<PAGE>
As filed with the Securities and Exchange Commission on February 10, 2000
Registration No. 333-
Post-Effective Amendment No. One to Registration No. 333-16233
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
AND POST EFFECTIVE AMENDMENT NO. 1
Under
the Securities Act of 1933
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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)
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Delaware 93-1225376
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization of
registrant)
2121 South El Camino Real
San Mateo, California 94403
(650) 573-7300
(Address, including ZIP code, and telephone number, including
area code, of registrant's principal executive offices)
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Douglas J. Wallis
Bay View Securitization Corporation
2121 South El Camino Real
San Mateo, California 94403
(650) 573-7300
(Name, address, including ZIP code, and telephone number,
including area code, of agent for service)
Copies to:
DAVE M. MUCHNIKOFF, P.C.
CRAIG M. SCHEER, ESQ.
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C. 20005
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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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed
Proposed maximum
Title of each class of Amount maximum aggregate Amount of
securities to be to be offering price offering registration
registered registered(1) per unit(2) price(2) fee(1)(3)
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<S> <C> <C> <C> <C>
Asset Backed
Securities............ $1,000,001,904 100% $1,000,001,904 $264,000
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</TABLE>
(1) The $1,000,001,904 of securities registered under this Registration
Statement includes $1,904 aggregate amount of securities carried forward
under Registration Statement No. 333-16233, for which the issuer previously
paid a filing fee.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) For securities not carried forward under Registration Statement No. 333-
16233, determined pursuant to Section 6(b) of the Securities Act at a rate
of $264 per $1,000,000.
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<PAGE>
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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.
Pursuant to Rule 429 under the Securities Act, upon effectiveness, this
Registration Statement shall contain a combined prospectus which also relates
to $1,904 aggregate amount of securities registered on Form S-3, Registration
No. 333-16233 (which was declared effective on January 21, 1997) for which the
fee has previously been paid. This Registration Statement also constitutes
Post-Effective Amendment No. 1 to Registration Statement No. 333-16233.
INTRODUCTORY NOTE
This registration statement contains:
. two forms of prospectus supplement relating to the offering by Bay View
[YEAR]- Auto Trust of the series of asset backed certificates
described in such forms of prospectus supplement using the grantor trust
structure described in the prospectus,
. a form of prospectus supplement relating to the offering by Bay View
[YEAR]- Auto Trust of the series of asset backed notes described
therein, using the owner trust structure described in the prospectus,
and
. a form of prospectus relating to the offering of series of asset backed
securities (consisting of notes and/or certificates) by various Bay View
Auto Trusts created from time to time by Bay View Securitization
Corporation.
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 securities, including asset
backed certificates and/or asset backed notes under this registration statement
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<PAGE>
[PROSPECTUS SUPPLEMENT FOR GRANTOR TRUST]
Bay View [Year] Auto Trust
Automobile Receivable Backed Certificates
Bay View Securitization Corporation,
as depositor
Bay View Acceptance Corporation,
as servicer
We are offering the following classes of automobile receivable backed
certificates:
<TABLE>
<CAPTION>
Final
Initial Pass Through Scheduled Underwriting
Certificate Interest Distribution Price Discount
Class of Certificates Balance Rate Date to Public per Certificate
--------------------- ----------- ------------ ------------ --------- ---------------
<S> <C> <C> <C> <C> <C>
Class A certificates.... $ % % %
Class I Interest Only
certificates........... $ (1) % %(2) %
</TABLE>
- --------
(1) Initial notional principal amount.
(2) As a percent of initial notional principal amount.
The total price to the public is $ . The total underwriting discount is
$ . The total proceeds to the depositor, including accrued interest of $ ,
are $ .
. The trust will include up to $ of subsequent receivables to be
purchased after .
The offered certificates represent interests of the Bay View [Year] Auto
Trust only and do not represent obligations of or interests in Bay View
Securitization Corporation, Bay View Acceptance Corporation, any of their
affiliates or any governmental agency. You should carefully consider the
factors set forth under "Risk Factors" beginning on page S- of this
prospectus supplement and on page in the prospectus.
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This prospectus supplement may be used to offer and sell the offered
certificates only if accompanied by the prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
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[UNDERWRITERS OF THE CERTIFICATES]
The date of this prospectus supplement is , .
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the offered certificates in the following documents:
(1) this prospectus supplement, which describes the specific terms of
the offered certificates; and
(2) the accompanying prospectus, which provides general information,
some of which may not apply to the offered certificates.
If the description of the offered certificates varies between this
prospectus supplement and the prospectus, you should rely on the information in
this prospectus supplement.
We include cross-references in this prospectus supplement and in the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
You can find a list of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Principal Terms"
beginning on page S- in this prospectus supplement and under the caption
"Index of Principal Terms" beginning on page in the accompanying prospectus.
In this prospectus supplement and the accompanying prospectus, "we" refers
to the depositor, Bay View Securitization Corporation, and "you" refers to any
prospective investor in the offered certificates.
S-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF TERMS.......................................................... S-5
Issuer.................................................................. S-5
Depositor............................................................... S-5
Servicer................................................................ S-5
Trustee................................................................. S-5
Dates................................................................... S-5
The Offered Certificates................................................ S-5
Distribution Date....................................................... S-5
Interest on the Class A Certificates.................................... S-6
Distributions of Principal.............................................. S-6
The Class I Certificates................................................ S-6
Class I Notional Principal Amount....................................... S-6
The Class IC Certificate................................................ S-7
The Trust Assets........................................................ S-7
Pre-Funding Account..................................................... S-8
Available Funds; Rights of the Class IC Certificateholder............... S-9
The Policy.............................................................. S-10
Policy Amount........................................................... S-10
Insurer................................................................. S-10
Optional Redemption..................................................... S-10
Tax Status.............................................................. S-10
Ratings................................................................. S-10
ERISA Considerations.................................................... S-11
RISK FACTORS.............................................................. S-12
You May Not be Able to Resell the Offered Certificates.................. S-12
The Offered Certificates Are Interests in the Trust Only and are Not
Guaranteed by any Other Party.......................................... S-12
Prepayments May Reduce the Yield on the Class I Certificates............ S-12
You May Incur a Loss if there is a Default Under the Policy............. S-12
A Change in the Certificate Ratings May Adversely Affect the Offered
Certificates........................................................... S-13
Geographic Concentrations of the Receivables May Increase the Losses
Realized by the Trust.................................................. S-13
THE DEPOSITOR AND BAY VIEW ACCEPTANCE CORPORATION......................... S-14
FORMATION OF THE TRUST.................................................... S-14
THE RECEIVABLES POOL...................................................... S-14
General................................................................. S-14
Composition of the Receivables by Financed Vehicle Type as of
, ................................................................... S-16
Distribution of the Receivables by Remaining Term to Stated Maturity as
of ............................................................... S-16
Geographic Distribution of the Receivables as of , .............. S-16
Distribution of the Receivables by Financed Vehicle Model Year as of
, .............................................................. S-17
Distribution of the Receivables by Contract Rate as of , ........ S-18
Delinquency and Net Credit Losses....................................... S-18
YIELD AND PREPAYMENT CONSIDERATIONS....................................... S-19
General................................................................. S-19
The Class I Certificates................................................ S-19
Mandatory Repurchase.................................................... S-19
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
THE OFFERED CERTIFICATES................................................... S-20
Sale and Assignment of Receivables; Subsequent Receivables............... S-20
Accounts................................................................. S-21
Advances................................................................. S-21
Distributions on the Offered Certificates................................ S-21
The Class I Certificates--Calculation of Notional Principal Amount....... S-24
Class I Yield Considerations............................................. S-25
Distributions on the Class IC Certificate................................ S-27
The Policy............................................................... S-27
Rights of the Insurer upon Servicer Default, Amendment or Waiver......... S-28
THE INSURER................................................................ S-28
REPORTS TO CERTIFICATEHOLDERS.............................................. S-29
ERISA CONSIDERATIONS....................................................... S-29
UNDERWRITING............................................................... S-29
LEGAL OPINIONS............................................................. S-30
EXPERTS.................................................................... S-30
INDEX OF PRINCIPAL TERMS................................................... S-31
</TABLE>
S-4
<PAGE>
SUMMARY OF TERMS
. This summary highlights selected information from this prospectus supplement
and does not contain all the information that you should consider in making
your investment decision. To understand all of the terms of this offering,
read the entire prospectus supplement and accompanying prospectus.
. The definitions of or references to capitalized terms used in this
prospectus supplement can be found on the pages indicated in the "Index of
Principal Terms" on page S- in this prospectus supplement or on page of the
accompanying prospectus.
Issuer
The Bay View [Year] Auto Trust will issue the certificates offered in
this prospectus supplement.
Depositor
Bay View Securitization Corporation is the depositor of the trust. The
depositor will transfer the automobile receivables and related property to the
trust. The depositor is a wholly-owned subsidiary of Bay View Capital
Corporation ("BVCC").
Servicer
Bay View Acceptance Corporation ("BVAC") will act as the servicer of the
trust. The servicer will receive and apply payments on the receivables, service
the collection of the receivables and direct the trustee to make the
appropriate distributions to the certificateholders. The servicer will receive
a monthly servicing fee as compensation for its services. The servicer is a
wholly-owned subsidiary of Bay View Bank, N.A. (the "Bank"), which is a wholly-
owned subsidiary of BVCC. See "Bay View Acceptance Corporation and Affiliates"
in the accompanying prospectus.
Trustee
.
Dates
Cutoff Date
. , . The trust will receive payments received with respect to the
receivables after this date. This is also the date used for preparing the
statistical information used in this prospectus supplement.
Closing Date
. , .
The Offered Certificates
On the closing date, the trust will issue the Class A certificates and the
Class I certificates (collectively we refer to these certificates offered for
sale as the "offered certificates") as described below, under a pooling and
servicing agreement among the depositor, the servicer and the trustee. We are
offering these certificates for sale in this prospectus supplement. The
interest rate and initial certificate balance of the Class A certificates is as
follows:
<TABLE>
<CAPTION>
Pass-Through Initial
Interest Rate Certificate
(per annum) Balance
------------- -----------
<S> <C> <C>
Class A certificates.................................. % $
</TABLE>
The Class I certificates will be issued with an original notional principal
amount of $ . See "The Offered Certificates" in this prospectus supplement.
Distribution Date
The trust will distribute interest and principal on the offered certificates
on the fifteenth calendar day of each month or, if such day is not a business
day, on the next business day. The distributions will begin on , and
will be made to holders of record of the offered certificates as of the record
date, which will be the last day of the collection period related to the
distribution date. The collection period with respect to any distribution date
is the calendar month immediately preceding the calendar month in which such
distribution date occurs. See "The Offered Certificates--Distributions on the
Offered Certificates" in this prospectus supplement and "Description of the
Certificates--Definitive Certificates" in the accompanying prospectus.
S-5
<PAGE>
Interest on the Class A Certificates
Interest on the Class A certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months. See "Yield and Prepayment
Considerations" and "The Offered Certificates--Distributions on the Offered
Certificates" in this prospectus supplement.
Generally, the amount of monthly interest distributable to the Class A
certificateholders on each distribution date is the product of:
(1) one-twelfth of %; and
(2) the aggregate outstanding certificate balance of the Class A
certificates on the preceding distribution date (after giving effect to all
distributions to certificateholders on such date) or, in the case of the
first distribution date, from the closing date.
See "The Certificates--Distributions on the Certificates" in this prospectus
supplement.
Distributions of Principal
The trust will distribute principal on each distribution date to the Class A
certificateholders of record as of the record date. Generally, the amount of
monthly principal the trust will pay is equal to the decrease in the
outstanding principal balance of the receivables pool during the preceding
calendar month. See "The Offered Certificates--Distributions on the Offered
Certificates" in this prospectus supplement.
The trust must distribute an amount equal to the outstanding certificate
balance of the Class A certificates, to the extent not previously distributed,
by the final scheduled distribution date.
Since the rate of distribution of principal on the Class A certificates
depends upon the rate of payment of principal on the receivables (including
voluntary prepayments and principal in respect of defaulted receivables and
purchased receivable), the final distribution in respect of the Class A
certificates could occur significantly earlier than the final scheduled payment
date. See "Risk Factors--You May Incur a Loss if there is a Default Under the
Policy" and "The Offered Certificates-- Distributions on the Offered
Certificates" in this prospectus supplement.
The Class I Certificates
The Class I certificates are interest only certificates which will not
receive any principal distributions. The pass-through rate for the Class I
certificates is % per annum. Interest on the Class I certificates will accrue
on the notional principal amount of the Class I certificates at the Class I
pass-through rate. The notional principal amount represents a designated
notional principal component of the receivables. The notional principal amount
is $ as of the closing date and shall be reduced on each distribution date as
described below.
Interest on the Class I certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Generally, the amount of
interest distributable to Class I certificateholders on each distribution date
is the product of one-twelfth of the Class I pass-through rate and the notional
principal amount as of the preceding distribution date or, in the case of the
first distribution date, the closing date (after giving effect to any reduction
of the notional principal amount on such distribution date). Such amount will
also be determined by assuming that the month of the closing date has 30 days.
Class I certificateholders will not be entitled to any distributions after the
notional principal amount has been reduced to zero.
Class I Notional Principal Amount
The Class I certificates are interest only certificates based upon a planned
amortization of the notional principal amount of the Class I certificates. We
intend this amortization feature to reduce the uncertainty to Class I
certificateholders caused by prepayments on the receivables. We base the
reduction in the notional principal amount on an expected principal paydown
schedule rather than on the reduction in the actual principal balances of the
receivables. We expect the interest payments on the Class I certificates to
come from the excess of interest earned on the receivables over distributions
of monthly interest on the Class A certificates and the payment of the monthly
servicing fee. We divided the aggregate Class A certificate balance into two
notional principal components, the "PAC Component" and the "Companion
Component," for purposes of calculating the notional principal amount. The sum
of the PAC Component and the Companion Component at any time will equal the
then aggregate unpaid Class A certificate balance at
S-6
<PAGE>
such time. The notional principal amount of the Class I certificates will equal
the principal balance of the PAC Component at all times as such amount is
calculated using the allocations of principal payments described below.
The pooling and servicing agreement establishes the planned schedule for the
amortization of the notional principal amount (the "Planned Notional Principal
Amount Schedule") and we provide this schedule to you in this prospectus
supplement under "The Offered Certificates--The Class I Certificates--
Calculation of Notional Principal Amount."
On each distribution date, the amount of monthly principal allocated to
Class A certificateholders will determine the reduction in the notional
principal amount as follows:
(1) to the PAC Component, in an amount up to the amount necessary to
reduce this amount to the amount specified in the Planned Notional
Principal Amount Schedule for such distribution date;
(2) to the Companion Component, until the outstanding principal amount
is reduced to zero; and
(3) to the PAC Component, without regard to the planned notional
principal amount.
The notional principal amount of the Class I certificates will be the same
amount as the outstanding amount of the PAC Component and will decline as the
PAC Component declines.
The Planned Notional Principal Amount Schedule is based on the assumption
that the receivables prepay at a constant prepayment rate between % and % ABS
(which is an assumed constant rate of prepayments used in the ABS prepayment
model set forth in this prospectus supplement). 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 and may fluctuate
significantly during the actual term of the Class I certificates. If the
receivables prepay at a constant rate within the range of % to % ABS, the PAC
Component (and the notional principal amount of the Class I certificates) will
decline according to the Planned Notional Principal Amount Schedule. If the
receivables prepay at a constant rate higher than % ABS, the yield on the
Class I certificates will be reduced because (1) the amount of the Companion
Component will be reduced to zero more quickly than scheduled, and (2) the
amount of the PAC Component (and the notional principal amount) will decline
more quickly than provided in the Planned Notional Principal Amount Schedule. 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 has been prepared on the
basis of certain assumptions, which are described in this prospectus supplement
under "The Offered Certificates--Class I Yield Considerations." You should
fully consider the risks associated with owning Class I certificates, including
the risk that a rapid rate of prepayments could prevent you from recovering
your initial investment in the Class I certificates. See "Risk Factors--
Prepayments May Reduce the Yield on the Class I Certificates" and "Yield and
Prepayment Considerations--The Class I Certificates" in this prospectus
supplement.
The Class IC Certificate
In addition to the Class A and Class I certificates, the trust will issue a
Class IC certificate pursuant to the pooling and servicing agreement. The Class
IC certificate will be retained by the depositor. We are not offering this
certificate for sale in this offering.
The Trust Assets
The trust assets 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-duty
trucks, motorcycles, recreational vehicles, sport utility vehicles and
vans;
. certain monies (including accrued interest) due in respect of the
receivables after , , but excluding accrued interest paid before
the closing date;
S-7
<PAGE>
. security interests in the related vehicles financed through the
receivables;
. funds on deposit in a certificate account;
. any proceeds from claims on certain insurance policies relating to the
financed vehicles or the related obligors;
. an unconditional and irrevocable insurance policy issued by
guaranteeing payments of principal and interest on the certificates; and
. certain rights under the agreements by which the receivables are sold
from BVAC to the depositor and from the depositor to the trust.
The receivables arise from:
(1) motor vehicle installment sale contracts that were originated by
dealers for assignment to BVAC or the Bank (directly or through Ultra
Funding Corporation ("Ultra"), or Bay View Credit ("BVC"), both of which
were wholly-owned subsidiaries of BVAC prior to being merged into BVAC on
June 14, 1999, or California Thrift & Loan ("CTL"), which was renamed Bay
View Credit on January 2, 1998) or
(2) motor vehicle loan contracts that were solicited by dealers for
origination by BVC, the Bank or CTL.
BVAC will sell all the receivables to be included in the trust to the
depositor. The trust will acquire its assets from the depositor pursuant to the
pooling and servicing agreement. In addition, the depositor must sell
subsequent receivables to the trust (subject to availability) having an
aggregate principal balance or pre-funded amount equal to approximately $ .
The trust will be obligated to purchase the subsequent receivables from the
depositor (subject to the satisfaction of certain conditions) prior to the end
of a specific funding period. The depositor will designate as a subsequent
cutoff date each effective date that subsequent receivables are conveyed to the
trust. Each date during the funding period on which subsequent receivables will
be conveyed to the trust is a subsequent transfer date. See "The Certificates--
Sale and Assignment of Receivables; Subsequent Receivables" and "The
Receivables Pool" in this prospectus supplement and "Formation of the Trust"
and "The Receivables Pools" in the accompanying prospectus.
Payment of the amount due to the registered lienholder under each receivable
is secured by a first perfected security interest in the related financed
vehicle. BVAC, BVC, the Bank (or its predecessor, Bay View Federal Bank) or CTL
is or will be the registered lienholder (the "Named Lienholders") on the
certificate of title of each of the financed vehicles.
The receivables were selected from the automobile receivable portfolio of
BVAC, based on the criteria specified in the pooling and servicing agreement
and described in this prospectus supplement under "The Receivables Pools," and
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the accompanying prospectus. The underwriting procedures and
standards employed with respect to the receivables are described under "The
Receivables Pools--Underwriting Procedures" in the accompanying prospectus.
Subsequent receivables may be originated using credit criteria that differ
from those used for the initial receivables. Therefore, the initial receivables
may be of a different credit quality and seasoning. In addition, the transfer
of subsequent receivables to the trust may adversely affect the characteristics
of the entire pool of receivables. The provisions describing the transfer of
subsequent receivables and verification that subsequent receivables conform to
the requirements of the pooling and servicing agreement can be found in "The
Receivables Pool" and "The Certificates--Sale and Assignment of Receivables;
Subsequent Receivables" in this prospectus supplement. See also "Risk Factors--
Certain Risks Associated with Pre-Funding" and "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Subsequent Receivables" in the
accompanying prospectus.
Pre-Funding Account
The trustee will deposit and maintain the pre-funded amount in a pre-funding
account during the funding period from the closing date until the earliest of:
S-8
<PAGE>
(1) the date on which the amount on deposit in the pre-funding account
is equal to or less than $ ;
(2) the occurrence of an event of default under the pooling and
servicing agreement;
(3) the occurrence of certain events of insolvency of the depositor or
the servicer; or
(4) the [third] payment date.
The funding period will not be more than three calendar months.
The pre-funded amount initially will equal $ and will be reduced by the
amount used to purchase subsequent receivables. See "Description of the
Transfer and Servicing Agreements--Accounts--Pre-Funding Account" in the
accompanying prospectus and "The Certificates--Sale and Assignment of
Receivables; Subsequent Receivables" in this prospectus supplement.
The trustee will invest funds on deposit in the pre-funding account during
the funding period in eligible investments, subject to certain limitations. Any
investment income from such investments will be transferred from the pre-
funding account to the collection account on each payment date and will be
included in available funds for such payment date.
If any pre-funded amount remains in the pre-funding account at the end of
the pre-funding period, the trustee will pay such amount to the
certificateholders on the payment date on or immediately following the last day
of the pre-funding period. The trustee will pay the amount to the
certificateholders pro rata, based on the initial certificate amounts of the
certificates held by the certificateholders. The amount the trustee pays to the
certificateholders will constitute a prepayment of the aggregate certificate
balance of the certificates and may reduce the certificateholders' anticipated
yield. See "The Certificates--Sale and Assignment of Receivables; Subsequent
Receivables" in this prospectus supplement. See also "Risk Factors--Certain
Risks Associated with Pre-Funding" and "Description of the Transfer and
Servicing Agreements--Accounts" in the accompanying prospectus.
Available Funds; Rights of the Class IC Certificateholder
The amount of funds available for distribution to Class A and Class I
certificateholders on any distribution date will consist of funds from the
following sources:
(1) payments received from obligors in respect of the receivables (net
of any amount required to be deposited to the payahead account in respect
of precomputed receivables);
(2) any net withdrawal from the payahead account in respect of
precomputed receivables;
(3) interest earned on funds on deposit in the certificate account;
(4) liquidation proceeds received in respect of receivables;
(5) advances received from the servicer in respect of interest on
certain delinquent receivables; and
(6) amounts received in respect of required repurchases or purchases of
receivables by BVAC or the servicer.
The trustee will draw on the policy if the amount of available funds for any
distribution date is not sufficient to pay:
(1) the amounts owed to the servicer (including the monthly servicing
fee and reimbursement for advances made by the servicer to the trust); and
(2) the required distributions of interest to the Class A and Class I
certificateholders and principal to the Class A certificateholders.
If there is a default under the policy, any losses on the receivables will
be borne directly by the Class A certificateholders and the Class I
certificateholders. See "Risk Factors--You May Incur a Loss if there is a
Default Under the Policy," "The Offered Certificates--Accounts" and "--
Distributions on the Offered Certificates" in this prospectus supplement.
Any amount on deposit in the certificate account on any distribution date
after all other required deposits to and withdrawals from the certificate
account have been made will be distributed to the Class IC certificateholder.
Any
S-9
<PAGE>
such distribution to the Class IC certificateholder will no longer be an asset
of the trust.
See "The Offered Certificates--Accounts" and "--The Policy" in this
prospectus supplement.
The Policy
The depositor will obtain an unconditional and irrevocable insurance policy.
Subject to the terms of the policy, the insurer will guarantee the payment of
the monthly servicing fee and the distribution of monthly interest and monthly
principal on the offered certificates up to the policy amount.
In addition, the policy will cover any amount paid or required to be paid by
the trust to the Class A and Class I certificateholders, which amount is sought
to be recovered as a voidable preference by a trustee in bankruptcy of BVAC or
the depositor under the United States Bankruptcy Code in accordance with a
final nonappealable order of a court having competent jurisdiction.
See "The Offered Certificates--The Policy" in this prospectus supplement.
Policy Amount
The policy amount with respect to any distribution date will be the sum of:
(1) the monthly servicing fee;
(2) monthly interest; and
(3) the lesser of (a) the outstanding aggregate certificate balance of
the Class A certificates on such distribution date (after giving effect to
any distributions of available funds to distribute monthly principal on
such distribution date) and (b) the initial aggregate certificate balance
of the Class A certificates minus all amounts drawn on the policy with
respect to monthly principal.
Insurer
is the insurer and will guarantee the payment of monthly interest and
monthly principal under the terms of the policy. See "The Insurer" in this
prospectus supplement.
Optional Redemption
The servicer has the right to purchase all of the receivables as of the last
day of any collection period on which (1) the aggregate balance of the
receivables on the related distribution date (after the distribution of all
amounts to be paid on such distribution date) will be equal to or less than 10%
of the initial aggregate balance of the receivables and (2) the notional
principal amount of the Class I certificates is zero (or will be reduced to
zero on or before the related distribution date). We will redeem the offered
certificates as a result of such a purchase of the receivables.
The purchase price for the receivables will be equal to the fair market
value of the receivables; provided that such amount may not be less than the
sum of:
(1) 100% of the outstanding aggregate certificate balance of the Class A
certificates,
(2) accrued and unpaid interest on the outstanding certificate balance
of the Class A certificates at the weighted average interest rate of the
receivables, and
(3) any amounts due the insurer.
Tax Status
In the opinion of special tax counsel to the depositor, for federal income
tax purposes 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 certificateholders will agree to treat the trust as a
partnership for federal income tax purposes. As a partnership, the trust will
not be subject to federal income tax and the certificateholders will be
required to report their respective shares of the trust's taxable income,
deductions and other tax attributes. See "Federal Income Tax Consequences" in
the accompanying prospectus.
Ratings
On the closing date, each class of offered certificates will be issued only
if such class receives ratings from and , as follows:
S-10
<PAGE>
<TABLE>
<CAPTION>
Rating
-------
--- ---
<S> <C> <C>
Class A certificates....................................................
Class I certificates....................................................
</TABLE>
A rating is not a recommendation to buy, sell or hold the offered
certificates and may be subject to revision or withdrawal at any time by the
assigning rating agency. See "Risk Factors--A Change in the Certificate Ratings
May Adversely Affect the Offered Certificates" in this prospectus supplement.
ERISA Considerations
The Class A and Class I certificates may be eligible for purchase by
employee benefit plans subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Any benefit plan fiduciary
considering the purchase of Class A and Class I certificates should, among
other things, consult with experienced legal counsel in determining whether all
required conditions for such purchase have been satisfied. See "ERISA
Considerations" in this prospectus supplement and in the accompanying
prospectus.
S-11
<PAGE>
RISK FACTORS
You should carefully consider the risk factors set forth below and in the
accompanying prospectus as well as the other investment considerations
described in such documents as you decide whether to purchase the offered
certificates.
You May Not be Able to There is currently no secondary market for the
Resell the Offered offered certificates. The underwriters
Certificates currently intend to make a market to enable
resale of the offered certificates, but are
under no obligation to do so. As such, we
cannot assure you that a secondary market will
develop for your certificates or, if one does
develop, that such market will provide you with
liquidity of investment or that it will
continue for the life of your certificates.
The Offered Certificates Are The offered certificates are interests in the
Interests in the Trust Only trust only and do not represent an interest in
and are Not Guaranteed by or obligation of the depositor, BVAC, any of
any Other Party their affiliates or any other party or
governmental body. Except for the policy, the
offered certificates have not been insured or
guaranteed by any party or governmental body.
See "The Offered Certificates--Distributions on
the Offered Certificates" and "--The Policy" in
this prospectus supplement.
Prepayments May Reduce the If the Receivables prepay at a constant rate
Yield on the Class I within the range of % to % ABS assumed in
Certificates preparing the Planned Notional Principal Amount
Schedule, the 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 notional principal amount will be reduced
more quickly than provided in the Planned
Notional Principal Amount Scheduled and will
reduce the yield of the Class I certificates. A
rapid rate of principal prepayments will have a
material negative effect on the yield to
maturity of the Class I certificates. You
should fully consider the risks associated with
owning Class I certificates, including the risk
that a rapid rate of prepayments could prevent
you from recovering your initial investment in
the Class I certificates. See "Yield and
Prepayment Considerations--The Class I
Certificates" in this prospectus supplement.
You May Incur a Loss if If the insurer fails to make a required payment
there is a Default Under the under the policy, the trust will depend solely
Policy on payments on and proceeds from the
receivables. If the insurer fails to make a
payment required under the policy to the trust
when due for any reason, such failure will
constitute an insurer default under the policy.
If the trust does not have sufficient funds to
fully make the required distributions to Class
A and Class I certificateholders on a
distribution date during a default by the
insurer, distributions on the offered
certificates on such distribution date will
generally be reduced in the following order:
1. Class A monthly principal, pro rata and
2. Class A and Class I monthly interest, pro
rata.
S-12
<PAGE>
A Change in the Certificate
Ratings May Adversely Affect and are the rating agencies
the Offered Certificates rating the offered certificates. The rating for
the offered certificates will reflect only the
view of the relevant rating agency. We cannot
assure you that any such rating will continue
for any period of time or that any rating 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 liquidity and market price of
your offered certificates. A rating is not a
recommendation to buy, sell or hold the offered
certificates.
Geographic Concentrations of As of , , based upon billing address
the Receivables May Increase information provided to BVAC, the obligors
the Losses Realized by the resided in 50 states and the District of
Trust Columbia, three of which states, ,
and account for approximately %, %
and %, respectively, of the aggregate
principal balance of the receivables. Adverse
economic conditions in , or
could adversely affect the delinquency, loan
loss or repossession experience of the trust.
S-13
<PAGE>
THE DEPOSITOR AND BAY VIEW ACCEPTANCE CORPORATION
BVAC is an automotive finance company engaged primarily in the indirect
financing (the purchase of loan contracts from dealers) of automobile purchases
by individuals. BVAC currently acquires receivables from over 3,800
manufacturer franchised automobile dealerships in 14 states. For the fiscal
years ended , , , , [and the months ended , ,] BVAC and/or
the other Named Lienholders acquired motor vehicle loans aggregating $
million, $ million, $ million and $ million, respectively. At ,
the servicing portfolio of BVAC (consisting of the principal balance of
receivables held to maturity and securitized receivables) totaled approximately
$ million. The depositor is a wholly-owned bankruptcy remote subsidiary of
BVCC.
FORMATION OF THE TRUST
The depositor will establish the trust by assigning the trust assets to the
trustee in exchange for the certificates. The depositor will sell the offered
certificates and retain the Class IC certificate. BVAC will service the
receivables pursuant to the pooling and servicing agreement and will receive
compensation for acting as the servicer. To facilitate servicing and to
minimize administrative burden and expense, the servicer will serve as
custodian of the receivables for the trustee. However, the servicer will not
stamp the receivables to reflect the sale and assignment of the receivables to
the trust or the trustee or make any notation of the trustee's lien on the
certificates of title of the financed vehicles. In the absence of such notation
on the certificates of title, the trust or the trustee may not have perfected
security interests in the financed vehicles securing the receivables. Under the
terms of the pooling and servicing agreement, BVAC may delegate its duties as
servicer and custodian; however, any such delegation will not relieve BVAC of
its liability and responsibility with respect to such duties. See "Description
of the Transfer and Servicing Agreements--Servicing Compensation and
Distribution of Expenses" and "Certain Legal Aspects of the Receivables" in the
accompanying prospectus.
The depositor will obtain the policy for the benefit of the
certificateholders. The trustee will draw on the policy, up to the policy
amount, if available funds (after paying amounts owed to the servicer) are not
sufficient to fully distribute monthly interest and monthly principal. If there
is a default under the policy, 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 offered certificates. In such event, certain factors, such as
the trustee 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 the
certificateholders. See "The Offered Certificates--Accounts," "--Distributions
on the Offered Certificates" and "--The Policy" in this prospectus supplement
and "Certain Legal Aspects of the Receivables" in the accompanying prospectus.
THE RECEIVABLES POOL
General
The receivables were acquired by BVAC or a Named Lienholder from dealers or
originated by BVAC or a Named Lienholder through dealers in the ordinary course
of business. One of the Named Lienholders will be the registered lienholder on
the certificates of title to each of the financed vehicles.
The receivables were selected from the portfolio of BVAC for purchase by the
depositor according to several criteria, including that each receivable:
. is secured by a new or used vehicle;
. provides for level monthly payments (except for the initial down
payment, which may be different from the level payments) that fully
amortize the amount financed over the original term to maturity of the
receivable;
S-14
<PAGE>
. is a precomputed receivable or a simple interest receivable;
. has an original term to stated maturity of not more than months and
not less than months;
. has a remaining term to stated maturity of not more than months and
not less than months; and
. has a contract rate of interest (exclusive of prepaid finance charges)
of not less than %.
The weighted average remaining term to stated maturity of the receivables
was approximately months as of , .
Approximately % of the aggregate principal balance of the receivables as of
, are simple interest contracts which provide for equal monthly
payments. Approximately % of the aggregate principal balance of the
receivables as of , are precomputed receivables originated in the
State of California. All of such precomputed receivables are rule of 78's
receivables. Approximately % of the aggregate principal balance of the
receivables as of , represent financing of new vehicles; the remainder
of the receivables represent financing of used vehicles.
Receivables representing more than 10% of the aggregate principal balance of
the receivables as of , were originated in the States of ,
and . The performance of the receivables in the aggregate could be
adversely affected in particular by the development of adverse economic
conditions in such states.
The trust is obligated to purchase subsequent receivables on a subsequent
transfer date only if the subsequent receivables satisfy certain criteria,
including that:
. [describe criteria specific to the particular transaction].
In addition, the trust is obligated to purchase the subsequent receivables
only if the weighted average remaining term of the receivables (including the
subsequent receivables) is not more than months. The trust will determine
whether the receivables satisfy the above criteria based on the characteristics
of the initial receivables as of and any subsequent receivables as of
the related subsequent cutoff date.
The initial receivables will represent approximately % of the initial
aggregate principal balance of the certificates. However, except for the
criteria described in the preceding paragraphs, the subsequent receivables are
not required to have any other specified criteria. 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.
Composition of the Receivables by Financed Vehicle Type as of ,
<TABLE>
<CAPTION>
Number of Aggregate Original Weighted Average
Receivables Principal Balance Principal Balance Contract Rate
----------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
New Automobiles and
Light-Duty Trucks...... $ $ %
Used Automobiles and
Light-Duty Trucks......
New Motorcycles.........
Used Motorcycles........
New Recreational
Vehicles...............
Used Recreational
Vehicles...............
New Sport Utility
Vehicles...............
Used Sport Utility
Vehicles...............
New Vans (1)............
Used Vans (1)........... %
--- --- --- ---
All Receivables....... $ $ %
=== === === ===
</TABLE>
S-15
<PAGE>
<TABLE>
<CAPTION>
Weighted Average Weighted Average Percent of Aggregate
Remaining Term(2) Original Term(3) Principal Balance(4)
----------------- ---------------- --------------------
<S> <C> <C> <C>
New Automobiles and
Light-Duty Trucks...... %
Used Automobiles and
Light-Duty Trucks(1)...
New Motorcycles.........
Used Motorcycles........
New Recreational
Vehicles...............
Used Recreational
Vehicles...............
New Sport Utility
Vehicles...............
Used Sport Utility
Vehicles...............
New Vans(1).............
Used Vans(1)............
--- --- -------
All Receivables....... 100.00%
=== === =======
</TABLE>
- --------
(1) References to vans include minivans and van conversions.
(2) Expressed in months. Based on stated maturity as of the cutoff date and
assuming no prepayments of the receivables.
(3) Expressed in months. Based on stated maturity as of the origination date
and assuming no prepayment of receivables.
(4) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Remaining Term to Stated Maturity as of
,
<TABLE>
<CAPTION>
Number of Aggregate Percent of Aggregate
Remaining Term Range Receivables Principal Balance Principal Balance(1)
- -------------------- ----------- ----------------- --------------------
<S> <C> <C> <C>
months..................... $ %
to months................
to months................
to months................
to months................
to months................
to months................
to months................
--- --- -------
Total...................... $ 100.00%
=== === =======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
Geographic Distribution of the Receivables as of ,
<TABLE>
<CAPTION>
Number of Aggregate Percent of Aggregate
State(1)(2) Receivables Principal Balance Principal Balance(3)
- ----------- ----------- ----------------- --------------------
<S> <C> <C> <C>
.......................... $ %
..........................
..........................
..........................
..........................
--- --- -------
Total...................... $ 100.00%
=== === =======
</TABLE>
- --------
(1) Based on address of the borrower.
(2) No other state accounts for greater than 1.00% of the aggregate principal
balance of the receivables.
(3) Sum may not equal 100% due to rounding.
(4) Includes military personnel located outside the United States.
S-16
<PAGE>
Distribution of the Receivables by Financed Vehicle Model Year as of ,
<TABLE>
<CAPTION>
Number of Aggregate Percent of Aggregate
Model Year Receivables Principal Balance Principal Balance(1)
- ---------- ----------- ----------------- --------------------
<S> <C> <C> <C>
or Prior................... $ %
..........................
..........................
..........................
..........................
..........................
..........................
..........................
..........................
..........................
..........................
--- --- -------
Total...................... $ 100.00%
=== === =======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Contract Rate as of ,
<TABLE>
<CAPTION>
Number of Aggregate Percent of Aggregate
Contract Rate Range Receivables Principal Balance Principal Balance(1)
- ------------------- ----------- ----------------- --------------------
<S> <C> <C> <C>
to %...................... $ %
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
to %......................
--- --- -------
Total...................... $ 100.00%
=== === =======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
S-17
<PAGE>
Delinquency and Net Credit Losses
We have set forth below certain information about the experience of BVAC
relating to delinquencies and net losses on its fixed rate retail automobile,
light truck, motorcycle, recreational vehicle, sport utility vehicle and van
receivables serviced by BVAC. We cannot assure you that the delinquency and net
loss experience of the receivables will be comparable to that set forth in the
following tables.
Delinquency Experience(1)
<TABLE>
<CAPTION>
At , At ,
-------------------------------------------------------- ------------------
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..... $ $ $ $
--- --- --- --- --- --- --- ---
Delinquencies
30-59 days............
60-89 days............
90 days or more.......
--- --- --- --- --- --- --- ---
Total delinquencies..... $ $ $ $
=== === === === === === === ===
Total delinquencies as a
percent of servicing
portfolio.............. % % % % % % % %
</TABLE>
- --------
(1) Sums may not total due to rounding.
Credit Loss Experience(1)
<TABLE>
<CAPTION>
Year Ended Months Ended (5)
-------------------------------------------------------- ------------------
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>
Avg. servicing
portfolio(2)........... $ $ $ $
--- --- --- --- --- --- --- ---
Gross charge-offs.......
Recoveries(3)...........
--- --- --- --- --- --- --- ---
Net losses..............
=== === === === === === === ===
Gross charge-offs as a %
of average servicing
portfolio(4)........... % % % % % % % %
Recoveries as a % of
gross charge-offs...... % % % %
Net losses as a % of
average servicing
portfolio(4)........... % % % %
</TABLE>
- --------
(1) There is generally no recourse to dealers under any of the receivables in
the portfolio serviced by BVAC, except to the extent of limited
representations and warranties made by dealers in connection with such
receivables.
(2) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(3) Recoveries include recoveries on receivables previously charged off, cash
recoveries and unsold repossessed assets carried at fair market value.
(4) Variation in the size of the portfolio serviced by BVAC 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."
(5) Percentages are annualized in "Gross charge-offs as a percentage of average
servicing portfolio" and "Net losses as a percentage of average servicing
portfolio" for partial years.
S-18
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
General
Monthly interest will be distributed to Class A and Class I
certificateholders on each distribution date to the extent of the pass-through
interest rate applicable to each offered certificate applied to the aggregate
certificate balance or notional principal amount, as applicable, as of the
preceding distribution date or the closing date, as applicable (after giving
effect to payments of principal on such preceding distribution date). See "The
Offered Certificates--Distributions on the Offered Certificates" in this
prospectus supplement.
Upon a full or partial prepayment on a receivable, Class A and Class I
certificateholders should receive interest for the full month of such
prepayment either:
(1) through the distribution of interest paid on the receivables;
(2) by an advance from the servicer; or
(3) by a draw on the policy.
The receivables will have different contract rates. The contract rate on a
small percentage of the receivables will generally not exceed the sum of:
(1) the pass-through interest rate on the Class A certificates;
(2) the Class I pass-through rate;
(3) the per annum rate used to calculate the insurance premium paid to
the insurer; and
(4) the per annum rate used to calculate the monthly servicing fee.
Disproportionate rates of prepayments between receivables with higher and
lower contract rates could affect the ability of the trust to distribute
monthly interest to you.
The Class I Certificates
The Class I certificates are interest-only certificates. We intend the
planned amortization feature of the notional principal amount of the Class I
certificates to reduce the effect that prepayments will have on the Class I
certificates. However, the notional principal amount of the Class I
certificates may be reduced more quickly than provided in the Planned Notional
Principal Amount Schedule if the receivables prepay more quickly than % ABS.
Such prepayments in excess of the rate assumed in the Planned Notional
Principal Amount Schedule will reduce the yield of the Class I certificates. As
such, the yield to maturity on the Class I certificates will be very sensitive
to the rate of prepayments, including voluntary prepayments and prepayments due
to liquidations and repurchases. See "Risk Factors--Prepayments May Reduce the
Yield on the Class I Certificates" and "The Offered Certificates--The Class I
Certificates--Calculation of Notional Principal Amount" and "--Class I Yield
Considerations" in this prospectus supplement.
Mandatory Repurchase
If any pre-funded amount remains in the pre-funding account at the end of
the pre-funding period, the trustee will pay such amount to the Class A
certificateholders on the payment date on or immediately following the last day
of the pre-funding period. The trustee will pay the amount, which will be
applied as a principal prepayment of the Class A certificates, to the Class A
certificateholders pro rata, based on the initial certificate balances of the
Class A certificates held by the Class A certificateholders.
S-19
<PAGE>
THE OFFERED CERTIFICATES
The offered certificates will be issued pursuant to the pooling and
servicing agreement. You may request a copy of this agreement (without
exhibits) by contacting the servicer at the address set forth under "Reports to
Certificateholders" in this prospectus supplement. We do not claim that the
following summary is complete. For a more detailed description of the pooling
and servicing agreement, you should read the pooling and servicing agreement.
Sale and Assignment of Receivables; Subsequent Receivables
We have described the conveyance of the initial receivables (1) from BVAC to
the depositor pursuant to the purchase agreement dated as of , among BVAC
and the depositor and (2) from the depositor to the trust pursuant to the
pooling and servicing agreement in the accompanying prospectus under the
heading "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables." In addition, during the funding period, BVAC 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 the pre-funded amount of approximately $ to the extent that
subsequent receivables are available.
On each subsequent transfer date during the funding period, BVAC will sell
and assign to the depositor, and the depositor will sell and assign to the
trust, without recourse, its interest in the subsequent receivables. The
subsequent receivables will be designated by BVAC as of the related subsequent
cutoff date and identified in a schedule attached to a subsequent assignment
instrument relating to such subsequent receivables. Such instrument will be
executed and delivered on such subsequent transfer date by the seller for
delivery to the trustee pursuant to the pooling and servicing agreement,
subject to the conditions described below.
Any conveyance of subsequent receivables is subject to the satisfaction of
the following conditions, among others, on or before the related subsequent
transfer date:
. 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 BVAC or
the depositor deems adverse to the interests of the certificateholders;
. 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 criteria
described under "The Receivables Pool" in this prospectus supplement and
under "The Receivables Pools" in the accompanying prospectus; and
. BVAC 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 seller 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 of the following requirements within days after the
termination of the funding period:
. the seller 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;
. the trustee shall have received written confirmation from a firm of
certified independent public accountants that the receivables, including
the subsequent receivables, satisfy the criteria described under "The
Receivables Pool" in this prospectus supplement and under "The
Receivables Pools" in the accompanying prospectus; and
. the rating agencies shall have notified the seller 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 at
least the same rating categories in which they were rated on the closing
date.
S-20
<PAGE>
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, motorcycle, recreational vehicle, sport utility vehicle and van
receivables in the portfolio serviced by the servicer. BVAC will immediately
repurchase from the trustee, at a price equal to the purchase amount, any
subsequent receivable that fails to satisfy any of the foregoing conditions
subsequent.
Subsequent receivables may be or may have been originated or acquired by
BVAC at a later date using credit criteria different from those that were
applied to the initial receivables. See "The Receivables Pool" in this
prospectus supplement.
Accounts
In addition to the certificate account, the property of the trust will
include the payahead account.
