.
SECTION 13.06. DELEGATION OF DUTIES. Except as provided in Section 13.03
hereof, it is understood and agreed by the parties hereto that the Servicer or
the Depositor may at any time delegate any duties including duties as custodian
to any Person willing to accept such
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delegation and to perform such duties (including any affiliate of the Servicer)
in accordance with the customary procedures of the Servicer. In connection with
such delegation, the Servicer or the Depositor may assign rights to the delegee
or direct the payment to the delegee of benefits or amounts otherwise inuring to
the benefit of, or payable to, the Depositor or the Servicer hereunder. Any
such delegation shall not relieve the Servicer or the Depositor of their
respective liability and responsibility with respect to such duties, and shall
not constitute a resignation within Section 13.05 hereof. The Servicer shall
give written notice to the Rating Agency, the Surety Bond Issuer and the Trustee
of any such delegation.
ARTICLE XIV
DEFAULT
SECTION 14.01. EVENTS OF DEFAULT. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer or CTL to deliver to the Trustee for
distribution to Certificateholders any proceeds or payment required to be so
delivered under the terms of the Certificates and this Agreement or the Purchase
Agreement or any failure by the Servicer to deliver any Servicer's Certificate
pursuant to Section 8.09 that, in either case, shall continue unremedied for a
period of two Business Days (A) after written notice from either the Trustee,
the Surety Bond Issuer (so long as the Surety Bond Issuer is not in default of
its obligations under the Surety Bonds) or the Holders of Certificates
evidencing not less than 25% of the Certificate Balance and 25% of the Notional
Principal Amount of the Class I Certificates is received by the Servicer or CTL
as specified in this Agreement or (B) after discovery by an officer of the
Servicer; or
(ii) Failure on the part of the Servicer, the Depositor or CTL duly to
observe or to perform in any material respect any other covenants or agreements
of the Servicer, the Depositor or CTL, as the case may be, set forth in the
Certificates or in this Agreement or the Purchase Agreement, which failure shall
(a) materially and adversely affect the rights of Certificateholders or the
Surety Bond Issuer and (b) continue unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given (1) to the Servicer, CTL or the Depositor, as the case may
be, by the Trustee, or (2) to the Servicer or the Depositor, as the case may be,
and to the Trustee, by the Surety Bond Issuer (so long as the Surety Bond Issuer
is not in default of its obligations under the Surety Bonds) or by the Holders
of Certificates evidencing not less than 25% of the Certificate Balance and 25%
of the Notional Principal Amount of the Class I Certificates; or
(iii) The occurrence of an Insolvency Event with respect to the Servicer;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, either the Trustee, or the Holders of Certificates evidencing not
less than 25% of the Certificate Balance and 25% of the Notional Principal
Amount of the Class I Certificates, by notice then given in writing to the
Servicer (and to the Trustee if given by the Certificateholders) may, with the
consent of the Surety Bond Issuer (so long as the Surety Bond Issuer is not in
default of its
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obligations under the Surety Bonds) terminate all of the rights and obligations
of the Servicer under this Agreement. In addition, if a Trigger Event (as
defined in the Insurance Agreement) shall have occurred, the Surety Bond Issuer
may (A) require that the Trustee deliver a notice of termination to the Servicer
and appoint a successor Servicer designated by the Surety Bond Issuer in such
notice pursuant to Section 14.02 (B) require that the Trustee amend certificates
of title relating to the Financed Vehicles and take other actions to identify
the Trust as the new secured party on such certificates of title; (C) as
provided in the Insurance Agreement, require that the Servicer or successor
Servicer or the Trustee instruct Obligors in respect of the Receivables to remit
payment on the Receivable directly to the Trustee or a separate account
established exclusively for the Trust; and (D) as provided in the Insurance
Agreement, compel transfer by the Servicer of all Receivables files and, if
applicable, certain rights in respect of servicing systems assets to the Surety
Bond Issuer or to the successor Servicer designated by the Surety Bond Issuer.
On or after the receipt by the Servicer of such written notice, all authority
and power of the Servicer under this Agreement, whether with respect to the
Certificates or the Receivables or otherwise, shall, without further action,
pass to and be vested in the Trustee (except that the Trustee may but shall not
be required to make Advances and shall not be subject to the indemnification
obligations of the Servicer under Section 13.02(i), (ii) or (iv)) or such
successor Servicer as may be appointed under Section 14.02 pursuant to and under
this Section 14.01; and, without limitation, the Trustee is hereby authorized
and empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer of electronic records related to the Receivables in such form
as the successor Servicer may reasonably request and the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or shall thereafter be
received with respect to a Receivable. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 14.01 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses.
SECTION 14.02. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 14.01 or the Servicer's resignation
in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the later of (x) the date 45 days
from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's resignation or
termination hereunder, the Trustee shall appoint a successor Servicer, which
successor Servicer shall be reasonably acceptable to the Surety Bond Issuer (so
long as the Surety Bond Issuer is not in default of its obligations under the
Surety Bond), and the successor Servicer shall accept its
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appointment by a written assumption in form acceptable to the Trustee. In the
event that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section 14.02, the Trustee without further action shall automatically be
appointed the successor Servicer. Notwithstanding the above, the Trustee shall,
if it shall be legally unable or unwilling so to act, appoint, or petition a
court of competent jurisdiction to appoint, any established financial
institution, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automotive receivables, as the successor
to the Servicer under this Agreement and which financial institution is, in the
case of appointment by the Trustee, reasonably acceptable to the Surety Bond
Issuer.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement. The predecessor Servicer shall be entitled to be
reimbursed for Outstanding Advances.
(c) In connection with such appointment, the Trustee may make such
arrangements for successor Servicer out of payments on Receivables it and such
successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of that permitted the original Servicer under this Agreement.
The Trustee and such successor Servicer shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
SECTION 14.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any notice of an
Event of Default or upon any termination of, or appointment of a successor to,
the Servicer pursuant to this Article XIV, the Trustee shall give prompt written
notice thereof to Certificateholders at their respective addresses appearing in
the Certificate Register.
SECTION 14.04. WAIVER OF PAST DEFAULTS. The Holders of Certificates
evidencing not less than 51% of the Certificate Balance and 51% of the Notional
Principal Amount of the Class I Certificates, may, on behalf of all Holders of
Certificates, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Certificate Account in accordance with
this Agreement; provided, that the no waiver of any default or provision of this
Agreement shall become effective without the consent of the Surety Bond Issuer
(unless the Surety Bond Issuer is in default of its obligations under the Surety
Bond). Upon any such waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.
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ARTICLE XV
THE TRUSTEE
SECTION 15.01. DUTIES OF TRUSTEE. The Trustee, both prior to and after
the occurrence of an Event of Default, shall undertake to perform such duties as
are specifically set forth in this Agreement. If an Event of Default shall have
occurred and shall not have been cured and, in the case of an Event of Default
described in clause (i) of Section 14.01, the Trustee has received notice of
such Event of Default, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and shall use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs; provided, however, that if the
Trustee shall assume the duties of the Servicer pursuant to Section 14.02, the
Trustee in performing such duties shall use the degree of skill and attention
customarily exercised by a servicer with respect to motor vehicle receivables
that it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the curing
of all such Events of Default that may have occurred, the duties and obligations
of the Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of such
duties and obligations as shall be specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, or manifest
error, the Trustee may conclusively rely on the truth of the statements and the
correctness of the opinions expressed in any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
shall have been negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action taken,
suffered, or omitted to be taken in good faith in accordance with this Agreement
or at the direction of the Holders of Certificates evidencing not less than 25%
of the Certificate Balance relating to the time, method, and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement;
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(iv) The Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
clauses (i) or (ii) of Section 14.01, or of any failure by the Depositor to
comply with the obligations of the Depositor referred to in clause (ii) of
Section 14.01, unless a Responsible Officer of the Trustee receives written
notice of such failure (it being understood that knowledge of the Servicer or
the Servicer as custodian, in its capacity as agent for the Trustee, is not
attributable to the Trustee) from the Servicer or the Depositor, as the case may
be, or the Holders of Certificates evidencing not less than 25% of the
Certificate Balance; and
(v) Without limiting the generality of this Section or Section 15.04,
the Trustee shall have no duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to therein or any
financing statement evidencing a security interest in the Receivables or the
Financed Vehicles, or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any thereof,
(B) to see to any insurance of the Financed Vehicles or Obligors or to effect or
maintain any such insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any Lien or encumbrance of any kind
owing with respect to, assessed, or levied against, any part of the Trust, (D)
to confirm or verify the contents of any reports or certificates of the Servicer
delivered to the Trustee pursuant to this Agreement believed by the Trustee to
be genuine and to have been signed or presented by the proper party or parties,
or (E) to inspect the Financed Vehicles at any time or ascertain or inquire as
to the performance or observance of any of the Depositor's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable Files under this
Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers, and privileges of, the Servicer in accordance with
the terms of this Agreement. Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to impair the
security interests created or existing under any Receivable or to impair the
value of any Receivable.
SECTION 15.02. TRUSTEE'S CERTIFICATE. On or as soon as practicable after
each Distribution Date on which Receivables shall be (i) assigned to CTL
pursuant to Section 7.02 or deemed to be assigned to the Depositor as a result
of the application of Available Funds in respect of Defaulted Receivables
pursuant to Section 9.02 or (ii) assigned to the Servicer pursuant to Section
8.07 or 16.02, the Trustee shall, at the written request of the Servicer,
execute a Trustee's Certificate, substantially in the form of, in the case of an
assignment to CTL, Exhibit 1, or, in the case of an assignment to the Servicer,
Exhibit 2, based on the information contained in the Servicer's Certificate for
the related Collection Period, amounts deposited to the Certificate Account, and
notices received pursuant to this Agreement, identifying the Receivables
repurchased or deemed to be repurchased by CTL pursuant to Section 7.02 or 9.02
or purchased by the Servicer pursuant to Section 8.07 or 16.02 during such
Collection Period, and shall deliver
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such Trustee's Certificate, accompanied by a copy of the Servicer's Certificate
for such Collection Period to CTL or the Servicer, as the case may be. The
Trustee's Certificate shall be an assignment pursuant to Section 15.03.
SECTION 15.03. TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES. With
respect to each Receivable repurchased by CTL pursuant to Section 7.02, or
deemed to be so repurchased pursuant to Section 9.02 or purchased by the
Servicer pursuant to Section 8.07 or 16.02, the Trustee shall assign, as of the
last day of the Collection Period during which such Receivable became a
Defaulted Receivable or became subject to repurchase by CTL or purchase by the
Servicer, without recourse, representation, or warranty, to CTL or the Servicer
(as the case may be) all the Trustee's right, title, and interest in and to such
Receivables, and all security and documents relating thereto, such assignment
being an assignment outright and not for security. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a Receivable
on the ground that it shall not be a real party in interest or a holder entitled
to enforce the Receivable, the Trustee shall, at the Servicer's expense, take
such steps as the Trustee deems necessary to enforce the Receivable, including
bringing suit in its name or the name of the Certificateholders.
SECTION 15.04. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise
provided in Section 15.01:
(i) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, Servicer's Certificate,
certificate of auditors, or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(ii) The Trustee may consult with counsel and any written advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such written advice or Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct, or
defend any litigation under this Agreement or in relation to this Agreement, at
the request, order, or direction of any of the Certificateholders pursuant to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity reasonably satisfactory
to the Trustee against the costs, expenses, and liabilities that may be incurred
therein or thereby. Nothing contained in this Agreement, however, shall relieve
the Trustee of the obligations, upon the occurrence of an Event of Default (that
shall not have been cured), to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(iv) The Trustee shall not be liable for any action taken, suffered, or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement.
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(v) Prior to the occurrence of an Event of Default and after the curing
of all Events of Default that may have occurred, the Trustee shall not be bound
to make any investigation into the facts of matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, or other paper or document, unless requested in writing
so to do by Holders of Certificates evidencing not less than 25% of the
Certificate Balance or not less than 25% of the Notional Principal Amount of the
Class I Certificates; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses, or liabilities likely to be incurred
by it in the making of such investigation shall be, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense, or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the Servicer or,
if paid by the Trustee, shall be reimbursed by the Servicer upon demand. Nothing
in this clause (v) shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors.
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties under this Agreement either directly or by or through agents
or attorneys or a custodian. The Trustee shall not be responsible for any
misconduct or negligence solely attributable to the acts or omissions of the
Servicer in its capacity as Servicer or custodian.
(vii) Subsequent to the sale of the Receivables by the Depositor to the
Trustee, the Trustee shall have no duty of independent inquiry, except as may be
required by Section 15.01, and the Trustee may rely upon the representations and
warranties and covenants of the Depositor and the Servicer contained in this
Agreement with respect to the Receivables and the Receivable Files.
SECTION 15.05. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance, lender's
collateral protection insurance, or credit life or disability and
hospitalization insurance with respect to any Receivable; the existence and
contents of any Receivable or any computer or other record thereof; the validity
of the assignment of any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; the performance or enforcement
of any Receivable; the compliance by the Depositor or the Servicer with any
warranty or representation made under this Agreement or in any related document
and the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith or any
breach thereof; any investment of monies by the Servicer or any loss resulting
therefrom (it being
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understood that the Trustee shall remain responsible for any Trust property that
it may hold); the acts or omissions of the Depositor, the Servicer, or any
Obligor; an action of the Servicer taken in the name of the Trustee; or any
action by the Trustee taken at the instruction of the Servicer; provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. Except with respect to a claim based
on the failure of the Trustee to perform its duties under this Agreement or
based on the Trustee's negligence or willful misconduct, no recourse shall be
had for any claim based on any provision of this Agreement, the Certificates, or
any Receivable or assignment thereof against the Trustee in its individual
capacity, the Trustee shall not have any personal obligation, liability, or duty
whatsoever to any Certificateholder or any other Person with respect to any such
claim, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor or the Servicer in respect of
the Receivables.