Payahead Account. The servicer will establish a payahead account in the name
of the trustee on behalf of obligors on the receivables and the
certificateholders. The payahead account will initially be maintained with the
trustee. To the extent required by the pooling and servicing agreement, early
payments by or on behalf of obligors on precomputed receivables will be
deposited in the payahead account 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 payment to certificateholders. We will
pay the interest earned on the balance in the payahead account to the servicer
each month. We will apply collections received on a precomputed receivable
during a collection period first to any overdue scheduled payment on such
receivable, then to the scheduled payment on such receivable due in such
collection period. If the amount collected on a precomputed receivable exceeds
the amount required for any overdue scheduled payment or scheduled payment, but
is insufficient to prepay the precomputed receivable in full, then generally
such excess collections will be transferred to and kept in the payahead account
until such amount may be 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 if the servicer, in its sole discretion, expects to
recover the advance from subsequent collections on the receivable. The servicer
will deposit the advance in the certificate account on or before the second
business day before the distribution date. The servicer will recover 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 recover its advance from any
collections made on other receivables.
Distributions on the Offered Certificates
Available Funds. The servicer will deposit in the certificate account the
aggregate principal and interest payments, including full and partial
prepayments (except certain prepayments in respect of precomputed receivables
as described above under "--Accounts") received on all receivables with respect
to the preceding collection period. The funds available for distribution on the
next distribution date ("Available Funds") will consist of:
. all payments on the simple interest receivables received during the
related collection period;
. the scheduled payments received from obligors on precomputed
receivables:
. interest earned on funds on deposit in the certificate account;
. the net amount to be transferred from the payahead account to the
certificate account for the related distribution date;
S-21
<PAGE>
. all advances for such collection period; and
. the purchase amount for all receivables that were purchased or
repurchased by BVAC or the servicer during the preceding collection
period.
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 with respect to the collection period (as described below). The
servicer, however, will account to the trustee and to the certificateholders as
if all deposits and distributions were made individually.
The servicer will determine the amount of funds necessary to make
distributions of Monthly Principal and Monthly Interest to the holders of the
offered certificates and to pay the monthly servicing fee to the servicer. If
there is a deficiency with respect to Monthly Interest or Monthly Principal on
any distribution date, after giving effect to payments of the monthly servicing
fee and permitted reimbursements of outstanding advances to the servicer on
such distribution date, or if there is a deficiency with respect to the monthly
servicing fee, the servicer will notify the trustee of the remaining
deficiency, and the trustee will draw on the policy, up to the Policy Amount,
to pay Monthly Interest, Monthly Principal, and the monthly servicing fee.
Distributions. On each distribution date, the trustee will use the Available
Funds (plus any amounts drawn on the policy) to make the following
distributions in the following priority:
(a) without duplication, an amount equal to the sum of (1) the amount of
outstanding advances in respect of receivables that became defaulted
receivables during the prior collection period plus (2) the amount of
outstanding advances in respect of receivables that the servicer determines
to be unrecoverable, to the servicer;
(b) the monthly servicing fee, including any overdue monthly servicing
fee, to the servicer, to the extent not previously distributed to the
servicer;
(c) Monthly Interest (including any overdue amounts) to the Class A and
Class I certificateholders;
(d) Monthly Principal (including any overdue amounts) to the Class A
certificateholders;
(e) the insurance premium including any overdue insurance premium plus
any accrued interest to the insurer;
(f) 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;
(g) the aggregate amount of any unreimbursed draws on the policy payable
to the insurer under the insurance and reimbursement agreement, for Monthly
Interest, Monthly Principal and any other amounts owing to the insurer
under the insurance and reimbursement agreement plus accrued interest
thereon; and
(h) the excess, if any, to the Class IC certificateholder.
Payments due the insurer on a distribution date as described in clause (g)
above will be payable from Available Funds, after distribution of the amounts
described in clauses (a) through and including (f) above.
Any amounts distributed to the Class IC certificateholder will no longer be
property of the trust and will not be available to make payments to you.
Definitions. The following defined terms are used in this "Distributions on
the Offered Certificates" section.
"Monthly Principal" for any distribution date will equal the sum of the
following:
1. the amount by which the aggregate principal balance of the
receivables pool declined during the related collection period; and
S-22
<PAGE>
2. the additional amount, if any, which is necessary to reduce the
certificate balance of the Class A certificates to zero on its final
maturity date.
If there is a shortfall in Available Funds on any distribution date, the
amount of Monthly Principal otherwise distributable to Class A
certificateholders will be reduced by the lesser of: (1) the amount of such
shortfall or (2) the amount, if any, by which the aggregate outstanding
certificate balance of the Class A certificates as of the preceding
distribution date (after giving effect to all distributions of principal on
such date) was less than the aggregate principal balance of the receivables
pool as of the end of the related collection period. For the purpose of
determining Monthly Principal, the unpaid principal balance of a defaulted
receivable or a receivable required to be purchased or repurchased by BVAC or
the servicer will be zero as of the end of the collection period in which such
receivable became a defaulted receivable or a purchased receivable. In no event
will Monthly Principal exceed the aggregate outstanding certificate balance of
the Class A certificates.
A defaulted receivable for any collection period is a receivable as to which
the earliest to occur of any of the following has occurred: (1) any payment, or
part thereof, is 120 days or more delinquent as of the last day of such
collection period; (2) the financed vehicle that secures the receivable has
been repossessed and liquidated; or (3) 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 seller 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 unless not repurchased within the time period
provided for in the pooling and servicing agreement.
"Monthly Interest" for any distribution date will equal the sum of Class A
Monthly Interest and Class I Monthly Interest.
"Class A Monthly Interest" means for any distribution date, the product of
the following:
(a) one-twelfth of the Class A interest rate, and
(b) the aggregate certificate balance of the Class A certificates as of
the immediately preceding distribution date or, in the case of the first
distribution date, the closing date (after giving effect to any
distribution of principal made on such distribution date).
"Class I Monthly Interest" means for any distribution date, the product of
the following:
(a) one-twelfth of the Class I pass-through rate; and
(b) the notional principal amount of the Class I certificates as of the
immediately preceding distribution date or, in the case of the first
distribution date, the closing date (after giving effect to any
distribution of Monthly Principal made on such distribution date);
provided, however, that after the Class A Final Scheduled Distribution Date,
the Class I Monthly Interest shall be zero.
Example of Distribution Date Activities. The following chart sets forth an
example of the application of the foregoing provisions to the first
distribution date on :
, ................... Collection Period. The collection period for
each distribution date is the calendar month
preceding the distribution date. 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 monthly servicing
fee from such deposits.
S-23
<PAGE>
, ................... Determination Date. The determination date is
the tenth calendar day of the month, or if such
day is not a business day, the first business
day thereafter. On or before this date, the
servicer delivers the servicer's certificate to
the trustee setting forth the amounts to be
distributed on the distribution date and the
amounts of any deficiencies. If necessary, the
trustee notifies the insurer of any draws in
respect of the policy.
, ................... Record Date. The record date is the last day of
the collection period before the distribution
date. Payments on the distribution date are
made to certificateholders of record at the
close of business on this date.
, ................... Distribution Date. The distribution date is the
fifteenth calendar day of the month, or if such
day is not a business day, the first business
day thereafter. The trustee withdraws funds
from the certificate account and then draws on
the policy, if necessary, to pay Monthly
Interest and Monthly Principal to the
certificateholders as described in this
prospectus supplement, pays the monthly
servicing fee to the extent not previously
paid, pays the insurance premium and all other
amounts owing to the insurer.
The Class I Certificates--Calculation of Notional Principal Amount
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.
Solely for the purpose of calculating the amount payable to the Class I
certificateholders, the Class A certificate balance will be divided into two
notional principal components, the "PAC Component" and the "Companion
Component." The notional principal amount will be the same amount as the PAC
Component, originally $ . The sum of the PAC Component and the Companion
Component at any time will equal the then aggregate unpaid Class A certificate
balance at such time.
The pooling and servicing agreement establishes the Planned Notional
Principal Amount Schedule under which principal will be allocated to the PAC
Component and the Companion Component. On each distribution date, the amount of
Monthly Principal allocated to Class A certificateholders will determine the
reduction in the notional principal amount as follows:
(1) to the PAC Component up to the amount necessary to reduce the PAC
Component to the amount specified in the Planned Notional Principal Amount
Schedule for such Distribution Date;
(2) to the Companion Component until the balance thereof is reduced to
zero; and
(3) to the PAC Component, without regard to the planned notional
principal amount for such distribution date.
As the PAC Component is reduced, the notional principal amount and payments
to the Class I certificateholders will also be reduced. The Class I
certificates are not entitled to receive any principal payments.
S-24
<PAGE>
Planned Notional Principal Amount Schedule
<TABLE>
<CAPTION>
Planned Notional
Distribution Date in Principal Amount
- -------------------- ----------------
<S> <C>
Initial........................................................ $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
, ..................................................... $
</TABLE>
The Class I certificates will not be entitled to any distribution after the
notional principal amount has been reduced to zero.
Class I Yield Considerations
We intend the planned amortization feature of the Class I certificates to
reduce the uncertainty caused by prepayments of the receivables and the effect
of prepayments to the Class I certificates. However, the yield to maturity of
the Class I certificates will still be very sensitive to the prepayment
experience of the receivables,
S-25
<PAGE>
including voluntary prepayments and prepayments due to liquidations and
repurchases. You should note that you will not be entitled to any
distributions on your Class I certificates after the notional principal amount
of the Class I certificates has been reduced to zero and that receivables may
be repurchased due to breaches of representations. See "Risk Factors--
Prepayments May Reduce the Yield on the Class I Certificates" in this
prospectus supplement.
The following tables illustrate the significant effect that prepayments on
the receivables have upon the yield to maturity of the Class I certificates.
The first table assumes that the receivables have been aggregated into
hypothetical pools having the characteristics described therein and that the
level scheduled monthly payment for each of the seven pools (which is based on
its principal balance, weighted average contract rate, weighted average
remaining term as of , 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. Based on such hypothetical pools, the second table
shows the approximate hypothetical pre-tax yields to maturity of the Class I
certificates, stated on a corporate bond equivalent basis, under five
different prepayment assumptions based on the assumed purchase price and the
ABS prepayment model described below.
<TABLE>
<CAPTION>
Weighted Average Weighted Average
, Weighted Average Original Term to Remaining Term to
Pool Principal Balance Contract Rate Maturity (in Months) Maturity (in Months)
- ---- ----------------- ---------------- -------------------- --------------------
<S> <C> <C> <C> <C>
1 $ %
</TABLE>
For purposes of the table, it is also assumed that:
(1) the purchase price of the Class I certificates is as set forth
below;
(2) the receivables prepay monthly at the specified percentages of ABS
as set forth in the table below;
(3) prepayments representing prepayments in full of individual
receivables are received on the last day of the month and include a full
month's interest;
(4) the closing date for the offered certificates is , ;
(5) distributions on the offered certificates are made, in cash,
commencing on , , and on the fifteenth day of each month thereafter;
(6) no defaults or delinquencies in the payment of the receivables are
experienced; and
(7) no receivable is repurchased for any breach of representation or
warranty or for any other reason.
Sensitivity of the Yield on the Class I Certificates to Prepayments
<TABLE>
<CAPTION>
Price(1) % ABS % ABS % ABS % ABS % ABS % ABS
- -------- ------ ------ ------ ------ ------ ------
<S> <C> <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 0%.
We do not expect that the receivables will prepay at a constant rate until
maturity. In addition, we do not expect that 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, the 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
S-26
<PAGE>
discounted present value of such assumed cash flows to equal the assumed
purchase price of such Class I certificates. Then we convert such monthly
rates to corporate bond equivalent rates. Our calculations do not take into
account variations that may occur in the interest rates at which you may be
able to reinvest funds received as distributions on the Class I certificates
and we 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 we cannot assure you that:
(1) the receivables will prepay at any of the rates shown in the table or
at any other particular rate or will prepay proportionately;
(2) the pre-tax yield on the Class I certificates will correspond to any of
the pre-tax yields shown above; or
(3) the aggregate purchase price of the Class I certificates will be equal
to the assumed purchase price.
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 will differ from those set forth above, even if all of the
receivables prepay at the indicated constant prepayment rates.
The ABS prepayment model was used in the preceding table to model the rate
of prepayment each month on the receivables.
Distributions on the Class IC Certificate
The Class IC certificate will be initially issued to the depositor and will
entitle the depositor to receive all funds after payment of all amounts owed
to the Class A and Class I certificateholders, the servicer and the insurer.
On or after the termination of the trust, the Class IC certificateholder is
entitled to receive any amounts remaining in the trust (only after all
required payments to the insurer are made) after the payment of expenses and
payments to the Class A and Class I certificateholders. See "--Accounts" and
"--Distributions on the Offered Certificates" above.
The Policy
On or before the closing date, the depositor, the trust, BVAC, in its
individual capacity and as servicer, and the insurer will enter into the
insurance and reimbursement agreement pursuant to which the insurer will issue
an unconditional and irrevocable insurance policy. Subject to the terms of the
policy, the insurer will guarantee the payment of the monthly servicing fee,
Monthly Interest and Monthly Principal up to the Policy Amount. Under the
terms of the pooling and servicing agreement, the trustee will be authorized
to draw on the policy to pay a deficiency in the monthly servicing fee,
Monthly Interest or Monthly Principal, and credit the certificate account for
such draws as described above under "--Distributions on the Offered
Certificates."
The maximum amount that may be drawn under the policy on any distribution
date is limited to the policy amount for such distribution date. The policy
amount with respect to any distribution date will equal the sum of:
(1) the monthly servicing fee; and
(2) Monthly Interest; and
(3) the lesser of (a) the outstanding aggregate certificate balance of the
Class A certificates on such distribution date (after giving effect to
any distributions of Available Funds on such distribution date) and (b)
the initial aggregate certificate balance of the Class A certificates
minus all amounts drawn on the policy with respect to principal.
S-27
<PAGE>
The policy will also cover any amount paid or required to be paid by the
trust to Class A and Class I certificateholders that is sought to be recovered
as a voidable preference by a trustee in bankruptcy of BVAC or the depositor
pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended from time
to time, in accordance with a final nonappealable order of a court having
competent jurisdiction.
The insurer will be entitled to receive the insurance premium and certain
other amounts on each distribution date as described under "--Distributions on
the Offered Certificates." Generally, the insurance premium for a distribution
date will be the product of one three hundred sixtieth ( 1/360th) of the policy
per annum fee rate (as set forth in the insurance and reimbursement agreement),
the actual days elapsed and the aggregate certificate balance of the Class A
certificates as of the preceding distribution date (after giving effect to all
payments of principal on such date). The insurer will not be entitled to
reimbursement of any amounts from the Class A and Class I certificateholders.
The insurer's obligation under the policy is irrevocable and unconditional. The
insurer will have no obligation to the Class A and Class I certificateholders
or the trustee, other than its obligations under the policy.
If there has been a default under the policy, the trust will depend solely
on current collections on the receivables to make payments of principal and
interest on the offered 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
accompanying 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 Class A and Class I certificateholders may suffer a
corresponding loss. Any such losses by the Class A and Class I
certificateholders will be borne based upon the aggregate outstanding
certificate balance of the Class A certificates or the notional principal
amount, as applicable. See "--Distributions on the Offered Certificates" above.
Rights of the Insurer upon Servicer Default, Amendment or Waiver
Upon the occurrence of an event of default by the servicer under the pooling
and servicing agreement, the insurer, or the trustee upon the consent of the
insurer, will be entitled to appoint a successor servicer. In addition to the
events constituting an event of default as described in the accompanying
prospectus, the pooling and servicing agreement will also permit the insurer 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 and reimbursement
agreement.
The pooling and servicing agreement cannot be amended or any provisions
thereof waived without the consent of the insurer if such amendment or waiver
would have a materially adverse effect upon the rights of the insurer.
[THE INSURER]
[Information about the insurer will be provided.]
S-28
<PAGE>
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur only
under the limited circumstances described in the accompanying prospectus),
, as trustee, will provide monthly and annual statements concerning the
trust and the offered certificates to Cede & Co., the nominee of The Depository
Trust Company, as registered holder of the offered 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 Bay View Acceptance Corporation, 818 Oak
Park Road, Covina, California 91724 (telephone (800) 524-9292).
ERISA CONSIDERATIONS
Subject to the considerations set forth under "ERISA Considerations" in the
accompanying prospectus, the Class A certificates and Class I Certificates may
be eligible for purchase by an employee benefit plan or an individual
retirement account (a "Benefit Plan") subject to Title I of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary
of a Benefit Plan must determine that the purchase of a Class A or Class I
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 and Class I certificates under ERISA, see "ERISA Considerations" in
the accompanying prospectus.
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement for the sale of the offered certificates, dated , , the
underwriters, , have agreed, subject to the terms and conditions set
forth therein, to purchase all the offered certificates.
The underwriters propose to offer part of the offered certificates directly
to you at the prices set forth on the cover page of this prospectus supplement
and part to certain dealers at a price that represents a concession not in
excess of % of the denominations of the Class A certificates and % 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, and % of the gross proceeds of the Class I
certificates.
The depositor and BVAC have agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The underwriters tell us that they intend to make a market in the offered
certificates, as permitted by applicable laws and regulations. However, the
underwriters are not obligated 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, we give no assurances regarding the liquidity
of, or trading markets for, the offered certificates.
In connection with this offering, the underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the offered
certificates at a level above that which might otherwise prevail in the open
market. Such stabilizing, if commenced, may be discontinued at any time.
In the ordinary course of their businesses, the underwriters and their
respective affiliates have engaged and may in the future engage in investment
banking, commercial banking and other advisory or commercial relationships with
the depositor, BVAC and their affiliates.
We will receive proceeds of $ from the sale of the offered certificates,
before deducting our net expenses estimated to be $ .
S-29
<PAGE>
LEGAL OPINIONS
Certain legal matters relating to the offered certificates will be passed
upon for the depositor and the trust by Silver, Freedman & Taff, L.L.P., and
for the underwriters by . Certain federal income tax consequences with
respect to the offered certificates will be passed upon for the trust by
Silver, Freedman & Taff, L.L.P.
EXPERTS
[To Be Completed]
S-30
<PAGE>
INDEX OF PRINCIPAL TERMS
We have listed below the terms used in this prospectus supplement and the
pages where definitions of the terms can be found.
<TABLE>
<S> <C>
Available Funds............................................................ S-21
Bank....................................................................... S-5
Benefit Plan............................................................... S-29
BVAC....................................................................... S-5
BVC........................................................................ S-8
BVCC....................................................................... S-5
CTL........................................................................ S-8
Class A Monthly Interest................................................... S-23
Class I Monthly Interest................................................... S-23
Closing Date............................................................... S-5
Collection Period.......................................................... S-23
Cutoff Date................................................................ S-5
Determination Date......................................................... S-24
Distribution Date.......................................................... S-5
ERISA...................................................................... S-11
Monthly Interest........................................................... S-23
Monthly Principal.......................................................... S-22
Named Lienholders.......................................................... S-8
Offered Certificates....................................................... S-5
Planned Notional Principal Amount Schedule................................. S-7
Policy Amount.............................................................. S-10
Record Date................................................................ S-24
Ultra...................................................................... S-8
</TABLE>
S-31
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
You should rely only on the information contained or incorporated by
reference in its prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different or additional
information.
We are not offering the offered certificates in any state where the offer
is not permitted.
Dealers will deliver this prospectus supplement and prospectus when acting
as underwriters of the offered certificates with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the offered
certificates will deliver this prospectus supplement and prospectus until
, .
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BAY VIEW [Year] AUTO TRUST
Bay View Securitization Corporation,
as depositor
Bay View Acceptance Corporation,
as servicer
$ Class A Automobile Receivable Backed Certificates
$ Class I Interest Only Certificates
---------------
Prospectus Supplement
---------------
[UNDERWRITERS OF THE CERTIFICATES]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[PROSPECTUS SUPPLEMENT FOR GRANTOR TRUST]
Bay View [Year] Auto Trust
Automobile Receivable Backed Certificates
Bay View Securitization Corporation,
as depositor
Bay View Acceptance Corporation,
as servicer
We are offering the following classes of automobile receivable backed
certificates:
<TABLE>
<CAPTION>
Final
Initial Pass Through Scheduled Underwriting
Class of Certificate Interest Distribution Price Discount
Certificates Balance Rate Date to Public per Certificate
------------ ----------- ------------ ------------ --------- ---------------
<S> <C> <C> <C> <C> <C>
Class A certificates.... $ % % %
Class B certificates.... $ % % %
</TABLE>
The total price to the public is $ . The total underwriting discount is
$ . The total proceeds to the depositor, including accrued interest of $ ,
are $ .
. The Class B certificates will be subordinate to the Class A
certificates.
. A spread account will serve as credit enhancement for the certificates.
Over time, it is expected that the amount on deposit in the spread
account will grow to % of the initial aggregate principal balance of
the receivables pool.
. The trust will include up to $ of subsequent receivables to be
purchased after .
The offered certificates represent interests of the Bay View [Year] Auto
Trust only and do not represent obligations of or interests in Bay View
Securitization Corporation, Bay View Acceptance Corporation, any of their
affiliates or any governmental agency. You should carefully consider the
factors set forth under "Risk Factors" beginning on page S-12 of this
prospectus supplement and on page 7 in the prospectus.
----------------
This prospectus supplement may be used to offer and sell the offered
certificates only if accompanied by the prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
----------------
[UNDERWRITERS OF THE CERTIFICATES]
The date of this prospectus supplement is , .
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the offered certificates in the following documents:
(1) this prospectus supplement, which describes the specific terms of the
offered certificates; and
(2) the accompanying prospectus, which provides general information, some
of which may not apply to the offered certificates.
If the description of the offered certificates varies between this
prospectus supplement and the prospectus, you should rely on the information in
this prospectus supplement.
We include cross-references in this prospectus supplement and in the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
You can find a list of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Principal Terms"
beginning on page S- in this prospectus supplement and under the caption
"Index of Principal Terms" beginning on page in the accompanying prospectus.
In this prospectus supplement and the accompanying prospectus, "we" refers
to the depositor, Bay View Securitization Corporation, and "you" refers to any
prospective investor in the offered certificates.
S-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF TERMS.......................................................... S-5
Issuer.................................................................. S-5
Depositor............................................................... S-5
Servicer................................................................ S-5
Trustee................................................................. S-5
Dates................................................................... S-5
The Offered Certificates................................................ S-5
Distribution Date....................................................... S-5
Interest on the Class A and Class B Certificates........................ S-6
Distributions of Principal.............................................. S-6
Subordination........................................................... S-6
The Class IC Certificate................................................ S-6
The Trust Assets........................................................ S-6
Pre-Funding Account..................................................... S-8
Spread Account; Available Funds; Rights of the Class IC
Certificateholder...................................................... S-8
The Policy.............................................................. S-9
Policy Amount........................................................... S-9
Insurer................................................................. S-9
Optional Redemption..................................................... S-10
Tax Status.............................................................. S-10
Ratings................................................................. S-10
ERISA Considerations.................................................... S-10
RISK FACTORS.............................................................. S-11
You May Not be Able to Resell the Offered Certificates.................. S-11
The Offered Certificates Are Interests in the Trust Only and are Not
Guaranteed by any Other Party.......................................... S-11
Subordination........................................................... S-11
You May Incur a Loss if there is a Default Under the Policy............. S-11
A Change in the Certificate Ratings May Adversely Affect the Offered
Certificates........................................................... S-11
Geographic Concentrations of the Receivables May Increase the Losses
Realized by the Trust.................................................. S-12
THE DEPOSITOR AND BAY VIEW ACCEPTANCE CORPORATION......................... S-13
FORMATION OF THE TRUST.................................................... S-13
THE RECEIVABLES POOL...................................................... S-13
General................................................................. S-13
Composition of the Receivables by Financed Vehicle Type as of , .. S-15
Distribution of the Receivables by Remaining Term to Stated Maturity as
of ................................................................ S-16
Geographic Distribution of the Receivables as of , ............... S-16
Distribution of the Receivables by Financed Vehicle Model Year as of
, ............................................................... S-17
Distribution of the Receivables by Contract Rate as of , ......... S-17
Delinquency and Net Credit Losses....................................... S-18
YIELD AND PREPAYMENT CONSIDERATIONS....................................... S-19
General................................................................. S-19
Mandatory Repurchase.................................................... S-19
THE OFFERED CERTIFICATES.................................................. S-19
Sale and Assignment of Receivables; Subsequent Receivables.............. S-19
Accounts................................................................ S-20
Subordination of the Class B Certificates............................... S-20
Advances................................................................ S-22
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
Distributions on the Offered Certificates................................ S-22
Distributions on the Class IC Certificate................................ S-25
The Policy............................................................... S-25
Rights of the Insurer upon Servicer Default, Amendment or Waiver......... S-26
THE INSURER................................................................ S-26
REPORTS TO CERTIFICATEHOLDERS.............................................. S-27
ERISA CONSIDERATIONS....................................................... S-27
UNDERWRITING............................................................... S-27
LEGAL OPINIONS............................................................. S-28
EXPERTS.................................................................... S-28
INDEX OF PRINCIPAL TERMS................................................... S-29
</TABLE>
S-4
<PAGE>
SUMMARY OF TERMS
. This summary highlights selected information from this prospectus supplement
and does not contain all the information that you should consider in making
your investment decision. To understand all of the terms of this offering,
read the entire prospectus supplement and accompanying prospectus.
. The definitions of or references to capitalized terms used in this
prospectus supplement can be found on the pages indicated in the "Index of
Principal Terms" on page S- in this prospectus supplement or on page of
the accompanying prospectus.
Issuer
The Bay View [Year] Auto Trust will issue the certificates offered in
this prospectus supplement.
Depositor
Bay View Securitization Corporation is the depositor of the trust. The
depositor will transfer the automobile receivables and related property to the
trust. The depositor is a wholly-owned subsidiary of Bay View Capital
Corporation ("BVCC").
Servicer
Bay View Acceptance Corporation ("BVAC") will act as the servicer of the
trust. The servicer will receive and apply payments on the receivables, service
the collection of the receivables and direct the trustee to make the
appropriate distributions to the certificateholders. The servicer will receive
a monthly servicing fee as compensation for its services. The servicer is a
wholly-owned subsidiary of Bay View Bank, N.A. (the "Bank"), which is a wholly-
owned subsidiary of BVCC. See "Bay View Acceptance Corporation and Affiliates"
in the accompanying prospectus.
Trustee
.
Dates
Cutoff Date
. , . The trust will receive payments received with respect to the
receivables after this date. This is also the date used for preparing
the statistical information used in this prospectus supplement.
Closing Date
. , .
The Offered Certificates
On the closing date, the trust will issue the Class A certificates and the
Class B certificates (collectively we refer to these certificates offered for
sale as the "offered certificates") as described below, under a pooling and
servicing agreement among the depositor, the servicer and the trustee. We are
offering these certificates for sale in this prospectus supplement. The
interest rates and initial certificate balances of the Class A and Class B
certificates are as follows:
<TABLE>
<CAPTION>
Pass-Through
Interest Initial
Rate Certificate
(per annum) Balance
------------ -----------
<S> <C> <C>
Class A certificates................................... % $
Class B certificates................................... % $
</TABLE>
See "The Offered Certificates" in this prospectus supplement.
Distribution Date
The trust will distribute interest and principal on the offered certificates
on the fifteenth calendar day of each month or, if such day is not a business
day, on the next business day. The distributions will begin on , and
will be made to holders of record of the offered certificates as of the record
date, which will be the last day of the collection period related to the
distribution date. The collection period with respect to any distribution date
is the calendar month immediately preceding the calendar month in which such
distribution date occurs. See "The Offered Certificates--Distributions on the
Offered Certificates" in this prospectus supplement and "Description of the
Certificates--
S-5
<PAGE>
Definitive Certificates" in the accompanying prospectus.
Interest on the Class A and Class B Certificates
Interest on the Class A and Class B certificates will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. See "Yield and
Prepayment Considerations" and "The Offered Certificates--Distributions on the
Offered Certificates" in this prospectus supplement.
Generally, the amount of monthly interest distributable to the Class A and B
certificateholders on each distribution date is the product of:
(1) one-twelfth of the interest rate applicable to the class of
certificates; and
(2) the aggregate outstanding certificate balance of the class on the
preceding distribution date (after giving effect to all distributions to
certificateholders on such date) or, in the case of the first distribution
date, from the closing date.
See "The Certificates--Distributions on the Certificates" in this prospectus
supplement.
Distributions of Principal
The trust will distribute principal on each distribution date to the Class A
and Class B certificateholders of record as of the record date. Generally, the
amount of monthly principal the trust will pay is equal to the decrease in the
outstanding principal balance of the receivables pool during the preceding
calendar month. See "The Offered Certificates--Distributions on the Offered
Certificates" in this prospectus supplement.
Generally, on any payment date monthly principal will be distributed
proportionately between the Class A certificateholders and the Class B
certificateholders pro rata based upon the aggregate balances of the
certificates as of the preceding payment date. However, if there is a shortfall
in the funds available to pay monthly principal, no principal will be
distributed to the Class B certificateholders until the full amount of interest
on and principal of the Class A certificates payable on such payment date has
been distributed to the Class A certificateholders.
The trust must distribute an amount equal to the outstanding certificate
balance of the Class A and the Class B certificates, as the case may be, to the
extent not previously distributed, by the final scheduled distribution date.
Since the rate of distribution of principal of the Class A and Class B
certificates depends upon the rate of payment of principal on the receivables
(including voluntary prepayments and principal in respect of defaulted
receivables and purchased receivable), the final distribution in respect of the
Class A and Class B certificates could occur significantly earlier than the
final scheduled payment date. See "Risk Factors--You May Incur a Loss if there
is a Default Under the Policy" and "The Offered Certificates--Distributions on
the Offered Certificates" in this prospectus supplement.
Subordination
The rights of the Class B certificateholders to receive distributions of
monthly interest and monthly principal are subordinated to the rights of the
Class A certificateholders. See "The Certificates--Subordination of the Class B
Certificates," "--Distributions on the Certificates," "--Accounts--Spread
Account," "Risk Factors--Subordination" and "--You May Incur a Loss if there is
a Default Under the Policy" in this prospectus supplement.
The Class IC Certificate
In addition to the Class A and Class B certificates, the trust will issue a
Class IC certificate pursuant to the pooling and servicing agreement. The Class
IC certificate will be retained by the depositor. We are not offering this
certificate for sale in this offering.
The Trust Assets
The trust assets 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-duty
trucks, motorcycles, recreational vehicles, sport utility vehicles and
vans;
S-6
<PAGE>
. certain monies (including accrued interest) due in respect of the
receivables after , , but excluding accrued interest paid before
the closing date;
. security interests in the related vehicles financed through the
receivables;
. funds on deposit in a certificate account and a spread account;
. any proceeds from claims on certain insurance policies relating to the
financed vehicles or the related obligors;
. an unconditional and irrevocable insurance policy issued by
guaranteeing payments of principal and interest on the certificates; and
. certain rights under the agreements by which the receivables are sold
from BVAC to the depositor and from the depositor to the trust.
The receivables arise from:
(1) motor vehicle installment sale contracts that were originated by
dealers for assignment to BVAC or the Bank (directly or through Ultra
Funding Corporation ("Ultra"), or Bay View Credit ("BVC"), both of which
were wholly-owned subsidiaries of BVAC prior to being merged into BVAC on
June 14, 1999, or California Thrift & Loan ("CTL"), which was renamed Bay
View Credit on January 2, 1998) or
(2) motor vehicle loan contracts that were solicited by dealers for
origination by BVAC, BVC, the Bank or CTL.
BVAC will sell all the receivables to be included in the trust to the
depositor. The trust will acquire its assets from the depositor pursuant to the
pooling and servicing agreement. In addition, the depositor must sell
subsequent receivables to the trust (subject to availability) having an
aggregate principal balance or pre-funded amount equal to approximately $ .
The trust will be obligated to purchase the subsequent receivables from the
depositor (subject to the satisfaction of certain conditions) prior to the end
of a specific funding period. The depositor will designate as a subsequent
cutoff date each effective date that subsequent receivables are conveyed to the
trust. Each date during the funding period on which subsequent receivables will
be conveyed to the trust is a subsequent transfer date. See "The Certificates--
Sale and Assignment of Receivables; Subsequent Receivables" and "The
Receivables Pool" in this prospectus supplement and "Formation of the Trust"
and "The Receivables Pools" in the accompanying prospectus.
Payment of the amount due to the registered lienholder under each receivable
is secured by a first perfected security interest in the related financed
vehicle. BVC, the Bank (or its predecessor, Bay View Federal Bank) or CTL is or
will be the registered lienholder (the "Named Lienholders") on the certificate
of title of each of the financed vehicles.
The receivables were selected from the automobile receivable portfolio of
BVAC, based on the criteria specified in the pooling and servicing agreement
and described in this prospectus supplement under "The Receivables Pools," and
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the accompanying prospectus. The underwriting procedures and
standards employed are described under "The Receivables Pools--Underwriting
Procedures" in the accompanying prospectus.
Subsequent receivables may be originated using credit criteria that differ
from those used for the initial receivables. Therefore, the initial receivables
may be of a different credit quality and seasoning. In addition, the transfer
of subsequent receivables to the trust may adversely affect the characteristics
of the entire pool of receivables. The provisions describing the transfer of
subsequent receivables and verification that subsequent receivables conform to
the requirements of the pooling and servicing agreement can be found in "The
Receivables Pool" and "The Certificates--Sale and Assignment of Receivables;
Subsequent Receivables" in this prospectus supplement. See also "Risk Factors--
Certain Risks Associated with Pre-Funding" and "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Subsequent Receivables" in the
accompanying prospectus.
S-7
<PAGE>
Pre-Funding Account
The trustee will deposit and maintain the pre-funded amount in a pre-funding
account during the funding period from the closing date until the earliest of:
(1) the date on which the amount on deposit in the pre-funding account
is equal to or less than $ ;
(2) the occurrence of an event of default under the pooling and
servicing agreement;
(3) the occurrence of certain events of insolvency of the depositor or
the servicer; or
(4) the [third] payment date.
The funding period will not be more than three calendar months.
The pre-funded amount initially will equal $ and will be reduced by the
amount used to purchase subsequent receivables. See "Description of the
Transfer and Servicing Agreements--Accounts--Pre-Funding Account" in the
accompanying prospectus and "The Certificates--Sale and Assignment of
Receivables; Subsequent Receivables" in this prospectus supplement.
The trustee will invest funds on deposit in the pre-funding account during
the funding period in eligible investments, subject to certain limitations. Any
investment income from such investments will be transferred from the pre-
funding account to the collection account on each payment date and will be
included in available funds for such payment date.
If any pre-funded amount remains in the pre-funding account at the end of
the pre-funding period, the trustee will pay such amount to the
certificateholders on the payment date on or immediately following the last day
of the pre-funding period. The trustee will pay the amount to the
certificateholders pro rata, based on the initial principal amounts of the
certificates held by the certificateholders. The amount the trustee pays to the
certificateholders will constitute a prepayment of the aggregate principal
balance of the certificates and may reduce the certificateholders' anticipated
yield. See "The Certificates--Sale and Assignment of Receivables; Subsequent
Receivables" in this prospectus supplement. See also "Risk Factors--Certain
Risks Associated with Pre-Funding" and "Description of the Transfer and
Servicing Agreements--Accounts" in the accompanying prospectus.
Spread Account; Available Funds; Rights of the Class IC Certificateholder
The depositor will establish a spread account on the closing date in the
name of the trustee for the benefit of the certificateholders and the insurer.
The spread account will hold the excess, if any, of the collections on the
receivables over the amounts which the trust is required to distribute to the
certificateholders, the servicer and the insurer.
The amount of funds available for distribution to Class A and Class B
certificateholders on any distribution date will consist of funds from the
following sources:
(1) payments received from obligors in respect of the receivables (net
of any amount required to be deposited to the payahead account in respect
of precomputed receivables);
(2) any net withdrawal from the payahead account in respect of
precomputed receivables;
(3) interest earned on funds on deposit in the certificate account;
(4) liquidation proceeds received in respect of receivables;
(5) advances received from the servicer in respect of interest on
certain delinquent receivables; and
(6) amounts received in respect of required repurchases or purchases of
receivables by BVAC or the servicer.
The trustee will withdraw funds from the spread account (up to the amount on
deposit in the account) and, if necessary, draw on the policy if the amount of
available funds for any distribution date is not sufficient to pay:
(1) the amounts owed to the servicer (including the monthly servicing
fee and reimbursement for advances made by the servicer to the trust); and
S-8
<PAGE>
(2) the required distributions of interest and principal to the Class A
and Class B certificateholders.
If the amount on deposit in the spread account is zero after any withdrawals
for the benefit of the certificateholders, and there is a default under the
policy, any losses on the receivables will be borne directly pro rata first by
the Class B certificateholders (to the extent of the outstanding Class B
certificates at such time) and then pro rata by the Class A certificateholders.
See "Risk Factors--You May Incur a Loss if there is a Default Under the
Policy," "The Offered Certificates--Accounts" and "--Distributions on the
Offered Certificates" in this prospectus supplement.
Any amount on deposit in the spread account on any distribution date in
excess of the required spread amount (after all other required deposits to and
withdrawals from the spread account have been made) and any amount on deposit
in the certificate account on any distribution date (after all other required
deposits to and withdrawals from the certificate account have been made) will
be distributed to the Class IC certificateholder. Any such distribution to the
Class IC certificateholder will no longer be an asset of the trust.
We intend for the amount on deposit in the spread account to grow over time
to the required spread amount through the deposit of the excess collections, if
any, on the receivables. However, we cannot assure you that the amount on
deposit in the spread account will actually grow to the required spread amount.
The required spread amount with respect to any payment date will equal % of
the aggregate principal balance of the certificates.
See "The Offered Certificates--Accounts" and "--The Policy" in this
prospectus supplement.
The Policy
The depositor will obtain an unconditional and irrevocable insurance policy.
Subject to the terms of the policy, the insurer will guarantee the payment of
the monthly servicing fee and the distribution of monthly interest and monthly
principal on the offered certificates up to the policy amount.
In addition, the policy will cover any amount paid or required to be paid by
the trust to the Class A and Class B certificateholders, which amount is sought
to be recovered as a voidable preference by a trustee in bankruptcy of BVAC or
the depositor under the United States Bankruptcy Code in accordance with a
final nonappealable order of a court having competent jurisdiction.
See "The Offered Certificates--The Policy" in this prospectus supplement.
Policy Amount
The policy amount with respect to any distribution date will be:
(A) the sum of:
(1) the monthly servicing fee;
(2) monthly interest; and
(3) the lesser of (a) the outstanding aggregate certificate balance of
the Class A and Class B certificates on such distribution date (after
giving effect to any distributions of available funds and any funds
withdrawn from the spread account to distribute monthly principal on such
distribution date) and (b) the initial aggregate certificate balances of
the Class A and Class B certificates minus all amounts drawn on the policy
or withdrawn from the spread account with respect to monthly principal.
(B) less
all amounts on deposit in the spread account on such payment date
(after giving effect to any funds withdrawn from the spread account to pay
monthly principal on such payment date).
Insurer
is the insurer and will guarantee the payment of monthly interest and
monthly principal under the terms of the policy. See "The Insurer" in this
prospectus supplement.
S-9
<PAGE>
Optional Redemption
The servicer has the right to purchase all of the receivables as of the last
day of any collection period on which the aggregate balance of the receivables
on the related distribution date (after the distribution of all amounts to be
paid on such distribution date) will be equal to or less than 10% of the
initial aggregate balance of the receivables. We will redeem the offered
certificates as a result of such a purchase of the receivables.
The purchase price for the receivables will be equal to the fair market
value of the receivables; provided that such amount may not be less than the
sum of:
(1) 100% of the outstanding aggregate certificate balance of the Class A
and Class B certificates,
(2) accrued and unpaid interest on the outstanding certificate balances
of the offered certificates at the weighted average interest rate of the
receivables, and
(3) any amounts due the insurer.
Tax Status
In the opinion of special tax counsel to the depositor, for federal income
tax purposes 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 certificateholders will agree to treat the trust as a
partnership for federal income tax purposes. As a partnership, the trust will
not be subject to federal income tax and the certificateholders will be
required to report their respective shares of the trust's taxable income,
deductions and other tax attributes. See "Federal Income Tax Consequences" in
the accompanying prospectus.
Ratings
On the closing date, each class of offered certificates will be issued only
if such class receives ratings from and , as follows:
<TABLE>
<CAPTION>
Rating
------
<S> <C>
Class A certificates.....................................................
Class B certificates.....................................................
</TABLE>
A rating is not a recommendation to buy, sell or hold the offered
certificates and may be subject to revision or withdrawal at any time by the
assigning rating agency. See "Risk Factors--A Change in the Certificate Ratings
May Adversely Affect the Offered Certificates" in this prospectus supplement.
ERISA Considerations
The Class A certificates may be eligible for purchase by employee benefit
plans subject to Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Any benefit plan fiduciary considering the purchase
of Class A certificates should, among other things, consult with experienced
legal counsel in determining whether all required conditions for such purchase
have been satisfied. See "ERISA Considerations" in this prospectus supplement
and in the accompanying prospectus.
Plans should not purchase Class B certificates, because the Class B
certificates are subordinate to the Class A certificates.
S-10
<PAGE>
RISK FACTORS
You should carefully consider the risk factors set forth below and in the
accompanying prospectus as well as the other investment considerations
described in such documents as you decide whether to purchase the offered
certificates.
You May Not be Able to Resell the Offered Certificates
There is currently no secondary market for the offered certificates. The
underwriters currently intend to make a market to enable resale of the offered
certificates, but are under no obligation to do so. As such, we cannot assure
you that a secondary market will develop for your certificates or, if one does
develop, that such market will provide you with liquidity of investment or that
it will continue for the life of your certificates.
The Offered Certificates Are Interests in the Trust Only and are Not Guaranteed
by any Other Party
The offered certificates are interests in the trust only and do not
represent an interest in or obligation of the depositor, BVAC, any of their
affiliates or any other party or governmental body. Except for the policy, the
offered certificates have not been insured or guaranteed by any party or
governmental body. See "The Offered Certificates--Distributions on the Offered
Certificates" and "--The Policy" in this prospectus supplement.
Subordination
The rights of the Class B certificateholders to receive distributions of
monthly interest and monthly principal are subordinated to the rights of the
Class A certificateholders. See "The Certificates--Subordination of the Class B
Certificates," and "--Distributions on the Certificates" in this prospectus
supplement. No distribution of interest will be made to the Class B
certificateholders on any distribution date until the full amount of interest
distributable 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 payment date until the
full amount of Class A monthly interest and Class A monthly principal on such
distribution date has been distributed. Distributions of interest on the Class
B certificates will not be subordinated to distributions of principal on 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 likely than the Class A certificates to
suffer losses due to losses on the receivables. If the insurer defaults on the
policy, Class B certificateholders may not recover their initial investment in
the Class B certificates.
You May Incur a Loss if there is a Default Under the Policy
If the insurer fails to make a required payment under the policy, the trust
will depend solely on payments on and proceeds from the receivables. If the
insurer fails to make a payment required under the policy to the trust when due
for any reason, such failure will constitute an insurer default under the
policy.
If the trust does not have sufficient funds to fully make the required
distributions to Class A and Class B certificateholders on a distribution date
during a default by the insurer, distributions on the offered certificates on
such distribution date will generally be reduced in the following order:
1. Class B monthly principal,
2. Class A monthly principal,
3. Class B monthly interest, and
4. Class A monthly interest.
A Change in the Certificate Ratings May Adversely Affect the Offered
Certificates
and are the rating agencies rating the offered certificates. The
rating for the offered certificates will reflect only the view of the relevant
rating agency. We cannot assure you that any such rating will continue for any
period of time or that any rating 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
S-11
<PAGE>
liquidity and market price of your offered certificates. A rating is not a
recommendation to buy, sell or hold the offered certificates.
Geographic Concentrations of the Receivables May Increase the Losses Realized
by the Trust
As of , , based upon billing address information provided to BVAC,
the obligors resided in 50 states and the District of Columbia, three of which
states, , and account for approximately %, % and %, respectively,
of the aggregate principal balance of the receivables. Adverse economic
conditions in , or could adversely affect the delinquency, loan loss
or repossession experience of the trust.