SECTION 15.06. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
SECTION 15.07. TRUSTEE'S FEES AND EXPENSES. The Servicer shall pay to the
Trustee, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts created by this Agreement and in the exercise and performance of any
of the Trustee's powers and duties under this Agreement, and the Servicer shall
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements, and advances (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) incurred or made by the Trustee in accordance with any provisions of
this Agreement, except any such expense, disbursement, or advance as may be
attributable to its willful misfeasance, negligence, or bad faith, and the
Servicer shall indemnify the Trustee (which, for purposes of this section, shall
include its directors, officers, employees, and agents) for and hold it harmless
against any loss, liability, or expense incurred without willful misfeasance,
negligence, or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties under this Agreement.
Additionally, the Depositor, pursuant to Section 12.02, and the Servicer,
pursuant to Section 13.02, respectively, shall indemnify the Trustee with
respect to certain matters. This indemnity shall survive the termination of
this Agreement or the Trust and the resignation or removal of the Trustee.
SECTION 15.08. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under
this Agreement shall at all times be a corporation having an office in the same
State as the location of the Corporate Trust Office as specified in this
Agreement; and organized and doing business under the laws of such State or the
United States of America; authorized under such laws to exercise corporate trust
powers; and having a net worth of at least $50,000,000 and subject to
supervision or examination by federal or State authorities and the long-term
unsecured debt of which is rated at least Baa3 or which is approved by the
Surety Bond Issuer and each Rating Agency. If such corporation shall publish
reports of condition at least annually, pursuant to law
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or to the requirements of the aforesaid supervising or examining authority, then
for the purpose of this Section 15.08, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 15.08, the Trustee shall resign immediately in the manner and with the
effect specified in Section 15.09.
SECTION 15.09. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer. Upon receiving such notice of resignation, the
Servicer, with the prior written consent of the Surety Bond Issuer, shall
promptly appoint a successor Trustee, by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 15.08 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation, or liquidation, then the Servicer may remove
the Trustee. If it shall remove the Trustee under the authority of the
immediately preceding sentence, the Servicer shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 15.09 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 15.10.
SECTION 15.10. SUCCESSOR TRUSTEE. Any successor Trustee appointed
pursuant to Section 15.09 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed, or conveyance, shall become fully vested with all the
rights, powers, duties, and obligations of its predecessor under this Agreement,
with like effect as if originally named as Trustee. The predecessor Trustee
shall deliver to the successor Trustee all documents and statements held by it
under this Agreement; and the Servicer and the predecessor Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Trustee
all such rights, powers, duties, and obligations.
No successor Trustee shall accept appointment as provided in this Section
15.10 unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 15.08.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 15.10, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all
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Holders of Certificates at their addresses as shown in the Certificate Register.
If the Servicer shall fail to mail such notice within 10 days after acceptance
of appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
SECTION 15.11. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 15.08, without the execution
or filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
SECTION 15.12. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 15.12,
such powers, duties, obligations, rights, and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor Trustee pursuant to Section 15.08 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 15.10.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or imposed
upon the Trustee shall be conferred upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act separately
without the Trustee joining in such act), except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be performed
(whether as Trustee under this Agreement or as successor to the Servicer under
this Agreement), the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee
or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and
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(iii) The Servicer and the Trustee acting jointly may at any time accept
the resignation of or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XV. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee, its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign, or be removed, all of its estates,
properties, rights, remedies, and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 15.13. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee
shall make the following representations and warranties on which the Depositor
and Certificateholders may rely:
(i) Organization and Existence. The Trustee is a New York banking
corporation duly organized and validly existing under the laws of the State of
New York and authorized to engage in a banking and trust business under such
laws.
(ii) Power and Authority. The Trustee has full power, authority, and
legal right to execute, deliver, and perform this Agreement, and shall have
taken all necessary action to authorize the execution, delivery, and performance
by it of this Agreement.
(iii) Duly Executed. This Agreement shall have been duly executed and
delivered by the Trustee and shall constitute the legal, valid, and binding
agreement of the Trustee, enforceable in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or other similar laws
now or hereinafter in effect relating to the enforcement of creditors' rights in
general, as such laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship, receivership or
similar occurrence affecting the Trustee, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) as well as concepts of reasonableness, good faith and fair
dealing.
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ARTICLE XVI
TERMINATION
SECTION 16.01. TERMINATION OF THE TRUST. The respective obligations and
responsibilities of the Depositor, the Servicer and the Trustee created hereby
and the Trust created by this Agreement shall terminate upon (i) the disposition
of the Trust corpus as of the last day of any Collection Period at the direction
of the Class IC Certificateholder, at its option, pursuant to Section 16.02,
(ii) the sale, liquidation or disposition of the Trust corpus following a
termination upon the bankruptcy of the Class IC Certificateholder as provided in
Section 16.03, or (iii) the payment to Certificateholders and the Surety Bond
Issuer of all amounts required to be paid to them pursuant to this Agreement and
the Insurance Agreement (as set forth in writing by the Surety Bond Issuer) and
the disposition of all property held as part of the Trust; provided, however,
that in no event shall the trust created by this Agreement continue beyond the
expiration of 21 years from the date as of which this Agreement is executed. The
Servicer shall promptly notify the Trustee of any prospective termination
pursuant to this Section 16.01.
Notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not earlier than the 10th day and
not later than the 20th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Certificate
Registrar (if other than the Trustee) at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 9.04 and, in the
event of a termination pursuant to clause (i) or (ii) of the preceding
paragraph, the provisions of Section 9 of Annex A hereto shall govern the
remaining distributions to Certificateholders.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall, upon notice to the Trustee, be distributed by the Trustee
to the __________ [BAY VIEW TO COMPLETE] or its successor, and upon such
distribution the Certificateholders' rights to any amounts so distributed will
be extinguished.
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SECTION 16.02. OPTIONAL DISPOSITION OF ALL RECEIVABLES. On the last day
of any Collection Period following which (i) the Notional Principal Amount has
been reduced to zero, and (ii) the Certificate Balance as of the related
Distribution Date is less than or equal to 10% of the Original Pool Balance, the
holder of the Class IC Certificate shall have the option to cause the Trustee to
sell (to the Class IC Certificateholder or any other person) the corpus of the
Trust at a price (the "Optional Disposition Price") equal to the fair market
value of the Receivables, but not less than (i) the sum of (x) 100% of the
Certificate Balance, (y) accrued and unpaid interest on such amount computed at
a rate equal to the weighted average Note Rate, and (z) all amounts due and
owing to the Surety Bond Issuer under the Agreement and the Insurance Agreement
minus any amounts representing payments received on the Receivables not yet
applied to the interest related thereto or to reduce the principal balance
thereof. The proceeds of such sale will be deposited into the Certificate
Account for distribution to the Certificateholders (and, to the extent
applicable, the Surety Bond Issuer) on the next succeeding Distribution Date. In
connection with such disposition, the Class IC Certificateholder is required to
pay any unpaid fees and expenses of the Trustee that it would otherwise have
been entitled to pursuant to this Agreement. The fair market value of the
outstanding Receivables for purposes of this Section 16.02 shall be an amount
equal to the average of the bid prices for such assets taken as a whole,
provided to the Servicer by two independent, nationally recognized dealers in
automobile loans substantially similar to the Receivables. Such price shall be
deposited to the Certificate Account in immediately available funds by 12:00
noon, New York City time, on the Distribution Date and, upon notice to the
Trustee of such deposit, the Trustee shall transfer the Receivables and the
Receivable Files to the purchaser, whereupon the Certificates shall no longer
evidence any right or interest in the Receivables or any proceeds thereof.
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proceed to consummate the sale, liquidation or disposition of the Receivables as
provided above with the highest bidder for the Receivables. The Servicer shall
be permitted to bid for the Receivables. The Trustee may obtain a prior
determination from trustee-in-bankruptcy that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable. The
provisions of Sections 9.04 and this Section 16.03 shall not be deemed to be
mutually exclusive. Following the sale, disposition or liquidation of the
Receivables in a commercially reasonable manner, the Trustee shall wind up the
affairs of the Trust and terminate the Trust in accordance with Section 16.01.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
SECTION 17.01. AMENDMENT. This Agreement may be amended by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be inconsistent
with the provisions of this Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, and the Trustee with the consent of the Class IC Certificateholder,
Holders of Certificates evidencing not less than 51% of the Certificate Balance
and 51% of the Notional Principal Amount of the Class I Certificates for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement, or of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment shall,
without the consent of the Holders of all Certificates then outstanding, reduce
the aforesaid percentage required to consent to any such amendment. In no case
may any such amendment increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made on any Certificate.
Notwithstanding anything to the contrary in this Agreement, no Opinion of
Counsel or consent of Certificateholders shall be required in connection with
any amendment of this Agreement to provide for a Spread Account Facility;
provided that prior to the effectiveness of any such amendment S&P and Moody's
shall confirm in writing that the rating of the Certificates will not be lowered
or withdrawn as a result of such amendment.
Notwithstanding anything to the contrary to this Agreement, no amendment of
this Agreement shall be effective without the prior written consent of the
Surety Bond Issuer.
Sections 7.08 and 16.03 shall not be subject to amendment under any
circumstances; provided however that Section 7.08(a) and Section 16.03 may be
deleted by an amendment pursuant to the first paragraph of this Section 17.01 if
the Depositor shall have provided to the Trustee, at Depositor's expense, an
Opinion of Counsel to the effect that the Trustee has complied
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with any applicable temporary or final Treasury Regulation or Notice of the
Internal Revenue Service providing for a "check-the-box" partnership
classification for federal income tax purposes; and such amendment shall further
provide that Section 1 of Annex A hereof shall be amended by adding the
following sentence immediately preceding the last sentence thereof: "If the
Treasury Department or Internal Revenue Service shall promulgate a temporary or
final regulation, notice or other rule adopting a "check-the-box" classification
system for unincorporated organizations and which shall be applicable to the
Trust, the Servicer on behalf of the Tax Partners shall elect, in such manner as
may be provided in such regulation, notice or other rule, to treat the Trust as
a partnership for federal income tax purposes, and each Tax Partner irrevocably
agrees to be bound by such election." Moreover, except as provided in the third
paragraph of this Section 17.01, no amendment to this Agreement shall be
recognized or be effective without the written consent of the Trustee and
receipt by the Trustee of an Opinion of Counsel to the effect that such
amendment will not cause the Trust to be treated as an association taxable as a
corporation or as a publicly-traded partnership.
Promptly after the execution of any amendment or consent, the Trustee shall
furnish written notification of the substance of such amendment or consent to
each Certificateholder.
It shall not be necessary for the consent of Certificateholders pursuant to
this Section 17.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
the Opinion of Counsel referred to in Section 17.02(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties, or immunities under this Agreement.
SECTION 17.02. PROTECTION OF TITLE TO TRUST.
(a) The Depositor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Certificateholders and the Trustee under this
Agreement in the Receivables and in the proceeds thereof. The Depositor shall
deliver (or cause to be delivered) to the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Depositor in
accordance with paragraph (a) above seriously misleading within the meaning of
ss. 9-402(7) of the UCC, unless it shall have given the Trustee at least 60
days' prior written notice thereof.
(c) The Depositor and the Servicer shall give the Trustee at least 60
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the
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applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement (in which case the Servicer shall file or cause to be filed such
amendment or continuation statement or new financing statement). The Servicer
shall at all times maintain each office from which it shall service Receivables,
and its principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly with reference to the particular
trust that such Receivable is owned by the Trustee. Indication of the Trustee's
ownership of a Receivable shall be deleted from or modified on the Servicer's
computer systems when, and only when, the Receivable shall have been paid in
full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender, or other transferee,
the Servicer shall give to such prospective purchaser, lender, or other
transferee computer tapes, records, or print-outs (including any restored from
back-up archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Trustee.
(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit, and make copies of and abstracts
from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of this Agreement and of
each amendment thereto, an Opinion of Counsel either (a) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Receivables and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (b) stating that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest; and
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(2) within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Cutoff
Date, an Opinion of Counsel, dated as of a date during such 90-day period,
either (a) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest.
SECTION 17.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided in
Section 14.04, 17.01 or 17.07) or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties to this Agreement
except as expressly set forth herein, nor shall anything in this Agreement set
forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this Agreement
(except for the Class IC Certificateholder to the extent provided in Section
7.08).
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing not less than 25% of the Certificate Balance
or not less than 25% of the Notional Principal Amount of the Class I
Certificates shall have made written request upon the Trustee to institute such
action, suit, or proceeding in its own name as Trustee under this Agreement and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Trustee, for 30 days after its receipt of such notice, request, and
offer of indemnity, shall have neglected or refused to institute any such
action, suit, or proceeding and during such 30-day period no direction
inconsistent with such written request has been given to the Trustee pursuant to
Section 14.04; no one or more Holders of Certificates shall have any right in
any manner whatever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb, or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under this Agreement except in the manner provided in this Agreement and for the
equal, ratable, and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 17.03, each Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
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SECTION 17.04. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within the State of New York, and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 17.05. NOTICES. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given unless otherwise provided herein, upon
receipt (a) in the case of the Depositor to the agent for service as specified
in this Agreement, at the following address: Bay View Securitization
Corporation, 2121 South El Camino Real, San Mateo, California 94403, or at such
other address as shall be designated by the Depositor in a written notice to the
Servicer or Trustee; (b) in the case of the Servicer to the agent for service as
specified in this Agreement, at the following address, California Thrift & Loan,
818 Oakpark Road, Covina, California 91724, (c) in the case of the Trustee, at
the Corporate Trust Office, (d) in the case of the Surety Bond Issuer, at
Capital Markets Assurance Corporation, 885 Third Avenue, New York, NY 10022, Fax
(212) 755-5462, Attention: Managing Director, Credit Enhancement. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register unless otherwise provided herein. Unless otherwise provided
herein, any notice so mailed within the time prescribed in this Agreement shall
be conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
SECTION 17.06. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 17.07. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided below or in Sections 12.03 and 13.03 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Trustee, the Class IC
Certificateholder, and the Holders of Certificates evidencing not less than 66%
of the Certificate Balance and 66% of the Notional Principal Amount of the Class
I Certificates provided, that, notwithstanding the foregoing, CTL may direct or
--------
irrevocably assign payments to which it is entitled under this Agreement to the
Depositor or another wholly-owned subsidiary of BVCC, upon written notice to the
Trustee.
SECTION 17.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificateholders shall not be personally liable for obligations of the Trust
(except to the extent provided in respect of the Class IC Certificateholder in
Section 7.08). The interests represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and, upon authentication thereof by the Trustee pursuant to Section
11.02, Certificates shall be deemed fully paid.
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SECTION 17.09. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement, the Servicer, CTL and the Trustee shall not,
prior to the date which is one year and one days after the termination of this
Agreement with respect to the Trust or the Depositor, acquiesce, petition or
otherwise invoke or cause the Trust or the Depositor to invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Trust or the Depositor under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or the
Depositor or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust or the Depositor.
SECTION 17.10. COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 17.11. THIRD PARTY BENEFICIARY. This Agreement shall inure to the
benefit of the Surety Bond Issuer and its successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
BAY VIEW SECURITIZATION CORPORATION,
as Depositor
By: __________________________________________
Title: President
CALIFORNIA THRIFT & LOAN,
as Servicer
By: __________________________________________
Title:
BANKERS TRUST COMPANY
as Trustee
By: __________________________________________
Title:
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EXHIBIT A-1
[FORM OF CLASS A-1 CERTIFICATE]
PRINCIPAL IN RESPECT OF THIS CLASS A-1 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
BAY VIEW 1996 RA-1 AUTO TRUST
____% CLASS A-1 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of simple and precomputed interest
installment loan and security agreements and installment sales contracts
secured by new and used automobiles, light trucks and vans. The contracts
were sold to the Trustee by Bay View Securitization Corporation.
(This Certificate does not represent an interest in or obligation of Bay
View Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are insured
or guaranteed by any government agency).
EXA-1-1
<PAGE>
NUMBER
CUSIP
$-------------
THIS CERTIFIES THAT ____________ is the registered owner of a _____________
dollars nonassessable, fully-paid, fractional undivided interest in the Bay View
1996 RA-1 Auto Trust (the "Trust") formed by Bay View Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of ______ , 1996 (the
"Agreement") between Bay View Securitization Corporation as Depositor,
California Thrift & Loan, as Servicer and Bankers Trust Company (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "____% Class A-1 Automobile
Receivable Backed Certificates" (the "Class A-1 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, motorcycles, vans and van conversions (the "Receivables"), all monies
paid thereon, and all monies due thereon, including Accrued Interest, after
______ __, 1996 (but excluding Accrued Interest paid or due prior to the Closing
Date), security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, all documents contained in the Receivable
Files, any property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Trust, any Liquidation Proceeds, any rights
of the Depositor in proceeds from claims or refunds of premiums on physical
damage, lender's collateral protection, credit life, disability and
hospitalization insurance policies, if any, covering vehicles financed thereby
and the obligors thereunder, the interest of the Depositor in recourse to
dealers relating to certain of the Receivables, the proceeds of all of the
foregoing and amounts on deposit from time to time in the Spread Account for the
benefit of the Class I and Class A Certificateholders, and the Surety Bond for
the benefit of the Class I and Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the Trust.
The Class A Certificates are comprised of "Class A-1 Certificates" and
"Class A-2 Certificates". In addition to the Class A Certificates, a class of
interest-only planned amortization Certificates representing an interest in
the Trust (the "Class I Certificates" and together with the Class A
Certificates, the "Certificates") and a Class IC Certificate (the "Class IC
Certificate") shall be issued pursuant to the Agreement. The Class A
Certificates and Class I Certificates are senior in right and interest to the
Class IC Certificate. In the event that the funds available are not sufficient
to pay the Class A and Class I Certificateholders in full, they shall share pro
rata in the amounts available based upon the total amounts they are due. The
Class I Certificates will receive monthly interest payments based on their
Notional Principal Amount and will receive no distributions after the date on
which the Notional Principal Amount of the Class I Certificates has been reduced
to zero. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
EXA-1-2
<PAGE>
Under the Agreement, there will be distributed on the 15th calendar day of
each month (the "Distribution Date"), commencing ___________, 1997, to the
person in whose name this Class A-1 Certificate is registered at the close of
business on the last Business Day of the month immediately preceding the month
of such distribution (the "Record Date"), such Certificateholder's fractional
interest in Class A-1 Monthly Interest and Monthly Principal. Each Class A-1
Certificateholder's "fractional interest" is equal to the original principal
amount of such Class A-1 Certificateholder's Certificate, as set forth on the
face thereof, divided by the aggregate Initial Class A-1 Certificate Balance.
Distributions on this Class A-1 Certificate will be made by the Trustee by
check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-1 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this
Class A-1 Certificate will be made only upon presentation and surrender of this
Class A-1 Certificate at the office or agency maintained for that purpose by
the Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class A-1 Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose.
The Class A-1 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-1
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-1 Certificates,
the Trustee will draw on the Surety Bond up to the Surety Bond Amount to pay
such deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-1 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-1 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-1 Certificate and of any Class
A-1 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-1
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Class A-1 Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Class A-1 Certificate is registrable in the
Certificate Register upon surrender of this Class A-1 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the
EXA-1-3
<PAGE>
Borough of Manhattan, The City of New York, accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Class A-1 Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Class A-1 Certificates are issuable only as registered Class A-1
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-1 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-1
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-1 Certificates are
exchangeable for new Class A-1 Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Class A-1
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-1 Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class A-1 Certificateholders of all amounts required to be paid to
them pursuant to the Agreement and the disposition of all property held as part
of the Trust. The holder of the Class IC Certificate may at its option cause the
Trustee to sell the corpus of the Trust at a price not to be less than the price
specified in the Agreement, and such sale of the Receivables and other property
of the Trust may effect early retirement of the Class A-1 Certificates; however,
such right is exercisable only as of a Record Date as of which the Certificate
Balance is less than or equal to 10% of the original aggregate principal balance
of the Receivables and the Notional Principal Amount has been reduced to zero.
No recourse shall be had for the payment of the principal of or interest on
this Certificate, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Agreement, against any incorporator,
stockholder, officer or director, as such, past, present, or future, of the
Depositor or Servicer or of any successor at law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Although this Class A-1 Certificate summarizes certain provisions of the
Agreement, this Class A-1 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-1 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder
EXA-1-4
<PAGE>
agrees to be bound by the foregoing provisions and the terms of the Tax
Partnership Agreement included as an annex to the Agreement.
EXA-1-5
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-1 Certificate to be duly executed.
Dated: __________, 199_ BAY VIEW 1996 RA-1 AUTO TRUST
By: Bankers Trust Company
_____________________________________
solely in its capacity as Trustee
By: _______________________________________
Responsible Officer
EXA-1-6
<PAGE>
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS A-1 CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
Bankers Trust Company as Trustee
By_______________________________
Signatory
Dated: ______ __, 1996
EXA-1-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- --------------------------------------------------------------------------------
the within Class A-1 Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
Attorney to transfer
- -----------------------------------------------------------
said Class A-1 Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A-1 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
EXA-1-8
<PAGE>
EXHIBIT A-2
[FORM OF CLASS A-2 CERTIFICATE]
PRINCIPAL IN RESPECT OF THIS CLASS A-2 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
BAY VIEW 1996 RA-1 AUTO TRUST
[____]% CLASS A-2 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple and precomputed
interest installment loan and security agreements and installment sales
contracts secured by new and used automobiles, light trucks and vans. The
contracts were sold to the Trustee by Bay View Securitization
Corporation.
(This Certificate does not represent an interest in or obligation
of Bay View Securitization Corporation or any of its affiliates. Neither
this Certificate nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
EXA-2-1
<PAGE>
NUMBER
CUSIP
$--------------
THIS CERTIFIES THAT ____________ is the registered owner of a _____________
dollars nonassessable, fully-paid, fractional undivided interest in the Bay View
1996 RA-1 Auto Trust (the "Trust") formed by Bay View Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of ________, 1996 (the
"Agreement") between Bay View Securitization Corporation as Depositor,
California Thrift & Loan, as Servicer and Bankers Trust Company (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "____% Class A-2 Automobile
Receivable Backed Certificates" (the "Class A-2 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, motorcycles, vans and van conversions (the "Receivables"), all monies
paid thereon, and all monies due thereon, including Accrued Interest, after
____________, 1996 (but excluding Accrued Interest paid or due prior to the
Closing Date), security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, all documents contained in the Receivable
Files, any property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Trust, any Liquidation Proceeds, any rights
of the Depositor in proceeds from claims or refunds of premiums on physical
damage insurance policy, lender's collateral protection, credit life, disability
and hospitalization insurance policies, if any, covering vehicles financed
thereby and the obligors thereunder, the interest of the Depositor in recourse
to dealers relating to certain of the Receivables, the proceeds of all of the
foregoing and amounts on deposit from time to time in the Spread Account for the
benefit of the Class I and Class A Certificateholders, and the Surety Bond for
the benefit of the Class I and Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the Trust.
The Class A Certificates are comprised of "Class A-1 Certificates" and "Class A-
2 Certificates." In addition to the Class A Certificates, a class of interest-
only planned amortization Certificates representing an interest in the Trust
(the "Class I Certificates" and together with the Class A Certificates, the
"Certificates") and a Class IC Certificate (the "Class IC Certificate") shall be
issued pursuant to the Agreement. The Class A Certificates and Class I
Certificates are senior in right and interest to the Class IC Certificate. In
the event that the funds available are not sufficient to pay the Class A and
Class I Certificateholders in full, they shall share pro rata in the amounts
available based upon the total amounts they are due. The Class I Certificates
will receive monthly interest payments based on their Notional Principal Amount
and will receive no distributions after the date on which the Notional Principal
Amount of the Class I Certificates has been reduced to zero. The Class IC
Certificate initially will be issued to the Depositor and it shall represent the
interest in the Receivables not represented by the Certificates.
EXA-2-2
<PAGE>
Under the Agreement, there will be distributed on the 15th calendar day of
each month (the "Distribution Date"), commencing ___________, 1997, to the
person in whose name this Class A-2 Certificate is registered at the close of
business on the last Business Day of the month immediately preceding the month
of such distribution (the "Record Date"), such Certificateholder's fractional
interest in Class A-2 Monthly Interest and Monthly Principal. Each Class A-2
Certificateholder's "fractional interest" is equal to the original principal
amount of such Class A-2 Certificateholder's Certificate, as set forth on the
face thereof, divided by the aggregate Initial Class A-2 Certificate Balance.
Distributions on this Class A-2 Certificate will be made by the Trustee by
check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-2 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class A-
2 Certificate will be made only upon presentation and surrender of this Class A-
2 Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class A-2 Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose.
The Class A-2 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-2
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-2 Certificates,
the Trustee will draw on the Surety Bond up to the Surety Bond Amount to pay
such deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-2 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-2 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-2 Certificate and of any Class
A-2 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-2
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Class A-
2 Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Class A-2 Certificate is registrable in the
Certificate Register upon surrender of this Class A-2 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the
EXA-2-3
<PAGE>
Borough of Manhattan, The City of New York, accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Class A-2 Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Class A-2 Certificates are issuable only as registered Class A-2
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-2 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-2
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-2 Certificates are
exchangeable for new Class A-2 Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Class A-2
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-2 Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class A-2 Certificateholders of all amounts required to be paid to
them pursuant to the Agreement and the disposition of all property held as part
of the Trust. The holder of the Class IC Certificate may at its option cause the
Trustee to sell the corpus of the Trust at a price not to be less than the price
specified in the Agreement, and such sale of the Receivables and other property
of the Trust may effect early retirement of the Class A-2 Certificates; however,
such right is exercisable only as of a Record Date as of which the Certificate
Balance is less than or equal to 10% of the original aggregate principal balance
of the Receivables and the Notional Principal Amount has been reduced to zero.
No recourse shall be had for the payment of the principal of or interest on
this Certificate, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Agreement, against any incorporator,
stockholder, officer or director, as such, past, present, or future, of the
Depositor or Servicer or of any successor at law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Although this Class A-2 Certificate summarizes certain provisions of the
Agreement, this Class A-2 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-2 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder
EXA-2-4
<PAGE>
agrees to be bound by the foregoing provisions and the terms of the Tax
Partnership Agreement included as an annex to the Agreement.
EXA-2-5
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-2 Certificate to be duly executed.
Dated: __________, 199_ BAY VIEW 1996 RA-1 AUTO TRUST
By: Bankers Trust Company
----------------------------------
solely in its capacity as Trustee
By:
----------------------------------
Responsible Officer
EXA-2-6
<PAGE>
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS A-2 CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
Bankers Trust Company as Trustee
By:
--------------------------------
Signatory
DATED:___________________, 199_
EXA-2-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address,including postal
zip code, of assignee)
- --------------------------------------------------------------------------------
the within Class A-2 Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
_________________________________________________________ Attorney to transfer
said Class A-2 Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A-2 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
EXA-2-8
<PAGE>
EXHIBIT B
[FORM OF CLASS I CERTIFICATE]
THIS CERTIFICATE DOES NOT ENTITLE THE HOLDER TO RECEIVE ANY PRINCIPAL BUT ONLY
INTEREST ON THE NOTIONAL PRINCIPAL AMOUNT DISTRIBUTABLE MONTHLY AS SET FORTH
HEREIN. THE NOTIONAL PRINCIPAL AMOUNT WILL DECREASE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE NOTIONAL PRINCIPAL AMOUNT OF THE INTEREST EVIDENCED HEREBY AT
ANY TIME MAY BE LESS THAN THE INITIAL NOTIONAL PRINCIPAL AMOUNT SET FORTH BELOW.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
BAY VIEW 1996 RA-1 AUTO TRUST
CLASS I INTEREST ONLY AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional interest in the Trust, as defined below, the property of
which includes a pool of simple and precomputed interest installment loan and
security agreements and installment sales contracts secured by new and used
automobiles, light trucks and vans. The contracts were sold to the Trustee by
Bay View Securitization Corporation.
(This Certificate does not represent an interest in or obligation of Bay View
Securitization Corporation or any of its affiliates. Neither this Certificate
nor the underlying Receivables, as defined below, are insured or guaranteed by
any government agency).