S-12
<PAGE>
THE DEPOSITOR AND BAY VIEW ACCEPTANCE CORPORATION
BVAC is an automotive finance company engaged primarily in the indirect
financing (the purchase of loan contracts from dealers) of automobile purchases
by individuals. BVAC currently acquires receivables from over 3,800
manufacturer franchised automobile dealerships in 14 states. For the fiscal
years ended , , , , [and the months ended , ,] BVAC
and/or the other Named Lienholders acquired motor vehicle loans aggregating
$ million, $ million, $ million and $ million, respectively. At
, the servicing portfolio of BVAC (consisting of the principal balance
of receivables held to maturity and securitized receivables) totaled
approximately $ million. The depositor is a wholly-owned bankruptcy remote
subsidiary of BVCC.
FORMATION OF THE TRUST
The depositor will establish the trust by assigning the trust assets to the
trustee in exchange for the certificates. The depositor will sell the offered
certificates and retain the Class IC certificate. BVAC will service the
receivables pursuant to the pooling and servicing agreement and will receive
compensation for acting as the servicer. To facilitate servicing and to
minimize administrative burden and expense, the servicer will serve as
custodian of the receivables for the trustee. However, the servicer will not
stamp the receivables to reflect the sale and assignment of the receivables to
the trust or the trustee or make any notation of the trustee's lien on the
certificates of title of the financed vehicles. In the absence of such notation
on the certificates of title, the trust or the trustee may not have perfected
security interests in the financed vehicles securing the receivables. Under the
terms of the pooling and servicing agreement, BVAC may delegate its duties as
servicer and custodian; however, any such delegation will not relieve BVAC of
its liability and responsibility with respect to such duties. See "Description
of the Transfer and Servicing Agreements--Servicing Compensation and
Distribution of Expenses" and "Certain Legal Aspects of the Receivables" in the
accompanying prospectus.
The depositor will establish the spread account for the benefit of the Class
A and Class B certificateholders and will obtain the policy for the benefit of
the certificateholders. The trustee will draw on the policy, up to the policy
amount, if available funds (after paying amounts owed to the servicer) are not
sufficient to fully distribute monthly interest and monthly principal. If there
is a default under the policy, 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 offered certificates. In such event, certain factors, such as
the trustee 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 the
certificateholders. See "The Offered Certificates--Accounts," "--Distributions
on the Offered Certificates" and "--The Policy" in this prospectus supplement
and "Certain Legal Aspects of the Receivables" in the accompanying prospectus.
THE RECEIVABLES POOL
General
The receivables were acquired by BVAC or a Named Lienholder from dealers or
originated by BVAC or a Named Lienholder through dealers in the ordinary course
of business. One of the Named Lienholders will be the registered lienholder on
the certificates of title to each of the financed vehicles.
The receivables were selected from the portfolio of BVAC for purchase by the
depositor according to several criteria, including that each receivable:
. is secured by a new or used vehicle;
S-13
<PAGE>
. provides for level monthly payments (except for the initial down
payment, which may be different from the level payments) that fully
amortize the amount financed over the original term to maturity of
the receivable;
. is a precomputed receivable or a simple interest receivable;
. has an original term to stated maturity of not more than months
and not less than months;
. has a remaining term to stated maturity of not more than months
and not less than months; and
. has a contract rate of interest (exclusive of prepaid finance
charges) of not less than %.
The weighted average remaining term to stated maturity of the receivables
was approximately months as of , .
Approximately % of the aggregate principal balance of the receivables as of
, are simple interest contracts which provide for equal monthly
payments. Approximately % of the aggregate principal balance of the
receivables as of , are precomputed receivables originated in the State
of California. All of such precomputed receivables are rule of 78's
receivables. Approximately % of the aggregate principal balance of the
receivables as of , represent financing of new vehicles; the remainder
of the receivables represent financing of used vehicles.
Receivables representing more than 10% of the aggregate principal balance of
the receivables as of , were originated in the States of , and
. The performance of the receivables in the aggregate could be adversely
affected in particular by the development of adverse economic conditions in
such states.
The trust is obligated to purchase subsequent receivables on a subsequent
transfer date only if the subsequent receivables satisfy certain criteria,
including that:
. [describe criteria specific to the particular transaction].
In addition, the trust is obligated to purchase the subsequent receivables
only if the weighted average remaining term of the receivables (including the
subsequent receivables) is not more than months. The trust will determine
whether the receivables satisfy the above criteria based on the characteristics
of the initial receivables as of and any subsequent receivables as of the
related subsequent cutoff date.
The initial receivables will represent approximately % of the initial
aggregate principal balance of the certificates. However, except for the
criteria described in the preceding paragraphs, the subsequent receivables are
not required to have any other specified criteria. 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.
S-14
<PAGE>
Composition of the Receivables by Financed Vehicle Type as of ,
<TABLE>
<CAPTION>
Weighted
Aggregate Original Average
Number of Principal Principal Contract
Receivables Balance Balance Rate
----------- --------- --------- --------
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty
Trucks.............................. $ $ %
Used Automobiles and Light-Duty
Trucks..............................
New Motorcycles......................
Used Motorcycles.....................
New Recreational Vehicles............
Used Recreational Vehicles...........
New Sport Utility Vehicles...........
Used Sport Utility Vehicles..........
New Vans(1)..........................
Used Vans(1)......................... %
--- ---- ---- ---
All Receivables...................... $ $ %
=== ==== ==== ===
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted Percent of
Average Average Aggregate
Remaining Original Principal
Term(2) Term(3) Balance(4)
--------- -------- ----------
<S> <C> <C> <C>
New Automobiles and Light-Duty Trucks............ %
Used Automobiles and Light-Duty Trucks(1)........
New Motorcycles..................................
Used Motorcycles.................................
New Recreational Vehicles........................
Used Recreational Vehicles.......................
New Sport Utility Vehicles.......................
Used Sport Utility Vehicles......................
New Vans(1)......................................
Used Vans(1).....................................
------
All Receivables.................................. 100.00%
======
</TABLE>
- --------
(1) References to vans include minivans and van conversions.
(2) Expressed in months. Based on stated maturity as of the cutoff date and
assuming no prepayments of the receivables.
(3) Expressed in months. Based on stated maturity as of the origination date
and assuming no prepayment of receivables.
(4) Sum may not equal 100% due to rounding.
S-15
<PAGE>
Distribution of the Receivables by Remaining Term to Stated Maturity as of
,
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Remaining Term Range Receivables Balance Balance(1)
- -------------------- ----------- --------- ------------
<S> <C> <C> <C>
months..................................... $ %
to months................................
to months................................
to months................................
to months................................
to months................................
to months................................
to months................................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
Geographic Distribution of the Receivables as of ,
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
State(1)(2) Receivables Balance Balance(3)
- ----------- ----------- --------- ------------
<S> <C> <C> <C>
.......................................... $ %
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
</TABLE>
- --------
(1) Based on address of the borrower.
(2) No other state accounts for greater than 1.00% of the aggregate principal
balance of the receivables.
(3) Sum may not equal 100% due to rounding.
(4) Includes military personnel located outside the United States.
S-16
<PAGE>
Distribution of the Receivables by Financed Vehicle Model Year as of ,
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Model Year Receivables Balance Balance(1)
- ---------- ----------- --------- ------------
<S> <C> <C> <C>
or Prior................................. $ %
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Contract Rate as of ,
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Contract Rate Range Receivables Balance Balance(1)
- ------------------- ----------- --------- ------------
<S> <C> <C> <C>
to %.................................... $ %
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
S-17
<PAGE>
Delinquency and Net Credit Losses
We have set forth below certain information about the experience of BVAC
relating to delinquencies and net losses on its fixed rate retail automobile,
light-duty truck, motorcycle, recreational vehicle, sport utility vehicle and
van receivables serviced by BVAC. We cannot assure you that the delinquency and
net loss experience of the receivables will be comparable to that set forth in
the following tables.
Delinquency Experience(1)
<TABLE>
<CAPTION>
At , At ,
-------------------------------------------------------- ------------------
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..... $ $ $ $
---- ---- ---- ---- ---- ---- ---- ----
Delinquencies
30-59 days.............
60-89 days.............
90 days or more........
---- ---- ---- ---- ---- ---- ---- ----
Total delinquencies..... $ $ $ $
==== ==== ==== ==== ==== ==== ==== ====
Total delinquencies as a
percent of servicing
portfolio.............. % % % % % % % %
</TABLE>
- --------
(1) Sums may not total due to rounding.
Credit Loss Experience(1)
<TABLE>
<CAPTION>
Months Ended
Year Ended , (5)
-------------------------------------------------------- ------------------
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>
Avg. servicing
portfolio(2)........... $ $ $ $
--- ---- --- ---- --- ---- --- ----
Gross charge-offs.......
Recoveries(3)...........
---- ---- ---- ----
Net losses..............
==== ==== ==== ====
Gross charge-offs as a %
of average servicing
portfolio(4)........... % % % % % % % %
Recoveries as a % of
gross charge-offs...... % % % %
Net losses as a % of
average servicing
portfolio(4)........... % % % %
</TABLE>
- --------
(1) There is generally no recourse to dealers under any of the receivables in
the portfolio serviced by BVAC, except to the extent of limited
representations and warranties made by dealers in connection with such
receivables.
(2) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(3) Recoveries include recoveries on receivables previously charged off, cash
recoveries and unsold repossessed assets carried at fair market value.
(4) Variation in the size of the portfolio serviced by BVAC 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."
(5) Percentages are annualized in "Gross charge-offs as a percentage of average
servicing portfolio" and "Net losses as a percentage of average servicing
portfolio" for partial years.
S-18
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
General
Monthly interest will be distributed to Class A and Class B
certificateholders on each distribution date to the extent of the pass-through
interest rate applicable to each offered certificate applied to the aggregate
certificate balance as of the preceding distribution date or the closing date,
as applicable (after giving effect to payments of principal on such preceding
distribution date). See "The Offered Certificates--Distributions on the
Offered Certificates" in this prospectus supplement.
Upon a full or partial prepayment on a receivable, Class A and Class B
certificateholders should receive interest for the full month of such
prepayment either:
(1) through the distribution of interest paid on the receivables;
(2) by an advance from the servicer;
(3) from a withdrawal from the spread account; or
(4) by a draw on the policy.
The receivables will have different contract rates. The contract rate on a
small percentage of the receivables will generally not exceed the sum of:
(1) the weighted average of the pass-through interest rates on the Class
A and Class B certificates;
(2) the per annum rate used to calculate the insurance premium paid to
the insurer; and
(3) the per annum rate used to calculate the monthly servicing fee.
Disproportionate rates of prepayments between receivables with higher and
lower contract rates could affect the ability of the trust to distribute
monthly interest to you.
Mandatory Repurchase
If any pre-funded amount remains in the pre-funding account at the end of
the pre-funding period, the trustee will pay such amount to the
certificateholders on the payment date on or immediately following the last
day of the pre-funding period. The trustee will pay the amount, which will be
applied as a principal prepayment of the certificates, to the
certificateholders pro rata, based on the initial principal amounts of the
certificates held by the certificateholders.
THE OFFERED CERTIFICATES
The offered certificates will be issued pursuant to the pooling and
servicing agreement. You may request a copy of this agreement (without
exhibits) by contacting the servicer at the address set forth under "Reports
to Certificateholders" in this prospectus supplement. We do not claim that the
following summary is complete. For a more detailed description of the pooling
and servicing agreement, you should read the pooling and servicing agreement.
Sale and Assignment of Receivables; Subsequent Receivables
We have described the conveyance of the initial receivables (1) from BVAC
to the depositor pursuant to the purchase agreement dated as of , among
BVAC and the depositor and (2) from the depositor to the trust pursuant to the
pooling and servicing agreement in the accompanying prospectus under the
heading "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables." In addition, during the funding period, BVAC 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 the pre-funded amount of approximately $ to the extent
that subsequent receivables are available.
S-19
<PAGE>
On each subsequent transfer date during the funding period, BVAC will sell
and assign to the depositor, and the depositor will sell and assign to the
trust, without recourse, its interest in the subsequent receivables. The
subsequent receivables will be designated by BVAC as of the related subsequent
cutoff date and identified in a schedule attached to a subsequent assignment
instrument relating to such subsequent receivables. Such instrument will be
executed and delivered on such subsequent transfer date by the seller for
delivery to the trustee pursuant to the pooling and servicing agreement,
subject to the conditions described below.
Any conveyance of subsequent receivables is subject to the satisfaction of
the following conditions, among others, on or before the related subsequent
transfer date:
. 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 BVAC or
the depositor deems adverse to the interests of the certificateholders;
. 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 criteria
described under "The Receivables Pool" in this prospectus supplement and
under "The Receivables Pools" in the accompanying prospectus; and
. BVAC 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 seller 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 of the following requirements within days after the
termination of the funding period:
. the seller 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;
. the trustee shall have received written confirmation from a firm of
certified independent public accountants that the receivables, including
the subsequent receivables, satisfy the criteria described under "The
Receivables Pool" in this prospectus supplement and under "The
Receivables Pools" in the accompanying prospectus; and
. the rating agencies shall have notified the seller 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 at
least 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, motorcycle, recreational vehicle, sport utility vehicle and van
receivables in the portfolio serviced by the servicer. BVAC will immediately
repurchase from the trustee, at a price equal to the purchase amount, any
subsequent receivable that fails to satisfy any of the foregoing conditions
subsequent.
Subsequent receivables may be or may have been originated or acquired by
BVAC at a later date using credit criteria different from those that were
applied to the initial receivables. See "The Receivables Pool" in this
prospectus supplement.
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 trustee will establish the spread
account for the benefit of the certificateholders and the insurer, into which
the depositor will deposit an amount equal to % of the initial aggregate
principal balance of the certificates. Thereafter, the amount held in the
spread account will increase up to the required spread amount by the deposit of
payments on the receivables not used to make payments to
S-20
<PAGE>
the certificateholders (other than the Class IC certificateholder), the insurer
and the servicer for the monthly servicing fee and any permitted reimbursements
of outstanding advances on any payment date. Although we intend for the amount
on deposit in the spread account to grow over time to equal the required spread
amount through monthly deposits of any excess collections on the receivables,
we cannot assure you that such growth will actually occur. On each payment
date, any amounts on deposit in the spread account, after the payment of any
amounts owed to the certificateholders and the insurer, in excess of the
required spread amount will be distributed to the depositor.
Under the terms of the pooling and servicing agreement, the trustee will
withdraw funds from the spread account to the extent available and transfer
such funds to the certificate account for any deficiency of Monthly Interest or
Monthly Principal as further described below under "--Distributions on the
Certificates."
If the balance of the spread account is reduced to zero and the insurer
defaults on the policy on any payment 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
accompanying 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, you may suffer a corresponding loss which will be borne
first by the Class B certificateholders, pro rata up to the aggregate principal
balance of the Class B certificates, and then pro rata by the Class A
certificateholders.
Payahead Account. The servicer will establish a payahead account in the name
of the trustee on behalf of obligors on the receivables and the
certificateholders. The payahead account will initially be maintained with the
trustee. To the extent required by the pooling and servicing agreement, early
payments by or on behalf of obligors on precomputed receivables will be
deposited in the payahead account 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 payment to certificateholders. We will
pay the interest earned on the balance in the payahead account to the servicer
each month. We will apply collections received on a precomputed receivable
during a collection period first to any overdue scheduled payment on such
receivable, then to the scheduled payment on such receivable due in such
collection period. If the amount collected on a precomputed receivable exceeds
the amount required for any overdue scheduled payment or scheduled payment, but
is insufficient to prepay the precomputed receivable in full, then generally
such excess collections will be transferred to and kept in the payahead account
until such amount may be applied either to a later scheduled payment or to
prepay such receivable in full.
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 in this prospectus supplement. 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 payment date, and to afford the Class A
certificateholders limited protection against losses due to losses on the
receivables.
No distribution of interest will be made to the Class B certificateholders
on any payment date until the full amount of interest payable on the Class A
certificates on such payment date has been distributed to the Class A
certificateholders, and no distribution of principal will be made to the Class
B certificateholders on any payment date until the full amount of Class A
Monthly Interest and Class A Monthly Principal payable on such payment date has
been paid. 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 likely than the Class A certificates to suffer losses due to
losses on the receivables. If the aggregate amount of losses on the receivables
exceed the
S-21
<PAGE>
amount on deposit in the spread account and the insurer defaults on the policy,
Class B certificateholders may not recover their initial investment in the
Class B certificates.
The Class A certificateholders are protected by their rights to receive
distributions on the receivables before the Class B certificateholders receive
distributions, in the manner and to the extent described above. In addition, if
there are delinquencies or losses on the receivables, the Class A
certificateholders may be protected by the funds, if any, in the spread account
and by policy.
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 if the servicer, in its sole discretion, expects to
recover the advance from subsequent collections on the receivable. The servicer
will deposit the advance in the certificate account on or before the second
business day before the distribution date. The servicer will recover 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 recover its advance from any
collections made on other receivables.
Distributions on the Offered Certificates
Available Funds. The servicer will deposit in the certificate account the
aggregate principal and interest payments, including full and partial
prepayments (except certain prepayments in respect of precomputed receivables
as described above under "--Accounts") received on all receivables with respect
to the preceding collection period. The funds available for distribution on the
next distribution date ("Available Funds") will consist of:
. all payments on the simple interest receivables received during the
related collection period;
. the scheduled payments received from obligors on precomputed
receivables:
. interest earned on funds on deposit in the certificate account;
. the net amount to be transferred from the payahead account to the
certificate account for the related distribution date;
. all advances for such collection period; and
. the purchase amount for all receivables that were purchased or
repurchased by BVAC or the servicer during the preceding collection
period.
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 with respect to the collection period (as described below). The
servicer, however, will account to the trustee and to the certificateholders as
if all deposits and distributions were made individually.
The servicer will determine the amount of funds necessary to make
distributions of Monthly Principal and Monthly Interest to the holders of the
offered certificates and to pay the monthly servicing fee to the servicer. If
there is a deficiency with respect to Monthly Interest or Monthly Principal on
any distribution date, after giving effect to payments of the monthly servicing
fee and permitted reimbursements of outstanding advances to the servicer on
such distribution date, or if there is a deficiency with respect to the monthly
servicing fee, the servicer will direct the trustee to withdraw amounts from
the spread account, up to the amount on deposit in such account. If there
remains a deficiency of Monthly Interest or Monthly Principal or the monthly
servicing fee after such a withdrawal, the servicer will notify the trustee of
the remaining deficiency, and the trustee will draw on the policy, up to the
Policy Amount, to pay Monthly Interest, Monthly Principal, and the monthly
servicing fee.
S-22
<PAGE>
Distributions. On each distribution date, the trustee will use the
Available Funds (plus any amounts withdrawn from the spread account or drawn
on the policy, as applicable) to make the following distributions in the
following priority:
(a) without duplication, an amount equal to the sum of (1) the amount of
outstanding advances in respect of receivables that became defaulted
receivables during the prior collection period plus (2) the amount of
outstanding advances in respect of receivables that the servicer determines
to be unrecoverable, to the servicer;
(b) the monthly servicing fee, including any overdue monthly servicing
fee, to the servicer, to the extent not previously distributed to the
servicer;
(c) pro rata, Class A Monthly Interest (including any overdue amounts)
to the Class A certificateholders;
(d) pro rata, Class B Monthly Interest (including overdue amounts) to
the Class B certificateholders;
(e) pro rata, Class A Monthly Principal (including any overdue amounts)
to the Class A certificateholders;
(f) pro rata, Class B Monthly Principal (including any overdue amounts)
to the Class B certificateholders;
(g) the insurance premium including any overdue insurance premium plus
any accrued interest to the insurer;
(h) 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;
(i) the aggregate amount of any unreimbursed draws on the policy payable
to the insurer under the insurance and reimbursement agreement, for Monthly
Interest, Monthly Principal and any other amounts owing to the insurer
under the insurance and reimbursement agreement plus accrued interest
thereon; and
(j) the balance into the spread account.
Payments due the insurer on a distribution date as described in clause (i)
above will be payable from Available Funds, after distribution of the amounts
described in clauses (a) through and including (h) above. After all
distributions pursuant to clauses (a) through (j) above have been made for
each payment date, the amount of funds remaining in the spread account on such
date, if any, in excess of the required spread amount (after payment of all
amounts owed to the insurer), will be distributed to the Class IC
certificateholder.
Any amounts distributed to the Class IC certificateholder will no longer be
property of the trust and will not be available to make payments to you.
Definitions. The following defined terms are used in this "Distributions on
the Offered Certificates" section.
"Monthly Principal" for any distribution date will equal the sum of Class A
Monthly Principal and Class B Monthly Principal.
"Class A Monthly Principal" for any payment date will equal the amount
necessary to reduce the aggregate principal balance of the Class A
certificates to % of the aggregate unpaid principal balances of the
receivables on the last day of the preceding collection period; provided,
however, that Class A Monthly Principal on the final scheduled payment date
will equal the aggregate principal balance of the Class A certificates on such
date.
"Class B Monthly Principal" for any payment date will equal the amount
necessary to reduce the aggregate principal balance of the Class B
certificates 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
S-23
<PAGE>
Monthly Principal on the final scheduled payment date will equal the aggregate
principal balance of the Class B certificates on such date.
If there is a shortfall in Available Funds on any distribution date, the
amount of Monthly Principal otherwise distributable to Class A and Class B
certificateholders will be reduced by the lesser of: (1) the amount of such
shortfall or (2) the amount, if any, by which the aggregate outstanding
certificate balance of the Class A and Class B certificates as of the preceding
distribution date (after giving effect to all distributions of principal on
such date) was less than the aggregate principal balance of the receivables
pool as of the end of the related collection period. For the purpose of
determining Monthly Principal, Class A Monthly Principal and Class B Monthly
Principal, the unpaid principal balance of a defaulted receivable or a
receivable required to be purchased or repurchased by BVAC or the servicer will
be zero as of the end of the collection period in which such receivable became
a defaulted receivable or a purchased receivable. In no event will Monthly
Principal exceed the aggregate outstanding certificate balance of the Class A
and Class B certificates.
A defaulted receivable for any collection period is a receivable as to which
the earliest to occur of any of the following has occurred: (1) any payment, or
part thereof, is 120 days or more delinquent as of the last day of such
collection period; (2) the financed vehicle that secures the receivable has
been repossessed and liquidated; or (3) 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 seller 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 unless not repurchased within the time period
provided for in the pooling and servicing agreement.
"Monthly Interest" for any distribution date will equal the sum of Class A
Monthly Interest and Class B Monthly Interest.
"Class A Monthly Interest" means for any distribution date, the product of
the following:
(a) one-twelfth of the Class A interest rate, and
(b) the aggregate certificate balance of the Class A certificates as of
the immediately preceding distribution date or, in the case of the first
distribution date, the closing date (after giving effect to any
distribution of principal made on such distribution date).
"Class B Monthly Interest" means for any distribution date, the product of
the following:
(a) one-twelfth of the Class B interest rate, and
(b) the aggregate certificate balance of the Class B certificates as of
the immediately preceding distribution date or, in the case of the first
distribution date, the closing date (after giving effect to any
distribution of principal made on such distribution date).
Example of Distribution Date Activities. The following chart sets forth an
example of the application of the foregoing provisions to the first
distribution date on :
, ................ Collection Period. The collection period for each
distribution date is the calendar month preceding
the distribution date. 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 monthly servicing fee from such deposits.
, ................ Determination Date. The determination date is the
tenth calendar day of the month, or if such day is
not a business day, the first business day
thereafter. On or before this date, the servicer
delivers the servicer's certificate to the trustee
setting forth the amounts to be distributed on the
S-24
<PAGE>
distribution date and the amounts of any
deficiencies. If necessary, the trustee notifies
the insurer of any draws in respect of the policy.
, ................ Record Date. The record date is the last day of the
collection period before the distribution date.
Payments on the distribution date are made to
certificateholders of record at the close of
business on this date.
, ................ Distribution Date. The distribution date is the
fifteenth calendar day of the month, or if such day
is not a business day, the first business day
thereafter. The trustee withdraws funds from the
certificate account and, as necessary, from the
spread account and then draws on the policy, if
necessary, to pay Monthly Interest and Monthly
Principal to the certificateholders as described in
this prospectus supplement, pays the monthly
servicing fee to the extent not previously paid,
pays the insurance premium and all other amounts
owing to the insurer.
Distributions on the Class IC Certificate
The Class IC certificate will be initially issued to the depositor and will
entitle the depositor to receive all funds after payment of all amounts owed to
the Class A and Class B certificateholders, the servicer and the insurer. On or
after the termination of the trust, the Class IC certificateholder is entitled
to receive any amounts remaining in the trust (only after all required payments
to the insurer are made) after the payment of expenses and payments to the
Class A and Class B certificateholders. See "--Accounts" and "--Distributions
on the Offered Certificates" above.
The Policy
On or before the closing date, the depositor, the trust, BVAC, in its
individual capacity and as servicer, and the insurer will enter into the
insurance and reimbursement agreement pursuant to which the insurer will issue
an unconditional and irrevocable insurance policy. Subject to the terms of the
policy, the insurer will guarantee the payment of the monthly servicing fee,
Monthly Interest and Monthly Principal up to the Policy Amount. 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
Monthly Interest or Monthly Principal, the trustee will be authorized to draw
on the policy to pay a deficiency in the monthly servicing fee, Monthly
Interest or Monthly Principal, and credit the certificate account for such
draws as described above under "--Distributions on the Offered Certificates."
The maximum amount that may be drawn under the policy on any distribution
date is limited to the policy amount for such distribution date. The policy
amount with respect to any distribution date will equal:
(A) the sum of:
(1) the monthly servicing fee; and
(2) Monthly Interest; and
(3) the lesser of (a) the outstanding aggregate certificate balance
of the Class A and Class B certificates on such distribution date
(after giving effect to any distributions of Available Funds and any
amounts withdrawn from the spread account on such distribution date)
and (b) the initial aggregate certificate balances of the Class A and
Class B certificates minus all amounts drawn on the policy or withdrawn
from the spread account with respect to principal;
(B) less:
all amounts on deposit in the spread account on such distribution
date (after giving effect to any funds withdrawn from the spread
account to pay Monthly Principal on such distribution date).
S-25
<PAGE>
The policy will also cover any amount paid or required to be paid by the
trust to Class A and Class B certificateholders that is sought to be recovered
as a voidable preference by a trustee in bankruptcy of BVAC or the depositor
pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended from time
to time, in accordance with a final nonappealable order of a court having
competent jurisdiction.
The insurer will be entitled to receive the insurance premium and certain
other amounts on each distribution date as described under "--Distributions on
the Offered Certificates" and to receive amounts on deposit under the spread
account as described under "--Accounts." Generally, the insurance premium for a
distribution date will be the product of one three hundred sixtieth (1/360th)
of the policy per annum fee rate (as set forth in the insurance and
reimbursement agreement), the actual days elapsed and the aggregate certificate
balance of the Class A and Class B certificates as of the preceding
distribution date (after giving effect to all payments of principal on such
date). The insurer will not be entitled to reimbursement of any amounts from
the Class A and Class B certificateholders. The insurer's obligation under the
policy is irrevocable and unconditional. The insurer will have no obligation to
the Class A and Class B certificateholders or the trustee, other than its
obligations under the policy.
If the spread account balance has been reduced to zero and there has been a
default under the policy, the trust will depend solely on current collections
on the receivables to make payments of principal and interest on the offered
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 accompanying 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,
first, the Class B certificateholders and second, the Class A
certificateholders may suffer a corresponding loss. Any such losses by the
Class A and Class B certificateholders will be borne pro rata based upon the
relative certificate balances of the outstanding classes. See "--Distributions
on the Offered Certificates" above.
Rights of the Insurer upon Servicer Default, Amendment or Waiver
Upon the occurrence of an event of default by the servicer under the pooling
and servicing agreement, the insurer, or the trustee upon the consent of the
insurer, will be entitled to appoint a successor servicer. In addition to the
events constituting an event of default as described in the accompanying
prospectus, the pooling and servicing agreement will also permit the insurer 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 and reimbursement
agreement.
The pooling and servicing agreement cannot be amended or any provisions
thereof waived without the consent of the insurer if such amendment or waiver
would have a materially adverse effect upon the rights of the insurer.
[THE INSURER]
[Information about the insurer will be provided.]
S-26
<PAGE>
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur only
under the limited circumstances described in the accompanying prospectus),
, as trustee, will provide monthly and annual statements concerning the
trust and the offered certificates to Cede & Co., the nominee of The Depository
Trust Company, as registered holder of the offered 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 Bay View Acceptance Corporation, 818 Oak
Park Road, Covina, California 91724 (telephone (800) 524-9292).
ERISA CONSIDERATIONS
Subject to the considerations set forth under "ERISA Considerations" in the
accompanying prospectus, the Class A certificates may be eligible for purchase
by an employee benefit plan or an individual retirement account (a "Benefit
Plan") subject to Title I of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"). A fiduciary of a Benefit 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 accompanying prospectus.
Benefit Plans should not purchase Class B certificates because the Class B
certificates are subordinate to the Class A certificates.
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement for the sale of the offered certificates, dated , , the
underwriters, , have agreed, subject to the terms and conditions set
forth therein, to purchase all the offered certificates.
The underwriters propose to offer part of the offered certificates directly
to you at the prices set forth on the cover page of this prospectus supplement
and part to certain dealers at a price that represents a concession not in
excess of % of the denominations of the Class A certificates and % 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 and % of the denominations of the Class B
certificates.
The depositor and BVAC have agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The underwriters tell us that they intend to make a market in the offered
certificates, as permitted by applicable laws and regulations. However, the
underwriters are not obligated 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, we give no assurances regarding the liquidity
of, or trading markets for, the offered certificates.
In connection with this offering, the underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the offered
certificates at a level above that which might otherwise prevail in the open
market. Such stabilizing, if commenced, may be discontinued at any time.
S-27
<PAGE>
In the ordinary course of their businesses, the underwriters and their
respective affiliates have engaged and may in the future engage in investment
banking, commercial banking and other advisory or commercial relationships with
the depositor, BVAC and their affiliates.
We will receive proceeds of $ from the sale of the offered certificates,
before deducting our net expenses estimated to be $ .
LEGAL OPINIONS
Certain legal matters relating to the offered certificates will be passed
upon for the depositor and the trust by Silver, Freedman & Taff, L.L.P., and
for the underwriters by . Certain federal income tax consequences with
respect to the offered certificates will be passed upon for the trust by
Silver, Freedman & Taff, L.L.P.
EXPERTS
[To Be Completed]
S-28
<PAGE>
INDEX OF PRINCIPAL TERMS
We have listed below the terms used in this prospectus supplement and the
pages where definitions of the terms can be found.
<TABLE>
<S> <C>
Available Funds............................................................ S-22
Bank....................................................................... S-5
Benefit Plan............................................................... S-27
BVAC....................................................................... S-5
BVC........................................................................ S-7
BVCC....................................................................... S-5
Code....................................................................... S-27
CTL........................................................................ S-7
Class A Monthly Interest................................................... S-24
Class B Monthly Interest................................................... S-24
Class A Monthly Principal.................................................. S-23
Class B Monthly Principal.................................................. S-23
Closing Date............................................................... S-5
Collection Period.......................................................... S-24
Cutoff Date................................................................ S-5
Determination Date......................................................... S-24
Distribution Date.......................................................... S-5
ERISA...................................................................... S-10
Monthly Interest........................................................... S-24
Monthly Principal.......................................................... S-23
Named Lienholders.......................................................... S-7
Offered Certificates....................................................... S-5
Policy Amount.............................................................. S-9
Record Date................................................................ S-25
Ultra...................................................................... S-7
</TABLE>
S-29
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BAY VIEW [Year] AUTO TRUST
Bay View Securitization Corporation,
as depositor
Bay View Acceptance Corporation,
as servicer
$ Class A Automobile Receivable Backed Certificates
$ Class B Automobile Receivable Backed Certificates
----------------
Prospectus Supplement
----------------
[UNDERWRITERS OF THE CERTIFICATES]
----------------
You should rely only on the information contained or incorporated by
reference in its prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different or additional information.
We are not offering the offered certificates in any state where the offer is
not permitted.
Dealers will deliver this prospectus supplement and prospectus when acting
as underwriters of the offered certificates with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the offered
certificates will deliver this prospectus supplement and prospectus until
, .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[PROSPECTUS SUPPLEMENT FOR OWNER TRUST]
Bay View [YEAR]-- Owner Trust
Automobile Receivable Backed Notes
Bay View Securitization Corporation, Bay View Acceptance Corporation,
as seller as servicer
We are offering the following classes of automobile receivable backed notes:
<TABLE>
<CAPTION>
Underwriting
Price
Class of Initial Aggregate Final to Public Discount
Notes Principal Balance Interest Rate Maturity Date per Note per Note
- -------- ----------------- ------------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
A-1........ $ % % %
A-2........
A-3........
A-4........
B..........
</TABLE>
The total price to the public is $ . The total underwriting discount is
$ . The total proceeds to the trust are $ .
You should carefully consider the factors set forth under "Risk Factors"
beginning on page of this prospectus supplement and on page in the
prospectus.
The notes represent interests in the Bay View [Year]-- Owner Trust only
and do not represent obligations of or interests in Bay View Securitization
Corporation, Bay View Acceptance Corporation, any of their affiliates or any
governmental agency.
----------------
This prospectus supplement may be used to offer and sell the notes only if
accompanied by the prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
----------------
[Underwriters]
The date of this prospectus supplement is .
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the notes in the following documents:
(1) this prospectus supplement, which describes the specific terms of your
notes; and
(2) the accompanying prospectus, which provides general information, some
of which may not apply to the notes.
If the description of the notes varies between this prospectus supplement
and the prospectus, you should rely on the information in this prospectus
supplement.
We include cross-references in this prospectus supplement and in the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
You can find a list of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Principal Terms"
beginning on page S- in this prospectus supplement and under the caption
"Index of Principal Terms" beginning on page in the accompanying prospectus.
In this prospectus supplement and the accompanying prospectus, "we" refers
to the seller, Bay View Securitization Corporation, and "you" refers to any
prospective investor in the notes.
S-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF TERMS.......................................................... S-5
Issuer.................................................................. S-5
Seller.................................................................. S-5
Servicer................................................................ S-5
Indenture Trustee....................................................... S-5
Owner Trustee........................................................... S-5
Closing Date............................................................ S-5
The Notes............................................................... S-5
Payment Date............................................................ S-5
Interest on the Notes................................................... S-6
Note Principal.......................................................... S-6
The Certificate......................................................... S-7
The Trust Assets........................................................ S-7
Spread Account; Rights of the Certificateholder......................... S-7
The Policy.............................................................. S-9
Policy Amount........................................................... S-9
Insurer................................................................. S-9
Indenture Default; Control by the Insurer and Noteholders............... S-9
Optional Redemption..................................................... S-9
Increase of the Class A-4 Interest Rate and the Class B Interest Rate... S-9
Tax Status.............................................................. S-10
Ratings................................................................. S-10
ERISA Considerations.................................................... S-10
RISK FACTORS.............................................................. S-11
You May Not be Able to Resell the Notes................................. S-11
The Notes Are Obligations of the Trust Only and are Not Guaranteed by
any Other Party........................................................ S-11
The Amount in the Spread Account May Not be Sufficient to Assure Payment
of Principal and Interest.............................................. S-11
You May Incur a Loss if there is a Default Under the Policy............. S-11
Some Notes are More at Risk than Others if There are Losses on the
Receivables............................................................ S-12
The Class B Notes are Subordinate to the Class A Notes.................. S-12
Noteholders Have a Limited Right to Declare Indenture Defaults or
Remedies............................................................... S-12
A Change in the Note Ratings May Adversely Affect the Notes............. S-13
Geographic Concentrations of the Receivables May Increase the Losses
Realized by the Trust.................................................. S-13
THE SELLER AND BAY VIEW ACCEPTANCE CORPORATION............................ S-13
FORMATION OF THE TRUST.................................................... S-13
THE RECEIVABLES POOL...................................................... S-14
General................................................................. S-14
Composition of the Receivables by Financed Vehicle Type as of ,..... S-15
Distribution of the Receivables by Remaining Term to Stated Maturity as
of ................................................................. S-15
Geographic Distribution of the Receivables as of ,.................. S-16
Distribution of the Receivables by Financed Vehicle Model Year as of
,...................................................................... S-16
Distribution of the Receivables by Contract Rate as of ,............ S-17
Delinquency and Net Credit Losses....................................... S-17
YIELD AND PREPAYMENT CONSIDERATIONS....................................... S-19
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
THE NOTES.................................................................. S-19
Sale and Assignment of Receivables....................................... S-19
Accounts................................................................. S-19
Advances................................................................. S-20
Payments on the Notes.................................................... S-20
Distributions on the Certificate......................................... S-25
The Policy............................................................... S-25
Default under the Indenture.............................................. S-26
Rights of the Insurer upon Servicer Default, Amendment or Waiver......... S-26
THE INSURER................................................................ S-26
REPORTS TO NOTEHOLDERS..................................................... S-27
FEDERAL INCOME TAX CONSEQUENCES............................................ S-27
General.................................................................. S-27
Discount and Premium..................................................... S-27
Gain or Loss on Disposition.............................................. S-28
Backup Withholding and Information Reporting............................. S-28
New Withholding Regulations.............................................. S-28
ERISA CONSIDERATIONS....................................................... S-28
UNDERWRITING............................................................... S-30
LEGAL OPINIONS............................................................. S-30
EXPERTS.................................................................... S-30
INDEX OF PRINCIPAL TERMS................................................... S-31
</TABLE>
S-4
<PAGE>
SUMMARY OF TERMS
. This summary highlights selected information from this prospectus supplement
and does not contain all of the information that you should consider in
making your investment decision. To understand all of the terms of this
offering, read the entire prospectus supplement and accompanying prospectus.
. The definitions of capitalized terms used in this prospectus supplement can
be found on the pages indicated in the "Index of Principal Terms" on page S-
in this prospectus supplement or on page of the accompanying prospectus.
Issuer
The Bay View [ ]- Owner Trust, a Delaware business trust, will issue the
notes offered in this prospectus supplement.
Seller
Bay View Securitization Corporation is the seller and the depositor of the
trust. The seller will transfer the automobile receivables and related property
to the trust. The seller is a wholly-owned subsidiary of Bay View Capital
Corporation ("BVCC").
Servicer
Bay View Acceptance Corporation ("BVAC") will act as the servicer of the
trust. The servicer will receive and apply payments on the automobile
receivables, service the collection of the receivables and direct the trustees
to make the appropriate payments to the noteholders and the certificateholder.
The servicer will receive a monthly servicing fee as compensation for its
services. The servicer is a wholly-owned subsidiary of Bay View Bank, N.A. (the
"Bank"), which is a wholly-owned subsidiary of BVCC. See "Bay View Acceptance
Corporation and Affiliates" in this prospectus supplement.
Indenture Trustee
will serve as the indenture trustee under the terms of an indenture
between the trust and the indenture trustee.
Owner Trustee
will serve as the owner trustee under the terms of a trust and
servicing agreement between the seller, the servicer and the owner trustee.
Closing Date
The closing date will be on or about , .
The Notes
On the closing date, the trust will issue the Class A-1 notes, the Class A-2
notes, the Class A-3 notes, the Class A-4 notes and the Class B notes, as
described below, under an indenture between the trust and the indenture
trustee. We are offering the notes for sale in this prospectus supplement. The
notes are non-recourse obligations of the trust and are secured by certain
assets of the trust. The interest rates and initial principal balances of the
notes are as follows:
<TABLE>
<CAPTION>
Initial Note
Interest Rate Balance
------------- ------------
<S> <C>
Class A-1 notes % per annum....................................... $
Class A-2 notes % per annum....................................... $
Class A-3 notes % per annum....................................... $
Class A-4 notes % per annum....................................... $
Class B notes % per annum......................................... $
</TABLE>
See "The Notes" in this prospectus supplement.
Payment Date
The trust will pay interest and principal on the notes on the fifteenth
calendar day of each month or, if such day is not a business day, on the next
business day. The payments will begin on , and will be made to
holders of record of the notes as of the record date, which will be the day
before the payment date. However, if
S-5
<PAGE>
definitive notes are issued, the record date will be the last day of the
collection period related to the payment date. The collection period with
respect to any payment date is the calendar month immediately preceding the
calendar month in which such payment date occurs. See "The Notes--Payments on
the Notes" in this prospectus supplement and "Description of the Notes--
Definitive Securities" in the accompanying prospectus.
Interest on the Notes
Interest on the Class A-1 notes will be calculated on the basis of a 360-day
year and the actual number of days from the previous payment date through the
day before the related payment date. Interest on all other classes of notes
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. See "Yield and Prepayment Considerations" and "The Notes--Payments on
the Notes" in this prospectus supplement.
Class A-1 Monthly Interest. Generally, the amount of monthly interest
distributable to the Class A-1 noteholders on each payment date is the product
of:
(1) 1/360th of the interest rate for the Class A-1 notes;
(2) the actual number of days from the previous payment date through
the day before the related payment date; and
(3) the aggregate outstanding principal balance of the Class A-1 notes
on the preceding payment date (after giving effect to all payments to
noteholders on such date).
Monthly Interest for Other Notes. Generally, the amount of monthly interest
distributable to each class of noteholders (other than the Class A-1
noteholders) on each payment date is the product of:
(1) one-twelfth of the interest rate applicable to such class of notes;
and
(2) the outstanding principal balance of such class on the preceding
payment date (after giving effect to all payments to noteholders on such
date).
The amount of interest distributable on the first payment date of ,
will be based upon the initial aggregate principal balance of the
applicable class of notes and will accrue from the closing date until the day
before the first payment date (and in the case of all of the notes other than
the Class A-1 notes, assuming that the month of the closing date has 30 days).
Note Principal
The trust will distribute principal on each payment date to the noteholders
of record as of the record date. Generally, the amount of monthly principal the
trust will pay is equal to the decrease in the outstanding principal balance of
the receivables pool during the preceding calendar month. Additional amounts of
available cash flow from the receivables will be used to reduce the outstanding
aggregate principal balances of the notes below the pool balance, until the
pool balance exceeds such aggregate note balances by % of the initial
aggregate principal balance of the notes or $ . See "The Notes--Payments on
the Notes" in this prospectus supplement.
Generally, principal will be distributed to the noteholders in the order of
the alpha-numeric designation of each class of the notes, starting with the
Class A-1 notes and ending with the Class B notes. For example, no principal
will be distributed to the Class A-2 noteholders until the outstanding
principal balance of the Class A-1 notes has been reduced to zero. No principal
will be distributed to the Class B noteholders until the principal of all of
the Class A notes has been paid in full.
The trust must pay the outstanding principal amount of each class of notes,
to the extent not previously paid, by the final maturity date for such class of
notes as follows:
<TABLE>
<CAPTION>
Final Maturity Date
-------------------
<S> <C>
Class A-1 notes.............................................
Class A-2 notes.............................................
Class A-3 notes.............................................
Class A-4 notes.............................................
Class B notes...............................................
</TABLE>
Since the rate of payment of principal of each class of notes depends
greatly upon the rate of
S-6
<PAGE>
payment of principal on the receivables (including voluntary prepayments and
principal in respect of defaulted receivables and purchased receivables), the
final payment in respect of each class of notes could occur significantly
earlier than the respective final maturity dates. See "Risk Factors--You May
Incur a Loss if there is a Default Under the Policy" and "The Notes--Payments
on the Notes" in this prospectus supplement.
The Certificate
In addition to the notes, the trust will issue an automobile receivable
backed certificate pursuant to the trust and servicing agreement. The
certificate represents an undivided beneficial ownership interest in the trust
and will be retained by the seller. We are not offering the certificate for
sale in this offering.
The Trust Assets
The trust will pledge its assets to the indenture trustee as collateral for
the repayment of the notes. The trust assets 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-duty
trucks, motorcycles, recreational vehicles, sport utility vehicles and
vans;
. certain monies due in respect of the receivables as of and after ,
;
. security interests in the related vehicles financed through the
receivables;
. funds on deposit in a collection account and a spread account;
. any proceeds from claims on certain insurance policies relating to the
financed vehicles or the related obligors;
. an unconditional and irrevocable insurance policy issued by
guaranteeing payments of principal and interest on the notes; and
. certain rights under the agreements by which the receivables are sold
from BVAC to the seller and from the seller to the trust.