EXB-1
<PAGE>
NUMBER
$------
THIS CERTIFIES THAT ______________ is the registered owner of a designated
initial notional principal amount of ___________ dollars nonassessable, fully-
paid interest in the Bay View 1996 RA-1 Auto Trust (the "Trust") formed by Bay
View Securitization Corporation, a Delaware corporation (the "Depositor"). The
Trust was created pursuant to a Pooling and Servicing Agreement dated as of
________, 1996 (the "Agreement") between Bay View Securitization Corporation as
Depositor, California Thrift & Loan, as Servicer and Bankers Trust Company (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. A copy of the Agreement may be examined during normal business
hours at the Corporate Trust Office of the Trustee by any Certificateholder upon
request. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Class I Certificates designated as "Class I Interest
Only Automobile Receivable Backed Certificates, (the "Class I Certificates").
This Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which Agreement the holder of this Class I
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of the Trust includes a pool of simple and precomputed
interest loan and security agreements and installment sales contracts for new
and used automobiles, motorcycles, light trucks, vans and van conversions (the
"Receivables"), generally all monies paid thereon, and all monies due thereon,
including Accrued Interest, after ____________, 1996 (but excluding Accrued
Interest paid or due prior to the Closing Date), security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof, all
documents contained in the Receivable Files, any property that shall have
secured a Receivable and that shall have been acquired by or on behalf of the
Trust, any Liquidation Proceeds, any rights of the Depositor in proceeds from
claims or refunds of premiums on physical damage, lender's collateral
protection, credit life, disability and hospitalization insurance policies, if
any, covering vehicles financed thereby and the obligors thereunder, the
interest of the Depositor in recourse to dealers relating to certain of the
Receivables, the proceeds of all of the foregoing and amounts on deposit from
time to time in the Spread Account for the benefit of the Class I and Class A
Certificateholders, and the Surety Bond for the benefit of the Class I and Class
A Certificateholders.
In addition to the Class I Certificates, a class of Certificates
representing interests in the Trust (the "Class A Certificates," (which consist
of the "Class A-1 Certificates" and the "Class A-2 Certificates") together with
the Class I Certificates, the "Certificates") and a Class IC Certificate (the
"Class IC Certificate") shall be issued pursuant to the Agreement. The Class A
Certificates will receive monthly payments of principal and interest in
accordance with the Agreement. The Class A and Class I Certificates are senior
in right and interest to the Class IC Certificates. In the event that the funds
available are not sufficient to pay the Class A and Class I Certificateholders
in full, they shall share pro rata in the amounts available based upon the total
amounts they are due. The Class IC Certificate initially will be issued to the
Depositor and it shall represent the interest in the Receivables not represented
by the Certificates.
EXB-2
<PAGE>
Under the Agreement, there will be distributed on the 15th calendar day of
each month (the "Distribution Date"), commencing on ____________, 1997, to the
person in whose name this Certificate is registered at the close of business on
the last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"), such Class I Certificateholder's fractional
interest in Class I Monthly Interest. Each Class I Certificateholder's
"fractional interest" is equal to the original notional principal amount of such
Class I Certificateholder's Class I Certificate, as set forth on the face
thereof, divided by the aggregate original notional principal amount of all of
the Class I Certificates. The Class I Monthly Interest as of any Distribution
Date (except the first Distribution Date) will be the product of one-twelfth
(1/12) of the Class I Pass-Through Rate of ____% per annum and the Notional
Principal Amount, which shall be reduced on each Distribution Date as more fully
described in the Agreement.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto without the presentation or surrender of
this Certificate or the making of any notation hereon, except that with respect
to Class I Certificates registered in the name of CEDE & Co., the nominee
registrant for The Depository Trust Company, payments will be made in the form
of immediately available funds. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this Certificate will
be made only upon presentation and surrender of this Certificate at the office
or agency maintained for that purpose by the Trustee in the Borough of
Manhattan, The City of New York. The Class I Certificateholders will not be
entitled to any distributions after the Notional Principal Amount of the Class I
Certificates has been reduced to zero.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class I Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
The Certificates do not represent an obligation of, or an interest in, the
Depositor or any affiliate of the Depositor. The Certificates are limited in
right of payment to certain collections and recoveries respecting the
Receivables, all as more specifically set forth in the Agreement. The Agreement
provides for certain amounts to be deposited into the Spread Account. In the
event amounts available for withdrawal from the Spread Account are insufficient
to make distributions on the Class I Certificates, the Trustee will draw on the
Surety Bond to pay such deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class I Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class I Certificate and of any Class I
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class I
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
EXB-3
<PAGE>
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Class I Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class I Certificates are issuable only as registered Class I
Certificates without coupons in denominations representing a minimum of $1,000
of Original Notional Principal Amount. As provided in the Agreement and subject
to certain limitations therein set forth, Class I Certificates are exchangeable
for new Class I Certificates of authorized denominations evidencing the same
aggregate denomination, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Class I
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class I Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class I Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held as part of
the Trust. The holder of the Class IC Certificate may at its option cause the
Trustee to sell the corpus of the Trust at a price not less than the price
specified in the Agreement; however, such right is exercisable only as of a
Record Date as of which the Pool Balance is less than or equal to 10% of the
original aggregate principal balance of the Receivables and the Notional
Principal Amount has been reduced to zero.
No recourse shall be had for the payment of the principal of or interest on
this Certificate, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Agreement, against any incorporator,
stockholder, officer or director, as such, past, present, or future, of the
Depositor or Servicer or of any successor at law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Although this Certificate summarizes certain provisions of the Agreement,
this Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. In the event of any inconsistency or
conflict between the terms of this Certificate and the terms of the Agreement,
the terms of the Agreement shall control. By acceptance of this Certificate, the
holder agrees to
EXB-4
<PAGE>
be bound by the foregoing provisions and the terms of the Tax Partnership
Agreement included as an annex to the Agreement.
EXB-5
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: __________, 199_ BAY VIEW 1996 RA-1 AUTO TRUST
By: Bankers Trust Company
----------------------------------
solely in its capacity as Trustee
By:
__________________________________
Responsible Officer
EXB-6
<PAGE>
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS I CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
Bankers Trust Company
as Trustee
DATED:__________________, 199_ BY: ________________________________
Responsible Officer
EXB-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
----------------------------------------------------------------------
(Please print or typewrite name and address, including postal
zip code, of assignee)
----------------------------------------------------------------------
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
_________________________________________________________Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
EXB-8
<PAGE>
EXHIBIT C
[FORM OF CLASS IC CERTIFICATE]
THIS CLASS IC CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NEITHER THIS CLASS IC CERTIFICATE NOR ANY PORTION HEREOF MAY
BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT (1)
IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS AND (2) IN COMPLIANCE WITH
THE RESTRICTIONS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
BAY VIEW 1996 RA-1 AUTO TRUST
CLASS IC AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing an undivided interest in the Trust, as defined below, the property of
which includes a pool of simple interest installment loan and security
agreements and installment sales contracts secured by new and used automobiles,
light trucks and vans. The contracts were sold to the Trustee by Bay View
Securitization Corporation. (This Class IC Certificate does not represent an
interest in or obligation of Bay View Securitization Corporation or any of its
affiliates. Neither this Class IC Certificate nor the underlying Receivables, as
defined below, are insured or guaranteed by any other government agency).
NUMBER
One Unit R-IC-1
THIS CERTIFIES THAT Bay View Securitization Corporation, a Delaware
corporation, is the registered owner of a nonassessable, fully-paid interest in
the Bay View 1996 RA-1 Auto Trust (the "Trust") formed by Bay View
Securitization Corporation. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of ________, 1996 (the "Agreement") between Bay
View Securitization Corporation as Depositor, California Thrift & Loan, as
Servicer and Bankers Trust Company (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee by any Certificateholder upon request. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement. This Class IC Certificate is issued under and is subject
to the terms, provisions, and conditions of the Agreement, to which Agreement
the holder of this Class IC Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the Trust includes a
pool of simple and precomputed interest loan and security agreements and
installment sales contracts for new and used automobiles, motorcycles, light
trucks, vans and van conversions (the "Receivables"), all monies paid thereon,
and all monies due thereon, including Accrued Interest, after ____________, 1996
(but excluding Accrued Interest paid or due before the Closing Date), security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, all documents contained in the Receivable Files, any
EXC-1
<PAGE>
property that shall have secured a Receivable and that shall have been acquired
by or on behalf of the Trust, any Liquidation Proceeds, proceeds from claims or
refunds of premiums on physical damage, lender's single interest, credit life,
disability and hospitalization insurance policies, if any, covering vehicles
financed thereby and the obligors thereunder, certain interests of the Depositor
in recourse to dealers relating to certain of the Receivables and amounts on
deposit from time to time in the Spread Account for the benefit of the Class I
and Class A Certificateholders and the Surety Bond for the benefit of the Class
I and Class A Certificateholders.
This Class IC Certificate represents an interest in certain assets of the
Trust, including the right to receive a portion of the Collections and other
amounts at the times and in the amounts specified in the Agreement. In addition
to the Class IC Certificates, two classes of Certificates representing undivided
interests in the Trust, the Class A Certificates (which consist of the "Class A-
1 Certificates" and the "Class A-2 Certificates") and the Class I
Certificates (collectively, the "Certificates") shall be issued pursuant to the
Agreement. The Class A and Class I Certificates are senior in right and interest
to the Class IC Certificates. In the event that the funds available are not
sufficient to pay the Class A and Class I Certificateholders in full, they shall
share pro rata in the amounts available based upon the total amounts they are
due. The Class A Certificates will receive monthly payments of principal and
interest in accordance with the Agreement. The Class I Certificates will receive
monthly interest payments based on their Notional Principal Amount and will
receive no distributions after the date on which the Notional Principal Amount
of the Class I Certificates has been reduced to zero.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual or facsimile signature, this
Class IC Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose. Registration of transfer of the Class
IC Certificate to a person may not be effected unless (a) the Surety Bond Issuer
consents to such transfer, and the Trustee receives an Opinion of Counsel,
satisfactory to it, to the effect that (i) such transfer may be made in reliance
upon an exemption from the registration requirements of the Securities Act of
1933, as amended, and (ii) such transfer will not adversely affect the tax
treatment of the Trust or the Certificates, and (b) the Surety Bond Issuer
consents to such transfer. Notwithstanding the foregoing, the Depositor shall
have no obligation to register this Class IC Certificate under the Securities
Act of 1933, as amended.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The holder of this Class
IC Certificate may at its option cause the Trustee to sell the corpus of the
Trust at a price not to be less than the price specified in the Agreement, and
such sale of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right is exercisable only as of a
Record Date as of which the Certificate Balance is less than or equal to 10% of
the original aggregate principal balance of the Receivables and the Notional
Principal Amount has been reduced to zero. The Class IC Certificateholder is
required to pay any unpaid fees and expenses of the Trustee and in connection
with such disposition and also is responsible for paying certain obligations of
the Trust, as set forth in Section 7.08(a) of the Agreement.
EXC-2
<PAGE>
Although this Certificate summarizes certain provisions of the Agreement,
this Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. In the event of any inconsistency or
conflict between the terms of this Certificate and the terms of the Agreement,
the terms of the Agreement shall control. By acceptance of this Certificate, the
holder agrees to be bound by the terms of the Tax Partnership Agreement included
as an annex to the Agreement.
EXC-3
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: __________, 199__ BAY VIEW 1996 RA-1 AUTO TRUST
By:
------------------------------------
solely in its capacity as Trustee
By:
------------------------------------
Responsible Officer
EXC-4
<PAGE>
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS IC CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED
AGREEMENT
[__________________________________]
as Trustee
DATED:_______________________, 199__ BY:___________________________
Responsible Officer
EXC-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal
zip code, of assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
_________________________________________________________ Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company savings bank or other savings and loan institution.
EXC-6
<PAGE>
EXHIBIT D
FORM OF LETTER OF REPRESENTATIONS
EXD-1
<PAGE>
SCHEDULE A
TO THE POOLING AND
SERVICING AGREEMENT
SCHEDULE OF RECEIVABLES
Depositor Name of Amount Financed Account Number
Obligor (as of the Cutoff Date)
$
A COPY OF THE SCHEDULE OF RECEIVABLES, INCLUDING THE
ABOVE CAPTIONED INFORMATION WITH RESPECT TO EACH
RECEIVABLE, WAS DELIVERED TO THE TRUSTEE WITH A
COUNTERPART OF THE POOLING AND SERVICING AGREEMENT.
<PAGE>
SCHEDULE B
TO THE POOLING AND
SERVICING AGREEMENT
1. Location of Receivables:
818 Oakpark Road
Covina, California 91724
4620 California Avenue
Bakersfield, California 93309-7017
170 E. 17th Street, #101
Costa Mesa, California 92627-3701
1320 E. Shaw Avenue, Suite 169
Fresno, California 93710-7905
1501 State Street
Santa Barbara, California 93101-2513
1730 Sepulveda Blvd., #4
Torrance, California 90501-5645
5995 Topanga Canyon Blvd.
Woodland Hills, California 91367-3623
<PAGE>
SCHEDULE C
PLANNED NOTIONAL PRINCIPAL AMOUNT SCHEDULE
Planned Notional
Distribution Date in Principal Amount
Initial........................................................
January 1997...................................................
February 1997..................................................
March 1997.....................................................
April 1997.....................................................
May 1997.......................................................
June 1997......................................................
July 1997......................................................
August 1997....................................................
September 1997.................................................
October 1997...................................................
November 1997..................................................
December 1997..................................................
January 1998...................................................
February 1998..................................................
March 1998.....................................................
April 1998.....................................................
May 1998.......................................................
June 1998......................................................
July 1998......................................................
August 1998....................................................
September 1998.................................................
October 1998...................................................
November 1998..................................................
December 1998..................................................
January 1999...................................................
February 1999..................................................
March 1999.....................................................
April 1999.....................................................
May 1999.......................................................
June 1999......................................................
July 1999......................................................
August 1999....................................................
September 1999.................................................
October 1999...................................................
November 1999..................................................
[TO BE AMENDED]
<PAGE>
ANNEX A
TAX PARTNERSHIP AGREEMENT
1. Characterization for Tax Purposes. For United States federal and state
income tax purposes, the Depositor's contribution of the Receivables to the
Trust in exchange for interests in the Trust, and the sale by the Depositor of
Class A Certificates (which includes Class A-1 Certificates, Class A-2
Certificates and Class A-3 Certificates) and Class I Certificates and the
retention by the Depositor of the Class IC Certificate is intended to constitute
the formation of a partnership (the "Tax Partnership") whose partners are the
Class A Certificateholders, the Class I Certificateholders and the Class IC
Certificateholder (which are hereinafter collectively referred to as the "Tax
Partners"). This Tax Partnership shall continue in effect as provided in
Paragraph 3 below. The Tax Partnership shall not be a partnership to any other
extent or for any other purpose.
2. Election with Respect to Subchapter K. Notwithstanding anything to the
contrary, each Tax Partner agrees: (a) not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code, or any
comparable provisions of applicable state laws; and (b) to join in the execution
of such additional documents and elections as may be required in order to
effectuate the foregoing.
3. Term. The provisions of this Tax Partnership Agreement shall be effective
as of the effective date of the sale by the Depositor of the Class A
Certificates and Class I Certificates and the issuance to the Depositor of the
Class IC Certificate (the "Effective Date") and shall continue in full force and
effect from and after such date until the earliest of: (a) the termination of
the Agreement pursuant to its terms; or (b) the mutual agreement of all of the
Tax Partners to terminate the Trust.
4. Capital Contributions and Capital Accounts.
(a) The value of the interests contributed by the Class A
Certificateholders and the Class I Certificateholders shall equal the amount
paid by such Certificateholders, respectively, for their Certificates and such
amounts shall constitute the opening balance in their Capital Accounts (as
hereinafter defined). The value of the interests contributed by the Class IC
Certificateholder shall equal the fair market value of the Class IC
Certificate, which the Tax Partners agree shall be based on the present value
of the cash flow to the Class IC Certificateholder of the amounts to which the
Class IC Certificateholder is entitled to receive pursuant to Section 10.02(e)
at each Distribution Date using a discount rate of approximately three percent
over the weighted average pass-through rate of the Class A Certificates (based
upon the Servicer's determination of what an investor would pay for such an
interest) and a prepayment assumption of approximately 1.5 Asset Back Speed
("ABS") and such total shall be submitted to the Trustee in writing within
five (5) Business Days after the Closing Date. Such amount shall constitute
the opening balance in the Class IC Certificateholder's Capital Account.
(b) An individual capital account (a "Capital Account") shall be
maintained for each Tax Partner in compliance with Treasury Regulation
Sections 1.704-1(b)(2)(iv) and 1.704-2 and accordingly, except as otherwise
provided herein:
<PAGE>
(i) The Capital Account of each Tax Partner shall be credited by (A) the
amount of cash and the fair market value of property other than cash contributed
(or deemed contributed pursuant to Code Section 708) by such Tax Partner to the
Tax Partnership (net of any liabilities assumed by the Tax Partnership upon such
contribution or to which such property is subject at the time of such
contribution); and (B) the amount of any item of taxable income or gain and the
amount of any item of income or gain exempt from tax allocated to such Tax
Partner.
(ii) The Capital Account of each Tax Partner shall be debited by (A) the
amount of any item of tax deduction or loss allocated to such Tax Partner; (B)
such Tax Partner's allocable share, of expenditures not deductible in computing
taxable income and not properly chargeable as capital expenditures; and (C)
the amount of cash and the fair market value of any property other than cash
(net of any liabilities assumed by such Tax Partner or to which such property is
subject at the time of distribution) distributed to such Tax Partner.
(iii) Immediately prior to any distribution of property in kind, the Tax
Partners' Capital Accounts shall be adjusted by assuming that the distributed
properties were sold for cash at their respective fair market values as of the
date of distribution and crediting or debiting each Tax Partner's Capital
Account with its respective share of the hypothetical gains or losses resulting
from such assumed sales in the same manner as gains or losses on actual sales of
such properties would be allocated under Paragraph 6 below.
(iv) Any adjustments of basis of property provided for under Code Section
734 and 733 and comparable provisions of state law (resulting from an election
under Code Section 754 or comparable provisions of state law) shall not affect
the Capital Accounts of the Tax Partners, except as provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(m)(5).
5. Federal and State Income Tax Returns and Elections.
(a) The Tax Partners agree that the holder of the Class IC Certificate
shall serve as the "tax matters partner" (as such term is defined in Code
Section 6231(a)(7) (the "Tax Matters Partner") of the Tax Partnership. The Tax
Matters Partner shall (i) apply to the Internal Revenue Service for a taxpayer
identification number for the Tax Partnership, (ii) elect to adopt the accrual
method of accounting and, if permitted by applicable federal tax law, the
calendar year as the Tax Partnership's fiscal year, (iv) make such other
elections as it deems proper, including, but not limited to, making or causing
the Trust to make a proper election not to be treated as an association taxable
as a corporation pursuant to the final "check-the-box" regulations issued by the
Department of the Treasury on December 17, 1996 and effective as of January 1,
1997, by timely filing Form 8832--Entity Classification Election, with the
appropriate IRS service center, (v) prepare, execute and file the necessary
federal and state partnership income tax returns for the Tax Partnership and
(vi) keep the other Tax Partners informed of all material matters that may come
to its attention in its capacity as Tax Matters Partner. Each Tax Partner agrees
to furnish the Tax Matters Partner with all pertinent information relating to
activities under
ANNEX-2
<PAGE>
the Agreement and this Annex A which is necessary for the Tax Matters Partner to
prepare and file federal and state partnership returns. In acting as Tax Matters
Partner, the Tax Matters Partner shall use its best efforts, but shall incur no
liability to the other Tax Partners.
(b) Within 60 days after the end of each of the Tax Partnership's taxable
years, the Tax Matters Partner shall send to each Tax Partner who has been a Tax
Partner at any time during the taxable year then ended such tax information as
shall be necessary for the preparation by such Tax Partner of its Federal income
tax return and state income and other tax returns, if any, in states where the
Tax Partnership is organized or is qualified to do business.
6. Allocations.
(a) (i) "Net Income" and "Net Loss" respectively, for any period, means
the income or losses of the Tax Partnership as determined in accordance with the
method of accounting followed by the Tax Partnership for Federal income tax
purposes, including, for all purposes, any income exempt from tax and any
expenditures of the Tax Partnership described in Code Section 705(a)(2)(B);
provided, however, (i) that any item allocated under Paragraphs 6(b)(iii) or
6(c) shall be excluded from the computation of Net Income and Net Loss and (ii)
that if, as a result of the contribution of an asset whose fair market value
differs from its adjusted basis for Federal income tax purposes or as a result
of the revaluation of the Tax Partnership's assets, the book value of any Tax
Partnership asset differs from its adjusted basis for Federal income tax
purposes, gain, loss, depreciation and amortization with respect to such asset
shall be computed using the asset's book value consistently with the
requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(ii) "Period" shall mean the calendar month; provided that as to the
month in which the Closing Date occurs, Period shall mean the period commencing
on the Closing Date and ending on the last day of that calendar month, and as to
the month in which the Tax Partnership terminates, Period shall mean the period
beginning on the first day of such month and ending on the date of the Tax
Partnership's termination.
(b) The Tax Partners agree that the Tax Partnership's Net Income and Net
Loss and each item of income, gain, loss, or deduction entering into the
computation thereof for any Fiscal Year shall be allocated by first allocating
the Tax Partnership's Net Income and Net Loss (and each item of income, gain,
loss, or deduction entering into the computation thereof) for each Period within
such Fiscal Year (as if such Period were a complete fiscal year) and then
aggregating the allocations for each Period within the Fiscal Year. In the case
of the transfer of any interest in the Tax Partnership, the items of Net Income
and Net Loss allocated for any Period with respect to the transferred interest
shall be allocated to the holder of that interest on the first business day of
the month following the end of such Period (or in the case of the Period in
which the Tax Partnership terminates, the last day of such Period). If the Tax
Matters Partner determines that this method of allocation of items of Net Income
and Net Loss is not consistent with the requirements of the Code and applicable
Treasury Regulations, it may revise such
ANNEX-3
<PAGE>
method of allocation to conform with such requirements. The Tax Partnership's
Net Income and Net Loss for each Period within a Fiscal Year shall be allocated
as follows:
(i) Net Income for such Period shall be allocated as follows:
(A) (I) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of (1) the product of the Class A-1 Pass-Through Rate and
(2) the Class A-1 Certificate Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously allocated to the Class A-
1 Certificateholders pursuant to this Paragraph 6(b)(i)(A)(I) shall be
allocated 100% to the Class A-1 Certificateholders, in proportion to their
holdings of Class A-1 Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a 360 day year
consisting of twelve 30 day months, and that any such product shall be
appropriately prorated for any Period that is not a full calendar month in
a manner consistent with the computation of cash distributions with respect
to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-1 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-1 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-1
Certificateholders pursuant to this Paragraph 6(b)(i)(A)(II) shall be
allocated 100% to the Class A-1 Certificateholders, in proportion to their
holdings of Class A-1 Certificates.
(B) (I) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of (1) the product of the Class A-2 Pass-Through Rate and
(2) the Class A-2 Certificate Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously allocated to the Class A-
2 Certificateholders pursuant to this Paragraph 6(b)(i)(B)(I) shall be
allocated 100% to the Class A-2 Certificateholders, in proportion to their
holdings of Class A-2 Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a 360 day year
consisting of twelve 30 day months, and that any such product shall be
appropriately prorated for any Period that is not a full calendar month in
a manner consistent with the computation of cash distributions with respect
to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-2 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-2 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-2
Certificateholders pursuant to this Paragraph
ANNEX-4
<PAGE>
6(b)(i)(B)(II) shall be allocated 100% to the Class A-2 Certificateholders,
in proportion to their holdings of Class A-2 Certificates.
(C) (I) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of (1) the product of the Class A-3 Pass-Through Rate and
(2) the Class A-3 Certificate Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously allocated to the Class A-
3 Certificateholders pursuant to this Paragraph 6(b)(i)(C)(I) shall be
allocated 100% to the Class A-3 Certificateholders, in proportion to their
holdings of Class A-3 Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a 360 day year
consisting of twelve 30 day months, and that any such product shall be
appropriately prorated for any Period that is not a full calendar month in
a manner consistent with the computation of cash distributions with respect
to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-3 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-3 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-3
Certificateholders pursuant to this Paragraph 6(b)(i)(C)(II) shall be
allocated 100% to the Class A-3 Certificateholders, in proportion to their
holdings of Class A-3 Certificates.
(D) An amount of Net Income equal to the excess of (x) the sum for
such Period and each preceding Period up to the Period beginning with the
Closing Date, of the Periodic Allocation (as hereinafter defined) over (y)
all amounts previously allocated to the Class I Certificateholders pursuant
to this Paragraph 6(b)(i)(D), shall be allocated 100% to the Class I
Certificateholders, in proportion to their holdings of Class I
Certificates. The "Periodic Allocation" for any Period shall equal the
excess of (i) the product of (1) the Class I Pass-Through Rate and (2) the
Notional Principal Amount for such Period over (ii) the portion of the
amount distributable with respect to the Class I Certificates with respect
to such Period that would constitute a return of basis for an initial
holder if the Class I Certificates constituted an instrument described in
Code Section 860G(a)(1)(B)(ii), employing the principles of Code Section
1272(a)(6) and the constant yield method of accrual; provided that the
product of (1) and (2) in clause (i) shall be computed on the basis of a
360 day year consisting of twelve 30 days months, and that such product
shall be appropriately prorated for any Period that is not a full calendar
month in a manner consistent with the computation of cash distributions
with respect to such Periods as provided by the Agreement.
(E) Notwithstanding the foregoing Paragraphs (A) through (D), if the
actual Net Income for such Period is less than the Net Income allocable
under the sum of the amounts described in such Paragraphs (A) through (D),
the actual Net
ANNEX-5
<PAGE>
Income for such Period shall be allocable to the Class A Certificateholders
and the Class I Certificateholders in proportion to the allocations that
would have been made to such Certificateholders with respect to such Period
under such foregoing Paragraphs (A) through (D) if sufficient Net Income
for such period had existed and the amount distributable hereunder to Class
A Certificateholders shall be distributed pro rata. For the purposes of
applying the foregoing Paragraphs (A) through (D), in such periods, any
amounts allocated pursuant to this Paragraph (E) shall be treated as
allocated pursuant to Paragraphs (A) through (D), as the case may be, to
the extent the allocation was related thereto.
(F) Any remaining Net Income shall be allocated 100% to the Class IC
Certificateholder.
(ii) Net Losses for such Periods shall be allocated as follows:
(A) 100% to the Class IC Certificateholder until the Adjusted Capital
Account (as hereinafter defined) balance of the Class IC Certificateholders
equals zero.
(B) 100% pro rata:
(I) to the Class I Certificateholders, in proportion to their
holdings of Class I Certificates, until the Adjusted Capital Account
balances of the Class I Certificateholders equal zero; and
(II) to the Class A Certificateholders, in proportion to their
holdings of Class A Certificates, until the Adjusted Capital Account
balances of the Class A Certificateholders equal zero.
(C) Any remaining Net Losses shall be allocated 100% to the Class IC
Certificateholder. (iii) Any provision of this Agreement to the contrary
notwithstanding, any payment of amounts due and owing the Surety bond
Issuer from time to time or in connection with an optional disposition of
all Receivables pursuant to Section 16.02 of the Agreement or upon a
termination of the Trust upon the bankruptcy of the Class IC
Certificateholder pursuant to Section 16.03 of the Agreement shall be
treated as a loss of the Tax Partnership and shall be allocated in the same
manner as the Net Loss would be allocated under paragraph 6(b)(ii).
(c) (i) In the taxable year in which the final redemption of the Class I
Certificates occurs, a portion of the premium and other deductions derived by
the Trust up to an amount equal to the aggregate remaining Capital Account
balances of the Class I Certificateholders shall be allocated to the Class I
Certificateholders in proportion to their respective Capital Account balances.
(ii) Any deductions not allocated pursuant to Paragraph 6(c)(i) and
attributable to (w) the amortization of premium on the Receivables, (x) payments
to the
ANNEX-6
<PAGE>
Trustee and (y) payments to the Servicer shall be specially allocated to the
Class IC Certificateholder.