The receivables arise from:
(1) motor vehicle installment sale contracts that were originated by
dealers for assignment to BVAC or the Bank (directly or through Ultra
Funding Corporation ("Ultra"), or Bay View Credit ("BVC"), both of which
were wholly-owned subsidiaries of BVAC prior to being merged into BVAC on
June 14, 1999, or California Thrift & Loan ("CTL"), which was renamed Bay
View Credit on January 2, 1998) or
(2) motor vehicle loan contracts that were solicited by dealers for
origination by BVC, the Bank or CTL.
BVAC will sell all the receivables to be included in the trust to the
seller. The trust will acquire its assets from the seller pursuant to the trust
and servicing agreement. See "Formation of the Trust" in this prospectus
supplement.
Payment of the amount due to the registered lienholder under each receivable
is secured by a first priority perfected security interest in the related
financed vehicle. BVAC, BVC, the Bank (or its predecessor, Bay View Federal
Bank) or CTL is or will be the registered lienholder (the "Named Lienholders")
on the certificate of title of each of the financed vehicles.
The receivables were selected from the automobile receivable portfolio of
BVAC, based on the criteria specified in the trust and servicing agreement and
described in this prospectus supplement under "The Receivables Pools," and
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the accompanying prospectus. The underwriting procedures and
standards employed with respect to the receivables are described under "The
Receivables Pools--Underwriting Procedures" in the accompanying prospectus.
Spread Account; Rights of the Certificateholder
The trust will establish a spread account on the closing date for the
benefit of the noteholders and the insurer. The spread account will hold the
excess, if any, of the collections on the receivables over the
S-7
<PAGE>
amounts which the trust is required to pay to the noteholders, the servicer and
the insurer. The amount of funds available for payment to noteholders on any
payment date will consist of funds from the following sources:
(1) payments received from obligors in respect of the receivables (net
of any amount required to be deposited to the payahead account in respect
of precomputed receivables);
(2) any net withdrawal from the payahead account in respect of
precomputed receivables;
(3) interest earned on funds on deposit in the collection account;
(4) liquidation proceeds received in respect of receivables;
(5) advances received from the servicer in respect of interest on
certain delinquent receivables; and
(6) amounts received in respect of required repurchases or purchases of
receivables by BVAC or the servicer.
The indenture trustee will withdraw funds from the spread account (up to the
amount on deposit in the account) and then draw on the policy, if the amount of
available funds for any payment date is not sufficient to pay:
(1) the amounts owed to the servicer (including the monthly servicing
fee and reimbursement for advances made by the servicer to the trust); and
(2) the required payments of interest and principal to the noteholders.
If the amount on deposit in the spread account is zero, after any
withdrawals for the benefit of the noteholders, and there is a default under
the policy, any remaining losses on the receivables will be borne directly by
the Class B noteholders (up to the full Class B note balance at the time a loss
is incurred) and then by the Class A noteholders pro rata (to the extent of the
outstanding class or classes of Class A notes at such time). See "Risk
Factors--You May Incur a Loss if there is a Default Under the Policy," "The
Notes--Accounts" and "--Payments on the Notes" in this prospectus supplement.
The trust will be required to maintain a specified amount on deposit in the
spread account. The required deposit or required spread amount with respect to
any payment date will equal the lesser of:
(1) % of the initial principal balance of all classes of notes, or
(2) the outstanding principal balance of all classes of notes as of the
previous payment date (after giving effect to all payments of principal to
noteholders on such date).
Any amount on deposit in the spread account on any payment date in excess of
the required spread amount (after all other required deposits to and
withdrawals from the spread account have been made) will be distributed to the
certificateholder. Any such distribution to the certificateholder will no
longer be an asset of the trust.
We intend for the amount on deposit in the spread account to grow over time
to the required spread amount through the deposit of the excess collections, if
any, on the receivables. However, we cannot assure you that the amount on
deposit in the spread account will actually grow to the required spread amount.
If the average aggregate yield of the receivables in excess of losses falls
below the levels set forth in the insurance and reimbursement agreement among
the seller, the trust, BVAC, in its individual capacity and as servicer, and
the insurer, the required spread amount will be increased to % of the
aggregate principal balance of the notes. The required spread amount may be
increased:
(1) if the servicer defaults, fails to perform or breaches a material
representation under the trust and servicing agreement or the insurance
agreement; or
(2) upon the occurrence of certain other events described in the
insurance agreement generally involving the amount of losses on the
receivables. See "The Notes--Accounts" and "--The Policy" in this
prospectus supplement.
S-8
<PAGE>
The Policy
The seller will obtain an unconditional and irrevocable insurance policy.
Subject to the terms of the policy, the insurer will guarantee the payment of
monthly interest and monthly principal on the notes (exclusive of any
accelerated principal amount) up to the policy amount. See "The Notes--The
Policy" in this prospectus supplement.
Policy Amount
The policy amount with respect to any payment date will be:
(1) the sum of:
(A) the lesser of: (i) the aggregate principal balances of the notes
(after giving effect to any distribution of available funds and any
funds withdrawn from the spread account to pay monthly principal on such
payment date) and (ii) the initial principal balances of the notes minus
all amounts previously drawn on the policy or withdrawn from the spread
account with respect to monthly principal, plus
(B) monthly interest, plus
(C) the monthly servicing fee;
less
(2) all amounts on deposit in the spread account on such payment date
(after giving effect to any funds withdrawn from the spread account to pay
monthly principal on such payment date).
Insurer
is the insurer and will guarantee the payment of monthly interest and
monthly principal (exclusive of any accelerated payments of principal) under
the terms of the policy. See "The Insurer" in this prospectus supplement.
Indenture Default; Control by the Insurer and Noteholders
Certain events will cause events of default under the indenture. If an
indenture default occurs and the insurer is not in default under the policy,
the insurer may declare the indenture default and control the remedy. If an
indenture default occurs and the insurer is in default under the policy, the
noteholders holding notes evidencing at least two-thirds of the outstanding
principal balances of the notes may declare the indenture default and control
the remedy.
The party that controls the remedy may give notice of acceleration,
accelerate the payment of principal in respect of the notes and declare the
principal of the notes to be immediately due and payable. The rights and
remedies of the insurer and the noteholders upon the occurrence of an indenture
default may include the right to direct the indenture trustee to liquidate the
property of the trust. The rights and remedies are further described under "The
Indenture--Default Under the Indenture" in the accompanying prospectus. See
also "Risk Factors--Noteholders Have a Limited Right to Declare Indenture
Defaults or Remedies" in this prospectus supplement.
Optional Redemption
The certificateholder has the right to redeem all of the receivables as of
the last day of any collection period on which the aggregate principal balance
of the receivables pool is equal to or less than 10% of the original pool
balance.
The purchase price for the optional redemption will be equal to the fair
market value of the receivables; provided that such amount is equal to or
greater than the sum of:
(1) 100% of the outstanding principal balances of the notes,
(2) accrued and unpaid interest on the outstanding principal balances
of the notes at the weighted average contract rates of the receivables less
any payments received but not applied to interest or principal, and
(3) any amounts due the insurer.
[Increase of the Class A-4 Interest Rate and the Class B Interest Rate
If the certificateholder does not exercise its rights with respect to the
optional redemption on the first payment date that the optional redemption is
permitted, the Class A-4 interest rate and the Class B interest rate will be
increased by 0.50% after such date.]
S-9
<PAGE>
Tax Status
In the opinion of special tax counsel to the seller, for federal income tax
purposes,
. the Class A notes will be characterized as debt,
. the Class B notes should also be characterized as debt, and
. the trust will not be treated as an association taxable as a corporation
or as a "publicly traded partnership" taxable as a corporation.
The owner trustee, the noteholders and the certificateholder will agree to
treat the notes as indebtedness for federal income tax purposes. See "Federal
Income Tax Consequences" in this prospectus supplement and in the accompanying
prospectus.
Ratings
On the closing date, each class of notes will be issued only if such class
receives ratings from and , as follows:
<TABLE>
<CAPTION>
Rating
-------
Class
- -----
<S> <C> <C>
A-1.....................................................................
A-2.....................................................................
A-3.....................................................................
A-4.....................................................................
B.......................................................................
</TABLE>
A rating is not a recommendation to buy, sell or hold the notes and may be
subject to revision or withdrawal at any time by the assigning rating agency.
See "Risk Factors--A Change in the Note Ratings May Adversely Affect the Notes"
in this prospectus supplement.
ERISA Considerations
The Class A notes may be eligible for purchase by employee benefit plans
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Any benefit plan fiduciary considering the purchase of notes
should, among other things, consult with experienced legal counsel in
determining whether all required conditions for such purchase have been
satisfied. Neither an employee benefit plan subject to ERISA or Section 4975 of
the Code nor an individual retirement account may purchase Class B notes. See
"ERISA Considerations" in this prospectus supplement and in the accompanying
prospectus.
S-10
<PAGE>
RISK FACTORS
You should carefully consider the risk factors set forth below and in the
accompanying prospectus as well as the other investment considerations
described in such documents as you decide whether to purchase the notes.
You May Not be Able to There is currently no secondary market for the
Resell the Notes notes. The underwriters intend to make a market
to enable resale of the notes, but are not
obligated to do so. As such, we cannot assure
you that a secondary market will develop for
your notes or, if one does develop, that such
market will provide you with liquidity of
investment or that it will continue for the
life of your notes.
The Notes Are Obligations of The notes are obligations of the trust only and
the Trust Only and are Not do not represent an interest in or obligation
Guaranteed by any Other of the seller, BVAC, any of their affiliates or
Party any other party or governmental body. Except
for the policy, the notes have not been insured
or guaranteed by any party or governmental
body. See "The Notes--Payments on the Notes"
and "--The Policy" and "The Insurer" in this
prospectus supplement.
The Amount in the Spread If the amount of available funds on any payment
Account May Not be date is not sufficient to pay monthly interest
Sufficient to Assure Payment and monthly principal (after payment of the
of Principal and Interest monthly servicing fee) to you, the indenture
trustee will withdraw funds from the spread
account, up to the full balance of the funds on
deposit in such account.
The amount on deposit in the spread account may
increase over time to an amount equal to the
required spread amount. We cannot assure you
that such growth will occur or that the balance
in the spread account will always be sufficient
to assure payment in full of monthly interest
and monthly principal. If the amount on deposit
in the spread account is reduced to zero (after
giving effect to all deposits and withdrawals
from the spread account), the indenture trustee
will then draw on the policy, up to the policy
amount, in an amount equal to any remaining
shortfall in respect of monthly interest and
monthly principal.
You May Incur a Loss if If the spread account is reduced to zero and
there is a Default Under the the insurer defaults under the policy, the
Policy trust will depend solely on payments on and
proceeds from the receivables to make payments
on the notes. The insurer will default under
the policy if it fails to pay any required
amount to the trust when due, for any reason,
including the insolvency of the insurer.
If the trust does not have sufficient funds to
fully make the required payments to noteholders
on a payment date during a default by the
insurer, payments on the notes on such payment
date will generally be reduced in the following
order:
1. Class B monthly principal,
2. Class B monthly interest,
S-11
<PAGE>
3. Class A monthly principal, pro rata, and
4. Class A monthly interest, pro rata.
You may not recover the shortfall in your
payment from subsequent collections on the
receivables or from the insurer. See "The
Receivables Pool--Delinquencies and Net Losses"
and "--Delinquency and Credit Loss Experience"
and "The Notes--Accounts," "--Payments on the
Notes" and "--The Policy" in this prospectus
supplement.
Some Notes are More at Risk Principal will be paid on the notes in alpha-
than Others if There are numeric order, beginning with the Class A-1
Losses on the Receivables notes and ending with the Class B notes, with
the exceptions noted in this prospectus
supplement if an indenture default occurs.
Because payments of principal will be applied
first to the Class A-1 notes, second to the
Class A-2 notes, third to the Class A-3 notes,
fourth to the Class A-4 notes, and finally to
the Class B notes, in the event the insurer
defaults under the policy after the Class A-1
notes have been fully or partially repaid and
before the other classes of notes have been
fully repaid, delinquencies, defaults and
losses experienced on the receivables will have
a disproportionately greater effect on the
classes of notes which pay principal to
noteholders later.
The Class B Notes are Interest and principal due on the Class B notes
Subordinate to the Class A is subordinate in priority of payment to
Notes interest and principal due on the Class A
notes. Consequently, the Class B noteholders
will not receive any interest or principal on a
payment date until the full amount of interest
and principal on the Class A notes due on such
payment date has been paid.
In the event of a default by the insurer, the
Class B notes will be more at risk than the
Class A notes due to delinquencies, defaults
and losses experienced on the receivables. See
"The Notes--Payments on the Notes" in this
prospectus supplement.
Noteholders Have a Limited The insurer is the only party that has the
Right to Declare Indenture right to declare an indenture default and
Defaults or Remedies control the remedy for such default, unless the
insurer is in default under the policy, in
which case the noteholders will have such right
subject to applicable voting requirements.
If an indenture default occurs, the insurer or,
in certain limited circumstances, the
noteholders, will have the right to accelerate
the payment of principal of the notes and,
possibly, to direct the indenture trustee to
liquidate the trust property.
Following an indenture default, the indenture
trustee and the owner trustee will continue to
submit claims under the policy to enable the
trust to make payments to you each month.
However, following an indenture default, the
insurer may elect to pay all or any portion of
the outstanding notes, plus accrued interest.
S-12
<PAGE>
A Change in the Note Ratings and are the rating agencies
May Adversely Affect the rating the notes. Such ratings will reflect
Notes only the views of the relevant rating agency.
We cannot assure you that any such rating will
continue for any period of time or that any
rating 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 liquidity and market
price of your notes. A rating is not a
recommendation to buy, sell or hold the notes.
Geographic Concentrations of As of , , based upon billing address
the Receivables May Increase information provided to BVAC, the obligors
the Losses Realized by the resided in 50 states and the District of
Trust Columbia, three of which, , and
account for approximately %, % and %,
respectively, of the aggregate principal
balance of the receivables. Adverse economic
conditions in , or could adversely
affect the delinquency, loan loss or
repossession experience of the trust.
THE SELLER AND BAY VIEW ACCEPTANCE CORPORATION
BVAC is an automotive finance company engaged primarily in the indirect
financing (the purchase of loan contracts from dealers) of automobile purchases
by individuals. BVAC currently acquires receivables from over 3,800
manufacturer franchised automobile dealerships in 14 states. For the fiscal
years ended , , , , and the months ended , , BVAC
and/or the other Named Lienholders acquired motor vehicle loans aggregating $
million, $ million, $ million and $ million, respectively. At
, the servicing portfolio of BVAC (consisting of the principal
balance of receivables held to maturity and securitized receivables) totaled
approximately $ million. The seller is a wholly-owned bankruptcy remote
subsidiary of BVCC.
FORMATION OF THE TRUST
The trust is a business trust formed under the laws of the State of Delaware
under a trust and servicing agreement between the seller, the servicer and the
owner trustee. The trust was formed solely for the purpose of accomplishing the
transactions described in this prospectus supplement. Upon formation, the trust
will not engage in any business activity other than:
. acquiring, managing and holding the receivables and related interests
described in this prospectus supplement;
. issuing the notes and the certificate;
. making payments and distributions on the notes and the certificate; and
. engaging in those activities, including entering into agreements, that
are necessary, suitable or convenient to accomplish the above listed
activities or are incidental to those activities.
Pursuant to an indenture between the trust and the indenture trustee, the
trust will grant a security interest in the trust assets in favor of the
indenture trustee on behalf of and for the benefit of the noteholders and the
insurer.
The seller will transfer the trust assets to the owner trustee in exchange
for the cash proceeds of the notes and the certificate. The seller will retain
the certificate. BVAC will service the receivables pursuant to the trust
S-13
<PAGE>
and servicing agreement and will receive compensation for acting as the
servicer. To facilitate servicing and to minimize administrative burden and
expense, the servicer will serve as custodian of the receivables for the owner
trustee. However, the servicer will not stamp the receivables to reflect the
sale and assignment of the receivables to the trust or the indenture trustee or
make any notation of the indenture trustee's lien on the certificates of title
of the financed vehicles. In the absence of such notation on the certificates
of title, the trust or the indenture trustee may not have perfected security
interests in the financed vehicles securing the receivables. Under the terms of
the trust and servicing agreement, BVAC may delegate its duties as servicer and
custodian; however, any such delegation will not relieve BVAC of its liability
and responsibility with respect to such duties. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" and "Certain Legal Aspects of the Receivables" in the accompanying
prospectus.
The trust will establish a spread account for the benefit of the noteholders
and the insurer and will obtain the policy. The indenture trustee will draw on
the policy, up to the Policy Amount, if Available Funds and the amount on
deposit in the spread account (after paying amounts owed to the servicer) are
not sufficient to fully distribute Monthly Interest and Monthly Principal. If
the spread account is reduced to zero and there is a default under the policy,
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 payments of interest and principal on the notes. In such event,
certain factors, such as the indenture trustee 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 the noteholders. See "The Notes-- Accounts," "--
The Policy" and "--Payments on the Notes" in this prospectus supplement and
"Certain Legal Aspects of the Receivables" in the accompanying prospectus.
THE RECEIVABLES POOL
General
The receivables were acquired by BVAC or a Named Lienholder from dealers or
originated by BVAC or a Named Lienholder through dealers in the ordinary course
of business. One of the Named Lienholders will be the registered lienholder on
the certificates of title to each of the financed vehicles.
The receivables were selected from the portfolio of BVAC for purchase by the
seller according to several criteria, including that each receivable:
. is secured by a new or used vehicle;
. provides for level monthly payments (except for the initial down payment,
which may be different from the level payments) that fully amortize the
amount financed over the original term to maturity of the receivable;
. is a precomputed receivable or a simple interest receivable;
. has an original term to stated maturity of not more than months and not
less than months;
. has a remaining term to stated maturity of not more than months and not
less than months; and
. has a contract rate of interest (exclusive of prepaid finance charges) of
not less than %.
The weighted average remaining term to stated maturity of the receivables
was approximately months as of , .
Approximately % of the aggregate principal balance of the receivables as of
, are simple interest contracts which provide for equal monthly
payments. Approximately % of the aggregate principal balance of the
receivables as of BVAC are precomputed receivables originated in the State of
California. All of such precomputed receivables are rule of 78's receivables.
Approximately % of the
S-14
<PAGE>
aggregate principal balance of the receivables as of BVAC represent financing
of new vehicles; the remainder of the receivables represent financing of used
vehicles.
Receivables representing more than 10% of the aggregate principal balance of
the receivables as of , were originated in the States of ,
and . The performance of the receivables in the aggregate could be
adversely affected in particular by the development of adverse economic
conditions in such states.
Composition of the Receivables by Financed Vehicle Type as of ,
<TABLE>
<CAPTION>
Weighted
Aggregate Original Average
Number of Principal Principal Contract
Receivables Balance Balance Rate
----------- --------- --------- --------
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty
Trucks.............................. $ $ %
Used Automobiles and Light-Duty
Trucks..............................
New Motorcycles......................
Used Motorcycles.....................
New Recreational Vehicles............
Used Recreational Vehicles...........
New Sport Utility Vehicles...........
Used Sport Utility Vehicles..........
New Vans(/1/)........................
Used Vans(/1/)....................... %
--- --- ---
All Receivables...................... $ $ %
=== === ===
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted Percent of
Average Average Aggregate
Remaining Original Principal
Term(/2/) Term(/3/) Balance(/4/)
--------- --------- ------------
<S> <C> <C> <C>
New Automobiles and Light-Duty Trucks......... %
Used Automobiles and Light-Duty Trucks(/1/)...
New Motorcycles...............................
Used Motorcycles..............................
New Recreational Vehicles.....................
Used Recreational Vehicles....................
New Sport Utility Vehicles....................
Used Sport Utility Vehicles...................
New Vans(/1/).................................
Used Vans(/1/)................................
------
All Receivables............................... 100.00%
======
</TABLE>
- --------
(/1/) Referencesto vans include minivans and van conversions.
(/2/) Expressed in months. Based on stated maturity as of the cutoff date and
assuming no prepayments of the receivables.
(/3/) Expressed in months. Based on stated maturity as of the origination date
and assuming no prepayment of receivables.
(/4/) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Remaining Term to Stated Maturity as of
,
S-15
<PAGE>
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Remaining Term Range Receivables Balance Balance(1)
- -------------------- ----------- --------- ------------
<S> <C> <C> <C>
months.................................... $ %
to months..............................
to months..............................
to months..............................
to months..............................
to months..............................
to months..............................
to months..............................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
- --------
(1) Sum may not equal 100% due to rounding.
Geographic Distribution of the Receivables as of ,
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
State(1)(2) Receivables Balance Balance(3)
- ----------- ----------- --------- ------------
<S> <C> <C> <C>
......................................... $ %
.........................................
.........................................
.........................................
.........................................
.........................................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
- --------
(1) Based on address of the borrower.
(2) No other state accounts for greater than 1.00% of the aggregate principal
balance of the receivables.
(3) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Financed Vehicle Model Year as of
,
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Model Year Receivables Balance Balance(1)
- ---------- ----------- --------- ------------
<S> <C> <C> <C>
or Prior.................................. $ %
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
S-16
<PAGE>
Distribution of the Receivables by Contract Rate as of ,
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Contract Rate Range Receivables Balance Balance(1)
- ------------------- ----------- --------- ------------
<S> <C> <C> <C>
to %.................................... $ %
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
to %....................................
--- ---- ------
Total...................................... $ 100.00%
=== ==== ======
</TABLE>
- --------
(1) Sum may not equal 100% due to rounding.
Delinquency and Net Credit Losses
We have set forth below certain information about the experience of BVAC
relating to delinquencies and net losses on its fixed rate retail automobile,
light truck, motorcycle, recreational vehicle, sport utility vehicle and van
receivables serviced by BVAC. We cannot assure you that the delinquency and net
loss experience of the receivables will be comparable to that set forth in the
following tables.
Delinquency Experience(1)
<TABLE>
<CAPTION>
At , At ,
-------------------------------------------------------- ------------------
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..... $ $ $ $
--- ---- --- ---- --- ---- --- ----
Delinquencies
30-59 days.............
60-89 days.............
90 days or more........
--- ---- --- ---- --- ---- --- ----
Total delinquencies.... $ $ $ $
=== ==== === ==== === ==== === ====
Total delinquencies as
a percent of servicing
portfolio............. % % % % % % % %
</TABLE>
- --------
(1) Sums may not total due to rounding.
S-17
<PAGE>
Credit Loss Experience(1)
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended(5)
-------------------------------------------------------- -------------------------
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>
Avg. servicing
portfolio(2)........... $ $ $ $
Gross charge-offs.......
Recoveries(3)...........
--- --- --- --- --- --- ---------- ----------
Net losses..............
=== === === === === === ========== ==========
Gross charge-offs as a %
of average servicing
portfolio(4)........... % % % % % % % %
Recoveries as a % of
gross charge-offs...... % % % %
Net losses as a % of
average servicing
portfolio(4)........... % % % %
</TABLE>
- --------
(1) There is generally no recourse to dealers under any of the receivables in
the portfolio serviced by BVAC, except to the extent of limited
representations and warranties made by dealers in connection with such
receivables.
(2) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(3) Recoveries include recoveries on receivables previously charged off, cash
recoveries and unsold repossessed assets carried at fair market value.
(4) Variation in the size of the portfolio serviced by BVAC 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."
(5) Percentages are annualized in "Gross charge-offs as a percentage of average
servicing portfolio" and "Net losses as a percentage of average servicing
portfolio" for partial years.
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<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
Monthly Interest will be distributed to noteholders on each payment date to
the extent of the interest rate applicable to each class of notes applied to
the aggregate principal balance for each class of notes, as of the preceding
payment date or the closing date, as applicable (after giving effect to
payments of principal on such preceding payment date). See "The Notes--Payments
on the Notes" in this prospectus supplement.
Upon a full or partial prepayment on a receivable, noteholders should
receive interest for the full month of such prepayment either:
(1) through the distribution of interest paid on the receivables;
(2) from a withdrawal from the spread account;
(3) by an advance from the servicer; or
(4) by a draw on the policy.
Although the receivables will have different contract rates, the contract
rate of each receivable generally will exceed the sum of:
(1) the weighted average of the Class A-1 interest rate, the Class A-2
interest rate, the Class A-3 interest rate, the Class A-4 interest rate
and the Class B interest rate;
(2) the per annum rate used to calculate the insurance premium paid to the
insurer; and
(3) the per annum rate used to calculate the monthly servicing fee.
However, the contract rate on a small percentage of the receivables 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 pay Monthly Interest to you.
THE NOTES
The notes will be issued by the trust pursuant to the indenture and the
certificate will be issued pursuant to the trust and servicing agreement. You
may request a copy of these agreements (without exhibits) by contacting the
servicer at the address set forth under "Reports to Noteholders" in this
prospectus supplement. We do not claim that the following summary is complete.
For a more detailed description of the agreements, you should read the
indenture and the trust and servicing agreement.
Sale and Assignment of Receivables
We have described the conveyance of the receivables (1) from BVAC to the
seller pursuant to a purchase agreement between BVAC and the seller, (2) from
the seller to the trust pursuant to the trust and servicing agreement and (3)
from the trust to the indenture trustee pursuant to the indenture in the
accompanying prospectus under the heading "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables."
Accounts
In addition to the collection account, the property of the trust will
include the spread account and the payahead account.
Spread Account. On the closing date, the indenture trustee will establish
the spread account for the benefit of the noteholders and the insurer. The
amount held in the spread account will increase up to the required spread
amount by the deposit of payments on the receivables not used to make payments
to the noteholders, the insurer and the servicer for the monthly servicing fee
and any permitted reimbursements of
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<PAGE>
outstanding advances on any payment date. Although we intend for the amount on
deposit in the spread account to grow over time to equal the required spread
amount through monthly deposits of any excess collections on the receivables,
we cannot assure you that such growth will actually occur. On each payment
date, any amounts on deposit in the spread account after the payment of any
amounts owed to the noteholders and the insurer in excess of the required
spread amount will be distributed to the certificateholder.
Under the terms of the indenture, the indenture trustee will withdraw funds
from the spread account, up to the amount on deposit in such account, and
transfer such funds to the collection account for any deficiency of Monthly
Interest or Monthly Principal as further described below under "--Payments on
the Notes," prior to making any draw on the policy.
In the event that the balance of the spread account is reduced to zero and
there is a default under the policy on any payment date, the trust will depend
solely on current distributions on the receivables to make payments of
principal and interest on the notes. In addition, because the market value of
motor vehicles generally declines with age and because of difficulties that may
been countered in enforcing motor vehicle contracts as described in the
accompanying 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 Class B noteholders may suffer a corresponding loss
up to the extent of the outstanding principal balance of the Class B notes at
such time. Any remaining losses will be borne pro rata by the Class A
noteholders (based upon the then relative outstanding principal balance of each
class of Class A notes).
Payahead Account. The servicer will establish a payahead account in the name
of the indenture trustee on behalf of obligors on the receivables and the
noteholders. The payahead account will initially be maintained with the
indenture trustee. To the extent required by the trust and servicing agreement,
early payments by or on behalf of obligors on precomputed receivables will be
deposited in the payahead account until such time as the payment becomes due.
Until such time as payments are transferred from the payahead account to the
collection account, they will not constitute collected interest or collected
principal and will not be available for payment to noteholders. We will pay the
interest earned on the balance in the payahead account to the servicer each
month. We will apply collections received with respect to a precomputed
receivable during a collection period first to any overdue scheduled payment on
such receivable, then to the scheduled payment on such receivable due in such
collection period. If the amount collected on a precomputed receivable exceeds
the amount required for any overdue scheduled payment or scheduled payment, but
is insufficient to prepay the precomputed receivable in full, then generally
such excess collections will be transferred to and kept in the payahead account
until such amount may be 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 if the servicer, in its sole discretion, expects to
recover the advance from subsequent collections on the receivable. The servicer
will deposit the advance in the collection account on or before the second
business day before the payment date. The servicer will recover 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 recover its advance from any
collections made on other receivables.
Payments on the Notes
Available Funds. The servicer will deposit in the collection account the
aggregate principal payments, including full and partial prepayments (except
certain prepayments in respect of precomputed receivables as described above
under "--Accounts") received on all receivables with respect to the preceding
collection period. The funds available for distribution on the next payment
date ("Available Funds") will consist of:
. all payments on the simple interest receivables;
. the scheduled payments received from obligors on precomputed receivables;
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. interest earned on funds on deposit in the collection account;
. the net amount to be transferred from the payahead account to the
collection account for the related payment date;
. all advances for such collection period; and
. the purchase amount for all receivables that were purchased or
repurchased by BVAC or the servicer during the preceding collection
period.
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 with respect to the collection period (as described below). The
servicer, however, will account to the indenture trustee and to the noteholders
as if all deposits and distributions were made individually.
The servicer will determine the amount of funds necessary to make payments
of Monthly Principal and Monthly Interest to the holders of the notes and to
pay the monthly servicing fee to the servicer. If there is a deficiency with
respect to Monthly Interest or Monthly Principal on any payment date, after
giving effect to payments of the monthly servicing fee and permitted
reimbursements of outstanding advances to the servicer on such payment date, or
if there is a deficiency with respect to the monthly servicing fee, the
servicer will direct the indenture trustee to withdraw amounts from the spread
account, up to the amount on deposit in such account. If there remains a
deficiency of Monthly Interest or Monthly Principal or the monthly servicing
fee after such a withdrawal, the servicer will notify the indenture trustee of
the remaining deficiency, and the indenture trustee will draw on the policy, up
to the Policy Amount, to pay Monthly Interest, Monthly Principal, and the
monthly servicing fee. Additionally, if the Available Funds for a payment date
are not sufficient to pay current and past due insurance premiums and other
amounts owed to the insurer pursuant to the insurance agreement, plus accrued
interest thereon, the servicer will notify the indenture trustee and the owner
trustee of such deficiency. 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 sentences) will be available to cover such
deficiency.
Payments. On each payment date, the indenture trustee will use the Available
Funds (plus any amounts withdrawn from the spread account or drawn on the
policy, as applicable) to make the following payments in the following
priority:
(a) without duplication, an amount equal to the sum of (1) the amount of
outstanding advances in respect of receivables that became defaulted
receivables during the prior collection period plus (2) the amount of
outstanding advances in respect of receivables that the servicer
determines to be unrecoverable, to the servicer;
(b) the monthly servicing fee, including any overdue monthly servicing fee,
to the servicer, to the extent not previously distributed to the
servicer;
(c) Class A Monthly Interest to the Class A noteholders;
(d) Monthly Principal to the Class A noteholders, in accordance with the
Principal Payment Sequence;
(e) Class B Monthly Interest to the Class B noteholders;
(f) Monthly Principal to the Class B noteholders, in accordance with the
Principal Payment Sequence (only after the principal balances of the
Class A notes have been repaid in full);
(g) the insurance premium, including any overdue insurance premium, plus
any accrued interest to the insurer;
(h) 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;
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(i) the aggregate amount of any unreimbursed draws on the policy payable to
the insurer under the insurance agreement, for Monthly Interest,
Monthly Principal and any other amounts owing to the insurer under the
insurance agreement, plus accrued interest thereon; and
(j) the balance into the spread account.
After all distributions pursuant to clauses (a) through (j) above have been
made for each payment date, the servicer will determine the amount of funds
remaining in the spread account on such date. If the funds in the spread
account exceed the required spread amount, the indenture trustee will
distribute any such excess to the owner trustee for distribution to the
certificateholder or will distribute such excess directly to the
certificateholder. Any amounts so distributed to the certificateholder will no
longer be property of the trust and will not be available to make payments to
you.
Accelerated Payments Following Indenture Default. If the notes are
accelerated following an indenture default, amounts collected will be applied
in the following priority:
(a) first, to pay any unpaid monthly servicing fee;
(b) second, to pay any accrued and unpaid fees of the indenture trustee and
the owner trustee without preference or priority of any kind;
(c) third, to pay accrued interest on each class of Class A notes on a pro
rata basis based on the interest accrued (including interest accrued on
past due interest) on each class of Class A notes;
(d) fourth, to pay principal on each class of Class A notes, on a pro rata
basis based on the aggregate principal balance of each class of Class A
notes, until the aggregate principal balance of each class of Class A
notes is reduced to zero;
(e) fifth, to pay accrued interest on the Class B notes (including accrued
interest on past due interest);
(f) sixth, to pay principal on the Class B notes until the aggregate
principal balance of the Class B notes is reduced to zero;
(g) seventh, to pay amounts owing the insurer under the insurance
agreement; and
(h) eighth, to the spread account, to be applied in accordance with the
insurance agreement.
Definitions. The following defined terms are used in this "Payments on the
Notes" section.
"Monthly Principal" for any payment date will equal the sum of the
following:
1. the amount by which the aggregate principal balance of the receivables
pool declined during the related collection period;
2. the amount, if any, which is necessary to reduce the principal balance
of a class of notes to zero on its final maturity date; and
3. the Accelerated Principal Amount.
For the purpose of determining Monthly Principal, the unpaid principal
balance of a defaulted receivable or a receivable required to be purchased or
repurchased by BVAC or the servicer will be zero as of the end of the
collection period in which such receivable became a defaulted receivable or a
purchased receivable. In no event will Monthly Principal exceed the aggregate
outstanding principal balance of the notes.
A defaulted receivable for any collection period is a receivable as to which
any of the following has occurred:
(1) any payment, or part thereof, is 120 days or more delinquent as of the
last day of such collection period;
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(2) the financed vehicle that secures the receivable has been repossessed
and liquidated; or
(3) 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 seller or the servicer is obligated to repurchase or purchase
pursuant to the trust and servicing agreement shall be deemed not to be
a defaulted receivable unless not repurchased within the time period
provided for in the trust and servicing agreement.
"Accelerated Principal Amount" means, for any payment date, after giving
effect to all payments of interest and principal (other than any Accelerated
Principal Amount) to the noteholders, an amount equal to the lesser of:
(1) the Available Excess Funds or
(2) the amount necessary to reduce the aggregate principal balances of the
notes below the aggregate principal balance of the receivables pool as
of the end of the related collection period until the aggregate
principal balance of the receivables pool exceeds the aggregate
principal balance of the notes by % of the initial aggregate principal
balance of notes or $ .
"Available Excess Funds" for any payment date means the amount of Available
Funds remaining from such payment date after paying the servicer, the
noteholders and the insurer the amounts they are entitled to receive, without
considering the amount of the Monthly Principal payment in respect of the
Accelerated Principal Amount.
"Monthly Interest" for any payment date will equal the sum of Class A
Monthly Interest and Class B Monthly Interest for such payment date and the
related collection period.
"Class A Monthly Interest" means the sum of Class A-1 Monthly Interest,
Class A-2 Monthly Interest, Class A-3 Monthly Interest and Class A-4 Monthly
Interest.
"Class A-1 Monthly Interest" means, for any payment date, the product of the
following:
(a) one-three hundred sixtieth (1/360th) of the Class A-1 interest
rate,
(b) the actual number of days from the previous payment date or, in the
case of the first payment date, from the closing date through the
day before the related payment date, and
(c) the aggregate principal balance of the Class A-1notes as of the
immediately preceding payment date or, in the case of the first
payment date, the closing date (after giving effect to any
distribution of Monthly Principal made on such payment date).
"Class A-2 Monthly Interest" means for any payment date, the product of the
following:
(a) one-twelfth of the Class A-2 interest rate, and
(b) the aggregate principal balance of the Class A-2 notes as of the
immediately preceding payment date or, in the case of the first
payment date, the closing date (after giving effect to any
distribution of Monthly Principal made on such payment date).
"Class A-3 Monthly Interest" means, for any payment date, the product of the
following:
(a) one-twelfth of the Class A-3 interest rate, and
(b) the aggregate principal balance of the Class A-3 notes as of the
immediately preceding payment date or, in the case of the first
payment date, the closing date (after giving effect to any
distribution of Monthly Principal made on such payment date).
"Class A-4 Monthly Interest" means, for any payment date, the product of the
following:
(a) one-twelfth of the Class A-4 interest rate, and
(b) the aggregate principal balance of the Class A-4 notes as of the
immediately preceding payment date or, in the case of the first
payment date, the closing date (after giving effect to any
distribution of Monthly Principal made on such payment date).
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"Class B Monthly Interest" means, for any payment date, the product of the
following:
(a) one-twelfth of the Class B interest rate, and
(b) the aggregate principal balance of the Class B notes as of the
immediately preceding payment date or, in the case of the first
payment date, the closing date (after giving effect to any
distribution of Monthly Principal made on such payment date).
"Principal Payment Sequence" means the order in which Monthly Principal will
be distributed among the noteholders. The order of distribution of Monthly
Principal is:
(1) to the Class A-1 noteholders until the aggregate principal balance of
the Class A-1 notes has been reduced to zero;
(2) to the Class A-2 noteholders until the aggregate principal balance of
the Class A-2 notes has been reduced to zero;
(3) to the Class A-3 noteholders until the aggregate principal balance of
the Class A-3 notes has been reduced to zero;
(4) to the Class A-4 noteholders until the aggregate principal balance of
the Class A-4 notes has been reduced to zero; and
(5) to the Class B noteholders until the aggregate principal balance of the
Class B notes has been reduced to zero.
However, if the amount of Available Funds (together with amounts withdrawn
from the spread account and/or the policy) are not sufficient to pay the
required payment of Class A Monthly Principal to Class A noteholders in full on
any payment date, the amount of such funds available to pay Class A Monthly
Principal to Class A noteholders will be distributed pro rata to the Class A
noteholders based upon the relative aggregate principal balance of each class
of Class A notes.
Example of Payment Date Activities. The following chart sets forth an
example of the application of the foregoing provisions to the first payment
date on :
, Collection Period. The collection period is the
calendar month preceding the payment date. The
servicer receives monthly payments,
prepayments, and other proceeds in respect of
the receivables and deposits them in the
collection account. The servicer may deduct the
monthly servicing fee from such deposits.
, Determination Date. The determination date is
the second business day before the payment
date. On or before this date, the servicer
delivers the servicer's certificate setting
forth the amounts to be distributed on the
payment date and the amounts of any
deficiencies. If necessary, the indenture
trustee notifies the insurer of any draws in
respect of the policy.
, Record Date. The record date is the day before
the payment date. Payments on the payment date
are made to noteholders of record at the close
of business on this date.
, Payment Date. The payment date is the fifteenth
calendar day of the month, or if such day is
not a business day, the first business day
thereafter. The indenture trustee withdraws
funds from the collection account and, as
necessary, from the spread account and then
draws on the policy, if necessary, to pay
Monthly Interest and
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Monthly Principal (exclusive of any Accelerated
Principal Amount, in the case of a draw on the
policy) to the noteholders as described in this
prospectus supplement. The indenture trustee
distributes the portion of Monthly Interest and
Monthly Principal to the noteholders, pays the
monthly servicing fee to the extent not
previously paid, pays the insurance premium and
all other amounts owing to the insurer.
Distributions on the Certificate
The certificate will be in the form of a trust certificate initially issued
to the seller and will entitle the seller to receive all funds held in the
spread account in excess of the required spread amount on each payment date
after payment of all amounts owed to the noteholders, the servicer and the
insurer. On or after the termination of the trust, the certificateholder is
entitled to receive any amounts remaining in the spread account (only after all
required payments to the insurer are made) after the payment of expenses and
payments to the noteholders. See "--Accounts" and "--Payments on the Notes"
above.
The Policy
On or before the closing date, the seller, the trust and BVAC, in its
individual capacity and as servicer, and the insurer will enter into the
insurance agreement pursuant to which the insurer will issue an unconditional
and irrevocable insurance policy. Subject to the terms of the policy, the
insurer will guarantee the payment of Monthly Interest and Monthly Principal
(exclusive of any Accelerated Principal Amount) up to the Policy Amount. Under
the terms of the indenture, after withdrawal of any amounts in the spread
account with respect to a payment date to pay a deficiency in Monthly Interest
or Monthly Principal, the indenture trustee will be authorized to draw on the
policy for the benefit of the noteholders and credit the collection account for
such draws as described above under "--Payments on the Notes."
The maximum amount that may be drawn under the policy on any payment date is
limited to the policy amount for such payment date. The policy amount with
respect to any payment date will equal:
(1) the sum of:
(A) the lesser of: (i) the aggregate outstanding principal balances of
the notes (after giving effect to any distribution of Available
Funds and any funds withdrawn from the spread account to pay
Monthly Principal on such payment date) and (ii) the initial
aggregate principal balances of the notes minus all amounts
previously drawn on the policy or withdrawn from the spread account
with respect to Monthly Principal, plus
(B) Monthly Interest, plus
(C) the monthly servicing fee;
less
(2) all amounts on deposit in the spread account on such payment date
(after giving effect to any funds withdrawn from the spread account to
pay Monthly Principal on such payment date).
The policy will also cover any amount paid or required to be paid by the
trust to noteholders that is sought to be recovered as a voidable preference by
a trustee in bankruptcy of BVAC or the seller pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
The insurer will be entitled to receive the insurance premium and certain
other amounts on each payment date as described under "--Payments on the Notes"
and to receive amounts on deposit in the spread account as described above
under "--Accounts." The insurance premium for any payment date will be one-
twelfth of the
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product of the policy per annum fee rate set forth in the insurance agreement
and the aggregate principal balances of the notes calculated as of the last day
of the collection period to which such payment date relates and payable monthly
in arrears. The insurer will not be entitled to reimbursement of any amounts
from the noteholders. The insurer's obligation under the policy is irrevocable
and unconditional. The insurer will have no obligation to the noteholders or
the indenture trustee other than its obligations under the policy.
If the balance in the spread account is reduced to zero and there has been a
default under the policy, the trust will depend solely on current collections
on the receivables to make payments of principal and interest on the notes. 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 accompanying 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, first, the
Class B noteholders and second, the Class A noteholders may suffer a
corresponding loss. Any such losses of the Class A noteholders will be borne
pro rata based upon the relative principal balances of the outstanding classes
of Class A notes. See "--Payments on the Notes" above.
Default under the Indenture
If one of the events of default under the indenture described in the
accompanying prospectus occurs, either the insurer or, in certain limited
circumstances, the noteholders may declare an indenture default. The insurer
will control the remedy for an indenture default, unless the insurer is in
default under the policy, in which case the noteholders will control the
remedy. The party who declares the indenture default may give notice and
accelerate the payment of principal in respect of the notes, declaring the
principal on the notes immediately due and payable. The rights and remedies of
the insurer and the noteholders may include the right to direct the indenture
trustee to liquidate the property of the trust. See "Risk Factors--Noteholders
Have a Limited Right to Declare Indenture Defaults or Remedies" in this
prospectus supplement and "The Indenture--Default under the Indenture" in the
accompanying prospectus.
Rights of the Insurer upon Servicer Default, Amendment or Waiver
Upon the occurrence of an event of default by the servicer under the trust
and servicing agreement, the insurer, or the owner trustee upon the consent of
the insurer, will be entitled to appoint a successor servicer. In addition to
the events constituting a servicer default as described in the accompanying
prospectus, the trust and servicing agreement will also permit the insurer to
appoint a successor servicer and to redirect payments made under the
receivables to the indenture 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.
The trust and servicing agreement cannot be amended or any provisions
thereof waived without the consent of the insurer if such amendment or waiver
would have a materially adverse effect upon the rights of the insurer.
THE INSURER
[Information about the insurer will be provided.]
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REPORTS TO NOTEHOLDERS
Unless and until definitive notes are issued (which will occur only under
the limited circumstances described in the accompanying prospectus), , as
indenture trustee, will provide monthly and annual statements concerning the
trust and the notes to Cede & Co., the nominee of The Depository Trust Company,
as registered holder of the notes. 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 notes may be obtained by contacting the servicer at Bay View
Acceptance Corporation, 818 Oak Park Road, Covina, California 91724 (telephone
(800) 524-9292).
FEDERAL INCOME TAX CONSEQUENCES
General
Set forth below is a summary of certain United States federal income tax
considerations relevant to the beneficial owner of a note that holds the note
as a capital asset and, unless otherwise indicated below, is a U.S. Person (as
defined in the accompanying prospectus). This summary does not address special
tax rules which may apply to certain types of investors, and investors that
hold notes as part of an integrated investment. This summary supplements the
discussion contained in the accompanying prospectus under the heading "Federal
Income Tax Consequences," and supercedes that discussion to the extent that the
two discussions are not consistent. The authorities on which we based this
discussion are subject to change or differing interpretations, and any such
change or interpretation could apply retroactively. This discussion reflects
the applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as regulations promulgated by the U.S. Department of Treasury.
You should consult your own tax advisors in determining the federal, state,
local and any other tax consequences of the purchase, ownership and disposition
of the Notes.
Characterization of the Notes. There are no regulations, published rulings
or judicial decisions addressing the characterization for federal income tax
purposes of securities with terms that are substantially the same as those of
the notes. A basic premise of United States federal income tax law is that the
economic substance of a transaction generally will determine the federal income
tax consequences of such transaction. The determination of whether the economic
substance of a loan secured by an interest in property is instead a sale of a
beneficial ownership interest in such property has been made by the Internal
Revenue Service (the "IRS") and the courts on the basis of numerous factors
designed to determine whether the trust has relinquished (and the investor has
obtained) substantial incidents of ownership in such property. Among those
factors, the primary factors examined are whether the investor has the
opportunity to gain if the property increases in value, and has the risk of
loss if the property decreases in value. Based on an assessment of these
factors, in the opinion of Silver, Freedman & Taff, L.L.P., special counsel to
the seller, the Class A notes will be treated as indebtedness and the Class B
notes should also be characterized as indebtedness for federal income tax
purposes and not as an ownership interest in the receivables or an equity
interest in the trust. See "Federal Income Tax Consequences" in the
accompanying prospectus.
Classification of the Trust. In the opinion of Silver, Freedman & Taff,
L.L.P., special counsel to the seller, the trust will not be treated as an
association or a publicly traded partnership taxable as a corporation for
federal income tax purposes, but rather will be ignored and treated as a mere
security device when there is a single beneficial owner of the trust, or will
be treated as a domestic partnership when there are two or more beneficial
owners of the trust.
Discount and Premium
For federal income tax reporting purposes, it is anticipated that the notes
[(other than the class [ ] notes)] will not be treated as having been issued
with original issue discount. [The class [ ] notes will not bear stated
interest and the original issue discount thereon will equal all amounts
scheduled to be paid thereon
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over their issue price.] The prepayment assumption that will be used in
determining the rate of accrual of original issue discount and of market
discount and premium, if any, for federal income tax purposes will be based on
the assumption that subsequent to the date of any determination the receivables
will prepay at [ %] ABS, and there will be no extensions of maturity for any
receivable. However, no representation is made as to the rate, if any, at which
the receivables will prepay. The IRS has issued regulations under Sections 1271
and 1275 of the Code generally addressing the treatment of debt instruments
issued with original issue discount. You should know that the original issue
discount regulations and Section 1272(a)(6) of the Code do not adequately
address certain issues relevant to, or are not applicable to, securities such
as the notes. Prospective purchasers of the notes are advised to consult with
their tax advisors concerning the tax treatment of the notes.
Certain classes of the notes may be treated for federal income tax purposes
as having been issued at a premium. Whether any holder of such a class of notes
will be treated as holding notes with amortizable bond premium will depend on
the noteholder's purchase price and the payments remaining to be made on such
note at the time of its acquisition by such noteholder. You should consult your
own tax advisors regarding the possibility of making an election to amortize
such premium on such classes of notes.
Gain or Loss on Disposition
If you sell a note, you must recognize gain or loss equal to the difference
between the amount realized from the sale and your adjusted basis in such note.
The adjusted basis generally will equal your cost of such note, increased by
any original issue discount included in your ordinary gross income with respect
to the note and reduced (but not below zero) by any payments on the note
previously received or accrued by you (other than qualified stated interest
payments) and any amortizable premium. Similarly, when you receive a principal
payment with respect to a note, you will recognize gain or loss equal to the
difference between the amount of the payment and the allocable portion of your
adjusted basis in the note. Such gain or loss will generally be a long-term
capital gain or loss if you held the note for more than one year.
Backup Withholding and Information Reporting
Payments of interest and principal, as well as payments of proceeds from the
sale of notes, may be subject to the "backup withholding tax" under Section
3406 of the Code at a rate of 31% if you fail to furnish to the trust certain
information, including your taxpayer identification number, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld from
a payment should be allowed as a credit against your federal income tax.
Furthermore, certain penalties may be imposed by the IRS on a recipient of
payments that is required to supply information but that does not do so in the
proper manner.
We will report to noteholders and to the IRS for each calendar year the
amount of any "reportable payments" during such year and the amount of tax
withheld, if any, with respect to payments on the notes.
New Withholding Regulations
On October 6, 1997, the Treasury Department issued new regulations which
make certain modifications to the withholding rules for investors who are Non-
U.S. Persons and the backup withholding and information reporting rules
described above. The new regulations attempt to unify certification
requirements and modify reliance standards. Such regulations will generally be
effective for payments made after December 31, 1999, subject to certain
transaction rules. You are urged to consult your tax advisors regarding the new
regulations.
ERISA CONSIDERATIONS
Subject to the considerations set forth below and under "ERISA
Considerations" in the accompanying prospectus, the Class A notes may be
purchased by an employee benefit plan or an individual retirement account (a
"Benefit Plan") subject to ERISA or Section 4975 of the Code. A fiduciary of a
Benefit Plan must
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determine that the purchase of a note 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 Internal Revenue Code.
Section 406 of ERISA prohibits parties in interest or disqualified persons
("Parties in Interest") with respect to a Benefit Plan from engaging in certain
transactions (including loans) involving a Benefit Plan and its assets unless a
statutory or administrative exemption applies to the transaction. Section 4975
of the Internal Revenue Code imposes certain excise taxes (or, in some cases, a
civil penalty may be assessed pursuant to section 502(i) of ERISA) on Parties
in Interest which engage in non-exempt prohibited transactions.
The United States Department of Labor has issued a regulation (29 CFR
Section 2510.3- 101) concerning the definition of what constitutes the assets
of a Benefit Plan. This regulation provides that, as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a Benefit Plan purchases an "equity interest"
will be deemed for purposes of ERISA to be assets of the investing Benefit Plan
unless certain exceptions apply. This regulation defines an "equity interest"
as any interest in an entity other than an instrument that is treated as
indebtedness under applicable local law and which has no substantial equity
features. Although the issue is not free from doubt, we believe that the Class
A notes should not be treated as "equity interests" for purposes of the
regulation. Accordingly, the acquisition of the Class A notes by benefit plan
investors should not cause the assets of the trust to be treated as Benefit
Plan assets for purposes of Title I of ERISA. However, the Class A notes may
not be purchased with the assets of a Benefit Plan if the seller, the servicer,
the indenture trustee, the owner trustee or any of their affiliates:
(1) has investment or administrative discretion with respect to such
Benefit Plan assets;
(2) has authority or responsibility to give, or regularly gives, investment
advice with respect to such Benefit Plan assets, for a fee and pursuant
to an agreement or understanding that such advice (a) will serve as a
primary basis for investment decisions with respect to such Benefit
Plan assets and (b) will be based on the particular investment needs
for such Benefit Plan; or
(3) is an employer maintaining or contributing to such Benefit Plan.
Certain affiliates of the trust or the servicer might be considered or might
become Parties in Interest with respect to a Benefit Plan. In either case, the
acquisition or holding of Class A notes by or on behalf of such a Benefit Plan
could be considered to give rise to an indirect prohibited transaction within
the meaning of ERISA and the Internal Revenue Code, unless it is subject to one
or more exemptions such as one of the following Prohibited Transaction Class
Exemptions ("PTCE"):
. PTCE 84-14, which exempts certain transactions effected on behalf of a
Benefit Plan by a "qualified professional asset manager,"
. PTCE 90-1, which exempts certain transactions involving insurance company
pooled separate accounts,
. PTCE 91-38, which exempts certain transactions involving bank collective
investment funds,
. PTCE 95-60, which exempts certain transactions involving insurance
company general accounts, or
. PTCE 96-23, which exempts certain transactions effected on behalf of a
Benefit Plan by certain "in-house asset managers."
Each purchaser or transferee of a note that is a Benefit Plan shall be
deemed to have represented that the relevant conditions for exemptive relief
under at least one of the foregoing exemptions (or other applicable exemption
providing substantially similar relief) have been satisfied.
Because the Class B notes may be considered to have "substantial equity
features," you should not purchase Class B notes if you are a Benefit Plan or
any person using the assets of a Benefit Plan.
For additional information regarding treatment of the notes under ERISA, see
"ERISA Considerations" in the accompanying prospectus.
S-29
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement for the sale of the notes, dated , the underwriters
have agreed, subject to the terms and conditions set forth therein, to purchase
all the notes.
The underwriters propose to offer part of the notes directly to you at the
prices set forth on the cover page of this prospectus supplement and part to
certain dealers at a price that represents a concession not in excess of % of
the denominations of the Class A-1 notes, % of the denominations of the Class
A-2 notes, % of the denominations of the Class A-3 notes, % of the
denominations of the Class A-4 notes, or % of the denominations of the Class B
notes. The underwriters may allow and such dealers may reallow a concession not
in excess of % of the denominations of the Class A-1 notes, % of the
denominations of the Class A-2 notes, % of the denominations of the Class A-3
notes, % of the denominations of the Class A-4 notes, or % of the
denominations of the Class B notes.
The seller and BVAC have agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended. The underwriters tell us that they intend to make a market in the
notes, as permitted by applicable laws and regulations. However, the
underwriters are not obligated to make a market in the notes and any such
market-making may be discontinued at any time at the sole discretion of the
underwriters. Accordingly, we give no assurances regarding the liquidity of, or
trading markets for, the notes.
In connection with this offering, the underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the notes at a
level above that which might otherwise prevail in the open market. Such
stabilizing, if commenced, may be discontinued at any time.
In the ordinary course of their businesses, the underwriters and their
affiliates have engaged and may in the future engage in investment banking,
commercial banking and other advisory or commercial relationships with the
seller, BVAC and their affiliates.
We will receive proceeds of $ from the sale of the notes, before
deducting our net expenses estimated to be $ .
LEGAL OPINIONS
Certain legal matters relating to the notes will be passed upon for the
seller and the trust by Silver, Freedman & Taff, L.L.P., Washington, D.C., and
for the underwriters by . Certain federal income tax consequences with
respect to the notes will be passed upon for the trust by Silver, Freedman &
Taff, L.L.P.
EXPERTS
[To be completed.]
S-30
<PAGE>
INDEX OF PRINCIPAL TERMS
We have listed below the terms used in this prospectus supplement and the
pages where definitions of the terms can be found.
<TABLE>
<S> <C>
Accelerated Principal Amount............................................... S-23
Available Excess Funds..................................................... S-23
Available Funds............................................................ S-20
Bank....................................................................... S-5
Benefit Plan............................................................... S-28
BVAC....................................................................... S-5
BVC........................................................................ S-7
BVCC....................................................................... S-5
CTL........................................................................ S-7
Class A Monthly Interest................................................... S-23
Class A-1 Monthly Interest................................................. S-23
Class A-2 Monthly Interest................................................. S-23
Class A-3 Monthly Interest................................................. S-23
Class A-4 Monthly Interest................................................. S-23
Class B Monthly Interest................................................... S-24
Code....................................................................... S-27
ERISA...................................................................... S-23
IRS........................................................................ S-27
Monthly Interest........................................................... S-23
Monthly Principal.......................................................... S-22
Parties in Interest........................................................ S-29
Principal Payment Sequence................................................. S-24
Ultra...................................................................... S-7
</TABLE>
S-31
<PAGE>
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You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different or additional
information.
We are not offering the securities in any state where the offer is not
permitted.
Dealers will deliver this prospectus supplement and prospectus when acting
as underwriters of the securities with respect to their unsold allotments or
subscriptions. In addition, all dealers selling the securities will deliver
this prospectus supplement and prospectus until .
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$
BAY VIEW [YEAR]- OWNER TRUST
Bay View Securitization Corporation
Seller
[logo]
Bay View Acceptance Corporation
Servicer
$ Class A-1 Automobile Receivable Backed Notes
$ Class A-2 Automobile Receivable Backed Notes
$ Class A-3 Automobile Receivable Backed Notes
$ Class A-4 Automobile Receivable Backed Notes
$ Class B Automobile Receivable Backed Notes
---------------
PROSPECTUS SUPPLEMENT
---------------
[UNDERWRITERS]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[BASE PROSPECTUS]
PROSPECTUS
Bay View Auto Trusts
Asset Backed Securities
Bay View Securitization Corporation,
depositor
Bay View Acceptance Corporation,
servicer
The trusts--
. A new trust will be formed to issue each series of asset backed
securities.
. The primary assets of each trust will be a pool of new and used
automobile retail installment sale and installment loan contracts secured
by new and used automobiles, light-duty trucks, motorcycles, recreational
vehicles, sport utility vehicles and vans.
. Each trust will hold security or ownership interests in the vehicles
financed under the trust's receivables, any proceeds from claims on
certain related insurance policies, amounts on deposit in the trust
accounts identified in the related prospectus supplement and any credit
enhancement arrangements specified in the related prospectus supplement.
. If specified in the related prospectus supplement, the trust will own
funds on deposit in a pre-funding account which will be used to purchase
additional receivables during the period specified in the related
prospectus supplement.
The offered securities--
. will represent beneficial interests in or obligations of the related
trust;
. will be paid only from the assets of the related trust;
. will be rated by one or more nationally recognized rating agencies on the
related closing date;
. may benefit from one or more forms of credit enhancement; and
. will be issued as part of a designated series, which will include one or
more classes of notes and/or certificates.
Consider carefully the risk factors beginning on page in this prospectus.
The securities of a given series represent beneficial interests in or
obligations of the related trust only. Such securities do not represent
obligations of or interests in, and are not guaranteed or insured by Bay View
Securitization Corporation, Bay View Acceptance Corporation or any of their
affiliates.
This prospectus may be used to offer and sell any series of securities only
if accompanied by the related prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , .
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE RELATED PROSPECTUS SUPPLEMENT
We tell you about the securities in two separate documents that
progressively provide more detail: (1) this prospectus, which provides general
information, some of which may not apply to a particular series of securities,
including your series; and (2) the related prospectus supplement, which will
describe the specific terms of your series of securities, including:
. the timing of interest and principal payments;
. the priority of interest and principal payments;
. financial and other information about the receivables;
. information about credit enhancement for each class;
. the ratings of each class; and
. the method for selling the securities.
If the descriptions of a particular series of securities vary between this
prospectus and the prospectus supplement, you should rely on the information in
the prospectus supplement.
You should rely only on the information provided in this prospectus and the
related prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with any additional or
different information. The information in the related prospectus supplement is
only accurate as of the date of the related prospectus supplement. We are not
offering the securities in any state where the offer is not permitted.
We include cross-references in this prospectus and in the related prospectus
supplement to captions in these materials where you can find further related
discussions. The following table of contents provides the pages on which these
captions are located.
In this prospectus and in any related prospectus supplement, "we" refers to
the depositor, Bay View Securitization Corporation, and "you" refers to any
prospective investor in the securities.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE RE-
LATED PROSPECTUS SUPPLEMENT............................................... i
SUMMARY OF TERMS........................................................... 1
Issuer................................................................... 2
Depositor................................................................ 2
Servicer................................................................. 2
Trustee.................................................................. 2
Indenture Trustee........................................................ 2
The Notes................................................................ 2
The Certificates......................................................... 2
Strip Securities......................................................... 2
Book Entry Securities.................................................... 2
Prepayment of Securities due to Purchase................................. 2
The Trust Property....................................................... 2
Pre-Funded Receivables................................................... 3
Credit Enhancement....................................................... 3
Transfer and Servicing Agreements........................................ 4
Repurchase of Receivables by BVAC or the Servicer........................ 4
Certain Legal Aspects of the Receivables; Repurchase Obligations......... 5
Tax Considerations....................................................... 6
ERISA Considerations..................................................... 6
Ratings.................................................................. 6
RISK FACTORS............................................................... 7
If the Trust Does Not Have a Perfected Security Interest in a Financed
Vehicle, It May Not be Able to Collect on the Receivable................ 7
If a Receivables Transfer is Not a Sale, the Insolvency of BVAC or its
Affiliates Could Reduce Payments to You................................. 7
BVAC and its Affiliates Have Limited Obligations to Make Payments to the
Trusts.................................................................. 8
Each Trust Will Have Limited Assets...................................... 8
Payments on Some Securities May Be Subordinated to Payments on Other
Securities.............................................................. 9
Rapid Prepayments May Reduce Your Anticipated Yield...................... 9
Indirect Exercise of Rights due to Book-Entry Registration............... 9
Pre-Funding May Reduce Your Anticipated Yield............................ 10
THE TRUSTS................................................................. 11
The Owner Trustee and the Indenture Trustee.............................. 12
THE RECEIVABLES POOLS...................................................... 12
General.................................................................. 12
Underwriting Procedures.................................................. 12
Allocation of Payments................................................... 14
Delinquencies, Repossessions and Net Losses.............................. 14
WEIGHTED AVERAGE LIFE OF THE SECURITIES.................................... 15
POOL FACTORS AND OTHER POOL INFORMATION.................................... 15
USE OF PROCEEDS............................................................ 16
BAY VIEW ACCEPTANCE CORPORATION AND AFFILIATES............................. 16
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
DESCRIPTION OF THE SECURITIES............................................... 17
General................................................................... 17
Payments of Principal and Interest........................................ 17
Book-Entry Registration................................................... 18
Definitive Securities..................................................... 19
Statements to Securityholders............................................. 20
List of Securityholders................................................... 20
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS........................ 21
Sale and Assignment of Receivables........................................ 21
Sale and Assignment of Subsequent Receivables............................. 22
Accounts.................................................................. 23
Servicing Procedures...................................................... 25
Collections............................................................... 25
Advances.................................................................. 26
Servicing Compensation and Payment of Expenses............................ 26
Payments and Distributions................................................ 26
Credit Enhancement........................................................ 27
Evidence of Compliance.................................................... 28
Certain Matters Regarding the Servicer.................................... 28
Servicer Defaults......................................................... 28
Rights Upon Servicer Default.............................................. 29
Waiver of Past Defaults................................................... 29
Amendment................................................................. 29
Termination............................................................... 30
THE INDENTURE............................................................... 30
Default under the Indenture............................................... 31
Certain Covenants......................................................... 32
Satisfaction and Discharge of Indenture................................... 32
Modification of Indenture................................................. 32
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES.................................... 33
Security Interest in Vehicles............................................. 33
Repossession.............................................................. 35
Notice of Sale; Redemption Rights......................................... 35
Deficiency Judgments and Excess Proceeds.................................. 35
Consumer Protection Laws.................................................. 36
Other Limitations......................................................... 37
Bankruptcy Matters........................................................ 37
FEDERAL INCOME TAX CONSEQUENCES............................................. 38
FASITs.................................................................... 38
TRUSTS TREATED AS PARTNERSHIPS.............................................. 38
Tax Characterization of the Trust as a Partnership........................ 38
Tax Consequences to Holders of the Notes.................................. 39
Tax Consequences to Holders of the Certificates........................... 41
TRUSTS TREATED AS GRANTOR TRUSTS............................................ 44
Tax Characterization of Grantor Trusts.................................... 44
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ERISA CONSIDERATIONS........................................................ 49
PLAN OF DISTRIBUTION........................................................ 51
LEGAL MATTERS............................................................... 51
WHERE YOU CAN FIND MORE INFORMATION......................................... 51
INDEX OF PRINCIPAL TERMS.................................................... 53
</TABLE>
iii
<PAGE>
SUMMARY OF TERMS
. This summary highlights selected information from this prospectus and does
not contain all of the information that you should consider in making your
investment decision. To understand all of the terms of this offering, read the
entire prospectus and the accompanying prospectus supplement.
. The definitions of and references to capitalized terms used in this
prospectus can be found on the pages indicated in the "Index of Principal
Terms" on page of this prospectus.
Issuer
The issuer with respect to any series of notes and/or certificates will be a
trust. If the trust issues notes and certificates, the trust will be formed
under a trust and servicing agreement between the depositor, the servicer and
the owner trustee. If the trust only issues certificates, the trust will be
formed under a pooling and servicing agreement among the depositor, the
servicer and the trustee.
Depositor
Bay View Securitization Corporation will be the depositor in connection with
each trust. The depositor's principal executive offices are located at 2121
South El Camino Real, San Mateo, California 94403, and its telephone number is
(650) 573-7300. The depositor is a wholly-owned subsidiary of Bay View Capital
Corporation ("BVCC").
Servicer
Bay View Acceptance Corporation ("BVAC") will act as the servicer of each
trust. The servicer will receive and apply payments on the automobile
receivables, service the collection of the receivables and direct the trustee
to make the appropriate distributions to the certificateholders and payments to
noteholders. The servicer will receive a monthly servicing fee as compensation
for its services. The servicer's operations are located at 818 Oakpark Road,
Covina, California 91724 and its telephone number is (800) 524-9292. The
servicer is a wholly-owned subsidiary of Bay View Bank, N.A. (the "Bank"),
which is a wholly-owned subsidiary of BVCC.
Trustee
The trustee or owner trustee will be specified in the prospectus supplement
for each trust.
Indenture Trustee
The indenture trustee with respect to any series of securities that includes
one or more classes of notes will be the indenture trustee specified in the
related prospectus supplement.
The Notes
A series of securities issued by a trust may include one or more classes of
notes. Each class of notes of a series will be issued under an indenture
between the applicable trust and the related indenture trustee. We will specify
in the related prospectus supplement which class or classes of notes, if any,
will be offered in connection with the issuance of a series.
Generally, each class of notes will have a stated note principal balance
specified in the related prospectus supplement and the notes will accrue
interest on the stated note principal balance at a specified rate. Each class
of notes may have a different interest rate, which may be fixed, variable,
adjustable, or any combination of fixed, variable and adjustable. We will
specify the interest rate for each class of notes or the method for determining
such interest rate in the related prospectus supplement. In the related
prospectus supplement we will specify the timing and amount of principal
payments or the method for determining the timing and amount of principal
payments of each class of notes.
If a series includes two or more classes of notes, as specified in the
related prospectus supplement, each class may differ as to:
. timing and/or priority of payments;
. seniority and/or allocation of payments and losses;
. calculation and rate of interest;
. amount of payments of principal or interest;
1
<PAGE>
. dependence of payments upon the occurrence of specified events or upon
collections from certain designated receivables; and
. any combination of the above.
The Certificates
A series of securities issued by a trust may include one or more classes of
certificates. We will issue each class of certificates of a series pursuant to
the related trust and servicing agreement or pooling and servicing agreement.
We will specify in the related prospectus supplement which class or classes of
certificates, if any, of the related series are being offered for sale.
Generally, each class of offered certificates will have a stated certificate
principal balance and will accrue interest on such class certificate balance at
a specified pass-through rate. See "Description of the Securities--Payments of
Principal and Interest."
The pass-through rate applicable to each class of certificates may be fixed,
variable, adjustable or any combination of fixed, variable and adjustable.
We will specify the pass-through rate or the method for determining the
applicable pass-through rate for each class of certificates in the related
prospectus supplement. A series of certificates may include two or more classes
of certificates that may differ as to:
. timing and/or priority of distributions;
. seniority and/or allocations of distributions and losses;
. calculation and pass-through rate of interest;
. amount of distributions in respect of principal or interest;
. dependence of payments upon the occurrence of specified events or upon
collections from certain designated receivables; or
. any combination of the above.
Strip Securities
If provided in the related prospectus supplement, a series may include one
or more classes of strip notes or strip certificates entitled to:
. interest payments with disproportionate, nominal or no principal payments
or
. principal payments with disproportionate, nominal or no interest
payments.
Book Entry Securities
We expect that the securities 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 security of each class may be issued in such
denomination as is required to include any residual amount. You will be able to
receive definitive securities only in the limited circumstances described
elsewhere in this prospectus or in the related prospectus supplement. See
"Description of the Securities--Definitive Securities."
Prepayment of Securities due to Purchase
To the extent provided in the related prospectus supplement, the servicer or
another entity will be entitled to purchase the receivables from a trust or to
cause such receivables to be purchased by another entity when the outstanding
principal or certificate balance of the receivables or a class of securities,
respectively, has declined below a specified level. If the servicer or any such
other entity exercises any such option to purchase the receivables, the trust
will prepay the outstanding securities. See "Description of the Transfer and
Servicing Agreements --Termination." In addition, if the related prospectus
supplement provides that the property of a trust will include a pre-funding
account for the purchase of receivables for a specified funding period after
the closing date, one or more classes of securities 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."
The Trust Property
Unless the related prospectus supplement specifies otherwise, the property
of each trust will include:
2
<PAGE>
. a pool of simple interest and precomputed interest installment sale and
installment loan contracts secured by new and used automobiles, light
trucks, recreational vehicles, motorcycles and vans;
. certain amounts due or received from the receivables after the cutoff
date specified in the related prospectus supplement;
. security interests in the vehicles financed through the receivables;
. any right to recourse BVAC has against the dealers who sold the financed
vehicles;
. proceeds from claims on certain insurance policies;
. certain rights under the related purchase agreement; and
.all proceeds of the above.
The majority of receivables are currently originated in 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 or collection account and any pre-funding account, spread account
(or cash collateral account), payment account, yield supplement account or any
other account identified in the applicable prospectus supplement. See
"Description of the Transfer and Servicing Agreements--Accounts."
The receivables arise, or will arise, from:
(1) motor vehicle installment sale contracts that were originated by
dealers for assignment to BVAC or the Bank (directly or through Ultra
Funding Corporation ("Ultra"), or Bay View Credit ("BVC"), both of
which were wholly-owned subsidiaries of BVAC prior to being merged into
BVAC on June 14, 1999, or California Thrift & Loan ("CTL"), which was
renamed Bay View Credit on January 2, 1998) or
(2) motor vehicle loan contracts that were solicited by dealers for
origination by BVC, the Bank or CTL.
BVAC will sell all the receivables to be included in a trust to the
depositor. Then, the depositor will transfer the receivables to the trust.
Payment of the amount due to the registered lienholder under each receivable
is secured by a first perfected security interest in the related financed
vehicle. BVAC, BVC, the Bank (or its predecessor, Bay View Federal Bank) or CTL
is or will be the registered lienholder (the "Named Lienholders") on the
certificate of title of each of the financed vehicles.
The receivables for each receivables pool will be selected from the
automobile receivable portfolio of BVAC, based on the criteria specified in the
related trust and servicing agreement or pooling and servicing agreement and
described in this prospectus under "The Receivables Pools," "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" and "--
Sale and Assignment of Subsequent Receivables," and in the related prospectus
supplement under "The Receivables Pool."
On the date a series of securities is issued, the depositor will convey
receivables to the related trust in the aggregate principal amount provided in
the related prospectus supplement.
Pre-Funded Receivables
With respect to any series of securities, the trust may agree to purchase
additional receivables from the depositor following the date on which the trust
is established and the related securities are issued. See "Description of
Transfer and Servicing Agreements--Accounts--Pre-Funding Account." We will
describe any such pre-funding arrangement in the related prospectus supplement.
Credit Enhancement
A trust may provide any one or more of the following forms of credit
enhancement for one or more class or classes of securities to the extent
described in the related prospectus supplement:
. subordination of one or more other classes of securities of the same
series,
3
<PAGE>
. spread accounts (or cash collateral accounts),
. yield supplement accounts,
. insurance policies,
. surety bonds,
. letters of credit,
. credit or liquidity facilities,
. over-collateralization,
. guaranteed investment contracts,
. swaps or other interest rate protection agreements,
. repurchase obligations,
. other agreements providing third-party payments or other support,
. cash deposits, or
. any other arrangements described in the prospectus supplement.
We will describe any form of credit enhancement, including any limitations
and exclusions from coverage, with respect to a trust or class or classes of
securities in the related prospectus supplement.
Transfer and Servicing Agreements
BVAC will sell the receivables to the depositor without recourse, pursuant
to the related purchase agreement between BVAC and the depositor. If the trust
will issue one or more classes of notes, the trust will pledge the receivables
and the trust's property to the indenture trustee as collateral for repayment
of the notes. In addition, the servicer will agree in the related trust and
servicing agreement or pooling and servicing agreement to service, manage,
maintain custody of and make collections on the related receivables.
Unless otherwise provided in the related prospectus supplement, the servicer
will advance funds to cover 30 days of interest due on any receivable that is
more than 30 days delinquent. The servicer will make such an advance only if
the servicer expects to recover such advance from subsequent payments on the
receivable. Advances by the servicer will increase the funds available for
distributions to securityholders on a payment date, but the servicer will
recover such advances from subsequent payments of the receivables or, to the
extent set forth in the related prospectus supplement, from insurance proceeds
or withdrawals from any spread account or other available credit enhancement.
See "Description of the Transfer and Servicing Agreements--Advances."
Repurchase of Receivables by BVAC or the Servicer
BVAC must repurchase from the trust any receivable in which the interest of
such trust is materially and adversely affected by a breach of any
representation or warranty made by BVAC in the related purchase agreement,
unless such breach is cured in a timely manner following the discovery by or
notice to BVAC.
In addition, the servicer must purchase any receivable if:
(1) among other things, without being ordered to do so by a bankruptcy
court or otherwise being mandated by law, the servicer:
. reduces the rate of interest under the related receivable contract,
. reduces the amount of the scheduled monthly payments or the amount
financed or
. fails to maintain a perfected security interest in the related
financed vehicle and
(2) the interest of the securityholders 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 receivable beyond the latest final scheduled maturity date for any
class specified in the related prospectus supplement, the servicer must
purchase the receivable on such final scheduled maturity date. Except as
described above, none of BVAC, the trust or the depositor will have any other
obligation with
4
<PAGE>
respect to the receivables or the securities. See "Description of the Transfer
and Servicing Agreements--Sale and Assignment of Receivables."
The servicer will receive a monthly fee for servicing the receivables of
each trust. The monthly servicing fee will be equal to (1) the monthly
servicing fee rate multiplied by (2) the aggregate principal balance of the
receivables pool as of the beginning of the related collection period. In
addition, the servicer will receive certain late fees, prepayment charges and
other administrative fees or similar charges. 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 Obligations
In connection with the sale of receivables by BVAC to the depositor, by the
depositor to a trust, and, in the case of a series of notes issued by the
trust, the pledge of the receivables and the trust's property to the indenture
trustee, security interests in the related financed vehicles will be assigned
by BVAC to the depositor, by the depositor to the trust and, if applicable, by
the trust to the indenture trustee. However, the certificates of title to such
financed vehicles will not be amended to reflect the assignments to the
depositor or to the trust, or the grant to the indenture trustee. In the
absence of such amendments, the trust or the indenture trustee 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, BVAC must
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 related
financed vehicle in the name of the trust has not been taken as of the date
such receivable is purchased by such trust, if:
(1) such breach materially and adversely affects the interest of the
related securityholders in such receivable, and
(2) such breach is not cured by the end of the second month following the
discovery by or notice to BVAC of such breach.
If a trust or the indenture trustee does not have a perfected security
interest in a financed vehicle, it may not be able to enforce its rights to
repossess or otherwise collect on the financed vehicle. If the trust or the
indenture trustee has a perfected security interest in the financed vehicle,
the trust or the indenture trustee will have a prior claim over subsequent
purchasers of the financed vehicle and holders of subsequently perfected
security interests. However, a trust or indenture trustee could lose its
security interest or the priority of its security interest in a financed
vehicle due to liens for repairs of financed vehicles due to liens for unpaid
taxes by the related obligor, or through fraud or negligence of a third party.
Neither the depositor nor BVAC will be required to repurchase a receivable with
respect to which a trust or indenture trustee loses its security interest or
the priority of its security interest in the related financed vehicle after the
closing date as a result of any such mechanic's lien, tax lien or the fraud or
negligence of a third party.
Creditors such as BVAC must comply with federal and state consumer
protection laws in connection with originating, purchasing and collecting
consumer debt such as the receivables. Certain of these laws provide that an
assignee of such a receivable (such as a trust or an indenture trustee) is
liable to the related obligor for any violation of such laws by the creditor.
Unless otherwise specified in the related prospectus supplement, BVAC must
repurchase from the trust any receivable that fails to comply with the
requirements of such consumer protection laws on the closing date if:
(1) such failure materially and adversely affects the interests of the
related securityholders in such receivable; and
(2) such breach is not cured by the end of the second month following the
discovery by or notice to BVAC of such breach.
BVAC must repurchase any such receivable for which there is an uncured
breach on or before the date that such breach is required to be cured. See
"Certain Legal Aspects of the Receivables."
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Tax Considerations
If the prospectus supplement does not specify that the related trust will be
treated as a grantor trust, upon the issuance of a series of securities,
special federal tax counsel to such trust identified in the related prospectus
supplement will deliver an opinion to the effect that:
. any notes of such series will or, if so specified in the related
prospectus supplement, should be characterized as debt for federal income
tax purposes; and
. such trust will not be characterized as an association (or a publicly
traded partnership) taxable as a corporation for federal income tax
purposes.
If a prospectus supplement specifies that the related trust is a grantor
trust, federal tax counsel 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. See "Federal Income Tax
Consequences" for additional information regarding the application of federal
tax laws to a trust and the related securities.
ERISA Considerations
Subject to the considerations discussed under "ERISA Considerations" in this
prospectus and in the related prospectus supplement and unless otherwise
provided therein, any securities that meet certain U. S. Department of Labor
requirements are eligible for purchase by employee benefit plans and plans
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Notes that are treated as indebtedness under applicable local law
and which have no substantial equity features may be acquired by such employee
benefit plans. A 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, a plan subject to ERISA or an individual retirement account. The
related prospectus supplement will indicate if we do not believe a class of
securities is eligible for purchase by such plans. See "ERISA Considerations"
in this prospectus and in the related prospectus supplement.
Ratings
To the extent described in the related prospectus supplement, the securities
must be rated by one or more nationally recognized statistical rating
organizations. A rating is not a recommendation to purchase, hold or sell the
securities because a rating does not comment as to market price or suitability
for a particular investor. Ratings of securities address the likelihood of the
payment of principal and interest on the securities pursuant to their terms. We
cannot assure you that any rating will remain for a given period of time or
that any rating will not be lowered or withdrawn entirely by a rating agency.
For more detailed information regarding the ratings assigned to any class of
securities of a particular series, see "Summary of Terms--Ratings" and "Risk
Factors--The Limitations of the Note Ratings" in the related prospectus
supplement.
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RISK FACTORS
You should carefully consider the risk factors set forth below before
purchasing any securities of any series.
If the Trust Does Not Have a Simultaneously with each sale of receivables,
Perfected Security Interest BVAC will assign to the depositor, the
in a Financed Vehicle, It depositor will assign to the related trust,
May Not be Able to Collect and, in the case of a series of notes issued by
on the Receivable the trust, the trust will pledge to the
indenture trustee, security interests in the
related financed vehicles. Due to
administrative burden and expense, however, the
certificates of title to such financed vehicles
will not be amended to reflect the assignments
to the depositor, the trust or the indenture
trustee. In the absence of such amendments, a
trust or the indenture trustee may not have a
perfected security interest in such financed
vehicles in some states.
If a trust or the indenture trustee does not
have a perfected security interest in a
financed vehicle, it may not be able to enforce
its rights to repossess or otherwise collect on
such financed vehicle in the event of a default
by the obligor. As such, the trust or the
indenture trustee may be adversely affected by
such failure. If the trust's or the indenture
trustee's security interest in a financed
vehicle is perfected, the trust or the
indenture trustee will have a prior claim over
subsequent purchasers of such financed vehicle
and holders of subsequently perfected security
interests. However, the trust or the indenture
trustee could lose its security interest or the
priority of its security interest in a financed
vehicle due to liens for repairs of such
financed vehicle, due to liens for taxes unpaid
by the related obligor or through the fraud or
negligence of a third party. Neither the
depositor nor BVAC will have any obligation to
repurchase a receivable in respect of which a
trust or the indenture trustee loses its
security interest or the priority of its
security interest in the related financed
vehicle as the result of any such mechanic's
lien, tax lien or fraud or negligence occurring
after the date such security interest was
conveyed to the trust or the indenture trustee.
See "Certain Legal Aspects of the Receivables--
Security Interest in Vehicles" and "--Consumer
Protection Laws."
If a Receivables Transfer is BVAC will warrant to the depositor in each
Not a Sale, the Insolvency purchase agreement that the sales of the
of BVAC or its Affiliates receivables by BVAC to the depositor, and by
Could Reduce Payments to You the depositor to the related trust,
respectively, are valid sales of the
receivables to the depositor and to the trust.
The benefit of such warranty will be assigned
by the depositor to each trust in the related
trust and servicing agreement or pooling and
servicing agreement and further, in the case of
a series of notes issued by the related trust,
will be assigned by the related trust to the
indenture trustee. However, the interest of the
trust or the indenture trustee could be
affected by the insolvency of BVAC or its
affiliates as follows:
(1) If BVAC or the depositor becomes a debtor
in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or
such debtor itself claims that the sale of
receivables to the
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depositor or such trust, as applicable,
constitutes a pledge of such receivables to
secure a loan by such debtor, then delays in
distributions on the receivables to
securityholders could occur. If the court
rules in favor of any such bankruptcy
trustee, creditor or debtor, then reductions
in the amounts of such payments could result.
(2) If the transfer of receivables to the
depositor or any trust is treated as a
pledge rather than a sale, a tax or
government lien on the property of BVAC or
the depositor arising before the transfer of
such receivables to such trust may have
priority over such trust's interest in such
receivables.
However, if the transfers of receivables from
BVAC to the depositor and from the depositor to
the trust are treated as sales, the receivables
would not be part of BVAC's or the depositor's
bankruptcy estate and would not be available to
creditors of BVAC or the depositor. See "Certain
Legal Aspects of the Receivables--Bankruptcy
Matters."
In addition, because BVAC is a wholly owned
subsidiary of the Bank, if the FDIC is appointed
the receiver or conservator of the Bank, the
FDIC could take actions which could negatively
affect BVAC by repudiating or modifying
agreements between BVAC and the depositor. Such
action by the FDIC could impair or delay the
ability of the depositor to make distributions
on the receivables to the securityholders.
BVAC and its Affiliates Generally, neither the depositor nor BVAC will
Have Limited Obligations to be obligated to make any payments to a trust in
Make Payments to the Trusts respect of the related securities or
receivables. The limited circumstances under
which BVAC will be required to make payments to
a trust relate to BVAC's obligation to
repurchase from the trust any receivables with
respect to which BVAC has breached any
representations and warranties made in the
purchase agreements and such breach materially
and adversely affects the trust's interest in
such receivable. In addition, BVAC, as servicer,
may be required to purchase receivables from a
trust under certain circumstances set forth in
the trust and servicing agreement or the pooling
and servicing agreement. See "Description of the
Transfer and Servicing Agreements--Sale and
Assignment of Receivables" and "--Servicing
Procedures."
Each Trust Will Have None of the trusts will have significant assets
Limited Assets or sources of funds other than the related
receivables and, to the extent provided in the
related prospectus supplement, a pre-funding
account, spread account, yield supplement
account or other form of credit enhancement. The
securities of each series will represent
obligations of or interests in the related trust
only and will not represent obligations of or
interests in, or be insured or guaranteed by,
any of the lienholders named on the certificates
of title, the applicable trustees or any other
entity. Consequently, you must rely for
repayment upon payments on the related
receivables and, if and to the extent available,
amounts available under any available form
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of credit enhancement, all as specified in the
related prospectus supplement.
Payments on Some Securities To the extent specified in the related
May Be Subordinated to prospectus supplement, payments or
Payments on Other Securities distributions on certain classes of securities
may be subordinated to payments or
distributions on other classes of securities.
Rapid Prepayments May Reduce Any of the receivables can be prepaid at any
Your Anticipated Yield time by the related obligor. 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 single insurance policy, and
purchase amounts with respect to certain other
receivables repurchased by BVAC 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 many 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
appropriate lienholder. The rate of prepayment
on the receivables may also be influenced by
the structure of the underlying contracts. If
the receivables prepay more rapidly than
expected, your anticipated yield may be
reduced. See "Weighted Average Life of the
Securities." In addition, if so provided in the
related prospectus supplement, the servicer or
another entity may be entitled to purchase the
receivables of a given receivables pool under
the circumstances described in such prospectus
supplement which may further reduce your
anticipated yield. See "Description of the
Transfer and Servicing Agreements--
Termination."
In addition, a series of securities may include
one or more classes of interest-only or other
strip securities entitled to (1) interest
payments with disproportionate nominal or no
principal payments or (2) principal payments
with disproportionate, nominal or no interest
payments. Such strip securities may be more
sensitive than other classes of securities of
such series to the rate of payment on the
related receivables. If you wish to invest in
any such class of securities, you should
carefully consider the information provided
with respect to such strip securities under
"Risk Factors" and elsewhere in the related
prospectus supplement.
Indirect Exercise of Rights Unless otherwise specified in the related
due to Book-Entry prospectus supplement, each class of the
Registration securities of a given series initially will be
represented by one or more certificates
registered in the name of Cede & Co., 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 securities or
their nominees. Because of this, unless and
until definitive securities for such series are
issued, you will not be
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recognized by the trustee as securityholders as
such term is used in this prospectus. As such,
until definitive securities are issued,
beneficial owners of the securities will be
able to exercise the rights of securityholders
only indirectly through DTC and its
participating organizations. See "Description
of the Securities--Book-Entry Registration" and
"--Definitive Securities."
Pre-Funding May Reduce Your If the related prospectus supplement provides
Anticipated Yield for the sale and purchase of receivables during
a funding period after the closing date using a
pre-funded amount, the depositor or the trust
will deposit the pre-funded amount specified in
such prospectus supplement into the pre-funding
account on the closing date. 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 in eligible investments. Any
investment income with respect to such
investments (net of any related investment
expenses) will be distributed on each payment
date during the funding period as part of the
available funds for the preceding calendar
month. We expect that the investment income
earned on amounts on deposit in the pre-funding
account will be less than the interest accrued
at the interest rate or pass-through rate
applicable to the portion of the securities
represented by the pre-funded amount.
If the principal amount of receivables
originated or acquired by BVAC during a funding
period and possessing the required attributes
to transfer to a trust is less than the pre-
funded amount, BVAC and the depositor may have
insufficient eligible receivables to
subsequently transfer to a trust. To the extent
that the entire pre-funded amount has not been
applied to the subsequent purchase of
receivables by the end of the related funding
period, any amounts remaining in the pre-
funding account will be distributed as a full
or partial prepayment of principal to holders
of one or more classes of the related series of
securities following the end of the funding
period, in the amounts and pursuant to the
priorities set forth in the related prospectus
supplement. Such prepayment may reduce the
securityholder's outstanding principal balance
and anticipated yield. See "Summary of Terms--
Pre-Funded Receivables" and "Description of the
Transfer and Servicing Agreements--Sale and
Assignment of Subsequent Receivables."
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THE TRUSTS
Each series of securities will be issued by a separate trust established by
the depositor pursuant to a trust and servicing agreement or pooling and
servicing agreement for the transactions described in this prospectus and in
the related prospectus supplement. Except as otherwise provided in the related
prospectus supplement, the property of each trust will include:
(1) a pool of receivables, including any receivables conveyed to the trust
after the closing date, and certain payments due or received thereunder
after the applicable cutoff date;
(2) a pre-funded amount to purchase receivables after the closing date, if
so provided in the related prospectus supplement;
(3) interests in certain amounts that may from time to time be held in
separate trust accounts established and maintained pursuant to the
related trust and servicing agreement or pooling and servicing
agreement and, if so provided in the related prospectus supplement, the
proceeds of such accounts;
(4) security interests in the financed vehicles and any other interest of
BVAC and the Named Lienholders as the registered lienholders on the
certificates of title of each of the financed vehicles and the
depositor in such financed vehicles;
(5) any recourse rights of the Named Lienholders against dealers;
(6) any rights of BVAC 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 single interest insurance
policy;
(7) any property that secures a receivable and that has been acquired by
the trust;
(8) certain rights under the related purchase agreement between BVAC and
the depositor; and
(9) any and all proceeds of the foregoing.
The receivables in each receivables pool were or will be either (a)
originated by dealers for assignment to BVAC or (b) solicited by dealers for
origination by BVAC. One of the Named Lienholders will be the registered
lienholder listed on the certificates of title of the financed vehicles. The
receivables will continue to be serviced by BVAC as the initial servicer under
each trust and servicing agreement or pooling and servicing agreement.