(iii) If there is a net decrease in "partnership minimum gain" (within
the meaning of Treasury Regulation Section 1.704-2(d))for a Fiscal Year, then
there shall be allocated to each Tax Partner items of income and gain for that
year equal to that Tax Partner's share of the net decrease in partnership
minimum gain (within the meaning of Treasury Regulation Section 1.704-2(g)(2)),
subject to the exceptions set forth in Treasury Regulation Sections 1.704-
2(f)(2), (3) and (5), provided, that if the Tax Partnership has any discretion
as to an exception set forth pursuant to Treasury Regulation Section 1.704-
2(f)(5), the Tax Matters Partner may exercise such discretion on behalf of the
Tax Partnership. In the event the application of the minimum gain chargeback
requirement would cause a distortion in the economic arrangement among the Tax
Partners, the Tax Matters Partner shall request the Commissioner to waive the
minimum gain chargeback requirement pursuant to Treasury Regulation Section
1.704- 2(f)(4). The foregoing is intended to be a "minimum gain chargeback"
provision as described in Treasury Regulation Section 1.704-2(f) and shall be
interpreted and applied in all respects in accordance with that Treasury
Regulation. If during a Fiscal Year there is a net decrease in partner
nonrecourse debt minimum gain (as determined in accordance with Treasury
Regulation Section 1.704-2(i)(3)), then, in addition to the amounts, if any,
allocated pursuant to the preceding paragraph, any Tax Partner with a share of
that partner nonrecourse debt minimum gain (determined in accordance with
Treasury Regulation Section 1.704-2(i)(5)) as of the beginning of the Fiscal
Year shall, subject to the exceptions set forth in Treasury Regulation Section
1.704-2(i)(4), including exceptions analogous to those provided pursuant to
Treasury Regulation Sections 1.704-2(f)(2), (3) and (5) (provided, that if the
Tax Partnership has any discretion as to an exception set forth pursuant to
Treasury Regulation Section 1.704-2(f)(5) as made applicable by Treasury
Regulation Section 1.704-2(i)(4), the Tax Matters Partner may exercise such
discretion on behalf of the Tax Partnership) be allocated items of income and
gain for the year (and, if necessary, for succeeding years) equal to that Tax
Partner's share of the net decrease in the partner nonrecourse minimum gain. In
the event the application of the minimum gain chargeback requirement would cause
a distortion in the economic arrangement among the Tax Partners, the Tax Matters
Partner shall request the Commissioner to waive the minimum gain chargeback
requirement pursuant to Treasury Regulation Sections 1.704-2(i)(4) and 1.704-
2(f)(4). The foregoing is intended to be the "chargeback of partner nonrecourse
debt minimum gain" required by Treasury Regulation Section 1.704-2(i)(4) and
shall be interpreted and applied in all respects in accordance with that
Treasury Regulation.
(iv) If during any Fiscal Year of the Tax Partnership a Tax Partner
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes
or increases a deficit balance in the Tax Partner's Adjusted Capital Account (as
defined below), there shall be allocated to the Tax Partner items of income and
gain (consisting of a pro rata portion of each item of Tax Partnership income,
including gross income, and gain for such year) in an amount and manner
sufficient to eliminate such deficit as quickly as possible. The foregoing is
intended to be a "qualified income offset" provision as described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in
all respects
ANNEX-7
<PAGE>
in accordance with the Treasury Regulation. A Tax Partner's "Adjusted Capital
Account", at any time, shall equal the Tax Partner's Capital Account at such
time (x) increased by the sum of (A) the amount of the Tax Partner's share of
partnership minimum gain (as defined in Treasury Regulation Section 1.704-
2(g)(1)and (3)), (B) the amount of the Tax Partner's share of partner
nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-
2(i)(5)), and (C) any amount of the deficit balance in its Capital Account and
Tax Partner is obligated to restore on liquidation of the Tax Partnership and
(y) decreased by reasonably expected adjustments, allocations and distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
(v) Notwithstanding anything to the contrary in this Paragraph 6, Tax
Partnership losses, deductions, or Code Section 705(a)(2)(B) expenditures that
are attributable to a particular partner nonrecourse liability shall be
allocated to the Tax Partner that bears the economic risk of loss for the
liability in accordance with the rules of Treasury Regulation Section 1.704-
2(i).
(vi) Notwithstanding any provision of Paragraphs 6(b) and 6(c)(ii), no
allocation of items of loss or deduction shall be made to a Tax Partner if it
would cause the Tax Partner to have a negative balance in its Adjusted Capital
Account. Allocations of items of loss or deduction that would be made to a Tax
Partner but for this Paragraph 6(c)(vi) shall instead be made first to the Class
IC Certificateholder to the extent not inconsistent with this Paragraph
6(c)(vi), and second, to the Class A and Class I Certificateholders in
proportion to the amounts distributable for the related Period pursuant to
Sections 9.04(a)(iii) of the Agreement. To the extent allocations of items of
loss or deduction cannot be made to any Tax Partner because of this Paragraph
6(c)(vi), such allocations shall be made to the Tax Partners in accordance with
Paragraphs 6(b) and 6(c)(ii) notwithstanding this Paragraph 6(c)(vi).
(vii) To the extent that any item of income, gain, loss or deduction has
been specially allocated pursuant to Paragraphs 6(c)(iv) and (vi) and such
allocation is inconsistent with the way in which the same amount otherwise would
have been allocated under Paragraphs 6(b) and 6(c)(ii), subsequent allocations
under Paragraph 6(b) and 6(c)(ii) shall be made, to the extent possible and
without duplication, in a manner consistent with Paragraphs 6(c)(iii), (iv), (v)
and (vi) which negate as rapidly as possible the effect of all such inconsistent
allocations.
(viii) Any allocations made pursuant to this Paragraph 6 shall be made in
the following order:
(i) Paragraph 6(c)(iii)
(ii) Paragraph 6(c)(iv)
(iii) Paragraph 6(c)(v)
(iv) Paragraph 6(c)(vii)
(v) Paragraph 6(c)(i)
(vi) Paragraph 6(c)(ii)
(vii) Paragraph 6(b)(iii)
(viii) Paragraph 6(b)(i) and (ii)
ANNEX-8
<PAGE>
These provisions shall be applied as if all distributions and allocations
were made at the end of the Fiscal Year. Where any provision depends on the
Capital Account of any Partner, that Capital Account shall be determined
after the operation of all preceding provisions for the year. These
allocations shall be made consistently with the requirements of Treasury
Regulation Section 1.704-2(j).
(d) The income, gains, losses, deductions and credits of the Tax
Partnership for Federal, state and local income tax purposes shall be
allocated in the same manner as the corresponding items entering into the
computation of Net Income and Net Losses were allocated pursuant to
Paragraphs 6(b) and (c) provided that solely for Federal, local and state
income and franchise tax purposes and not for book or Capital Account
purposes, income, gain, loss and deduction with respect to property
properly carried on the Tax Partnership's books at a value other than its
tax basis shall be allocated (i) in the case of property contributed in
kind, in accordance with the requirements of Code Section 704(c) and such
Treasury Regulations as may be promulgated thereunder from time to time,
and (ii) in the case of other property, in accordance with the principles
of Code Section 704(c) and the Treasury Regulations thereunder as
incorporated among the requirements of the relevant provisions of the
Treasury Regulations under Code Section 704(b).
(e) The Tax Partnership shall comply with all withholding requirements
under Federal, state and local law and shall remit amounts withheld to and
file required forms with the applicable jurisdictions. To the extent the
Tax Partnership is required to withhold and pay over any amounts with
respect to distributions or allocations to any Tax Partner, the amount
withheld shall be treated as a distribution to that Tax Partner. In the
event of any claimed overwithholding, Tax Partners shall have no claim for
recovery against the Tax Partnership or other Tax Partners. If the amount
withheld was not withheld from actual distributions, the Tax Partnership,
may at its option, (i) require the Tax Partner to reimburse the Tax
Partnership for such withholding (and each Tax Partner agrees to reimburse
the Tax Partnership promptly following such request) or (ii) reduce any
subsequent distributions by the amount of such withholding. If there is a
possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Tax Partner), the Tax Partnership may
in its sole discretion withhold such amounts in accordance with this
Paragraph 6(e). Each Tax Partner agrees to furnish the Tax Partnership with
any representations and forms as shall reasonably be requested by the Tax
Partnership to assist it in determining the extent of, and in fulfilling,
its withholding obligations. If a Tax Partner wishes to apply for a refund
of any such withholding tax, the Trustee shall reasonably cooperate with
such Tax Partner in making such claim as long as the Tax Partner agrees to
reimburse the Tax Partnership for any out-of-pocket expenses incurred.
7. Sale of Interests. The Tax Partners agree that any sale by a Tax
Partner of any ownership interest in a Certificate shall be deemed to be a sale
of all or a portion of such Tax Partner's interest in the Tax Partnership.
8. Termination of a Tax Partner's Interest. Any distribution by the Tax
Partnership in termination of any Tax Partner's interest in the Tax Partnership
other than pursuant to Paragraph 9 below shall be in an amount of cash or
property other than cash having a net fair
ANNEX-9
<PAGE>
market value equal to the positive Capital Account balance of such Tax Partner
at the time such interest is terminated, after such Capital Account balance has
been adjusted in accordance with Paragraphs 4 and 6 above for all operations
preceding such distribution and the applicable Treasury Regulations under Code
Section 704(b), and shall be made by the later of: (a) the end of the Tax
Partnership's taxable year in which such termination occurs; or (b) within 90
days after the date of such termination.
9. Distributions upon Termination. Upon termination of the Agreement
pursuant to its terms, the activities of the Tax Partners under this Annex A
shall be concluded and the assets subject to the Agreement and this Annex A
shall be distributed to the Tax Partners in the manner and in the order set
forth below:
(a) Debts of the Tax Partnership created pursuant to the Agreement,
other than to Tax Partners, including, except as provided in Paragraph
9(e), all amounts due and owing to the Surety Bond Issuer, shall be paid.
(b) Debts owed among the Tax Partners created pursuant to the Agreement
shall be paid.
(c) All cash on hand representing unexpended contributions by any Tax
Partner shall be returned to the contributor.
(d) The Tax Partners' Capital Accounts shall be adjusted by:
(i) assuming the sale of all remaining assets at their fair market
values as of the date of termination of the Agreement; and
(ii) debiting or crediting each Tax Partner's Capital Account with
the Tax Partner's respective share of the hypothetical gains or losses
resulting from such assumed sales in the same manner as such Tax Partner's
Capital Account would be debited or credited under Paragraph 6 above for
gains or losses on actual sales of such properties.
(e) All Tax Partnership assets shall be distributed to the Tax Partners
in accordance with their respective Capital Account balances as so adjusted
by the later of: (i) the end of the Tax Partnership's taxable year in which
the termination occurs; or (ii) within 90 days after the date of such
termination, in the following order or priority:
(i) to the Class A and Class I Certificateholders, pro rata; and
(ii) to the Class IC Certificateholder; provided, that in the event
of a termination of the Trust Fund in the event of a bankruptcy of the
Class IC Certificateholders as provided in Section 16.03 of the Agreement
or an optional termination of the Trust under Section 16.02 of the
Agreement, all amounts due and owing to the Surety Bond Issuer shall be
paid to the Surety Bond Issuer after the distribution to the Class A and
Class I Certificateholders pursuant to clause (i) of this Paragraph 9(e)
and prior to the distribution to the Class IC Certificateholder pursuant to
ANNEX-10
<PAGE>
clause (ii) of this Paragraph 9(e). If property subject to the Agreement is
distributed pursuant to this paragraph, the amount of the distribution
shall be equal to the net fair market value of the distributed property.
ANNEX-11
<PAGE>
EXHIBIT 5.1
OPINION OF SILVER, FREEDMAN & TAFF, L.L.P.
WITH RESPECT TO LEGALITY OF THE CERTIFICATES
<PAGE>
January 2, 1997
Bay View Securitization Corporation
2121 South El Camino Real
San Mateo, California 94403
Re: Bay View Auto Trusts -- Registration No. 333-16233
--------------------------------------------------
Ladies and Gentlemen:
You have requested our opinion in connection with the Registration
Statement on Form S-3 ("Registration Statement") under the Securities Act of
1933, as amended (the "Act"), regarding the issuance by Bay View Securitization
Corporation (the "Corporation"), as originator of asset-backed certificates by
Bay View Auto Trusts (the "Trusts"), of Automobile Receivable Pass-Through
Certificates to be issued by the Trusts (the "Certificates"). We have examined
such corporate records, certificates and other documents, and have reviewed such
questions of law as we have considered necessary or appropriate for the purposes
of this opinion.
On the basis of such examination and review, we advise you that, in our
opinion, when (i) the Registration Statement on Form S-3 filed by the
Corporation with respect to the Trusts shall have become effective under the
Act; (ii) the applicable Prospectus Supplement has been prepared, completed,
filed and delivered in accordance with the Act; (iii) pricing and similar terms
in the applicable Pooling and Servicing Agreement (each, an "Agreement") between
the Corporation, as depositor, California Thrift & Loan, as servicer, and
Bankers Trust Company, as Trustee ("Trustee") have been appropriately completed
and the applicable Agreement has been duly executed and delivered; and (iv) the
Certificates shall have been executed, authenticated, issued and delivered by
the Trustee under the applicable Agreement and sold in accordance with the terms
set forth in the applicable form of Underwriting Agreement between the
Corporation, Bay View Capital Corporation, California Thrift & Loan and the
applicable underwriter or underwriters, relating to the Certificates, the
Certificates will be validly issued, fully paid and non-assessable and will be
entitled to the benefits afforded by the Agreement under which they are issued.
<PAGE>
Bay View Securitization Corporation
Date
Page 2
The foregoing is limited to the application of the internal laws of the
States of California and New York and applicable federal law, and no opinion is
expressed herein as to any matter governed by the laws of any other
jurisdiction, provided, that as to matters governed by the laws of the State of
California, we have relied upon the opinion of Robert J. Flax, Esquire dated
January 2, 1997.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us under the heading "Legal
Opinions" in the Prospectus forming part of the Registration Statement. In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Silver, Freedman & Taff, L.L.P.