On or prior to the applicable closing date, BVAC will sell to the depositor,
pursuant to the related 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 to the related
trust. BVAC and the depositor may be required to convey additional receivables
to the trust after the closing date if indicated in the prospectus supplement.
See "Description of the Transfer and Servicing Agreements--Sale and Assignment
of Subsequent Receivables" in this prospectus.
BVAC and the depositor will not convey to a trust 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, spread account, 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 applicable trustee for the benefit of holders of the related securities.
If the protection provided to the securityholders by the subordination, if
any, of one or more classes of securities of such series and by any spread
account, yield supplement account or other available form of credit enhancement
for such series is insufficient, the securityholders 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 securities. In such event,
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certain factors, such as the trust or the indenture trustee not having
perfected security interests in all of the financed vehicles, may limit the
ability of a trust to liquidate the collateral securing the related receivables
or may limit the amount realized to less than the amount due under such
receivable. Securityholders may not receive timely payment on, or may incur
losses on their investment in, such securities 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
Enhancement" and "Certain Legal Aspects of the Receivables."
The Owner Trustee and the Indenture Trustee
The owner trustee for each trust and, if the trust issues notes, the
indenture trustee for the series of notes, will be specified in the related
prospectus supplement. The liability of the owner trustee and/or the indenture
trustee in connection with the issuance and sale of the related securities is
limited solely to the express obligations of such trustee set forth in the
related trust and servicing agreement or pooling and servicing agreement and,
if applicable, in the related indenture.
A trustee may resign at any time. The servicer may remove an owner trustee,
and the servicer or the insurer may remove an indenture trustee, if such
trustee ceases to be eligible to continue as trustee under the trust and
servicing agreement or pooling and servicing agreement, or, if applicable,
under the indenture, or if such trustee becomes insolvent. If the trustee
resigns or if the servicer or the insurer removes a trustee, the servicer will
be obligated to appoint a successor to such trustee. The insurer must consent
to any such appointment of a successor trustee. Any resignation or removal of a
trustee and appointment of a successor trustee will not become effective until
the successor trustee accepts the appointment.
THE RECEIVABLES POOLS
General
The receivables in each receivables pool were or will be acquired by BVAC or
another Named Lienholder from dealers or originated by BVAC or another Named
Lienholder through dealers in the ordinary course of business. One of the Named
Lienholders will be the registered lienholder on the certificates of title to
each of the financed vehicles.
The receivables to be sold to each trust will be selected from BVAC's
portfolio for inclusion in a receivables pool based on several criteria,
including that, unless otherwise provided in the related prospectus supplement,
each receivable:
. is secured by a new or used vehicle;
. 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;
. is a precomputed receivable or a simple interest receivable; and
. satisfies the other criteria, if any, set forth in the related
prospectus supplement.
Except as described in the related prospectus supplement, no selection
procedures believed by BVAC or the depositor to be adverse to securityholders
were or will be used in selecting the receivables.
Underwriting Procedures
BVAC 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
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references, and other factors that bear on creditworthiness. BVAC generally
applies uniform underwriting standards when originating loans on new and used
vehicles. BVAC 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. BVAC's credit scoring model was developed by an independent firm
experienced in developing credit scoring models and utilizes extensive
historical data related to BVAC's origination and servicing experience as well
as the experience of BVAC's senior management. BVAC'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, BVAC'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. BVAC 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 BVAC personnel at various levels of authority, depending on a
variety of factors including the amount of the loan and the applicant's credit
score.
BVAC'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 BVAC
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 BVAC 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 BVAC'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, BVAC 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.
BVAC 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. BVAC 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. BVAC 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.
The underwriting procedures and standards employed by the other Named
Lienholders were generally similar to those used by BVAC except that Ultra used
a scoring model developed by Fair Isaac & Co., Inc., based on the industry
experience of its clients; the maximum amount financed is generally lower than
the amount permitted under the guidelines of BVAC, BVC and CTL; and lastly,
BVAC, BVC and CTL generally verified receipt of the automobile and other
information with the borrower. Accordingly, references to BVAC in the foregoing
discussion of BVAC's underwriting procedures apply also to any receivables
included in a receivables pool that was acquired by BVAC from another Named
Lienholder or receivables that were otherwise originated by BVAC or another
Named Lienholder. See also "Bay View Acceptance Corporation and Affiliates."
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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 interest accrued to the date of such payment, then to
principal due on such date, then to pay any applicable late charges, 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 (1) monthly actuarial receivables
or (2) receivables that provide for allocation of payments according to the
"sum of periodic balances" method, similar to the rule of 78's. An actuarial
receivable provides for amortization of the receivable over a series of fixed
level monthly installments. Each monthly installment, including the monthly
installment representing the final payment of the receivable, consists of an
amount of interest equal to one-twelfth of the annual percentage rate of the
receivable 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 or a method equivalent to the rule of
78's. 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, each trust will account for all rule of 78's receivables as if these
receivables were actuarial receivables. Except as otherwise indicated in the
related prospectus supplement, early payments on precomputed receivables 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 securityholders, except to the extent necessary to pay
interest and principal on the securities.
If a receivable is liquidated or a financed vehicle is repossessed, amounts
recovered are applied first to the expenses of repossession and then to unpaid
principal and interest and any related payment or other fee.
Delinquencies, Repossessions and Net Losses
Certain information about the experience of BVAC pertaining to
delinquencies, repossessions and net losses with respect to new and used
automobile, light-duty truck, motorcycle, recreational vehicle and van
receivables will be set forth in each prospectus supplement. We cannot assure
you that the delinquency, repossession and net loss experience with respect to
any receivables pool will be comparable to prior experience or to the
information provided in the prospectus supplement.
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WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the securities of any series generally will be
influenced by the rate at which the principal balances of the underlying
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 single interest insurance policies, and
the purchase amount of receivables repurchased by BVAC due to a breach of a
representation or warranty or purchased by the servicer for administrative
purposes. Obligors may prepay the receivables at any time without penalty (or
with a de minimis charge).
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 applicable Named Lienholder as the registered
lienholder (or the servicer on behalf of the lienholder). The rate of
prepayment on the receivables may also be influenced by the structure of the
underlying contracts. A series of securities which includes notes may require,
if specified in the related prospectus supplement, principal payments at a rate
faster than the rate at which principal payments on the receivables are
received. These accelerated payments, if any, will be made from the excess cash
flows expected to come from the receivables and this feature should shorten the
average life of some or all of the securities of such series.
In addition, under certain circumstances, BVAC will be obligated to
repurchase receivables from a trust as a result of breaches of representations
and warranties, and the servicer will be obligated to purchase receivables from
a trust as a result of breaches of certain covenants. In each case, BVAC will
repurchase such receivables pursuant to the related Transfer and Servicing
Agreements. See "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables," "--Servicing Procedures," and "--Termination"
regarding the option of the servicer or any other entity to purchase or cause
the receivables to be purchased from a trust.
A series of securities may include one or more classes of strip notes or
strip certificates that may be entitled to interest payments with
disproportionate, nominal or no principal payments or principal payments with
disproportionate, nominal or no interest payments ("Strip Securities"). Strip
Securities may be more sensitive than certain other classes of securities of
the same series to the rate of payment of the related receivables. Prospective
investors in Strip Securities should consider carefully the information about
Strip Securities in the related prospectus supplement.
In light of the above considerations, we cannot assure you as to the amount
of principal payments to be made on the securities of a series on any payment
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 securityholders. The
related prospectus supplement may set forth additional information with respect
to the maturity and prepayment considerations applicable to the particular
receivables pool and the related series of securities or particular classes of
securities.
POOL FACTORS AND OTHER POOL INFORMATION
The "Pool Factor" for each class of securities will be a seven-digit decimal
which the servicer will compute prior to each distribution with respect to such
class of securities and which will indicate the remaining aggregate principal
balance of such class of securities, as of the applicable payment date (after
giving effect to distributions to be made on such payment date), as a fraction
of the initial aggregate principal balance of such class of securities. Each
Pool Factor will be 1.0000000 as of the related closing date and thereafter
will decline
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to reflect reductions in the applicable aggregate principal balance of the
notes or the certificates. A securityholder's portion of the aggregate
outstanding aggregate principal balance of the notes or the certificates will
equal the product of (1) the original denomination of such securityholder's
security and (2) the applicable Pool Factor at the time of determination for
such class of securities.
Unless otherwise provided in the related prospectus supplement,
securityholders will receive reports on or about each payment date concerning
payments received on the receivables, the aggregate principal balance of the
receivables pool and each Pool Factor. In addition, securityholders of record
during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by law. See "Description of
the Securities--Statements to Securityholders."
USE OF PROCEEDS
Unless otherwise provided in the related prospectus supplement, the
depositor will apply the net proceeds from the sale of the securities to the
purchase of the receivables from BVAC and, if so provided in the related
prospectus supplement, to fund the pre-funding account. BVAC will use the
portion of such proceeds paid to it for general corporate purposes.
BAY VIEW ACCEPTANCE CORPORATION AND AFFILIATES
BVAC. BVAC is an automotive finance company engaged primarily in the
indirect financing (the purchase of loan contracts from dealers) of automobile
purchases by individuals. BVAC currently acquires receivables from over 3,800
manufacturer franchised automobile dealerships in 14 states. BVAC is a Nevada
corporation, formerly known as Bay View Financial Corporation ("BVFC") and was
formed in 1989 by BVAC's parent, the Bank. The Bank is the wholly-owned
subsidiary of BVCC. In January, 1998 BVFC was renamed BVAC and entered the
indirect automobile finance business through a corporate restructuring by which
it became the holding company of CTL, formerly a California thrift and loan
acquired by BVCC in June, 1996. CTL was also renamed in January 1998, as BVC.
CTL's primary business was the underwriting and purchasing of high yield retail
installment sales contracts secured by new and used automobiles and light-duty
trucks from dealers located primarily in the States of California, Arizona,
Colorado, Illinois, New Mexico, Nevada, Oregon and Texas. BVAC began purchasing
and originating receivables in January, 1998.
Ultra. Ultra was organized in August, 1997 by BVCC primarily to acquire
retail installment sales contracts secured by new and used automobiles
originated by Ultra Funding, Ltd., based in Austin, Texas, which Ultra acquired
in October, 1997. From November 1996 until its acquisition, BVCC participated
in a strategic alliance with Ultra Funding, Ltd. to purchase from Ultra
Funding, Ltd. all motor vehicle loan contracts meeting BVCC's underwriting
criteria. BVC and Ultra were both merged into BVAC in June, 1999.
Bay View Securitization Corporation. Bay View Securitization Corporation,
the depositor, is a special purpose, bankruptcy remote, wholly-owned subsidiary
of BVCC, the holding company of the Bank. The depositor was formed in November
1996 as a Delaware corporation and is organized for the limited purpose of
acquiring automobile installment sale and installment loan contracts, reselling
such receivables and conducting activities incidental thereto.
The depositor has taken steps in structuring the transactions contemplated
in this prospectus 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 will not result in the consolidation
of the assets and liabilities of the depositor with those of BVAC, the Bank or
BVCC. 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 bankruptcy or insolvency law
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without the unanimous affirmative vote of all its directors). However, we
cannot assure you that the activities of the depositor would not result in a
court concluding that the assets and liabilities of the depositor should be
consolidated with those of BVAC, the Bank or BVCC in a proceeding under such
bankruptcy or other applicable laws. See "Risk Factors--The Insolvency of BVAC
or its Affiliates Could Reduce Payments to You."
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 BVAC or its affiliates can be asserted
against the depositor. To the extent that any such liabilities arise after the
transfer of the receivables to the 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 United States Bankruptcy Code or other bankruptcy or insolvency laws. See
"Certain Legal Aspects of the Receivables--Bankruptcy Matters."
DESCRIPTION OF THE SECURITIES
General
With respect to each trust that issues notes and certificates, one or more
classes of notes of the related series will be issued pursuant to the terms of
an indenture and one or more classes of certificates of the related series will
be issued pursuant to the terms of a trust and servicing agreement or a pooling
and servicing agreement. With respect to each trust that only issues
certificates, one or more classes of certificates of the related series will be
issued pursuant to the terms of a pooling and servicing agreement. A form of
each of the indenture, the trust and servicing agreement and the pooling and
servicing agreement has been filed as an exhibit to the registration statement
of which this prospectus forms a part.
Unless otherwise specified in the related prospectus supplement, the
securities will be available for purchase in minimum denominations of $1,000
and integral multiples in excess thereof in book-entry form only. The
statements made under this caption are summaries only. For a more detailed
description of the securities, you should read the indenture, the trust and
servicing agreement and/or the pooling and servicing agreement, as applicable.
Payments of Principal and Interest
The timing and priority of payments of principal and interest,
distributions, seniority, allocations of losses, interest rate, pass-through
rate and amount of or method of determining payments of or distributions with
respect to principal and interest on each class of securities of a series will
be described in the related prospectus supplement. Payments or distributions on
the securities will be made on the payment dates specified in the related
prospectus supplement. To the extent provided in the related prospectus
supplement, a series of securities may include one or more classes of Strip
Securities entitled to (1) interest distributions with disproportionate,
nominal or no principal distributions or (2) principal distributions with
disproportionate, nominal or no interest distributions. Each class of
securities may have a different interest rate or pass-through rate, which may
be a fixed, variable or adjustable rate (and which may be zero for certain
classes of Strip Securities) or any combination of the foregoing. The related
prospectus supplement will specify the interest rate and/or pass-through rate
for each class of securities of a series or the method for determining such
rates.
If specified in any prospectus supplement, one or more classes of securities
of a given series may have fixed principal and/or interest payment schedules or
provisions for minimum mandatory payments, as set forth in such prospectus
supplement.
In the case of a series of securities that includes two or more classes of
securities, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal, and any schedule or
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formula or other provisions applicable to the determination thereof, of each
such class will be as set forth in the related prospectus supplement. Unless
otherwise specified in the related prospectus supplement, distributions in
respect of interest on and principal of any class of securities will be made on
a pro rata basis among all holders of securities of the class.
Book-Entry Registration
Unless otherwise specified in the related prospectus supplement, each class
of securities initially will be represented by one or more certificates, in
each case registered in the name of the nominee of DTC. Unless another nominee
is specified in the related prospectus supplement, the nominee of DTC will be
Cede & Co. Accordingly, such nominee is expected to be the holder of record of
the securities of each series, except for securities, if any, retained by the
depositor or BVAC. Unless and until definitive securities are issued under the
limited circumstances described in this prospectus or in the related prospectus
supplement, no securityholder will be entitled to receive a physical
certificate representing a security. All references in this prospectus and in
the related prospectus supplement to actions by securityholders refer to
actions taken by DTC upon instructions from the participating members of DTC,
and all references in this prospectus and in the related prospectus supplement
to distributions, notices, reports and statements to securityholders will refer
to distributions, notices, reports and statements to DTC or its nominee, as the
case may be, as the registered holder of the securities, for distribution to
securityholders in accordance with DTC's procedures. Beneficial owners of the
securities ("Security Owners") will not be recognized as "securityholders" by
the related trustee and/or, if applicable the indenture trustee, and Security
Owners will be permitted to exercise the rights of securityholders 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 Uniform Commercial Code (the "UCC") in effect in the
State of New York, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities and Exchange Act of 1934, as
amended. DTC was created to hold securities for the DTC participants and to
facilitate the clearance and settlement of securities transactions between DTC
participants through electronic book-entries, thereby eliminating the need for
physical movement of certificates. DTC 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 DTC
participant, either directly or indirectly.
Unless otherwise specified in the related prospectus supplement, Security
Owners that are not DTC participants or indirect participants but desire to
purchase, sell or otherwise transfer ownership of, or an interest in, the
securities may do so only through DTC participants and indirect participants.
In addition, all Security Owners will receive all distributions of principal
and interest from the related trustee through DTC participants. Under a book-
entry format, Security Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the related trustee to DTC's
nominee. DTC will then forward such payments to the DTC participants, which
thereafter will forward them to indirect participants or Security Owners.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among DTC
participants on whose behalf it acts with respect to the securities and to
receive and transmit distributions of principal of and interest on the
securities. DTC participants and indirect participants with which Security
Owners have accounts with respect to the securities similarly are required to
make book-entry transfers and to receive and transmit such payments on behalf
of their respective Security Owners. Accordingly, although Security Owners will
not possess physical securities representing the securities, the DTC rules
provide a mechanism by which DTC participants and indirect participants will
receive payments and transfer interests, directly or indirectly, on behalf of
Security Owners.
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Because DTC can act only on behalf of DTC participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a Security
Owner to pledge securities to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to such securities, may
be limited due to the lack of a physical certificate representing such
securities.
DTC has advised the depositor that it will take any action permitted to be
taken by a Security Owner under the applicable trust and servicing agreement or
pooling and servicing agreement and the indenture only at the direction of one
or more DTC participants to whose account with DTC the securities are credited.
DTC may take conflicting actions with respect to other undivided interests to
the extent that such actions are taken on behalf of DTC participants whose
holdings include such undivided interests.
Except as required by law, neither the trustee nor the indenture trustee, if
applicable, will have any liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of securities of
any series held by DTC's nominee, or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Definitive Securities
Unless otherwise stated in the related prospectus supplement, the securities
of a given series will be issued in fully registered, certificated form to
securityholders or their respective nominees, rather than to DTC or its
nominee, only if
. the related trustee or, if applicable, the indenture trustee determines
that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to the related securities
and such trustees are unable to locate a qualified successor,
. the trustee or, if applicable, the indenture trustee elects to terminate
the book-entry system through DTC, or
. after the occurrence of a default by the servicer under the applicable
trust and servicing agreement or pooling and servicing agreement,
Security Owners representing at least a majority of the outstanding
principal amount of the securities 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 Security 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
Security Owners, through DTC participants, of the availability of definitive
securities. Upon surrender by DTC of the certificates representing all
securities of any affected class and the receipt of instructions for re-
registration, the trustee or indenture trustee will issue definitive securities
to the related Security Owners. Payments on the related definitive securities
will be made thereafter by the related trustee directly to the holders in whose
name the related definitive securities are registered at the close of business
on the applicable record date, in accordance with the procedures set forth in
this prospectus and in the related trust and servicing agreement or pooling and
servicing agreement and the indenture, if applicable. Payments will be made by
check mailed to the address of such holders as they appear on the register
specified in the related agreements; however, the final payment on any
securities (whether definitive securities or securities registered in the name
of a depository or its nominee) will be made only upon presentation and
surrender of such securities at the office or agency specified in the notice of
final payment to securityholders.
Definitive securities 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.
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Statements to Securityholders
With respect to each series of securities, on or prior to each payment date,
the servicer (to the extent applicable to such securityholder) will prepare and
forward to the related trustee and, if applicable, the indenture trustee, to be
included with the payment to each securityholder of record a statement setting
forth for the related collection period the following information (and any
other information specified in the related prospectus supplement):
(1) the amount of the payment allocable to principal of each class of
securities of such series;
(2) the amount of the payment allocable to interest on each class of
securities of such series;
(3) the amount of the servicing fee paid to the servicer with respect to
the related collection period;
(4) the aggregate principal balance of the notes or the certificate balance
of the certificates and the Pool Factor for each class of securities of
such series as of the payment date after giving effect to all payments
under clause (1) above on such date;
(5) the balance of any spread 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 payment date;
(6) with respect to any series of securities as to which a pre-funding
account has been established, for payment dates during the funding
period, the remaining pre-funded amount; and
(7) with respect to any series of securities as to which a pre-funding
account has been established, for the payment date that falls on or
immediately after the end of the funding period, the amount, if any, of
the pre-funded amount that has not been used to purchase subsequent
receivables.
(8) the aggregate net losses on the receivables for the related collection
period;
(9) 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
(10) the amount of advances from the servicer made on such payment date;
the aggregate amount of outstanding advances on such payment date; and
the amount of advances reimbursed to the servicer on such payment date
based on the fact that the related receivable became a defaulted
receivable during the prior collection period.
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 or indenture trustee, as applicable, will mail to each person who at
any time during such calendar year shall have been a registered securityholder
a statement containing certain information for the purposes of such
securityholder's preparation of federal income tax returns. See "Federal Income
Tax Consequences."
List of Securityholders
Unless otherwise specified in the related prospectus supplement, each
trustee and indenture 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 securities. In addition, three or more holders of the
securities of any series or one or more holders of such securities evidencing
not less than 25% of the applicable aggregate principal balance of the
certificates or 25% of the applicable aggregate principal balance of the notes,
as the case may be, may, by written request to the related trustee or indenture
trustee, obtain access to the list of all certificateholders or noteholders, as
the case may be, maintained by such trustee for the purpose of communicating
with other certificateholders or noteholders with respect to their rights under
the related trust and servicing agreement or pooling and servicing agreement,
under the indenture, if applicable, or under such securities.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of (1) each purchase
agreement pursuant to which the depositor will purchase receivables from BVAC
and (2) each trust and servicing agreement or pooling and servicing agreement
pursuant to which a trust will be created and will purchase receivables from
the depositor and the servicer will agree to service such receivables and
pursuant to which securities may be issued (collectively, the "Transfer and
Servicing Agreements"). If the trust also issues a series of notes, the notes
will be issued pursuant to an indenture. See "The Indenture" in this
prospectus. Forms of the Transfer and Servicing Agreements have been filed as
exhibits to the registration statement of which this prospectus forms a part.
This summary of the Transfer and Servicing Agreements is not complete. For a
more detailed description of the agreements, you should read the Transfer and
Servicing Agreements and the related prospectus supplement.
Sale and Assignment of Receivables
On the related closing date:
(1) BVAC 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;
(2) the depositor will sell and assign to the related trust pursuant to
the applicable Transfer and Servicing Agreements, without recourse, (a) its
entire right in such receivables, including the security interests in the
financed vehicles, and (b) if so provided in the related prospectus
supplement, the applicable pre-funded amount; and
(3) in the case of a series of notes issued by a trust, the trust will
pledge its entire right in such receivables and the other property of the
trust as collateral for repayment of the notes.
Each receivable will be identified in a schedule appearing as an exhibit to
the related Transfer and Servicing Agreement. Concurrently with the sale and
assignment of the receivables and, if applicable, the pre-funded amount to the
related trust, the trustee or indenture trustee will execute, authenticate and
deliver the related series of securities to the depositor, or the trust, as
applicable, 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 and, if applicable, the related indenture
trustee.
In each purchase agreement, BVAC will represent and warrant to the
depositor, among other things, that:
(1) the information provided with respect to the related receivables is
correct in all material respects;
(2) the obligor on each such receivable has obtained or agreed to obtain
and maintain physical damage insurance covering the financed vehicle in
accordance with BVAC's normal requirements;
(3) 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 BVAC have been asserted or threatened with respect to the
related receivables;
(4) at the closing date or subsequent transfer date, as applicable, each
of the related receivables secured by a financed vehicle registered in the
State of California is secured by a first priority perfected security
interest in the related financed vehicle in favor of the trustee on behalf
of the trust as secured party or all necessary action has been taken by
BVAC, or one of the other Named Lienholders to secure such a first priority
perfected security interest; and
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(5) 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 BVAC 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 BVAC so elects), BVAC, 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 on such amount at the
contract rate of such receivable to the date of purchase, and such receivable
will be considered a purchased receivable as of the purchase date. In each
trust and servicing agreement or pooling and servicing agreement, the
depositor will assign certain rights under the related purchase agreement to
the related trust, and in each indenture, the trust will assign such rights
under the related purchase agreement to the related indenture trustee. Such
rights include the right to cause BVAC to repurchase receivables with respect
to which it is in breach of any such representation and warranty. The
repurchase obligation of BVAC pursuant to each Transfer and Servicing
Agreement or indenture will constitute the sole remedy available to the
related securityholders or applicable trustee for any uncured breach of a
representation or warranty.
Sale and Assignment of Subsequent Receivables
If the related prospectus supplement provides that the property of a trust
will include a pre-funding account, BVAC 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 trust and servicing agreement or 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. If the trust issues a series of notes, the trust will pledge its right
in such subsequent receivables to the indenture trustee as collateral for
payment of the notes. The related trust will be obligated pursuant to the
related trust and servicing agreement or pooling and servicing agreement to
purchase all such subsequent receivables from the depositor, and, as
applicable, the related indenture trustee will be obligated pursuant to the
related indenture to accept the pledge of such subsequent receivables from the
trust, subject to the satisfaction, on or before the related subsequent
transfer date, of the following conditions precedent, among others:
(1) each such subsequent receivable shall satisfy the eligibility
criteria specified in the related trust and servicing agreement or pooling
and servicing agreement and shall not have been selected from among the
eligible receivables in a manner that BVAC or the depositor deems adverse
to the interests of the related securityholders;
(2) as of the applicable cutoff date for such subsequent receivables,
all of the receivables in the related trust, including the subsequent
receivables to be conveyed to the trust as of such date, must satisfy the
parameters described under "The Receivables Pools" in this prospectus and
"The Receivables Pool" in the related prospectus supplement;
(3) any required deposit to any spread account or other similar account
must have been made; and
(4) BVAC must execute and deliver to the depositor, the depositor must
execute and deliver to such trust, and, if applicable, the trust must
execute and deliver to the indenture trustee, a written assignment
conveying such subsequent receivables to the depositor, the related trust
and the indenture trustee, respectively.
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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:
(1) the depositor must deliver certain opinions of counsel to the related
owner trustee and, if applicable, the indenture trustee with respect to
the validity of the conveyance of such subsequent receivables to the
trust and, if applicable, the indenture trustee;
(2) the applicable 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 related receivables
pool, including all such subsequent receivables, satisfied the
parameters described under "The Receivables Pools" in this prospectus
and "The Receivables Pool" in the related prospectus supplement; and
(3) each of the rating agencies must have notified the depositor in writing
that, following the conveyance of the subsequent receivables to the
trust and, if applicable, the pledge of the subsequent receivables to
the indenture trustee, each class of securities of the related series
will have the same rating assigned to it by such rating agency that it
had on the related closing date.
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, BVAC will be required under the related Transfer
and Servicing Agreement to repurchase such subsequent receivables from the
related trust, at a purchase price equal to the related purchase amounts
therefor.
Accounts
Collection or Certificate Account. With respect to each trust, the depositor
will establish and the servicer will maintain one or more accounts with and in
the name of the related trust on behalf of the related securityholders, into
which all payments made on or in respect of the related receivables will be
deposited (as described in this prospectus) and from which all payments or
distributions with respect to the related securities will be made. The amounts
on deposit in this account will be invested by the applicable trustee in
eligible investments.
Payahead Account. If so provided in the related prospectus supplement, the
servicer will establish a payahead account in the name of the related trust and
for the benefit of obligors on the receivables, into which, to the extent
required by the trust and servicing agreement or 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 collection or certificate account, they will
not constitute collected interest or collected principal and will not be
available for distribution to securityholders. The payahead account will
initially be maintained with the applicable 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
collection or 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 a pre-funding account in the name of
the related owner trustee (or, in the case of a series of securities which
includes notes, the indenture trustee) on behalf of the related
securityholders, into which the depositor or the trust, as applicable, will
deposit the pre-funded amount on the related closing date. In no event will the
pre-funded amount exceed 25% of the original aggregate principal balance of the
receivables pool for the related series of securities. The pre-funded amount
will be used by the related trustee to purchase subsequent
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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 applicable trustee in eligible investments. Any investment
income, net of any related investment expenses, received on the eligible
investments during a collection period will be included in the interest
distribution amount on the following payment 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 securityholders, in the manner and priority
specified in the related prospectus supplement, as a prepayment of principal of
the related securities.
Other Accounts; Investment of Trust Funds. Any other accounts to be
established with respect to a trust, including any spread account, payment
account or yield supplement account, will be described in the related
prospectus supplement.
For each series of securities, funds in the collection or certificate
account, pre-funding account and any other trust accounts identified as such in
the related prospectus supplement will be invested in eligible investments as
provided in the related Transfer and Servicing Agreement or, if applicable, the
indenture, and any related investment income will be distributed as described
in this prospectus 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 securities. Except
as may be otherwise indicated in the applicable prospectus supplement, eligible
investments will include:
(1) direct obligations of, and obligations guaranteed by, the United States
of America, Fannie Mae, or any instrumentality of the United States of
America;
(2) demand and time deposits in or similar obligations of any depository
institution or trust company (including the trustees or any agent of
the trustees, acting in their respective commercial capacities) having
an approved rating of at least P-1 by Moody's Investors Service, Inc.
or A-1+ by Standard & Poor's Rating Services (an "Approved Rating") or
any other deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(3) 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);
(4) 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;
(5) commercial paper having an Approved Rating at the time of such
investment;
(6) a guaranteed investment contract issued by any insurance company or
other corporation acceptable to the rating agencies;
(7) interests in any money market fund having a rating of Aaa by Moody's
Investors Service, Inc. or AAAm by Standard & Poor's Ratings Services;
and
(8) any other investment approved in advance in writing by the rating
agencies.
Except as described in this prospectus 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
securityholders of such series; provided, however, that, unless the related
prospectus supplement requires otherwise, each trust and servicing agreement or
pooling and servicing agreement and indenture, if applicable, will generally
permit the investment of funds in any spread 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 payment date if (1) the servicer obtains a
liquidity
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facility or similar arrangement with respect to such spread account or other
account and (2) each rating agency that initially rated the related securities
confirms in writing that the ratings of such securities will not be lowered or
withdrawn as a result of eliminating or modifying such limitation.
The accounts established on behalf of the trusts will be maintained as
eligible deposit accounts. Eligible deposit account means either:
(1) a segregated account with an eligible institution, or
(2) a segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so
long as any of the securities of such depository institution have a
credit rating from each rating agency in one of its generic rating
categories that signifies investment grade.
Eligible institution means, with respect to a trust,
(1) the corporate trust department of the applicable trustee, or
(2) 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)
(a) that has either (i) a long-term unsecured debt rating of at least
Baa3 from Moody's Investor's Service, Inc. or at least BBB- from
Standard & Poor's Ratings Services or (ii) a long-term unsecured
debt rating, a short-term unsecured debt rating or a certificate of
deposit rating acceptable to the rating agencies, and
(b) 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, consistent with the related trust and servicing
agreement or pooling and servicing agreement, will 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 latest final scheduled payment date of any class
of securities with respect to a series of securities specified in the related
prospectus supplement, the servicer will purchase such receivable as of the
last day of the collection period preceding such final scheduled payment date.
The servicer's purchase obligation will constitute the sole remedy available to
the related securityholders or applicable trustee for any such modification of
a receivable.
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 collection or certificate account
not later than two business days after receipt thereof. However, at any time
that and for so long as (1) BVAC is the servicer, (2) no servicer default under
the trust and servicing agreement or pooling and servicing agreement shall have
occurred and be continuing with respect to the servicer and (3) each other
condition to making deposits less frequently than daily as may be specified by
the rating agencies or set forth in the related
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prospectus supplement is satisfied, the servicer will not be required to
deposit such amounts into the collection or certificate account until on or
before the applicable payment date. Pending deposit into the collection or
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, securityholders 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.
Unless otherwise provided in the applicable prospectus supplement, payaheads
on precomputed receivables will be transferred from the collection or
certificate account and deposited into the payahead account for subsequent
transfer to the collection or certificate account, as described above under "--
Accounts."
Advances
Unless otherwise provided in the related prospectus supplement, 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 its sole
discretion, expects to recover the advance from subsequent collections on the
receivable or from withdrawals from any spread account or other form of credit
enhancement. The servicer will deposit advances in the collection or
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 recover 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
Unless otherwise specified in the related prospectus supplement, the
servicer will be entitled to receive a servicing fee with respect to each
trust, at a rate equal to one percent (1.00%) per annum, payable monthly at
one-twelfth the annual rate, of the related aggregate principal balance of the
receivables pool as of the beginning of the related collection period. Unless
otherwise provided in the related prospectus supplement, 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 securityholders. 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.
Payments and Distributions
With respect to each series of securities, beginning on the payment date
specified in the related prospectus supplement, payments of principal and
interest (or, where applicable, of interest only or principal only) on each
class of securities entitled thereto will be made by the related trustee to the
related securityholders. The timing, calculation, allocation, order, source and
priorities of, and requirements for, all payments to the holders of each class
of securities will be set forth in the related prospectus supplement.
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With respect to each trust, collections on or with respect to the related
receivables will be deposited into the related collection or certificate
account for distribution to the related securityholders on each payment date to
the extent and in the priority provided in the related prospectus supplement.
Credit enhancement, such as a spread account, 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, payments in respect of principal of a class
of securities of a series will be subordinate to payments in respect of
interest on such class, and payments in respect of one or more classes of
securities of a series may be subordinate to payments in respect of other
classes of securities. Payments of principal on the securities 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 or, to the extent provided in the
related prospectus supplement, may be made on an accelerated basis subject to
the availability of excess cash flow from the receivables.
Credit Enhancement
The amounts and types of any credit enhancement arrangements and the
provider thereof, if applicable, with respect to each class of securities 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 securities,
spread accounts, cash collateral accounts, reserve accounts, yield supplement
accounts, insurance policies, letters of credit, surety bonds, over-
collateralization, credit or liquidity facilities, 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 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 securities may cover one or more other classes of
securities of the same series, and credit enhancement for a series of
securities may cover one or more other series of securities.
The existence of a spread account or other form of credit enhancement for
the benefit of any class or series of securities is intended to enhance the
likelihood of receipt by the securityholders of such class or series of the
full amount of principal and interest due thereon and to decrease the
likelihood that such securityholders will experience losses. Unless otherwise
specified in the related prospectus supplement, the credit enhancement for a
class or series of securities will not provide protection against all risks of
loss and will not guarantee repayment of 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, securityholders 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 securities, securityholders of any such series will be subject to the
risk that such credit enhancement may be exhausted by the claims of
securityholders of other series.
Spread Account. If so provided in the related prospectus supplement,
pursuant to the related trust and servicing agreement or pooling and servicing
agreement or indenture, if applicable, the depositor or the trust, as
applicable, will cause the applicable trustee to establish a spread account for
a series or class or classes of securities, which will be maintained with such
trustee. To the extent provided in the related prospectus supplement, a spread
account may 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 spread account may be increased or reinstated on each payment 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 payment 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 spread account, either to holders of the certificates covered
thereby or to the depositor or to any other entity.
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Evidence of Compliance
Each trust and servicing agreement or 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 trust and servicing agreement or 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 such agreements 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 the occurrence of certain servicer defaults under the
related trust and servicing agreement or pooling and servicing agreement.
Copies of the foregoing statements and certificates may be obtained by
securityholders by a request in writing addressed to the related trustee or
indenture trustee at the Corporate Trust Office for such trustee specified in
the related prospectus supplement.
Certain Matters Regarding the Servicer
Each trust and servicing agreement or pooling and servicing agreement will
provide that BVAC may not resign from its obligations and duties as servicer
thereunder, except upon determination that BVAC's performance of such duties is
no longer permissible under applicable law. Under certain circumstances, BVAC
may transfer its obligations and duties as servicer to a qualified affiliate.
No such assignment or resignation will become effective until the related
trustee or a successor servicer has assumed BVAC's servicing obligations and
duties under the related trust and servicing agreement or pooling and servicing
agreement.
Each trust and servicing agreement or 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
securityholders for taking any action or for refraining from taking any action
pursuant to the related trust and servicing agreement or pooling and servicing
agreement or for errors in judgment, except that neither the servicer nor any
such person will be protected against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of the servicer's duties or by reason of reckless disregard of its
obligations and duties thereunder. In addition, each trust and servicing
agreement or 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 agreements and
that, in its opinion, may cause it to incur any expense or liability.
Under the circumstances specified in each trust and servicing agreement or
pooling and servicing agreement, any entity into which BVAC may be merged or
consolidated, or any entity resulting from any merger or consolidation to which
BVAC is a party, or any entity succeeding to the indirect automobile financing
and receivable servicing business of BVAC, which corporation or other entity
assumes the obligations of the servicer, will be the successor to the servicer
under such agreements.
Servicer Defaults
Unless otherwise provided in the related prospectus supplement, servicer
defaults under each trust and servicing agreement or pooling and servicing
agreement will consist of:
(1) any failure by the servicer or BVAC to deliver to the related owner
trustee or, if applicable, the indenture trustee for payment to the
related securityholders any required payment, which failure continues
unremedied for five business days after written notice to the servicer
of such failure from the applicable trustee or holders of the related
securities evidencing not less than 25% of the
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aggregate principal balance of the notes (or aggregate principal balance
of the certificates and/or notional principal amount, if applicable);
(2) any failure by the servicer, BVAC or the depositor duly to observe or
perform in any material respect any covenant or agreement in the
related trust and servicing agreement or pooling and servicing
agreement, which failure materially and adversely affects the rights of
the related securityholders and which continues unremedied for 60 days
after written notice of such failure is given to the servicer, BVAC or
the depositor, as the case may be, by the related owner trustee, or, if
applicable, the indenture trustee, or holders of the related securities
evidencing not less than 25% of the aggregate principal balance of the
notes (or aggregate principal balance of the certificates and/or
notional principal amount, if applicable); and
(3) certain events of insolvency, readjustment of debt, marshaling 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 Servicer Default
Unless otherwise provided in the related prospectus supplement, as long as a
servicer default under the related trust and servicing agreement or pooling and
servicing agreement remains unremedied, the related owner trustee or, if
applicable, indenture trustee, upon direction to do so by holders of securities
of the related series evidencing not less than 25% of the aggregate principal
balance of the notes (or aggregate principal balance of the certificates and/or
notional principal amount, if applicable) may terminate all the rights and
obligations of the servicer under such agreements, 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
agreements and will be entitled to similar compensation arrangements. If,
however, a bankruptcy trustee or similar official has been appointed for the
servicer, and no servicer default other than such appointment has occurred,
such trustee or official may have the power to prevent the related trustee or
the related securityholders from effecting a transfer of servicing. If 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 be paid to such successor servicer, which in no
event may be greater than the servicing compensation paid to the servicer under
the related trust and servicing agreement or pooling and servicing agreement.
Waiver of Past Defaults
Unless otherwise provided in the related prospectus supplement, holders of
securities evidencing not less than a majority of the related aggregate
principal balance of the notes (or aggregate principal balance of the
certificates or notional principal amount, if applicable) may, on behalf of all
such securityholders, waive any default by the servicer in the performance of
its obligations under the related trust and servicing agreement or 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 trust
and servicing agreement. No such waiver will impair the securityholders' rights
with respect to subsequent servicer defaults.
Amendment
Unless otherwise specified in the related prospectus supplement, each trust
and servicing agreement or pooling and servicing agreement may be amended from
time to time by the depositor, the servicer, the trust and the related owner
trustee or, if applicable, indenture trustee, without the consent of the
related securityholders, 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 agreements that are not inconsistent with the provisions of the
agreements; provided that such action shall not,
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in the opinion of counsel satisfactory to the related trustee, materially and
adversely affect the interests of any related securityholder. Each trust and
servicing agreement or 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 securities evidencing not less than 51% of the related
aggregate principal balance of the notes (or aggregate principal balance of the
certificates or 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 agreements or of modifying in any manner the rights of such
securityholders; provided, however, that no such amendment may (1) 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
securityholders or (2) reduce the aforesaid percentage of the aggregate
principal balance of such series that is required to consent to any such
amendment, without the consent of the holders of all of the outstanding
securities of such series. No amendment of the trust and servicing agreement
will 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, the trust and the related owner
trustee or indenture trustee pursuant to the applicable trust and servicing
agreement or pooling and servicing agreement or indenture, if applicable, will
terminate upon the earliest to occur of (1) 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, (2)
the payment to the related securityholders of all amounts required to be paid
to them pursuant to the applicable trust and servicing agreement or pooling and
servicing agreement and, in the case of a series of notes issued by a trust,
the indenture, and (3) the occurrence of certain insolvency events, to the
extent set forth in the related prospectus supplement.
Unless otherwise specified in the related prospectus supplement, in order to
avoid excessive administrative expenses, the servicer or one or more other
entities identified in the related prospectus supplement, will be permitted, 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 aggregate principal balance of the receivables pool
as of the end of the related collection period would be less than or equal to
the level set forth in the related prospectus supplement. The purchase price
will be equal to the fair market value of such receivables, but not less than
the sum of (1) the outstanding aggregate principal balance of the receivables
pool and (2) accrued and unpaid interest on such amount computed at a rate
equal to the weighted average contract rate of the receivables, minus any
amount representing payments received on the receivables and not yet applied to
reduce the principal balance thereof or interest related thereto or the
weighted average interest rate applicable to any outstanding securities as
specified in the related prospectus supplement.
THE INDENTURE
The following summary describes certain terms of each indenture pursuant to
which a trust will issue a series of notes, if any. The summary assumes that
the notes are insured by an insurance policy and, if the related prospectus
supplement provides that the notes will be insured by a policy, the insurer
will control the exercise of the rights and remedies of the noteholders unless
the insurer is in default under the policy. A form of indenture has been filed
as an exhibit to the registration statement of which this prospectus is a part.
The following summary is not complete. For a more detailed description of the
indenture, you should read the indenture and the related prospectus supplement.
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Default under the Indenture
With respect to the notes of a given series, unless otherwise specified in
the related prospectus supplement, an indenture default under the related
indenture will occur if:
. the trust fails to pay any interest or principal on any note after such
amounts are due and payable for five or more days after notice thereof
is given to the trust by the indenture trustee, or if applicable, the
insurer, or after notice is given to such trust and the indenture
trustee by the holders of at least 25% of the principal amount of the
outstanding notes;
. the trust defaults in the observance or performance of any covenant or
agreement that it made in the related indenture and the default
continues for a period of 90 days after notice is given to such trust by
the indenture trustee or, if applicable, the insurer, or after notice is
given to such trust and such indenture trustee by the holders of at
least 25% of the principal amount of the outstanding notes;
. the trust makes any representation or warranty in the related indenture
(or in any certificate delivered in connection with such indenture) that
was incorrect in a material respect as of the time made, and such breach
is not cured within 30 days after notice is given to such trust by the
indenture trustee or, if applicable, the insurer, or after notice is
given to such trust and such indenture trustee by the holders of at
least 25% of the principal amount of the outstanding notes (voting as a
single class); or
. certain events of bankruptcy, insolvency, receivership or liquidation of
the applicable trust (a "Trust Bankruptcy Event") occur.
Either the insurer or the noteholders may declare an indenture default. The
insurer will control the remedy for an indenture default, unless the insurer is
in default under the policy, in which case the noteholders will control the
remedy. The party who declares the indenture default may give notice and
accelerate the payment of principal in respect of the notes, declaring the
principal on the notes immediately due and payable.
If an indenture default occurs and the insurer is not in default under the
Policy, the insurer will have the right to control the remedy. The insurer may,
at its discretion, require the indenture trustee to liquidate the property of
the trust, in whole or in part, on any date following the acceleration of the
notes due to such indenture default. Such liquidation will cause a full or
partial redemption of the notes. However, the insurer may not cause the
indenture trustee to liquidate the property of the trust if the liquidation
proceeds would not be enough to pay all outstanding principal and accrued
interest on the notes, unless the indenture default arose from a Trust
Bankruptcy Event.
If an indenture default occurs and the insurer is in default under the
policy, the holders of at least two-thirds (2/3) of the aggregate principal
balance of the notes then outstanding (voting as a single class) will have the
right to control the remedies available under the indenture with respect to
such default, including the right to direct the indenture trustee to liquidate
the property of the trust. However, the noteholders may not direct the
indenture trustee to liquidate the property of the trust unless the indenture
default arose from a Trust Bankruptcy Event.
Following an indenture default and acceleration of the notes, the indenture
trustee will continue to submit claims under the policy for any shortfalls in
amounts needed to make payments on the notes, unless the party controlling the
remedies liquidates the property of the trust. If the insurer or the
noteholders elect to liquidate the trust property upon the occurrence of a
Trust Bankruptcy Event, as described above, the policy should be available to
cover losses to noteholders resulting from the liquidation of the trust assets.
Upon such a payment following a liquidation of all of the trust's assets, the
policy will be terminated, and the insurer will have no further obligation to
make any additional payment under the policy.
If the noteholders control the remedy upon an indenture default and wish to
sell the trust's assets upon a Trust Bankruptcy Event, the noteholders may
determine to sell the receivables whether or not the proceeds of such sale will
be sufficient to pay any portion of the principal and interest payable with
respect to any
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subordinated class of notes. Upon such a sale of the receivables by the
indenture trustee, if the insurer remains in default and the proceeds from such
sale and any amounts on deposit in the spread account and the collection or
certificate account are not sufficient to pay all the notes in full, then the
subordinated class of notes will bear losses as described in the prospectus
supplement.