Silver, Freedman & Taff, LLP
<PAGE>
EXHIBIT 5.2
OPINION OF ROBERT J. FLAX, ESQUIRE
WITH RESPECT TO LEGALITY OF THE CERTIFICATES
<PAGE>
January 2, 1997
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Suite 700, East Tower
Washington, D.C. 20005
Re: Bay View Auto Trusts -- Registration No. 333-16233
Ladies and Gentlemen:
I am delivering the opinion to you in connection with your opinion dated
the date hereof (the "Silver, Freedman Opinion") set forth as Exhibit 5(a) to
Registration Statement No. 333-16233,as amended by Amendment No. 1 thereto (as
amended, the "Registration Statement"), on Form S-3 under the Securities Act of
1933, as amended (the "Act"). The Registration Statement covers Automobile
Receivable Pass-Through Certificates ("Certificates") to be sold by Bay View
Securitization Corporation ("BVSC") in one or more series (each, a "Series") of
Certificates.
In connection with the Registration Statement and the Silver, Freedman
Opinion, you have requested my opinion as to certain California law matters
relating to (i) the forms of Agreements set forth as
Exhibits 4.1, 4.2 and 4.3 to the Registration Statement certain of which are to
be entered into with respect to each Series of Certificates (each, a "Pooling
and Servicing Agreement") among BVSC, as depositor, California Thrift & Loan
<PAGE>
("CTL"), as servicer, and a trustee to be identified in the Prospectus
Supplement for such Series of Certificates (a "Trustee") and (ii) the form of
Underwriting Agreement set forth as Exhibit 1 to the Registration Statement to
be entered into with respect to the sale of the Certificates of each Series
(each, an "Underwriting Agreement") among BVSC, Bay View Capital Corporation,
CTL and the underwriters to be identified in the Prospectus Supplement for each
Series. I have examined the forms of Pooling and Servicing Agreement set forth
as Exhibits 4.1, 4.2 and 4.4 to the Registration Statement and the form of
Underwriting Agreement set forth as Exhibit 1 to the Registration Statement, and
have reviewed such questions of law as I have considered necessary or
appropriate for the purposes of this opinion.
I do not express any opinions herein as to matters governed by the law of
any jurisdiction other than the State of California. In rendering the opinions
set forth below, I have relied with your permission on the Silver, Freedman
Opinion as to all matters governed by the law of any jurisdiction other than the
State of California.
Based upon the foregoing, I am of the opinion that none of the provisions
contained in the form of Underwriting Agreement or the form of Pooling and
Servicing Agreement would be interpreted under California law in a manner that
would cause any Certificates, when (i) the Registration Statement shall have
become effective under the Act, (ii) pricing and similar terms in the related
Pooling and Servicing Agreement shall have been appropriately completed and such
Pooling and Servicing Agreement shall have been duly executed and delivered by
all parties thereto, and (iii) such Certificates shall have been executed,
authenticated, issued and delivered by the Trustee under the related Pooling and
Servicing Agreement and sold in accordance with the terms set forth in the form
of Underwriting Agreement relating to such Certificates, not to be validly
issued, fully paid and non-assessable or entitled to the benefits of the related
Pooling and Servicing Agreement.
<PAGE>
I am furnishing this opinion to you solely for your benefit, understanding
that you will be relying on this opinion, as to California law matters only, for
the purpose of rendering the Silver, Freedman Opinion. In this regard, I consent
to the filing of this opinion as Exhibit 5(b) to the Registration Statement.
However, nothing contained herein shall be construed as an admission by me that
I am in the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Securities and Exchange Commission
thereunder. Except as mentioned above, this opinion is not to be used,
circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
/s/ Robert J. Flax
<PAGE>
EXHIBIT 8
OPINION OF SILVER, FREEDMAN & TAFF, L.L.P.
WITH RESPECT TO TAX MATTERS
<PAGE>
January 2, 1997
Bay View Securitization Corporation
2121 South El Camino Real
San Mateo, California 94403
Re: Bay View Auto Trusts: Automobile Receivable Pass-Through Certificates
---------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special tax counsel to Bay View Securitization Corporation
in connection with the filing of the Registration Statement (as defined below)
providing for the issuance of Automobile Receivable Pass-Through Certificates
(the "Certificates") by the Bay View Auto Trusts. In such capacity, we hereby
confirm to you our opinion with respect to such of the United States federal
income tax consequences of the purchase, ownership and disposition of the
Certificates as is set forth under the heading "Certain Federal Income Tax
Consequences" in the Prospectus included in the Registration Statement, as
amended, (Registration No. 333-16233) (the "Registration Statement") filed by
Bay View Securitization Corporation with the United States Securities and
Exchange Commission (the "Commission") in connection with the offering of the
Certificates. Such descriptions, however, do not purport to discuss all
possible federal income tax ramifications of the proposed issuance of the
Certificates.
We hereby consent to the filing of this opinion as Exhibit 8 to the
Registration Statement and to the reference to us under the heading "Certain
Federal Income Tax Consequences" in the Prospectus forming part of the
Registration Statement. However, nothing contained herein shall be construed as
an admission by us that we are in the category of persons whose consent is
required under Section 7 of the Securites Act of 1933 or the rules and
regulations of the Commission thereunder.
<PAGE>
Bay View Securitization Corporation
Date
Page 2
No opinion is expressed as to the tax treatment of the issuance, purchase,
ownership and disposition of the Certificates under other provisions of the
Internal Revenue Code of 1986, as amended, and the Income Tax Regulations
thereunder or about the tax treatment of any conditions existing at the time of
or effects resulting from the issuance, purchase, ownership and disposition of
the Certificates that are not specifically covered in our opinion as set forth
in the Registration Statement. Except as mentioned hereinabove, this opinion is
not to be used, circulated, quoted or otherwise referred to for any other
purpose.
Very truly yours,
/s/ Silver, Freedman & Taff, L.L.P
Silver, Freedman & Taff, L.L.P
<PAGE>
EXHIBIT 10
FORM OF PURCHASE AGREEMENT
<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this ___ day of _______, 199_,
between BAY VIEW SECURITIZATION CORPORATION, a Delaware corporation (the
"Purchaser"), and CALIFORNIA THRIFT AND LOAN, a California industrial loan
company ("Seller" or "CTL").
WHEREAS, the Purchaser desires to purchase certain Receivables from the
Seller and the Seller desires to sell such Receivables to the Purchaser; and CTL
shall service the Receivables on behalf of Purchaser and expects to service the
Receivables on behalf of the Bay View 199_-A Auto Trust and to receive the
benefits of acting as servicer in such capacities.
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration and the mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall, unless the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms of the terms defined):
"Agreement" means this Purchase Agreement and all amendments hereof and
supplements hereto.
"Assignment" means the document of assignment attached to this Agreement as
Annex A.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, Chicago, Illinois or San
Francisco, California are authorized or obligated by law, executive order or
governmental decree to be closed.
"Closing Date" means the date specified as such in Article II of the
Pooling and Servicing Agreement.
"Cutoff Date" means the date specified as such in the Pooling and Servicing
Agreement.
"Dealer" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to CTL under an existing agreement with CTL or
who arranged for a loan from CTL to the purchaser of a Financed Vehicle under an
existing agreement with CTL.
"Distribution Date" means, for each Collection Period, the third Business
Day after the 5th day of the following month.
<PAGE>
"Financed Vehicle" means a new or used automobile, light truck, motorcycle,
or van, together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable by operation of law.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
to the Depositor, which counsel shall be acceptable to the Purchaser and the
Trustee.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement
by and between the Purchaser as Depositor and the Servicer and Bankers Trust
Company as Trustee dated as of ___________, 199_, providing for the issuance of
Automobile Receivable Pass-Through Certificates.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the related
contract as an add-on finance charge) and the portion allocable to the Amount
Financed is determined according to the sum of periodic balances, the sum of
monthly balances, the rule of 78's or any equivalent method.
"Purchase Amount" of any Receivable, as of the close of business on the
last day of any Collection Period, means the amount equal to the sum of the
Principal Balance of such Receivable plus any unpaid interest accrued and due
during or prior to such Collection Period on such Receivable.
"Receivable" means any simple or precomputed interest installment sales
contract or installment loan and security agreement which shall appear on
Schedule A to this Agreement.
"Receivable Files" means the following documents or instruments with
respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the
Obligor.
(iii) The original certificate of title or such documents that the
Seller or CTL shall keep on file, in accordance with its
customary procedures, evidencing the security interest of
the Seller in the Financed Vehicle.
2
<PAGE>
(iv) Any and all other documents that the Seller shall keep on
file, in accordance with its customary procedures, relating
to a Receivable, an Obligor, or a Financed Vehicle.
"Servicer" means initially CTL and thereafter any Person appointed as the
successor Servicer as provided in Section 14.02 of the Pooling and Servicing
Agreement.
"Trust" means the trust created by the Pooling and Servicing Agreement.
"Trustee" means Bankers Trust Company, a banking corporation organized
under the laws of the State of New York and its successors or any corporation
resulting from or surviving any merger or consolidation to which it or its
successors may be a party or any successor trustee at the time serving as
successor trustee hereunder.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
Capitalized terms used herein but not defined herein have the meanings
assigned to them in the Pooling and Servicing Agreement.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.01 PURCHASE AND SALE OF RECEIVABLES.
(a) Purchase and Sale of Receivables. Simultaneously with the
transactions occurring on the Closing Date pursuant to the Pooling and
Servicing Agreement, the Seller shall sell, transfer, assign and otherwise
convey to the Purchaser, without recourse;
(i) all right, title, and interest of the Seller in and to the
Receivables listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims or
refunds of premiums on any physical damage, lender's
collateral protection, credit life, disability and
hospitalization insurance policies covering Financed
Vehicles or Obligors;
(iv) the interest of the Seller in any proceeds from recourse to
Dealers relating to the Receivables;
3
<PAGE>
(v) all documents contained in the Receivable Files;
(vi) all monies paid thereon, and all monies due thereon,
including Accrued Interest after the Cutoff Date (but
excluding interest paid prior to the Closing Date), with
respect to the Receivables held by the Servicer; and
(vii) all proceeds of the foregoing.
The Seller does not convey to the Purchaser any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
(b) Receivables Purchase Price. In consideration for the
Receivables, the Purchaser shall on the Closing Date pay to the Seller the
purchase price for such Receivables, equal to the Principal Balance of such
Receivables at the Cutoff Date in the amount of $____________.
SECTION 2.02 CLOSING THE PURCHASE AND SALE.
(a) The Closing. The closing of the sale of Receivables (the
"Closing") shall take place at the offices of Silver, Freedman & Taff, LLP,
1100 New York Avenue, Washington, D.C. 20005, on the Closing Date,
simultaneously with the closing under the Pooling and Servicing Agreement.
(b) Documents to be Delivered at the Closing.
(i) The Assignment. On or prior to the Closing, the Seller will
execute and deliver the Assignment. The Assignment shall be
in substantially the form of Annex A hereto.
(ii) Evidence of UCC Filing. The Seller shall record and file, at
its own expense, one or more financing statements with
respect to the Receivables in such manner and in such places
as required by law fully to preserve, maintain and protect
the interest of the Purchaser in the Receivables and other
property conveyed to the Purchaser hereunder, and shall
deliver a file-stamped copy of such financing statements or
other evidence of such filings to the Purchaser on or prior
to the Closing Date.
(iii) Schedule of Receivables. The Seller shall at its own
expense, on or prior to the Closing Date, indicate in its
computer files those Receivables that have been sold or
otherwise conveyed to the Purchaser pursuant to this
Agreement and deliver to the Purchaser (or to the Trustee on
the Purchaser's behalf) a computer file, hard copy or
microfiche list containing a true and complete list of all
such Receivables.
4
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER. The
Seller hereby represents and warrants to the Purchaser as of the date hereof and
as of the Closing Date;
(a) Organization and Good Standing. The Seller has been duly
incorporated and is validly existing as a corporation and in good standing
under the laws of the State of California, and has full corporate power,
authority and legal right to execute and deliver this Agreement and to
perform the terms and provisions hereof.
(b) Due Authorization. The execution, delivery and performance
of this Agreement by the Seller has been duly authorized by all necessary
corporate action, does not require any approval or consent of any
governmental agency or authority, does not and will not violate or result
in a breach which would constitute a material default under, any agreement
for borrowed money binding upon or applicable to it or such to its property
which is material to it or its subsidiaries (whether or not consolidated)
taken as a whole, or to the best of the Seller's knowledge, any law or
governmental regulation or court decree applicable to it or such material
property, and this Agreement is the valid, binding and enforceable
obligation of the Seller except as the same may be limited by insolvency,
bankruptcy or other similar laws of general application affecting the
enforcement of creditors' rights or general equity principles.
(c) Accuracy of Information. All information heretofore
furnished by the Seller in writing to the Purchaser for purposes of or in
connection with this Agreement or any transaction contemplated hereby is
true and accurate in every material respect or based on reasonable
estimates on the date as of which such information is stated or certified.
(d) No Proceedings. There are no proceedings or investigations
pending, or, to the best knowledge of the Seller, threatened against the
Seller before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking any determination or
ruling that, in the reasonable judgment of the Seller, would have a
material adverse effect on the performance by the Seller of its obligations
under this Agreement.
SECTION 3.02 REPRESENTATIONS AND WARRANTIES REGARDING THE RECEIVABLES.
The Seller makes the following representations and warranties as to the
Receivables on which the Purchaser relies in purchasing the Receivables. Such
representations and warranties speak as of the execution and delivery of the
Agreement, but shall survive the sale, transfer, and assignment of the
Receivables by the Seller to the Purchaser hereunder and by the Purchaser to the
Trustee under the Pooling and Servicing Agreement.
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(a) Characteristics of Receivables. Each Receivable (1) shall
have been either (A) originated in the United States of America by a Dealer
for the retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, shall have been purchased by CTL from such Dealer and
shall have been validly assigned by such Dealer to CTL in accordance with
its terms and, pursuant to this Agreement, by the Seller to the Purchaser
or (B) shall have been originated in the United States of America by CTL
and is validly sold and assigned, and, pursuant to this Agreement, by the
Seller to the Purchaser (2) shall have been fully and properly executed by
the parties thereto, (3) shall have created or shall create a valid,
subsisting, and enforceable first priority perfected security interest in
favor of CTL in the Financed Vehicle, which security interest shall be
assignable and shall have been validly assigned by the Seller to the
Purchaser, (4) shall contain customary and enforceable provisions such that
the rights and remedies of the holder thereof shall be adequate for
realization against the collateral of the benefits of the security, and (5)
shall bear a fixed rate of interest.
(b) Schedule of Receivables. The information set forth in
Schedule A to the Agreement shall be true and correct in all material
respects as of the closing of business on the Cutoff Date, and no selection
procedures believed to be adverse to the Certificateholders shall have been
utilized in selecting the Receivables.
(c) Compliance with Law. Each Receivable and each sale of the
related Financed Vehicle shall have complied at the time it was originated
or made and at the execution of the Agreement shall comply in all material
respects with all requirements of applicable federal, State, and local
laws, and regulations thereunder, including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the Magnuson-
Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, and
State adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, and other applicable consumer credit laws and equal credit
opportunity and disclosure laws.
(d) Binding Obligation. Each Receivable shall represent the
genuine, legal, valid, and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms.
(e) No Government Obligor. None of the Receivables shall be due
from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America, any State
or any local government.
(f) Security Interest in Financed Vehicle. Immediately prior to
the sale, assignment, and transfer thereof, each Receivable shall be
secured by a validly perfected first priority security interest in the
Financed Vehicle in favor of CTL as secured party or all necessary and
appropriate actions with respect to such Receivable shall have been
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taken to perfect a first priority security interest in the Financed Vehicle
in favor of CTL as secured party.
(g) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle have
been released from the lien granted by the related Receivable in whole or
in part.
(h) No Waiver. No provision of a Receivable shall have been
waived.
(i) No Defenses. No right of rescission, setoff, counterclaim,
or defense shall have been asserted or threatened with respect to any
Receivable.
(j) No Liens. No liens or claims shall have been filed,
including liens for work, labor, or materials relating to a Financed
Vehicle that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Receivable.
(k) No Default. Except for payment defaults continuing for a
period of not more than 30 days as of the Cutoff Date, no default, breach,
violation, or event permitting acceleration under the terms of any
Receivable shall have occurred; and no continuing condition that with
notice or the lapse of time would constitute a default, breach, violation,
or event permitting acceleration under the terms of any Receivable shall
have arisen; and neither CTL nor the Seller shall have waived any of the
foregoing.
(l) Insurance. Each Obligor has agreed to obtain physical damage
insurance covering the Financed Vehicle.
(m) Title. It is the intention of the Seller that the transfer
and assignment herein contemplated, taken as a whole, constitute a sale of
the Receivables from the Seller to the Purchaser and that the beneficial
interest in and title to the Receivables not be part of the receivership
estate in the event of the appointment of a receiver for the Seller. No
Receivable has been sold, transferred, assigned, or pledged by the Seller
to any Person other than the Purchaser, except for pledges as shall have
been duly and fully released. Immediately prior to the transfer and
assignment herein contemplated, the Seller had good and marketable title to
each Receivable free and clear of all liens, and, immediately upon the
transfer thereof, the Purchaser shall have good and marketable title to
each Receivable, free and clear of all liens and rights of others and the
transfer and assignment herein contemplated has been perfected under the
UCC.
(n) Lawful Assignment. No Receivable shall have been originated
in, or shall be subject to the laws of, any jurisdiction under which the
sale, transfer, and assignment of such Receivable under the Agreement or
transfers of the Certificates would be unlawful, void, or voidable.
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(o) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Purchaser a first priority perfected security interest in the Receivables
shall have been made.
(p) One Original. There shall be only one original executed copy
of each Receivable.
(q) Original Number of Scheduled Payments. Each Receivable shall
have not less than __ nor greater than __ monthly payments scheduled at
origination.
(r) Remaining Maturity of Receivables. Each Receivable shall
have a remaining maturity of not more than __ months.
(s) Minimum Note Rate. Each Receivable shall have a contract
rate of interest (exclusive of prepaid finance charges) equal to or greater
than _____% and less than or equal to _____%.
(t) Scheduled Payments. Each Receivable shall be not more than
30 days overdue as of the Cutoff Date.
(u) Interest Method. Each Receivable shall provide for accrual
of interest according to the simple interest method or shall be a
Precomputed Receivable and shall provide for monthly payments of principal
and interest that fully amortize the Amount Financed by maturity and for a
finance charge or yield interest at its Note Rate. The Principal Balance of
Precomputed Receivables (on an actuarial basis) as of the Cutoff Date
represents ____% of the Original Pool Balance.
(v) Latest First Payment Date. No Receivable shall have had a
first payment due after ___________, 199_.
(w) Location of Receivable Files. The Receivable Files shall be
kept at one or more of the locations listed in Annex B hereto.
(x) Composition of Receivables. Each and every Receivable listed
on Schedule A hereto shall arise from loans originated only on automobiles,
light trucks, motorcycles, vans or van conversions, at least _____% of
which (securing at least _____% of the Receivables by principal balance)
are new vehicles.
(y) Marking Records. By the Closing Date, the Seller and CTL
will have caused the portions of the electronic ledger or similar computer
records relating to the Receivables conveyed to the Purchaser hereunder to
be clearly and unambiguously marked to show that such Receivables
constitute property of the Purchaser and/or have been conveyed by Purchaser
to the Trust and constitute part of the Trust in accordance with the terms
of the Trust created under the Pooling and Servicing Agreement.
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(z) Precomputed Receivables. Each Precomputed Receivable shall
provide for, in the event that such a Receivable is prepaid, a prepayment
that fully pays the Principal Balance and includes accrued but unpaid
interest in an amount calculated using an interest rate at least equal to
its Note Rate.
SECTION 3.03 REPURCHASE UPON BREACH. The Purchaser or CTL, as the case may
be, shall inform the other parties promptly, in writing, upon the discovery of
any breach of the representations and warranties under Section 3.02. Unless the
breach shall have been cured by the second Record Date (as defined in the
Pooling and Servicing Agreement), following the discovery, CTL shall repurchase
from the Purchaser any Receivable materially and adversely affected by the
breach as of such Record Date (or, at CTL's option, the first Record Date
following the discovery). In consideration of the purchase of the Receivable,
CTL shall remit the Purchase Amount to or for the account of the Purchaser. The
sole remedy of the Purchaser shall be to require CTL to repurchase Receivables
pursuant to this Section 3.03. CTL hereby consents to the assignment by the
Purchaser of its rights under this Section 3.03 to the Trust in the Pooling and
Servicing Agreement and, in the event of such assignment, agrees to remit the
Purchase Amount in respect of any repurchased Receivable directly to the Trust
Certificate Account as provided for in the Pooling and Servicing Agreement. CTL
acknowledges that the Trust and the Surety Bond Issuer shall be third party
beneficiaries in respect of the rights and benefits arising hereunder that are
so assigned by Purchaser. Moreover, CTL hereby authorizes the Purchaser and its
assignee on behalf of CTL, to execute and deliver certificates of title for any
Financed Vehicle securing a Receivable naming CTL as secured party, and such
other documents or certificates as may be necessary in connection therewith, in
order to identify the Purchaser or its assignee, as appropriate, as the secured
party with respect to such Financed Vehicle.
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ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
The obligation of the Purchaser to purchase Receivables on the Closing Date
is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of CTL hereunder shall be true and correct on the Closing Date
with the same effect as if then made.
(b) Documents, Other Obligations. CTL have delivered the
documents and performed all other obligations to be performed by it
hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
The Seller agrees with the Purchaser as follows:
SECTION 5.01 CONFLICTS WITH POOLING AND SERVICING AGREEMENT. To the
extent that any provision of Sections 5.02 through 5.05 of this Agreement
conflicts with any provision of the Pooling and Servicing Agreement, the Pooling
and Servicing Agreement shall govern.
SECTION 5.02 PROTECTION OF RIGHT, TITLE AND INTEREST.
(a) The Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in
such manner and in such places as may be required by law fully to preserve,
maintain, and protect the interest of the Purchaser and/or the
Certificateholders and the Trustee under the Pooling and Servicing
Agreement in the Receivables and in the proceeds thereof. The Seller shall
deliver (or cause to be delivered) to the Purchaser and/or the Trustee
file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) The Seller shall not change its name, identity, or corporate
structure in any manner that would, could, or might make any financing
statement or continuation statement filed by the Seller in accordance with
paragraph (a) above seriously misleading within the meaning of 9-402(7) of
the UCC, unless it shall have given the Purchaser at least 60 days' prior
written notice thereof.
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(c) The Seller shall give the Purchaser at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement (in which case the
Servicer shall file or cause to be filed such amendment or continuation
statement or new financing statement).
(d) The Seller shall cause its computer systems to be maintained
so that, from and after the time of sale under this Agreement of the
Receivables to be maintained such that the master computer records
(including any back-up archives) that refer to a Receivable shall indicate
clearly that such Receivable is owned by the Purchaser or Trustee.
Indication of the Trustee's ownership of a Receivable shall be deleted from
or modified on the Servicer's computer systems when, and only when, the
Receivable shall have been paid in full or repurchased.
(e) If at any time the Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Seller shall give to such prospective purchaser, lender, or other
transferee computer tapes, records, or print-outs (including any restored
from back-up archives) that, if they shall refer in any manner whatsoever
to any Receivable, shall indicate clearly that such Receivable has been
sold and is owned by the Purchaser or the Trustee.
(f) The Seller shall permit the Purchaser and its agents at any
time during normal business hours to inspect, audit, and make copies of and
abstracts from the Seller's records regarding any Receivable.
SECTION 5.03 SECURITY INTERESTS. The Seller shall defend the right,
title and interest of the Purchaser in, to and under the Receivables, against
all claims of third parties claiming through or under the Seller.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01 OBLIGATIONS OF THE SELLER. The obligations of the Seller to
the Purchaser under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable.
SECTION 6.02 AMENDMENT. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the parties hereto.
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SECTION 6.03 TERMINATION. This Agreement shall terminate upon the
termination of the Trust pursuant to the Pooling and Servicing Agreement.
SECTION 6.04 WAIVERS. No failure or delay on the part of the Purchaser
in exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
SECTION 6.05 NOTICES. All communications and notices pursuant hereto to
either party shall be in writing or by telegraph or telex and addressed or
delivered to it at its address (or in case of telex, at its telex number at such
address) shown below or at such other address as may be designated by it by
notice to the other party and, if mailed or sent by telegraph or telex, shall be
deemed given when mailed, communicated to the telegraph office or transmitted by
telex. Such notice shall be sent to (a) in the case of the Seller, California
Thrift & Loan, 818 Oakpark Road, Covina, California 91724, Attention: Michael
Iachelli c) in the case of the Purchaser, Bay View Securitization Corporation,
212 South El Camino Real, San Mateo, California, Attention: Robert J. Flax, or
at such other address as shall be designated by Purchaser in a written notice to
Seller.
SECTION 6.06 HEADINGS AND CROSS-REFERENCES. The various headings in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such sections of this Agreement unless
otherwise specified.
SECTION 6.07 GOVERNING LAW. This Agreement and the Assignment shall be
governed by and construed in accordance with the internal laws of the State of
California, without reference to its conflict of laws provisions, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
SECTION 6.08 NON-PETITION COVENANT. Seller shall not, prior to the date
which is one year and one day after the termination of this Agreement,
acquiesce, petition or otherwise invoke or cause the Trust or the Depositor to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Trust or the Depositor under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or the Depositor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust or the
Depositor.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
CALIFORNIA THRIFT & LOAN
By:_____________________________________
Michael Iachelli
Its: President
------------------------------------
BAY VIEW SECURITIZATION CORPORATION,
Purchaser
By:_____________________________________
Edward H. Sondker
Its: President
------------------------------------
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ANNEX A
ASSIGNMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency are
hereby acknowledged, California Thrift & Loan, a California corporation (the
"Seller") does hereby sell, transfer, assign and otherwise convey to Bay View
Securitization Corporation, a Delaware corporation (the "Purchaser"), without
recourse:
(i) all right, title, and interest of the Seller in and to the
Receivables listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims or
refunds of premiums on any physical damage, lender's collateral
protection, credit life, disability and hospitalization
insurance policies covering Financed Vehicles or Obligors;
(iv) the interest of the Seller in any proceeds from recourse to
Dealers relating to the Receivables;
(v) all documents contained in the Receivable Files;
(vi) all monies paid thereon, and all monies due thereon, including
Accrued Interest after the Cutoff Date, (but excluding interest
paid or due prior to the Closing Date) with respect to the
Receivables held by the Servicer; and
(vii) all proceeds of the foregoing.
The Seller does not convey to the Purchaser any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
Capitalized terms used but not defined in this Assignment have the meanings
assigned to them in the Purchase Agreement dated as of ___________, 199_ between
the Purchaser and the Seller.
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IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the
___ day of _______________, 199_.
CALIFORNIA THRIFT & LOAN
By:_____________________________________
Name: Michael Iachelli
-----------------------------------
Title: President
----------------------------------
A-2
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SCHEDULE A
LIST OF RECEIVABLES
The Receivables consisting of motor vehicle retail installment sale
contracts originated and booked on or before ___________, 199_, aggregating
$______________ in remaining principal amount as of the Cutoff Date are listed
on the attached pages.
<PAGE>
ANNEX B
LOCATION OF RECEIVABLES FILES
The Receivables will be held at the following California Thrift & Loan
locations:
818 Oakpark Road
Covina, California 91724
4620 California Avenue
Bakersfield, California 93309-7017
170 E. 17th Street, #101
Costa Mesa, California 92627-3701
1320 E. Shaw Avenue, Suite 169
Fresno, California 93710-7905
1501 State Street
Santa Barbara, California 93101-2513
1730 Sepulveda Blvd., #4
Torrance, California 90501-5645
5995 Topanga Canyon Blvd.
Woodland Hills, California 91367-3623
B-1