Certain Covenants
Unless otherwise specified in a prospectus supplement with respect to a
series of securities that includes notes, each indenture will provide that the
related trust may not consolidate with or merge into any other entity, unless:
. the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state or the District
of Columbia;
. such entity expressly assumes the trust's obligation to make due and
punctual payments on the notes of the related series and the performance
or observance of every obligation of the trust under the indenture;
. no indenture default shall have occurred and be continuing immediately
after such merger or consolidation;
. the indenture trustee has been advised that the rating of the securities
of such series then in effect would not be reduced or withdrawn by any
rating agency as a result of such merger or consolidation; and
. the indenture trustee has received an opinion of counsel to the effect
that such consolidation or merger would have no material adverse tax
consequence to the trust or to any of its noteholders.
Each trust that issues notes will not, among other things:
. except as expressly permitted by the applicable indenture, the
applicable Transfer and Servicing Agreements or certain related
documents with respect to such trust, sell, transfer, exchange or
otherwise dispose of any of the assets of such trust;
. claim any credit on or make any deduction from the principal and
interest payable in respect of the notes of the related series (other
than amounts withheld under the Internal Revenue Code of 1986, as
amended (the "Code") or applicable state law) or assert any claim
against any present or former holder of such notes because of the
payment of taxes levied or assessed upon such trust;
. permit the validity or effectiveness of the related indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to such notes under such indenture except as
may be expressly permitted thereby;
. dissolve or liquidate in whole or in part until the notes are repaid or
will be repaid as a result thereof; or
. permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise impair the
assets of such trust or the proceeds thereof.
Satisfaction and Discharge of Indenture
An indenture will be discharged with respect to the collateral securing the
related notes upon the delivery to the indenture trustee for cancellation of
all such notes or, with certain limitations, upon deposit with such indenture
trustee of funds sufficient for the payment in full of all such notes.
Modification of Indenture
With respect to each trust that issues notes, unless otherwise provided in
the related prospectus supplement, the trust and the indenture trustee may,
with the consent of the holders of notes of the related
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series evidencing not less than 51% of the outstanding principal balance of
such notes, acting as a single class and with the consent of the servicer
(which consent may not be unreasonably withheld) execute a supplemental
indenture to add to or change in any manner the indenture, or modify (except as
provided below) in any manner the rights of the noteholders.
Unless otherwise specified in the related prospectus supplement with respect
to a series of securities which includes notes, the indenture may not be
amended to:
. change the due date of any installment of principal of or interest on
any outstanding note or reduce the principal amount, the interest rate
on or the redemption price with respect thereto or change the method,
place, or currency of payment;
. impair the right to institute suit for the enforcement of certain
provisions of the indenture regarding payment;
. reduce the percentage of the aggregate amount of the outstanding notes
of such series which is required for any such indenture supplement or
the consent of the holders of which is required for any waiver of
compliance with certain provisions of the indenture or defaults
thereunder;
. modify or alter the provisions of the indenture regarding the voting of
notes held by the applicable trust, the depositor or an affiliate of any
of them;
. reduce the percentage of the aggregate outstanding amount of such series
which is required to direct the indenture trustee to sell or liquidate
the receivables; or
. permit the creation of any lien ranking prior to or on a parity with the
lien of the indenture trustee with respect to any of the collateral for
such notes or, except as otherwise permitted or contemplated in such
indenture, terminate the lien of such indenture on any such collateral
or deprive the holder of any such note of the security afforded by the
lien of such indenture trustee.
Unless otherwise provided in the applicable prospectus supplement with
respect to a series that includes notes, the related trust and the indenture
trustee may also enter into supplemental indentures, without obtaining the
consent of the noteholders of the related series, but with the consent of the
servicer (which consent may not be unreasonably withheld) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the indenture or of modifying in any manner the rights of such
noteholders; provided that such action will not materially and adversely affect
the interest of any such noteholder.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Security Interest in Vehicles
Installment sale contracts, such as those included in the receivables,
evidence the credit sale of automobiles, light-duty trucks, recreational
vehicles, 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 BVAC 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.
With respect to the receivables, the lien is or will be perfected in the name
of one of the Named Lienholders. A majority of the receivables are currently
originated in California and Texas. The terms of each receivable prohibit the
sale or transfer of the financed vehicle without the lienholder's consent.
Pursuant to each purchase agreement, BVAC will assign its security interests
in the financed vehicles to the depositor along with the receivables. Pursuant
to each trust and servicing agreement or pooling and
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servicing agreement, the depositor will sell its security interests in the
financed vehicles to the related trustee along with the receivables. In the
case of a series of notes issued by a trust, pursuant to each indenture, the
trust will grant the indenture trustee a security interest in its assets,
including the receivables and its security interest in the financed vehicles.
Because of the administrative burden and expense, neither the depositor nor the
applicable trustee will amend any certificate of title to identify itself as
the secured party.
In most states, including California, an assignment in the form of a sale or
pledge such as that under the Transfer and Servicing Agreements or the
indenture 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. The Permanent
Editorial Board for the UCC has adopted an official comment to the UCC that
provides that this rule also applies to a security interest in a vehicle which
is perfected by the notation of the lien on the certificate of title. Although
the Permanent Editorial Board commentary does not have the force of law, such
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 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 or the indenture trustee as the secured party
on the certificate of title, the security interest of the trust or the
indenture trustee in the vehicle could be defeated through fraud or negligence.
In the absence of fraud or forgery by the vehicle owner or one of the Named
Lienholders, or administrative error by state or local agencies, the notation
of BVAC's lien on the certificates should be sufficient to protect the trust or
the indenture trustee 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 one of the Named Lienholders
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 would, however, constitute a
breach of warranties under the related Transfer and Servicing Agreements and
would create an obligation of BVAC 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 California and Texas, require surrender of a
certificate of title to re-register a vehicle. Since BVAC (or one of the other
Named Lienholders) will have its lien noted on the certificates of title and
the servicer will retain possession of the certificates of title 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.
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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 BVAC's (or one of the other Named Lienholders')
lien noted thereon and accordingly will have an opportunity to require
satisfaction of the related receivable before release of the lien. Under each
trust and servicing agreement or 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.
BVAC will represent and warrant in each Transfer and Servicing Agreement
that, as of the date of issuance of the securities, 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,
the indenture trustee or the securityholders 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 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 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. Some jurisdictions provide
for a similar right following repossession. 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.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of financed 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.
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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 or the indenture
trustee, as holder of the receivables, will be subject to any claims or
defenses that the obligor 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
vehicle dealers 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 used vehicle dealers furnish a written statement signed
by the seller certifying the accuracy of the odometer reading. If a dealer 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 dealer. If an obligor
were successful in asserting any such claim or defense, such claim or defense
would constitute a breach of BVAC's representations and warranties under each
Transfer and Servicing Agreement and would create an obligation of BVAC to
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.
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 United States
Constitution. 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.
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BVAC 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 or the indenture
trustee's interest in a receivable, such violation would constitute a breach of
BVAC's representations and warranties under the purchase agreement and would
create an obligation of BVAC 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.
Bankruptcy Matters
BVAC will represent and warrant to the depositor in each purchase agreement,
and the depositor will warrant to the related trust in each trust and servicing
agreement or pooling and servicing agreement, that the sales of the receivables
by BVAC to the depositor and by the depositor to the trust are valid sales of
the receivables to the depositor and the trust, respectively. Notwithstanding
the foregoing, if BVAC or the depositor were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to take the position that the sale of receivables to the depositor
or the trust should instead be treated as a pledge of such receivables to
secure a borrowing of such debtor, delays in payments of collections of
receivables to securityholders could occur or (should the court rule in favor
of any such trustee, debtor or creditor) reductions in the amounts of such
payments could result. If the transfer of receivables to the trust is treated
as a pledge instead of a sale, a tax or government lien on the property of BVAC
or the depositor arising before the transfer of the related receivables to such
trust may have priority over such trust's interest in such receivables. If the
transfers of receivables from BVAC to the depositor and from the depositor to
the trust are treated as sales, the receivables would not be part of BVAC's or
the depositor's bankruptcy estate and would not be available to the bankrupt
entity's creditors.
The decision of the U.S. Court of Appeals for the Tenth Circuit, Octagon Gas
System, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May 27, 1993),
contains language to the effect that under the UCC, accounts sold by a debtor
would remain property of the debtor's bankruptcy estate, 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 a bankruptcy of BVAC or
the depositor, a court were to follow the reasoning of the Tenth Circuit
reflected in the above case, then the receivables could be included in the
bankruptcy estate of BVAC or the depositor, as applicable, and delays in
payments of collections on or in respect of the receivables could occur. BVAC
will warrant to the depositor in each purchase agreement, and the depositor
will warrant to the trust in each trust and servicing agreement or pooling and
servicing agreement, that the sale of the related receivables to the depositor
or the related trust is a sale of such receivables to the depositor and to the
trust, respectively.
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FEDERAL INCOME TAX CONSEQUENCES
The following general summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of the securities to
the extent it relates to matters of law or legal conclusions represents the
opinion of Silver, Freedman & Taff, L.L.P., counsel to the depositor, subject
to the assumptions or qualifications set forth in this prospectus. The summary
does not purport to deal with federal income tax consequences applicable to all
categories of holders, some of which may be subject to special rules. For
example, its does not discuss the tax treatment of securityholders that are
insurance companies, regulated investment companies or dealers in securities.
You are urged to consult your own tax advisors in determining the federal,
state, local, foreign and any other tax consequences to you of the purchase,
ownership and disposition of the securities.
The following summary is based upon current provisions of the Code, the
Treasury regulations promulgated thereunder and judicial or ruling authority,
all of which are subject to change, which change may be retroactive. Each trust
will be provided with an opinion of federal tax counsel regarding certain
federal income tax matters discussed below. Such opinions, however, are not
binding on the Internal Revenue Service (the "IRS") or the courts. No ruling on
any of the issues discussed below will be sought from the IRS. For purposes of
the following summary, references to the trust, the notes, the certificates and
related terms, parties and documents shall be deemed to refer, unless otherwise
specified in this prospectus, to each trust, the notes and the certificates and
the related terms, parties and documents applicable to such trust.
The federal income tax consequences to certificateholders will vary
depending on whether the trust is treated as a partnership under the Code and
applicable Treasury regulations or whether the trust will be treated as a
grantor trust. The prospectus supplement for each series of certificates will
specify whether the trust will be treated as a partnership or as a grantor
trust.
FASITs
Sections 860H through 860L of the Code provide for the creation of an entity
for federal income tax purposes, referred to as a "financial asset
securitization investment trust" ("FASIT"). These provisions were effective as
of September 1, 1997, but many technical issues concerning FASITs have not yet
been addressed by Treasury regulations. To qualify as a FASIT, an entity must
meet certain requirements under Section 860L of the Code and must elect such
treatment. The applicable trust and servicing agreement or pooling and
servicing agreement and indenture, if applicable, may be amended in accordance
with the provisions thereof to provide that the depositor and trustee will
cause a FASIT election to be made for the trust if the depositor delivers to
the trustee or the indenture trustee and, if applicable, the insurer, an
opinion of counsel to the effect that, for federal income tax purposes, (1) the
deemed issuance of FASIT regular interests (occurring in connection with such
election) will not adversely affect the federal income tax treatment of the
securities, (2) following such election such trust will not be deemed to be an
association (or publicly traded partnership) taxable as a corporation and (3)
such election will not cause or constitute an event in which gain or loss would
be recognized by any securityholder or the trust.
TRUSTS TREATED AS PARTNERSHIPS
Tax Characterization of the Trust as a Partnership
A trust which is not treated as a grantor trust and which does not
affirmatively elect to be treated as a corporation will be treated as a
partnership under applicable Treasury regulations as long as there are two or
more beneficial owners and will be ignored as a separate entity where there is
a single beneficial owner of all equity classes of the related series. In the
opinion of Silver, Freedman & Taff, L.L.P., under current law, the trust will
not be an association (or publicly traded partnership) taxable as a corporation
for federal income tax purposes. This opinion is based on the assumption that
the terms of the trust and servicing agreement or
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pooling and servicing agreement and indenture and related documents will be
complied with, including the making of no affirmative election to be treated as
a corporation.
If a trust were taxable as a corporation for federal income tax purposes, it
would be subject to corporate income tax on its taxable income. The trust's
taxable income would include all of its income on the related receivables, less
servicing fees and other deductible expenses, which may include its interest
expense on the notes. Any such corporate income tax could materially reduce
cash available to make distributions on the securities, and beneficial owners
of securities (the "Security Owners") could be liable for any such tax that is
unpaid by the trust.
Tax Consequences to Holders of the Notes
Treatment of the notes as Indebtedness. The depositor will agree, and the
noteholders will agree by their purchase of notes, to treat the notes as debt
for federal income tax purposes. Silver, Freedman & Taff, L.L.P. will, except
as otherwise provided in the related prospectus supplement, advise the trust
that the notes should be classified as debt for federal income tax purposes.
The discussion below assumes this characterization of the notes is correct.
OID. The discussion below assumes that all payments on the notes are
denominated in U.S. dollars, and that the interest formula for the notes meets
the requirements for "qualified stated interest" under Treasury regulations
(the "OID Regulations") relating to original issue discount ("OID"), and that
any OID on the notes (i.e., any excess of the principal amount of the notes
over their issue price) does not exceed a de minimis amount (i.e., 0.25% of
their principal amount multiplied by the number of full years included in their
term), all within the meaning of the OID Regulations. If these conditions are
not satisfied with respect to any given series of notes, additional tax
considerations with respect to such notes will be disclosed in the applicable
prospectus supplement.
Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the notes will not be considered issued
with OID. The stated interest thereon will be taxable to a noteholder as
ordinary interest income when received or accrued in accordance with such
noteholder's method of tax accounting. Under the OID Regulations, a holder of a
note issued with more than a de minimis amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the note. A
purchaser who buys a note for more or less than its principal amount will
generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
A holder of a note that has a fixed maturity date of not more than one year
from the issue date of such short-term note may be subject to special rules. An
accrual basis holder of a short-term note (and certain cash method holders,
including regulated investment companies, as set forth in Section 1281 of the
Code) generally would be required to report interest income as interest accrues
on a straight-line basis over the term of each interest period. Other cash
basis holders of a short-term note would, in general, be required to report
interest income as interest is paid (or, if earlier, upon the taxable
disposition of the short-term note). However, a cash basis holder of a short-
term note reporting interest income as it is paid may be required to defer a
portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the short-term note until the taxable disposition of the
short-term note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
short-term note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a short-term note is purchased for more or less than its
principal amount.
Sale or Other Disposition. If a noteholder sells a note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the note. The
adjusted tax basis of a note to a particular noteholder will equal the holder's
cost for the note, increased by any market discount, acquisition discount, OID
and gain previously included by such noteholder
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in income with respect to the note and decreased by the amount of bond premium,
if any, previously amortized and by the amount of principal payments previously
received by such noteholder with respect to such note. Any such gain or loss
will be capital gain or loss if the note was held as a capital asset, except
for gain representing accrued interest and accrued market discount not
previously included in income. Capital losses generally may be used only to
offset capital gains.
Non-U.S. Holders. Interest payments made (or accrued) to a noteholder who is
a nonresident alien, foreign corporation or other holder who is a Non-U.S.
Person (as defined below under "Trusts Treated as Grantor Trusts --Tax
Consequences to Non-U.S. Certificateholders") generally will be considered
"portfolio interest" and generally will not be subject to United States federal
income tax and withholding tax, if the interest is not effectively connected
with the conduct of a trade or business within the United States by the Non-
U.S. Person and the Non-U.S. Person (1) is not actually or constructively a "10
percent shareholder" of the trust or the depositor (including a holder of 10%
of the outstanding certificates) or a "controlled foreign corporation" with
respect to which the trust or the depositor is a "related person" within the
meaning of the Code and (2) provides the trustee or other person who is
otherwise required to withhold U.S. tax with respect to the notes with an
appropriate statement (on Form W-8 or a similar form), signed under penalties
of perjury, certifying that the beneficial owner of the note is a Non-U.S.
Person and providing the Non-U.S. Person's name and address. If a note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent. In that case, however, the signed statement
must be accompanied by a Form W-8 or substitute form provided by the Non-U.S.
Person that owns the note. If such interest is not portfolio interest, then it
will be subject to United States federal income and withholding tax at a rate
of 30 percent, unless reduced or eliminated pursuant to an applicable tax
treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a Non-U.S. Person will be exempt from United
States federal income and withholding tax, provided that (1) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the Non-U.S. Person and (2) in the case of an individual Non-U.S.
Person, the individual is not present in the United States for 183 days or more
in the taxable year.
Final regulations dealing with withholding tax on income paid to Non-U.S.
Persons and related matters were issued by the Treasury Department on October
6, 1997. These new withholding regulations will generally be effective for
payments made after December 31, 2000, subject to certain transition rules.
Current withholding certificates will remain valid until the earlier of
December 31, 2000 or the due date of expiration of the certificate under the
rules as currently in effect. The new withholding regulations would require, in
the case of notes held by a foreign partnership, that (x) the certification
described above be provided by the partners rather than by the foreign
partnership and (y) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule would apply
in the case of tiered partnerships. Prospective investors who are Non-U.S.
Persons are strongly urged to consult their own tax advisors with respect to
the new withholding regulations.
Backup Withholding. Each noteholder (other than an exempt holder such as a
corporation, tax-exempt organization, qualified pension and profit-sharing
trust, individual retirement account or nonresident alien who provides
certification as to status as a nonresident) will be required to provide, under
penalties of perjury, a certificate containing the holder's name, address,
correct federal taxpayer identification number and a statement that the holder
is not subject to backup withholding. Should a nonexempt noteholder fail to
provide the required certification, the trust will be required to withhold 31
percent of the amount otherwise payable to the holder, and remit the withheld
amount to the IRS as a credit against the holder's federal income tax
liability.
Possible Alternative Treatments of the Notes. If, contrary to the opinion of
Silver, Freedman & Taff, L.L.P., the IRS successfully asserted that one or more
classes of notes in a series did not represent debt for federal income tax
purposes, such notes might be treated as equity interests in the trust. If so
treated, the trust might be treated as a publicly traded partnership that would
not be taxable as a corporation because it would
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meet certain qualifying income tests. Nonetheless, treatment of the notes as
equity interests in such a publicly traded partnership could have adverse tax
consequences to certain holders. For example, income to certain tax-exempt
entities (including pension funds) would be "unrelated business taxable
income", income to Non-U.S. Persons generally would be subject to U.S. tax and
U.S. tax return filing and withholding tax requirements, and individual holders
might be subject to certain limitations on their ability to deduct their share
of trust expenses.
Tax Consequences to Holders of the Certificates
Treatment of the Trust as a Partnership. The depositor and the servicer will
agree, and the related certificateholders 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 certificateholders (including
the holder of any certificates representing the retained interest in the trust)
and the notes being debt of the partnership. However, the proper
characterization of the arrangement involving the trust, the certificates, the
notes, the depositor and the servicer is not clear because there is no
authority on transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the certificates have certain features characteristic of debt, the
certificates might be considered debt of the depositor or the trust. Any such
characterization would not result in materially adverse tax consequences to
certificateholders as compared to the consequences from treatment of the
certificates as equity in a partnership, described below. The following
discussion assumes that the certificates represent equity interests in a
partnership.
Partnership Taxation. As a partnership, the trust will not be subject to
federal income tax. Rather, each certificateholder will be required to
separately take into account such holder's 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, OID and bond premium)
and any gain upon collection or disposition of such receivables. The trust's
deductions will consist primarily of interest accruing with respect to the
notes, 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
Transfer and Servicing Agreement and related documents). The Transfer and
Servicing Agreement will provide, in general, that the certificateholders will
be allocated taxable income of the trust for each month equal to the sum of:
(1) 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;
(2) 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;
(3) any other amounts of income payable to the certificateholders for such
month; and
(4) in the case of an individual, estate or trust, such certificateholder's
share of income corresponding to the miscellaneous itemized deductions
described in the next paragraph.
Such allocation of interest 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 owner of the retained interest of the trust. In the event
the trust issues certificates which are Strip Securities, the amount allocated
to such certificateholders will equal the excess of (1) the pass-through rate
applicable to the Strip Securities times the notional principal amount for the
Strip Securities for such month over (2) the portion
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of the amount distributed with respect to the Strip Securities for such month
that would constitute a return of basis if the Strip Securities 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 certificateholders will be allocated to such Strip
Securities in proportion to the respective capital account balances immediately
before the final redemption.
The portion of expenses of the trust (including fees to the servicer, but
not interest expense) allocated to taxpayers that are individuals, estates or
trusts would be miscellaneous itemized deductions to such taxpayers. Such
deductions might be disallowed to such taxpayers in whole or in part and might
result in such taxpayers being taxed on an amount of income that exceeds the
amount of cash actually distributed to such taxpayers over the life of the
trust. Any net loss of the trust will be allocated first to the retained
interest holder to the extent of its adjusted capital account, then to the
other certificateholders in the priorities set forth in the Transfer and
Servicing Agreement to the extent of their respective adjusted capital
accounts, and thereafter to the retained interest holder.
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 certificateholders.
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.)
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
certificateholders.
Section 708 Termination. Under Section 708 of the Code, the trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the trust are sold or exchanged within a 12-
month period. Under applicable Treasury regulations, such a 50% or greater
transfer 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. The trust
will not comply with certain technical requirements that might apply when such
a constructive termination occurs. As a result, the trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the trust might not be able to
comply due to lack of data.
Disposition of Certificates. 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. With respect to noncorporate certificateholders, such capital gain or
loss will be short-term or long-term, depending on whether the certificate has
been held for (1) 12 months or less, or (2) more than 12 months, respectively.
(Long-term capital gain tax rates provide a reduction as compared with short-
term capital gains, which are taxed at ordinary income tax rates.) A
certificateholder's tax basis in a certificate will generally equal the
holder's cost increased by the holder's share of trust income (includible in
income) and decreased by any distributions received with respect to such
certificate. In addition, both the tax basis in the certificates and the
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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 certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the certificates.
Allocations Between Transferors and Transferees. In general, the trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the certificateholders in
proportion to the principal amount of certificates (or notional principal
amount, in the case of any Strip Securities) 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 certificateholders. The retained
interest holder, 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.
Section 754 Election. In the event that a certificateholder sells its
certificates at a profit (loss), the purchasing certificateholder will have a
higher (lower) basis in the certificates than the selling certificateholder
had. The tax basis of the trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would
be involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the trust will not make such
election. As a result, certificateholders might be allocated a greater or
lesser amount of trust income than would be appropriate based on their own
purchase price for certificates.
Administrative Matters. The trustee is required to keep or have kept
complete and accurate books of the trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis, and the fiscal year
of the trust 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 certificateholder's allocable share of
items of trust income and expense to holders and the IRS on Schedule K-1. The
trust will provide the Schedule K-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 (1) the name,
address and taxpayer identification number of the nominee and (2) as to each
beneficial owner (a) the name, address and identification number of such
person, (b) whether such person is a U.S. Person (as defined under "Trusts
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Treated as Grantor Trusts--Non-U.S. Persons"), 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 Securities Exchange Act of 1934 is
not required to furnish any such information statement to the trust. The
information referred to above for any calendar year must be furnished to the
trust on or before the following January 31. Nominees, brokers and financial
institutions that fail to provide the trust with the information described
above may be subject to penalties.
The retained interest holder will be designated as the tax matters partner
for each trust in the related Transfer and Servicing Agreement and, as such,
will be responsible for representing the certificateholder in any dispute with
the IRS. The Code provides for administrative examination of a partnership as
if the partnership were a separate and distinct taxpayer. Generally, the
statute of limitations for partnership items does not expire before three years
after the date on which the partnership information return is filed. Any
adverse determination following an audit of the return of the trust by the
appropriate taxing authorities could result in an adjustment of the returns of
the certificateholders, and, under certain circumstances, a certificateholder
may be precluded from separately litigating a proposed adjustment to the items
of the trust. An adjustment could also result in an audit of a
certificateholder's returns and adjustments of items not related to the income
and losses of the trust.
Tax Consequences to Non-U.S. Certificateholders. Pursuant to a change in the
safe harbor provisions of Section 864(b)(2)(A) of the Code (applicable to tax
years beginning after December 31, 1997), certificateholders who are Non-U.S.
Persons will not 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 solely as a result of owning or trading certificates. As a result,
the trust is not obligated to withhold on the portion of its taxable income
that is allocable to Non-U.S. Persons at regular graduated rates (35% for Non-
U.S. Persons that are taxable as corporations and 39.6% for all other Non-U.S.
Persons), unless such Non-U.S. Person hold certificates in connection with the
conduct of a U.S. trade or business.
Interest allocable to a Non-U.S. Person that does not hold certificates in
connection with the conduct of a U. S. trade or business will not qualify for
the exemption for portfolio interest under Section 871(h) of the Code, because
underlying receivables owned by the trust are not in "registered form" as that
term is defined in applicable Treasury regulations. As a result, such Non-U.S.
Person who holds certificates will be subject to United States withholding tax
on interest or OID attributable to the underlying receivables (whether or not
such amount is distributed) at a rate of 30 percent, unless reduced or
eliminated pursuant to an applicable treaty. Potential investors who are Non-
U.S. Persons should consult their own tax advisors regarding the specific tax
consequences of owning a certificate.
Backup Withholding. Distributions made on the certificates and proceeds from
the sale of the certificates will be subject to a "backup" withholding tax of
31% if, in general, the certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
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 grantor trust certificates 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 as grantor trust certificates.
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Characterization. Each grantor trust certificateholder will be treated as
the owner of a pro rata undivided interest in the interest and principal
portions of the trust represented by the grantor trust certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
receivables in the trust. Any amounts received by a grantor trust
certificateholder in lieu of amounts due with respect to any receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each grantor trust certificateholder will be required to report on its
federal income tax return in accordance with such grantor trust
certificateholder's method of accounting its pro rata share of the entire
income from the receivables in the trust represented by 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. Under Code Sections 162 or 212, each grantor trust
certificateholder will be entitled to deduct 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. Grantor trust certificateholders that are individuals,
estates or trusts will be entitled to deduct their share of expenses only to
the extent such expenses plus all other miscellaneous itemized deductions
exceed two percent of their respective adjusted gross incomes. 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.
Stripped Bonds and Stripped Coupons. Although the tax treatment of stripped
bonds is not entirely clear, based on recent 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
OID. Generally, under Treasury regulations issued under Section 1286 of the
Code, 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. See "--Original Issue Discount" below. 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 will 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. 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.
Original Issue Discount. The rules of the Code relating to OID (currently
Sections 1271 through 1273 and 1275) will be applicable to a grantor trust
certificateholder that acquires an undivided interest in a stripped bond issued
or acquired with OID, and 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. Because payments on such stripped bonds may
be accelerated by prepayments on the underlying obligations, OID will be
determined as required under Code Section 1272(a)(6). Pursuant to Code Section
1272(a)(6), OID accruals will be calculated 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
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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 payment date). This will be done, in the case of each full
monthly accrual period, by adding (1) 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 (2) any payments (other
than qualified stated interest) 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 through 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 IRS may require you to compute market discount on a receivable by
receivable basis, based on the allocation of your purchase price among the
receivables based on their fair market values. However, we will not furnish
information to you on a receivable by receivable basis. Accordingly, if you
compute premium amortization on an aggregate basis, you may be required by the
IRS to recompute such premium on a receivable by receivable basis.
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 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 (1) the
total remaining market discount and (2) 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
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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 (1)
the total remaining market discount and (2) 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. The price paid for a grantor trust certificate by a holder will be
allocated to such holder's undivided interest in each receivable based on each
receivable's relative fair market value, so that such holder's undivided
interest in each receivable will have its own tax basis. A grantor trust
certificateholder that acquires an interest in receivables at a premium may
elect to amortize such premium under a constant interest method. Amortizable
bond premium will be treated as an offset to interest income on such grantor
trust certificate. The basis for such grantor trust certificate will be reduced
to the extent that amortizable premium is applied to offset interest payments.
We cannot tell you whether a reasonable prepayment assumption should be used in
computing amortization of premium allowable under Section 171 of the Code. A
grantor trust certificateholder that makes this election for a grantor trust
certificate that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such grantor trust certificateholder acquires
during the year of the election or thereafter. We will not furnish information
to you on a receivable by receivable basis. Accordingly, if you compute premium
amortization on an aggregate basis, the IRS may require you to recompute such
premium.
If a premium is not subject to amortization using a reasonable prepayment
assumption, the holder of a grantor trust certificate acquired at a premium
should recognize a loss if a receivable prepays in full, equal to the
difference between the portion of the prepaid principal amount of such
receivable that is allocable to the grantor trust certificate and the portion
of the adjusted basis of the grantor trust certificate that is allocable to
such receivable. If a reasonable prepayment assumption is used to amortize such
premium, it appears that such a loss would be available, if at all, only if
prepayments have occurred at a rate faster than the reasonable assumed
prepayment rate. It is not clear whether any other adjustments would be
required to reflect differences between an assumed prepayment rate and the
actual rate of prepayments.
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 OID) and premium in income as interest, based on a
constant yield method. If such an election were to be made with respect to a
grantor trust certificate with market discount, the certificateholder would be
deemed to have made an election to include in income currently market discount
with respect to all other debt instruments having market discount that such
grantor trust certificateholder acquires during the year of the election or
thereafter. Similarly, a grantor trust certificateholder that makes this
election for a grantor trust certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having
47
<PAGE>
amortizable bond premium that such grantor trust certificateholder owns or
acquires. See "--Premium" above. The election to accrue interest, discount and
premium on a constant yield method with respect to a grantor trust certificate
is irrevocable.
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of a
grantor trust certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the grantor trust certificate. Such adjusted basis generally
will equal the seller's purchase price for the grantor trust certificate,
increased by the OID 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 seller 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 of the Code (except in the
case of gain attributable to accrued market discount, as noted above under "--
Market Discount") and, with respect to noncorporate owners, will be short-term
or long-term, depending on whether the grantor trust certificate has been held
for 12 months or less, or more than 12 months, respectively. (Long-term capital
gain tax rates provide a reduction as compared with short-term capital gains,
which are taxed at ordinary income tax rates.)
Grantor trust certificates will be "evidences of indebtedness" within the
meaning of Section 582(c)(1) of the Code, so that gain or loss recognized from
the sale of a grantor trust certificate by a bank or a thrift institution to
which such section applies will be treated as ordinary income or loss.
Non-U.S. Persons. Interest or OID paid to Non-U.S. Persons who own 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 (1) the Non-U.S. Person 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 (2) such
certificateholder fulfills certain certification requirements. Under these
requirements, the certificateholder must certify, under penalty of perjury,
that it is not a "U.S. Person" and must provide its name and address. For this
purpose "U.S. Person" means a citizen or resident of the United States for U.S.
federal income tax purposes, a corporation or partnership (except to the extent
provided in applicable Treasury regulations) created or organized in or under
the laws of the United States, any state or the District of Columbia, including
an entity treated as a corporation or partnership for U.S. federal income tax
purposes, an estate the income of which is subject to U.S. federal income
taxation regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision over the administration of such
trust, and one or more such U.S. Persons have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996, which are
eligible to elect to be treated as U.S. Persons). A "Non-U.S. Person" is a
person who is not a U.S. Person as defined above. If, however, such interest or
gain is effectively connected to the conduct of a trade or business within the
U.S. by such certificateholder, such owner will be subject to U.S. federal
income tax thereon at graduated rates. Potential investors who are not U.S.
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 the servicer deems 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
48
<PAGE>
shown on its federal income tax return, 31% backup withholding may be required
with respect to any payments. Any amounts deducted and withheld from a
distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.
* * *
The federal tax discussion set forth above is included for general
information only and may not be applicable to your particular tax situation.
You should consult your own tax advisor with respect to the tax consequences of
the purchase, ownership and disposition of securities, 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
Section 406 of ERISA, and Section 4975 of the Code prohibit a pension,
profit sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each, a "Benefit Plan"), from
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code with
respect to the Benefit Plan. ERISA also imposes certain duties on persons who
are fiduciaries of Benefit Plans subject to ERISA and prohibits certain
transactions between a Benefit Plan and parties in interest with respect to
such Benefit Plans. Under ERISA, any person who exercises any authority or
control with respect to the management or disposition of the assets of a
Benefit Plan is considered to be a fiduciary of such Benefit Plan (subject to
certain exceptions not here relevant). A violation of these "prohibited
transaction" rules may generate excise tax and other liabilities under ERISA
and the Code for such persons.
Certain transactions involving a trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased notes or certificates if assets of the trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulations"), the assets of a trust
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the Code only if the Benefit Plan acquired an "equity interest" in the trust
and none of the exceptions contained in the Plan Assets Regulation were
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. To the
extent that the notes are treated as indebtedness under applicable local law
and do not have substantial equity features, their acquisition would not be
considered the acquisition of an "equity interest" in the related trust. In
addition, although they may represent equity interests in the related trust,
nonsubordinated certificates ("Senior Certificates") may be exempted from
certain of the prohibited transaction rules of ERISA as discussed below. The
likely treatment in this context of notes or certificates of a given series
will be discussed in the related prospectus supplement.
Employee Benefit Plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A Benefit Plan fiduciary considering the purchase of notes or certificates
of a given series should consult its tax and/or 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 U.S. Department of Labor may have 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 Benefit Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by the
Exemption include motor vehicle installment sales contracts such as the
receivables. The Exemption will apply to the acquisition, holding and resale of
Senior Certificates by a Benefit Plan, provided that certain conditions
(certain of which are described below) are met.
49
<PAGE>
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 payments are to be made to the
Senior Certificate owners, and rights of the indenture trustee under
the indenture or the rights of the owner trustee or trustee under the
Transfer and Servicing Agreements and under credit support arrangements
with respect to such obligations or qualified motor vehicle leases.
(2) The acquisition of the Senior Certificates by a Benefit Plan is on
terms (including the price for the Senior Certificates) that are at
least as favorable to the Benefit Plan as they would be in an arm's
length transaction with an unrelated party;
(3) The rights and interests evidenced by the Senior Certificates acquired
by the Benefit Plan are not subordinated to the rights and interests
evidenced by other certificates of the trust;
(4) The Senior Certificates acquired by the Benefit Plan have received a
rating at the time of such acquisition that is in one of the three
highest generic rating categories from either Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. or Fitch IBCA, Inc;
(5) The related owner trustee or indenture 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 receivables to the related trust represents not more
than the fair market value of such receivables; and the sum of all
payments made to and retained by the servicer represents not more than
reasonable compensation for the servicer's services under the related
Transfer and Servicing Agreements and indenture, if applicable, and
reimbursement of the servicer's reasonable expenses in connection
therewith; and
(7) The Benefit Plan investing in the Senior Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission (the "SEC") 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, (1) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty percent of the Senior
Certificates are acquired by persons independent of the Restricted Group (as
defined below), (2) the Benefit Plan's investment in Senior Certificates does
not exceed twenty-five percent of all of the Senior Certificates outstanding at
the time of the acquisition and (3) immediately after the acquisition, no more
than twenty-five percent of the assets of the Benefit Plan are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Benefit
Plans sponsored by the depositor, any underwriter, the related trustee, the
servicer, any obligor with respect to receivables included in the related trust
constituting more than five percent of the aggregate unamortized principal
balance of the assets in the trust, or any affiliate of such parties (the
"Restricted Group").
50
<PAGE>
PLAN OF DISTRIBUTION
On the terms and conditions set forth in any underwriting agreement with
respect to a given series, 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 securities of the related series set forth
therein and in the related prospectus supplement. The depositor may also cause
the related trust to sell a series of securities directly to investors.
In each underwriting agreement, the several underwriters will agree, subject
to the terms and conditions set forth therein, to purchase all of the
securities described therein that are offered hereby and by the related
prospectus supplement if any of such securities are purchased.
Each prospectus supplement will either (1) set forth the price at which each
class of securities being offered thereby will be offered to investors and any
concessions that may be offered to certain securities dealers participating in
the offering of such securities or (2) specify that the related securities 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 securities, such public offering prices and such concessions may be
changed.
Each underwriting agreement will provide that BVAC and the depositor will
indemnify the related underwriters against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended, 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 any such underwriters.
The closing of the sale of any class of securities will be conditioned on
the closing of the sale of all other classes of securities of such series.
The place and time of delivery for the securities in respect of which this
prospectus is delivered will be set forth in the related prospectus supplement.
LEGAL MATTERS
Certain legal matters relating to the securities 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 such
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.
WHERE YOU CAN FIND MORE INFORMATION
The depositor, as originator of each trust, filed a registration statement
relating to the securities with the SEC. This prospectus is part of the
registration statement, but the registration statement includes additional
information about the securities.
The servicer will file with the SEC all required periodic and special SEC
reports and other information about any trust.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. You can request copies of these documents, upon payment of a duplicating
fee, by writing to the SEC. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference rooms. Our SEC filings are
also available to the public on the SEC Internet site (http://www.sec.gov.).
51
<PAGE>
The SEC allows us to "incorporate by reference" information that the
depositor files with it, which means that the depositor can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information that the depositor files later with the SEC which we have
incorporated by reference will automatically update the information in this
prospectus. In all cases, you should rely on the later information over
different information included in this prospectus or the related prospectus
supplement. We incorporate by reference any future annual, monthly and special
SEC reports and proxy materials filed by or on behalf of any trust until we
terminate offering the securities.
As a recipient of this prospectus, you may request a copy of any document we
incorporate by reference, except exhibits to the documents (unless the exhibits
are specifically incorporated by reference), at no cost, by writing or calling:
Bay View Acceptance Corporation, 2121 South El Camino Real, San Mateo,
California 94403 Attention: (telephone: 650-573-7300).
52
<PAGE>
INDEX OF PRINCIPAL TERMS
We set forth below is a list of certain of the more significant terms used
in this prospectus and the pages on which you may find the definitions of such
terms.
<TABLE>
<CAPTION>
Term Page
- ---- ----
<S> <C>
Approved Rating............................................................ 24
Bank....................................................................... 1
Benefit Plan............................................................... 49
BVAC....................................................................... 1
BVCC....................................................................... 1
BVC........................................................................ 3
BVFC....................................................................... 16
CTL........................................................................ 3
Code....................................................................... 32
DTC........................................................................ 9
ERISA...................................................................... 6
Exemption.................................................................. 49
FASIT...................................................................... 38
FTC Rule................................................................... 36
IRS........................................................................ 38
Named Lienholder........................................................... 3
Non-U.S. Person............................................................ 48
OID........................................................................ 39
OID Regulations............................................................ 39
Plan Assets Regulation..................................................... 49
Pool Factor................................................................ 15
Restricted Group........................................................... 50
SEC........................................................................ 50
Security Owners............................................................ 39
Senior Certificates........................................................ 49
Strip Securities........................................................... 15
Transfer and Servicing Agreements.......................................... 21
Trust Bankruptcy Event..................................................... 31
UCC........................................................................ 18
U.S. Person................................................................ 48
Ultra...................................................................... 3
</TABLE>
53
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses in connection with the offering of the Securities being registered
herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee............................................... $264,000
Legal fees and expenses............................................ *
Accounting fees and expenses....................................... *
Blue sky fees and expenses......................................... *
Rating agency fees................................................. *
Trustees' fees and expenses........................................ *
Printing........................................................... *
Miscellaneous...................................................... *
--------
Total............................................................ $ *
========
</TABLE>
- --------
* To be completed by amendment.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person was an
officer or director of such corporation, or is or was serving at the request
of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such claim, suit or
proceeding, provided that such officer or director acted in good faith and in
a manner he or she reasonably believed to be in or not opposed to the
corporation's best interests, and, for criminal proceedings, had no reasonable
cause to believe that his or her conduct was illegal. A Delaware corporation
may indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify such officer or director against the expenses that
such officer or director actually and reasonably incurred.
The Certificate of Incorporation of Bay View Securitization Corporation
provides for indemnification of officers and directors to the full extent
permitted by the Delaware General Corporation Law.
Item 16. Exhibits.
<TABLE>
<C> <S>
1 Underwriting Agreement (incorporated by reference to Exhibit 1 to
Amendment No. One to Registration Statement on Form S-3 of Bay View
Securitization Corporation, Reg. No. 333-16233).
3.1 Certificate of Incorporation of Bay View Securitization Corporation
(incorporated by reference to Exhibit 3.1 to Amendment No. One to
Registration Statement on Form S-3 of Bay View Securitization
Corporation, Reg. No. 333-16233).
3.2 Bylaws of Bay View Securitization Corporation (incorporated by
reference to Exhibit 3.2 to Registration Statement on Form S-3 of Bay
View Securitization Corporation, Reg. No. 333-16233).
4.1(a) Form of Pooling and Servicing Agreement for Grantor Trusts, including
form of certificates (incorporated by reference to Exhibit 4.1 to
Amendment No. One to Registration Statement on Form S-3 of Bay View
Securitization Corporation, Reg. No. 333-16233).
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
4.1(b) Form of Standard Terms and Conditions of Grantor Trusts (incorporated
by reference to Exhibit 4.2 to Amendment No. One to Registration
Statement on Form S-3 of Bay View Securitization Corporation, Reg. No.
333-16233).
4.2 Form of Trust and Servicing Agreement for Owner Trusts.
4.3 Form of Indenture.
*5 Opinion of Silver, Freedman & Taff, L.L.P. with respect to legality of
the Securities.
*8 Opinion of Silver, Freedman & Taff, L.L.P. with respect to tax
matters.
10 Form of Purchase Agreement (incorporated by reference to Exhibit 10 to
Amendment No. One to Registration Statement on Form S-3 of Bay View
Securitization Corporation, Reg. No. 333-16233).
*23(a) Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit 5(a)).
*23(b) Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit 8).
24 Power of Attorney (included on signature page).
</TABLE>
- --------
* To be filed by amendment.
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, 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
of 1933, each filing of the Registrant's annual report 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 underwriter at the closing specified in the
underwriting agreements certificates in such denominations and registered
in such names as required by the underwriter to provide prompt delivery to
each purchaser.
(f) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
(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.
(i) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act ("Act") in
accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
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 Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Mateo, State of
California, on February 10, 2000.
Bay View Securitization Corporation,
as Depositor (Registrant)
/s/ Douglas J. Wallis
By: _________________________________
Name: Douglas J. Wallis
Title: Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas J. Wallis, his true and lawful attorney-
in-fact and agent, with full power of substitution and re-substitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all said attorney-in-fact and agent or his substitutes
or substitute may lawfully do or cause to be done by virtue hereof.
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
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Edward H. Sondker Director and Chief February 10, 2000
______________________________________ Executive Officer
Edward H. Sondker (Principal Executive
Officer)
/s/ David A. Heaberlin Director, Executive Vice February 10, 2000
______________________________________ President and Chief
David A. Heaberlin Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas J. Wallis Secretary and Director February 10, 2000
______________________________________
Douglas J. Wallis
/s/ Robert D. Dickey Director February 10, 2000
______________________________________
Robert D. Dickey
/s/ J. Kenny Lewis Director February 10, 2000
______________________________________
J. Kenny Lewis
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
-----------
<C> <S>
1 Underwriting Agreement (incorporated by reference to Exhibit 1 to
Amendment No. One to Registration Statement on Form S-3 of Bay
View Securitization Corporation, Reg. No. 333-16233).
3.1 Certificate of Incorporation of Bay View Securitization
Corporation (incorporated by reference to Exhibit 3.1 to Amendment
No. One to Registration Statement on Form S-3 of Bay View
Securitization Corporation, Reg. No. 333-16233).
3.2 Bylaws of Bay View Securitization Corporation (incorporated by
reference to Exhibit 3.2 to Registration Statement on Form S-3 of
Bay View Securitization Corporation, Reg. No. 333-16233).
4.1(a) Form of Pooling and Servicing Agreement for Grantor Trusts,
including form of certificates (incorporated by reference to
Exhibit 4.1 to Amendment No. One to Registration Statement on Form
S-3 of Bay View Securitization Corporation, Reg. No. 333-16233).
4.1(b) Form of Standard Terms and Conditions of Bay View Grantor Trusts
(incorporated by reference to Exhibit 4.2 to Amendment No. One to
Registration Statement on Form S-3 of Bay View Securitization
Corporation, Reg. No. 333-16233).
4.2 Form of Trust and Servicing Agreement for Owner Trusts.
4.3 Form of Indenture.
*5 Opinion of Silver, Freedman & Taff, L.L.P. with respect to
legality of the securities.
*8 Opinion of Silver, Freedman & Taff, L.L.P. with respect to tax
matters.
10 Form of Purchase Agreement (incorporated by reference to Exhibit
10 to Amendment No. One to Registration Statement on Form S-3 of
Bay View Securitization Corporation, Reg. No. 333-16233).
*23(a) Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit
5(a)).
*23(b) Consent of Silver, Freedman & Taff, L.L.P. (included in Exhibit
8).
24 Power of Attorney (included on signature page).
</TABLE>
- --------
* To be filed by amendment.
II-5
<PAGE>
Exhibit 4.2
BAY VIEW SECURITIZATION CORPORATION
Seller
BAY VIEW ACCEPTANCE CORPORATION
Servicer
and
,
----------------------
Owner Trustee
TRUST AND SERVICING AGREEMENT,
Dated as of __________, ____
Bay View ____-__ Owner Trust
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TABLE OF CONTENTS
ARTICLE I Creation of Trust...................................................1
SECTION 1.01. Name......................................................1
SECTION 1.02. Office....................................................1
SECTION 1.03. Purposes and Powers.......................................1
SECTION 1.04. Appointment of Owner Trustee..............................2
SECTION 1.05. Initial Capital Contribution of Trust Estate..............2
SECTION 1.06. Declaration of Trust......................................2
SECTION 1.07. Title to Trust Property...................................2
SECTION 1.08. Situs of Trust............................................2
ARTICLE II Definitions........................................................2
SECTION 2.01. Definitions...............................................2
SECTION 2.02. Usage of Terms...........................................10
SECTION 2.03. Cutoff Date and Record Date..............................10
SECTION 2.04. Section References.......................................10
ARTICLE III Conveyance of Receivables........................................10
ARTICLE IV Acceptance by Trustee.............................................11
ARTICLE V Information Delivered to the Rating Agencies.......................11
ARTICLE VI Agent for Service.................................................11
ARTICLE VII The Receivables..................................................12
SECTION 7.01. Representations and Warranties of Seller.................12
SECTION 7.02. Repurchase Upon Breach...................................12
SECTION 7.03. Custody of Receivable Files..............................12
SECTION 7.04. Duties of Servicer as Custodian..........................13
SECTION 7.05. Instructions; Authority to Act...........................13
SECTION 7.06. Custodian's Indemnification.............................13
SECTION 7.07. Effective Period and Termination.........................13
ARTICLE VIII Administration and Servicing of Receivables.....................14
SECTION 8.01. Duties of Servicer.......................................14
SECTION 8.02. Collection of Receivable Payments........................14
SECTION 8.03. Realization Upon Receivables.............................14
SECTION 8.04. Physical Damage Insurance................................15
SECTION 8.05. Maintenance of Security Interests in Financed Vehicles...15
SECTION 8.06. Covenants of Servicer. .................................15
SECTION 8.07. Purchase of Receivables Upon Breach......................15
SECTION 8.08. Servicing Fee............................................15
SECTION 8.09. Servicer's Certificate...................................16
SECTION 8.10. Annual Statement as to Compliance; Notice of Default.....16
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SECTION 8.11. Annual Independent Certified Public Accountant's Report..17
SECTION 8.12. Access to Certain Documentation and Information
Regarding Receivables................................17
SECTION 8.13. Servicer Expenses........................................17
SECTION 8.14. Reports to Noteholders...................................17
ARTICLE IX Collections; Distributions to Noteholders and Certificateholders..17
SECTION 9.01. Collection Account.......................................17
SECTION 9.02. Collections..............................................17
SECTION 9.03. Purchase Amounts.........................................18
SECTION 9.04. Application of Funds.....................................18
SECTION 9.05. Advances.................................................19
SECTION 9.06. Net Deposits.............................................19
SECTION 9.07. No Segregation of Moneys; No Interest....................19
SECTION 9.08. Accounting and Reports to the Certificateholder,
the Internal Revenue Service and Others..............19
SECTION 9.09. Payahead Account.........................................20
ARTICLE X Intentionally Blank................................................20
ARTICLE XI The Certificates..................................................20
SECTION 11.01. The Certificates.........................................20
SECTION 11.02. Authentication of Certificates...........................20
SECTION 11.03. Registration of Transfer and Exchange of Certificates....21
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificates.......21
SECTION 11.05. Agreement Regarding Tax Matters..........................21
SECTION 11.06. Signature on Returns; Tax Matters Partner................21
ARTICLE XII The Seller.......................................................22
SECTION 12.01. Representations and Undertakings of Seller...............22
SECTION 12.02. Liability of Seller; Indemnities.........................23
SECTION 12.03. Merger or Consolidation of, or Assumption of the
Obligations of Seller................................24
SECTION 12.04. Limitation on Liability of Seller and Others.............24
ARTICLE XIII The Servicer....................................................24
SECTION 13.01. Representations of Servicer..............................24
SECTION 13.02. Indemnities of Servicer..................................25
SECTION 13.03. Merger or Consolidation of, or Assumption of the
Obligations of Servicer..............................26
SECTION 13.04. Limitation on Liability of Servicer and Others...........26
SECTION 13.05. Servicer Not to Resign...................................26
SECTION 13.06. Delegation of Duties.....................................26
ARTICLE XIV Servicer Default.................................................27
SECTION 14.01. Events of Servicer Default...............................27
SECTION 14.02. Appointment of Successor.................................28
SECTION 14.03. Notice of Events of Servicer Default.....................28
SECTION 14.04. Waiver of Past Defaults..................................28
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ARTICLE XV The Owner Trustee.................................................29
SECTION 15.01. Duties of Owner Trustee..................................29
SECTION 15.02. Owner Trustee's Certificate..............................30
SECTION 15.03. Owner Trustee's Assignment of Purchased Receivables......30
SECTION 15.04. Certain Matters Affecting the Owner Trustee..............31
SECTION 15.05. Owner Trustee Not Liable for Certificates or
Receivables..........................................32
SECTION 15.06. Owner Trustee May Own Notes..............................32
SECTION 15.07. Owner Trustee's and Indenture Trustee's Fees and
Expenses.............................................32
SECTION 15.08. Eligibility Requirements for Owner Trustee...............33
SECTION 15.09. Resignation or Removal of Owner Trustee..................33
SECTION 15.10. Successor Owner Trustee..................................33
SECTION 15.11. Merger or Consolidation of Owner Trustee.................34
SECTION 15.12. Appointment of Co-Trustee or Separate Owner Trustee. ...34
SECTION 15.13. Representations and Warranties of Owner Trustee..........35
ARTICLE XVI Termination......................................................35
SECTION 16.01. Termination of the Trust.................................35
SECTION 16.02. Optional Disposition of All Receivables..................35
ARTICLE XVII Miscellaneous Provisions........................................36
SECTION 17.01. Amendment................................................36
SECTION 17.02. Protection of Title to Trust.............................36
SECTION 17.03. Limitation on Rights of Certificateholders...............37
SECTION 17.04. Governing Law............................................38
SECTION 17.05. Notices..................................................38
SECTION 17.06. Severability of Provisions...............................38
SECTION 17.07. Assignment...............................................38
SECTION 17.08. Certificates Nonassessable and Fully Paid................38
SECTION 17.09. Nonpetition Covenants....................................39
SECTION 17.10. Counterparts.............................................39
SECTION 17.11. Third Party Beneficiary..................................39
EXHIBIT 1 - Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2 - Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 3 - Servicer's Certificate
EXHIBIT A - Form of Certificate of Trust
EXHIBIT B - Form of Certificate
SCHEDULE A - Schedule of Receivables
SCHEDULE B - Location of Receivables
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This TRUST AND SERVICING AGREEMENT, dated as of _________, ____, is made
with respect to the formation of the Bay View ____-__ Owner Trust, among BAY
VIEW SECURITIZATION CORPORATION, a Delaware corporation, as depositor (the
"Seller"), BAY VIEW ACCEPTANCE CORPORATION, a Nevada corporation, as servicer
(the "Servicer"), and __________________, a Delaware banking corporation, as
owner trustee (the "Owner 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 and the prompt
filing thereafter of the Certificate of Trust in the State of Delaware, there is
hereby created the Bay View ____-__ Owner Trust.
SECTION 1.01. Name. The Trust created hereby shall be known as "Bay View
____-__ Owner Trust", in which name the Owner Trustee may conduct the business
of the Trust, make and execute contracts and other instruments on behalf of the
Trust and sue and be sued. The Trust shall constitute a business trust within
the meaning of Section 3801(a) of the Delaware Business Trust Act for which the
Owner Trustee has filed a certificate of trust with the Secretary of State of
the State of Delaware pursuant to Section 3810(a) of the Delaware Business Trust
Act.
SECTION 1.02. Office. The office of the Trust shall be in care of the Owner
Trustee at its Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificateholders, the Servicer,
the Seller, the Insurer and the Indenture Trustee.
SECTION 1.03. Purposes and Powers. The purpose of the Trust is to engage in
the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement and to sell or transfer the Notes and
the Certificates in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to fund the Spread Account pursuant to Section 10.02 of the
Indenture and to purchase the Receivables pursuant to this Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust estate pursuant to the Indenture and to hold, manage and distribute to the
Certificateholders pursuant to the terms of this Agreement any portion of the
Trust estate released from the Lien of, and remitted to the Trust pursuant to,
the Indenture;
(iv) to enter into and perform its obligations under the related
documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the related documents, to engage in
such other activities as may be required in connection with conservation of the
Trust estate and the making of distributions to the Certificateholders, the
Noteholders and the others specified in this Agreement.
The Trust is hereby authorized to engage in the foregoing activities.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the other related documents.
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SECTION 1.04. Appointment of Owner Trustee. The Seller hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 1.05. Initial Capital Contribution of Trust Estate. The Seller
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the Trust estate. The Owner Trustee hereby acknowledges
receipt in trust from the Seller, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Trust estate. The Seller shall
pay the organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
SECTION 1.06. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Trust estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Certificateholders, subject to the
obligations of the Trust under the other related documents. It is the intention
of the parties hereto that the Trust constitute a business trust under Delaware
law and that this Agreement constitute the governing instrument of such trust.
It is the intention of the parties hereto that the Trust will be disregarded and
that the Certificateholders will be treated as the owner of the Trust estate,
and that the Notes will be treated as indebtedness of the Certificateholders for
all federal and state income and franchise tax purposes. The Owner Trustee and
the Certificateholders, by acceptance of the Certificates, agree to treat the
Notes for purposes of federal, state and local income or franchise taxes as
indebtedness.
SECTION 1.07. Title to Trust Property. Legal title to all of the Trust
estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 1.08. Situs of Trust. The Trust will be located and administered in
the State of Delaware. Any bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware. The Trust shall
not have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments, if any, will be
received by the Trust only in Delaware, and payments, if any, will be made by
the Trust only from Delaware. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
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.
"Administration Agreement" means the Administration Agreement dated as of
__________, _____ among the Trust, the Owner Trustee and BVAC as administrator.
"Administrator" means the Administrator under the Administration Agreement,
which is initially BVAC, and its successors and assigns thereunder.
"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.
"Agreement" means this Trust and Servicing Agreement executed by the
Seller, the Servicer and the Owner Trustee, and all amendments and supplements
thereto.
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"Amount Financed" means, with respect to a Receivable, the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and any
related costs.
"Approved Rating" means a rating of ___ by _______ or ____ by
_________________.
"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.
"Available Spread Amount" means, on any Payment 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 of the Indenture.
"Available Funds" means the amount defined as such in Section 9.04(a)(i).
"BVAC" means Bay View Acceptance Corporation, a Nevada corporation, and its
successors and assigns, other than in its capacity as Servicer.
"Business Day" means, unless otherwise specified, any day other than a
Saturday, a Sunday or a day on which banking institutions in Wilmington,
Delaware, San Francisco, California or New York, New York shall be authorized or
obligated by law, executive order, or governmental decree to be closed.
"Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Owner Trustee substantially in the form attached hereto as
Exhibit B, which represents ownership of a 100% interest in the Trust.
"Certificate of Trust" means the Certificate of Trust of the Trust in
substantially the form of Exhibit A hereto.
"Certificate Register" means the register maintained by the Owner Trustee
pursuant to Section 11.03.
"Certificateholder" or "Holder" means the Person in whose name the
Certificate shall be registered in the Certificate Register.
"Closing Date" means _________________.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 9.01.
"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.
"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 ________, ____, and (ii)
thereafter, each calendar month, until the Trust shall terminate pursuant to
Article XVI.
"Consolidated Net Income" means, for any period, the consolidated net
income of BVAC and its subsidiaries determined in accordance with GAAP.
"Consolidated Tangible Net Worth" means the excess, if any, of the
consolidated assets of BVAC and its subsidiaries over the consolidated
liabilities of BVAC and its subsidiaries less any goodwill, trade names,
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trademarks, patents, unamortized debt discount and expense, and other
intangibles, except that dealer premium rebates and excess servicing shall not
be so deducted, determined in accordance with GAAP.
"Contract Rate" means, with respect to a Receivable, the contract rate of
interest on such Receivable, exclusive of prepaid finance charges.
"Corporate Trust Office" means the office of the Owner 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
___________________________________________________________; Attention:
__________________________; Telecopy ______________ or at such other address as
the Owner Trustee may designate from time to time by notice to the
Certificateholders, the Seller, the Servicer and the Indenture Trustee.
"Cutoff Date" means __________, ____.
"Dealer" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to BVAC under an existing agreement with BVAC or
who arranged for a loan from BVAC to the purchaser of a Financed Vehicle under
an existing agreement with BVAC.
"Defaulted Receivable" means, for any Collection Period, a Receivable as to
which any of the following has occurred: (i) any payment, or part thereof,
is 120 days or more delinquent as of the last day of such Collection Period,
(ii) the Financed Vehicle that secures the Receivable has been repossessed and
liquidated, or (iii) the Receivable has been determined to be 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 or
purchased pursuant to Section 8.07; provided further, that any Advances made
with respect to a Receivable shall not be considered in the determination of the
delinquency status of such Receivable.
"Determination Date" means, for each Collection Period, the second Business
Day prior to the related Payment Date.
"Dissolution Payment Date" means the Payment Date following the liquidation
of the trust corpus pursuant to Section 16.02.
"Eligible Bank" means any depository institution with trust powers
(including the Owner Trustee and the Indenture 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 ____ from _______ 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, Fannie Mae, 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 Owner Trustee, the
Indenture Trustee or any of their agents, 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
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(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
Collection 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 Owner
Trustee or the Indenture 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 Notes;
(vii) interests in any money market fund having a rating of ___ by
_______ or ____ by _________________; and
(viii) any other investment approved in advance in writing by the Rating
Agencies and the Insurer.
"Event of Servicer Default" means an event specified in Section 14.01.
"Financed Vehicle" means a new or used automobile, light-duty truck,
recreational vehicle, motorcycle or van, together with all accessions thereto,
securing an Obligor's indebtedness under the respective Receivable.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements that are
described in Statement on Auditing Standards No. 69 "The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles in the
Independent Auditor's Report" that are applicable to the circumstances as of the
date of determination, applied on a consistent basis.
"Holder" -- see "Certificateholder."
"Indenture" means the Indenture dated as of __________________ among the
Owner Trustee as issuer (on behalf of the Trust) and ____________________ as
Indenture Trustee, which provides for the issuance of the Notes.
"Indenture Trustee" means _____________________ in its role as Indenture
Trustee under the Indenture and its permitted successors and assigns.
"Indenture Trustee Office" means the office of the Indenture Trustee at
which its business as Indenture Trustee under the Indenture shall be
administered, which office is presently located at
______________________________________; telecopy _______________ or at such
other address as the
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Indenture Trustee may designate from time to time by notice to the Owner
Trustee, the Servicer and the Noteholders.
"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, marshaling 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, marshaling 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.
"Insolvency Proceeding" means the commencement, after the date hereof, of
any bankruptcy, insolvency, readjustment of debt, reorganization, marshaling of
assets and liabilities or similar proceedings by or against BVAC or the Seller,
the commencement, after the date hereof, of any proceedings by or against BVAC
or the Seller for the winding up or liquidation of its affairs or the consent,
after the date hereof, to the appointment of a trustee, conservator, receiver,
or liquidator in any bankruptcy, insolvency, readjustment of debt,
reorganization, marshaling of assets and liabilities or similar proceedings of
or relating to BVAC or the Seller.
"Insurance Agreement" means the Insurance and Reimbursement Agreement,
dated as of the Closing Date, among the Trust, the Seller, BVAC individually and
as Servicer, BVAC and the Insurer pursuant to which the Insurer issued the
Policy.
"Insurer" means __________________________, a ________ domiciled insurance
company.
"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).
"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 except that the amount of
Collected Interest in respect of Precomputed Receivables shall be increased by
giving effect to the withdrawal for the related Payment Date 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 Payment Date means such monies collected during the preceding
Collection Period. In no event shall Liquidation Proceeds be less than zero.
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"Monthly Interest" means the amount of interest which is payable to the
Noteholders on any Payment Date pursuant to the terms of the Indenture.
"Monthly Principal" means the amount of principal which is payable to the
Noteholders on any Payment Date pursuant to the terms of the Indenture.
"Monthly Servicing Fee" means, (i) for the first Payment Date, the product
of the following: the (a) monthly Servicing Rate (b) 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 and (c) the Original Pool Balance and
(ii) for any subsequent Payment Date, the product of (a) the Pool Balance as of
the beginning of the related Collection Period and (b) the monthly Servicing
Rate.
"Notes" mean the Notes issued by the Trust pursuant to the Indenture.
"Noteholders" mean the holders of the Notes issued pursuant to the
Indenture.
"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 BVAC, the Seller 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 BVAC, the Seller 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 Seller and/or Servicer, which counsel shall be acceptable to the Owner
Trustee.
"Optional Disposition Price" means the amount specified as such in Section
16.02.
"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.
"Owner Trustee" means ________________________, a banking corporation
organized under the laws of the State of Delaware 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.
"Owner Trustee's Certificate" means a certificate completed and executed by
the Owner Trustee by a Responsible Officer pursuant to Section 15.02,
substantially in the form of, in the case of an assignment to BVAC, Exhibit 1,
and in the case of an assignment to the Servicer, Exhibit 2.
"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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"Payment Date" means, for each Collection Period, the fifteenth calendar
day of the month or, if such day is not a Business Day, the first Business Day
thereafter. The first Payment Date shall be , .
"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.
"Policy" means the irrevocable Financial Guaranty Insurance Policy dated as
of the Closing Date issued by the Insurer to the Indenture Trustee for the
benefit of the Noteholders as required under the Indenture.
"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
BVAC) 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 that is actually purchased or 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.
"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.
"Purchase Agreement" means the Purchase Agreement dated as of the date
hereof by and between the Seller and BVAC, as amended, supplemented or modified
from time to time pursuant to which the Seller purchases Receivables which have
been or shall be transferred to the Trust.
"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 by the Servicer
pursuant to Section 8.07 or repurchased by BVAC pursuant to Section 7.02 not
later than the respective dates required thereby.
"Rating Agency" means each of _________ and _________ and their successors
and assigns.
"Rating Agency Condition" has the meaning specified in the Indenture.
"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.
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"Receivables" or "Receivables Pool" means those Receivables conveyed to the
Trust by the Seller listed as of the Cutoff Date in Schedule A.
"Record Date" has the meaning specified in the Indenture.
"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.
"Responsible Officer" means, when used with respect to the Owner Trustee,
any officer within the Corporate Trust Office (or any successor group of the
Owner Trustee) including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Owner 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
Contract Rate.
"Secured Parties" means each of the Indenture Trustee, the Noteholders and
the Insurer pursuant to the Indenture.
"Seller" means Bay View Securitization Corporation, a Delaware corporation,
in its capacity as the seller of the Receivables under this Agreement, and each
successor to Bay View Securitization Corporation (in the same capacity) pursuant
to Section 12.03.
"Servicer" means Bay View Acceptance Corporation, a Nevada corporation, in
its capacity as the servicer of the Receivables and each successor to Bay View
Acceptance Corporation (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 the Indenture.
"Spread Account Surplus" means, on any Payment Date, the excess, if any, of
the Available Spread Amount on such Payment Date, after giving effect to
deposits into and withdrawals from the Spread Account pursuant to Article IX of
the Indenture on such Payment Date, over the Required Spread Amount on such
Payment Date (after giving effect to any payments of Monthly Principal and
Monthly Interest and all amounts owing to the Insurer on such Payment Date
pursuant to the Indenture).
"State" means (i) any state of the United States of America or (ii) the
District of Columbia.
"Stated Final Payment Date" means ____________________.
"Trigger Event" means any of the events identified as such in Section 6.01
of the Insurance Agreement.
"Trust" means the Delaware business 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
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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 Collection 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 Seller in proceeds from
claims or refunds of premiums on any physical damage, lender's single interest,
credit life, disability, and hospitalization insurance policies covering
Financed Vehicles or Obligors; the interest of the Seller 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
Seller under the Purchase Agreement, including, without limitation, Section 3.04
thereof.
"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
Closing 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 Owner Trustee's delivery to the Seller of the
Certificates and the proceeds to be realized by the Trust from the issuance of
the Notes pursuant to the Indenture, the Seller does hereby sell, transfer,
assign, and otherwise convey to the Owner Trustee, in trust without recourse
(subject to the obligations herein):
(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 single interest, credit life,
disability and hospitalization insurance policies covering Financed Vehicles or
Obligors;
(iv) funds deposited in the Collection Account;
(v) the interest of the Seller 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, as
of and after the Cutoff Date, with respect to the Receivables held by the
Servicer or Seller (but excluding Accrued Interest paid on or prior to the
Closing Date);
(viii) the rights of the Seller pursuant to the Purchase Agreement to
require BVAC to repurchase any Receivables as to which there has been a breach
of the representations and warranties contained therein;
(ix) the benefits of the Policy; and
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(x) all proceeds of the foregoing.
The Seller does hereby further assign, convey, pledge and grant a security
interest in (i) any and all other right, title and interest, including any
beneficial interest the Seller may have in the Collection Account, the Spread
Account and the funds deposited therein, and (ii) any proceeds of any of the
foregoing, to the Owner Trustee and for the benefit of the Noteholders to secure
amounts payable to Noteholders as provided under this Agreement. The Seller
acknowledges that all of the foregoing shall constitute the "Pledged Assets"
pursuant to the terms of the Indenture and the Seller hereby consents to the
pledge of all of such assets to the Indenture Trustee for the benefit of the
Secured Parties pursuant to the Indenture.
The Seller does not convey to the Owner 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 Owner Trustee does hereby accept all consideration conveyed by the
Seller pursuant to Article III, and declares that the Owner 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 Agreement.
ARTICLE V
Information Delivered to the Rating Agencies
(a) The Servicer hereby expresses its intention to deliver promptly to
each Rating Agency (i) a copy of each Servicer's Certificate that it delivers to
the Owner Trustee, the Indenture Trustee and the Insurer 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 Indenture Trustee or the Owner Trustee
pursuant to Section 8.10, (iii) delinquency and loss information for the
Receivables, the amount of any draws on the Policy, written notice of any
merger, consolidation, or other succession of the Servicer, pursuant to Section
13.03, or the Seller, pursuant to Section 12.03, (iv) a copy of each amendment
to this Agreement and (v) any Opinion of Counsel delivered to the Owner Trustee
pursuant to Section 17.02(i).
(b) The Owner Trustee hereby expresses its intention to deliver promptly
to each Rating Agency (i) a copy of each annual certified public accountant's
report received by the Owner Trustee pursuant to Section 8.11, (ii) a copy of
each amendment to this Agreement and (iii) 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 V, the addresses for the Rating Agencies are:
(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 Owner 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.
ARTICLE VI
Agent for Service
The agent for service for the Seller shall be ___________, Vice President
of the Seller. Any and all service on the agent for service of the Seller shall
be sent to Bay View Securitization Corporation, 2121 South El Camino Real, San
Mateo, California 94403 or such other address as the Seller shall provide notice
thereof pursuant to Sections 17.02(c) or 17.05.
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The agent for service for the Servicer shall be __________, Vice President
of the Servicer. Any and all service on the agent for service of the Servicer
shall be sent to Bay View Acceptance Corporation, 818 Oakpark Drive, Covina,
California 91724.
ARTICLE VII
The Receivables
SECTION 7.01. Representations and Warranties of Seller. Pursuant to Article
III, the Seller has assigned to the Trust the benefit of, and its rights
respecting, the representations and warranties made to the Seller in the
Purchase Agreement as to the Receivables on which the Owner Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates and executing and delivering the Indenture. The Seller agrees that
the representations shall also be for the benefit of the Secured Parties. 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 Owner Trustee.
(a) The Seller hereby represents and warrants to the Owner Trustee that
it has entered into the Purchase Agreement with BVAC, that BVAC has made the
representations and warranties set forth therein, that such representations and
warranties run to and are for the benefit of the Seller, and that pursuant to
Article III of this Agreement the Seller has transferred and assigned to the
Owner Trustee all rights of the Seller to cause BVAC 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 Seller that the transfer and assignment
herein contemplated, taken as a whole, constitute a sale of the Receivables from
the Seller 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 Seller. No Receivable has been sold,
transferred, assigned, or pledged by the Seller to any Person other than the
Owner Trustee. 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 Owner
Trustee (for the benefit of the Certificateholders and the Secured Parties
pursuant to the Indenture) 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 Insurer; 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 Owner Trustee a first perfected ownership interest in the Receivables
shall have been made.
SECTION 7.02. Repurchase Upon Breach. The Seller, BVAC, the Servicer, or
the Owner Trustee, as the case may be, shall inform the Indenture Trustee, the
Insurer 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
Owner Trustee to actively seek to discover any such breaches. Unless the breach
shall have been cured by the second Record Date following the discovery, BVAC,
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 BVAC's option, the first Record Date following the discovery). In
consideration of the purchase of the Receivable, BVAC shall remit the Purchase
Amount, in the manner specified in Section 9.03. The sole remedy of the Owner
Trustee, the Trust, or the Indenture Trustee with respect to a breach of the
representations and warranties referred to in Section 7.01 shall be to require
BVAC 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 Owner 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 Indenture Trustee, to act as the agent of the Owner Trustee as
custodian of the following documents or instruments which are hereby
constructively delivered to the Owner Trustee with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the Obligor.
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(iii) The original certificate of title or such documents that the
Seller or Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of the Seller in the Financed
Vehicle.
(iv) Any and all other documents that the Servicer or the Seller
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 Owner Trustee for the use and
benefit of all present and future Owner Trustees, and maintain such accurate and
complete accounts, records, and computer systems pertaining to each Receivable
File as shall enable the Owner 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 automotive
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 Owner Trustee to verify the
accuracy of the Servicer's record keeping. The Servicer shall promptly report to
the Owner Trustee and the Indenture 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 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 Owner
Trustee and the Indenture Trustee by prior written notice. The Servicer shall
make available to the Owner Trustee and the Indenture Trustee and their 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 Owner Trustee
shall instruct.
(c) Release of Documents. Upon instruction from the Owner
Trustee, the Servicer shall release any document in a Receivable File to the
Owner Trustee, the Owner Trustee's agent, or the Owner Trustee's designee, as
the case may be, at such place or places as the Owner 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
Owner Trustee.
SECTION 7.06. Custodian's Indemnification. The Servicer, shall
indemnify the Trust, the Owner Trustee and the Indenture Trustee (which shall
include, for purposes of this Section 7.06, their 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, the Owner Trustee or the Indenture
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
Owner Trustee or the Indenture Trustee. This indemnity shall survive the
termination of this Agreement and the resignation or removal of the Owner
Trustee or the Indenture 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 by the Owner Trustee with the consent of the
Indenture Trustee and the Insurer (so long as the Insurer is not in default of
its obligations under the Policy). In addition, the Owner Trustee may terminate
the Servicer's appointment as custodian with cause at any time upon written
notification to the Servicer and the Indenture Trustee. As soon as practicable
after any termination of such appointment, the Servicer shall
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deliver the Receivable Files to the Owner Trustee or the Owner Trustee's agent
at such place or places as the Owner Trustee, with the consent of the Insurer
and the Indenture Trustee, may reasonably designate.
ARTICLE VIII
Administration and Servicing of Receivables
SECTION 8.01 Duties of Servicer. The Servicer, for the benefit of the
Trust and the Secured Parties, 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
automotive 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 of Obligors or of federal,
state or local governmental authorities with respect to the Receivables,
investigating delinquencies, sending payment coupons to Obligors, accounting for
collections, and furnishing monthly and annual statements to the Owner Trustee
and the Indenture 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 Owner Trustee to execute and
deliver, on behalf of itself, the Trust, the Owner Trustee, the Indenture
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 Owner Trustee and the Indenture
Trustee shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection, such Receivable to the Servicer. The Owner Trustee and
the Indenture Trustee shall execute any documents prepared by the Servicer and
delivered to the Owner 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
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 Payment 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 Payment 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.
(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 the amount of interest accrued on such Receivable to the date of receipt;
second, to principal due on such Receivable; third, to late charges, if any,
accrued on such Receivable; and last, to reduce the remaining principal amount
outstanding on such Receivable. Payments made by or on behalf of an Obligor
including any Payaheads previously made and added to the Payahead Balance 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 such 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 8.03 Realization Upon Receivables. (a) On behalf of the Trust
and the Secured Parties 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
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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. After appropriate disposition of the Financed Vehicle, the
Servicer shall also take such measures as it deems reasonable and appropriate to
realize value in respect of any deficiency balance of the Receivable including
pursuit of action on behalf of the Trust and/or the Secured Parties against the
Obligor or public or private sale of the remaining interest of the Trust and/or
the Secured Parties in such Receivable.
(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 final scheduled
Payment 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
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 Owner Trustee and the Indenture
Trustee hereby authorize 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. Without limiting the
forgoing, in the event that the Servicer consigns a repossessed Financed Vehicle
to an affiliate for liquidation, it shall take such measures as are necessary or
appropriate to maintain the security interest in the Financed Vehicle in the
hands of the consignee until such Financed Vehicle is liquidated, including
appropriate precautionary UCC-1 filings. In addition, BVAC and/or such affiliate
will notify the creditors, if any, of such affiliate that have entered into a
consignment arrangement on or before such arrangements are made.
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 or the Secured Parties 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 Contract Rate of a
Receivable (except if so ordered by a bankruptcy court in a proceeding
concerning the Obligor or otherwise mandated by law).
SECTION 8.07 Purchase of Receivables Upon Breach. The Servicer or the Owner
Trustee shall inform the other party and the Insurer promptly, in writing, upon
the discovery of (i) any breach by the Servicer of its obligations under Section
8.06 or (ii) the existence of the Servicer's obligation to purchase a Receivable
pursuant to Section 8.02(a). This obligation shall not constitute an obligation
on the part of the Owner Trustee to discover any such breaches or circumstances.
Unless the breach under Section 8.06 shall have been cured by the second Record
Date following the discovery, 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 first Record Date following the discovery). 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 Owner Trustee, the Trust, or the Secured
Parties with respect to a breach pursuant to Section 8.06 or the grant of an
extension which triggers an obligation of the Servicer under Section 8.02(a)
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
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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
Collection Account. The Servicer shall also be entitled to retain, and need not
deposit in the Collection 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 Owner Trustee's own funds. So long as Bay View Acceptance Corporation
is the Servicer, if the Servicer fails to pay the fees and expenses of the Owner
Trustee or the Indenture Trustee pursuant to Section 15.07 hereof or the
Indenture, the Owner Trustee and Indenture 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 Owner Trustee and Indenture
Trustee that are due and payable and any unpaid amount that the Servicer has
received notice is due the Owner 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 Owner
Trustee, the Indenture Trustee and the Insurer 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 of the Indenture
(so long as the Notes remain outstanding) for the Collection Period preceding
the date of such Servicer's Certificate and all information necessary for the
Indenture Trustee to send statements to the Noteholders, including (A) the
amount of aggregate collections on the Receivables, (B) the aggregate Purchase
Amount of the Receivables repurchased by BVAC 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 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) the amount, if any, to be withdrawn from
the Spread Account and the amount, if any, to be drawn on the Policy, (E)
information respecting (i) delinquent Receivables that are 30, 60 and 90 days
past due, and (ii) 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 (F) each other item listed in Section 9.04 of the Indenture
reasonably requested by a Rating Agency, the Indenture Trustee or the Insurer in
order to monitor the performance of the Receivables. Receivables purchased by
BVAC as of the last day of such Collection Period shall be identified by the
BVAC 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 Owner Trustee, the Indenture Trustee and the
Insurer, 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 Owner Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Owner
Trustee, the Indenture Trustee and the Insurer, 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 Seller or BVAC shall deliver to a Responsible Officer of the Owner
Trustee, the Indenture Trustee and the Insurer, 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.
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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 Owner Trustee, the
Indenture Trustee and the Insurer on or before September 30 of each year
concerning the 12-month period ended June 30 of such year (or shorter period
since the date of this Agreement), beginning on the first September 30 following
the first June 30 after the Closing Date, a report addressed to the Board of
Directors of the Servicer 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, van, light-duty truck, recreational
vehicle or motorcycle 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, light-duty truck, recreational vehicle or motorcycle 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 8.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Owner Trustee, Indenture Trustee
and the Insurer access to the Receivables Files in such cases where such parties
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 independent accountants, taxes imposed on the
Servicer, and expenses incurred in connection with regular payments and reports
to Noteholders.
SECTION 8.14. Reports to Noteholders. The Owner Trustee shall provide to
any Noteholder who so requests in writing (addressed to the Corporate Trust
Office) a copy of any certificate described in Section 8.09, the annual
statement described in Section 8.10, or the annual report described in Section
8.11. The Owner Trustee may require the requesting party to pay a reasonable sum
to cover the cost of the Owner Trustee's complying with such request.
ARTICLE IX
Collections; Distributions to Noteholders and Certificateholders
SECTION 9.01. Collection Account. The Seller shall establish the Collection
Account with an Eligible Bank as a segregated trust account in the name of the
Trust for the benefit of the Secured Parties with the Indenture Trustee (at the
Indenture Trustee Office) or another Eligible Bank. The Servicer shall direct
the Indenture Trustee to invest the amounts in the Collection Account in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Payment Date and to hold such Eligible Investments to maturity.
The Indenture 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 Indenture
Trustee or registered in the name of the Owner Trustee and (ii) cause any
Eligible Investment represented by an uncertificated security to be registered
in the name of the Indenture Trustee.
SECTION 9.02. Collections. (a) The Servicer shall remit to the Collection
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) BVAC remains the
Servicer, (b) no Event of Default shall have occurred and be continuing and
(c)(1) BVAC maintains a short-term
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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) and the prior written consent of the Insurer (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 Collection Account on a less frequent basis, but in no event later than
the Determination Date immediately preceding each Payment Date. The Servicer
shall remit any Advances with respect to a Collection Period to the Collection
Account on or before the Determination Date.
(b) The Servicer, the Owner Trustee and/or Indenture Trustee shall
deposit in the Collection Account any funds received by such parties in respect
of funds drawn under the Policy from the Insurer.
(c) If the Available Funds for a Payment Date are insufficient to pay
current and past due Insurance Premiums, or any amounts owing to the Insurer
pursuant to the Insurance Agreement including, without limitation,
reimbursements, indemnities, fees and expenses, plus accrued interest thereon,
to the Insurer, the Servicer shall notify the Owner Trustee and the Indenture
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
Servicer or BVAC shall remit to the Collection Account the aggregate Purchase
Amount for such Collection Period pursuant to Sections 7.02 and 8.07.
SECTION 9.04. Application of Funds. (a) On each Determination Date, the
Servicer shall determine (i) 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 Collection Account (net of amounts required to be paid pursuant
to Section 9.04(d) of the Indenture and excluding 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 Collection Account to the Payahead Account or from
the Payahead Account to the Collection Account as provided in Section 9.09, (the
"Available Funds"), and (ii) the amount of funds necessary to make the
distributions required pursuant to Section 9.04(a) of the Indenture, inclusive,
on the next Payment Date. The Servicer shall by a Servicer's Certificate on or
before the Determination Date notify the Owner Trustee and the Indenture Trustee
of such amounts by telecopy to the Corporate Trust Office and the Indenture
Trustee Office or to such numbers as the Owner Trustee or Indenture Trustee may
from time to time provide, followed promptly by mailing such notice to the Owner
Trustee and the Indenture Trustee and to the Insurer.
(b) On any Payment Date on which there are not sufficient Available
Funds to make the distributions required pursuant to Section 9.04(a) of the
Indenture, the Indenture 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 Collection
Account. If such deficiency exceeds the Available Spread Amount, the Servicer
shall simultaneously and in the same manner also notify the Owner Trustee, the
Indenture Trustee and the Insurer of the amount of such excess deficiency.
(c) On each Payment Date, the Owner Trustee shall distribute to each
Certificateholder such Certificateholder's interest and principal, if any, for
such Distribution Date, as received from the Indenture Trustee pursuant to
Section 9.04 of the Indenture on such Distribution Date.
(d) On each Payment Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Servicer
pursuant to Section 9.04 of this Agreement on such Distribution Date.
(e) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section 9.04. The Owner Trustee is hereby authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by
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the Trust (but such authorization shall not prevent the Owner Trustee from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust to be remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Certificateholder), the Owner
Trustee in its sole discretion may (but unless otherwise required by law shall
not be obligated to) withhold such amounts in accordance with this paragraph.
(e). In the event that a Certificateholder wishes to apply for a refund of any
such withholding tax, the Owner Trustee shall reasonably cooperate with such
Certificateholder in making such claim so long as such Certificateholder agrees
to reimburse the Owner Trustee for any out-of-pocket expenses incurred.
(f) Subject to Section 16.01, distributions required to be made to
Certificateholders on any Payment Date shall be made to each Certificateholder
of record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, or by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register.
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
subsequent 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 Collection 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 Bay View Acceptance Corporation
is the Servicer, Bay View Acceptance Corporation (in whatever capacity) may make
the remittances with respect to any Payment 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), if it determines pursuant to Section 9.02 that
there is no deficiency in Available Funds for such Payment Date. Nonetheless,
the Servicer shall account for all of the above described amounts as if such
amounts were deposited and distributed.
SECTION 9.07. No Segregation of Moneys; No Interest. Subject to Section
9.04, moneys received by the Owner Trustee hereunder need not be segregated in
any manner except to the extent required by law or this Agreement and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
SECTION 9.08. Accounting and Reports to the Certificateholder, the Internal
Revenue Service and Others. The Owner Trustee shall deliver to the
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, or as may be requested by such Certificateholder, such information,
reports or statements as may be necessary to enable each Owner to prepare its
federal and state income tax returns. Consistent with the Trust's
characterization for tax purposes as a security arrangement for the issuance of
non-recourse debt so long as the Seller or any other Person is the sole
beneficiary owner of the Trust, no federal income tax return shall be filed on
behalf of the Trust unless either (i) the Owner Trustee shall receive an Opinion
of Counsel that, based on a change in applicable law occurring after the date
hereof, or as a result of a transfer by the Company permitted by Section
11.03, the Code requires such a filing or (ii) the Internal Revenue Service
shall determine that the Trust is required to file such a return. In the event
that there shall be two or more beneficial owners of the Trust, the Owner
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Trustee shall inform the Indenture Trustee in writing of such event, (x) the
Owner Trustee shall prepare or shall cause to be prepared federal and, if
applicable, state or local partnership tax returns required to be filed by the
Trust and shall remit such returns to the Seller (or if the Seller no longer
owns the Certificate, to the Seller to the extent its tax liability is affected
thereby and otherwise to the successor Certificateholder) at least (5) days
before such returns are due to be filed, and (y) capital accounts shall be
maintained for each beneficial owner in accordance with the Treasury Regulations
under Section 704(b) of the Code reflecting each such beneficial owner's share
of the income, gains, deductions, and losses of the Trust and/or guaranteed
payments made by the Trust and contributions to, and distributions from, the
Trust. The Seller (or such successor Certificateholder, as applicable) shall
promptly sign such returns and deliver such returns after signature to the Owner
Trustee and such returns shall be filed by the Owner Trustee with the
appropriate tax authorities. In the event that a "tax matters partner" (within
the meaning of Code Section 6231(a)(7)) is required to be appointed with respect
to the Trust, the Seller is hereby designated as tax matters partner or, if the
Seller is not the Certificateholder, the Seller to the extent its tax liability
is affected thereby and otherwise the successor Certificateholder, shall be
designated as tax matters partner. In no event shall the Owner Trustee or the
Seller (or such designee Certificateholder, as applicable) be liable for any
liabilities, costs or expenses of the Trust or the Noteholders arising out of
the application of any tax law, including federal, state, foreign or local
income or excise taxes or any other tax imposed on or measured by income (or any
interest, penalty or addition with respect thereto or arising from a failure to
comply therewith) except for any such liability, cost or expense attributable to
any act or omission by the Owner Trustee or the Seller (or such designee
Certificateholder as applicable), as the case may be, in breach of its
obligations under this Agreement.
SECTION 9.09. Payahead Account. The Servicer shall establish the Payahead
Account in the name of the Trust on behalf of the Obligors and the Secured
Parties as their interests may appear. The Payahead Account shall be a
segregated interest bearing trust account established with the Indenture Trustee
or another 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 Payment 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 Payment Date, the Servicer shall
transfer or the Indenture 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 and
previously deposited to the Collection Account during the Collection Period
described in Section 8.02(b); 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 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 Collection 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 Collection
Account from the Payahead Account pursuant to Section 9.09(b) shall be included
in Available Funds under Section 9.02.
ARTICLE X
Intentionally Blank
ARTICLE XI
The Certificates
SECTION 11.01. The Certificates. The Certificates shall be issued in the
form of one or more certificates and shall initially be issued to the Seller.
The Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Responsible Officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of 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 Owner Trustee shall
cause the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Seller, signed by its
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chairman of the board, its president, or any vice president, without further
corporate action by the Seller, 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 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 Owner 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
Owner Trustee shall keep or cause to be kept, at the Corporate Trust Office, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of Certificates
and of transfers and exchanges of Certificates subject to the restrictions
provided herein.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Owner 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 Owner Trustee, provided, however, that
registration of transfer of the Certificates may not be effected unless (A) the
Owner 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
Notes; (B) the Insurer has consented to such transfer and (C) the Rating Agency
Condition shall have been satisfied with respect to such transfer.
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 Owner Trustee duly executed by the Holder or his attorney
duly authorized in writing. Each Certificate surrendered for registration of
transfer and exchange shall be canceled and subsequently destroyed by the Owner
Trustee.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner 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 Owner Trustee, or if the
Owner Trustee shall receive evidence to its satisfaction of the destruction,
loss, or theft of any Certificate and (b) there shall be delivered to the Owner
Trustee such security or indemnity as may be required by it to save it harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute
and the Owner 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 Owner Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 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. Agreement Regarding Tax Matters. The Owner Trustee, the
Seller as initial Certificateholder and each successor Certificateholder (as a
condition to acquiring its Certificate) agree to disregard the Trust as a
separate entity and to treat the Notes as indebtedness for federal, state and
local income and franchise tax purposes.
SECTION 11.06. Signature on Returns; Tax Matters Partner. (a) The Seller
shall sign on behalf of the Trust the tax returns of the Trust.
(b) If Subchapter K of the Code should be applicable to the Trust, the
Seller shall be designated the "tax matters partner" of the Trust pursuant to
Section 6231(a)(7)(A) of the Code and applicable Treasury Regulations.
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ARTICLE XII
The Seller
SECTION 12.01. Representations and Undertakings of Seller. (a) The Seller
makes the following representations on which the Owner Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates and undertaking its obligations under the Indenture. The Seller
agrees that the representations shall also be for the benefit of the Secured
Parties. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale of the Receivables to the Owner Trustee.
(i) Organization and Good Standing. The Seller 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 Seller 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.
(iii) Power and Authority. The Seller shall have the power and
authority to execute and deliver this Agreement and to carry out its terms; the
Seller shall have full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Owner Trustee as part of the Trust
and shall have duly authorized such sale and assignment to the Owner Trustee by
all necessary corporate action; and the execution, delivery, and performance of
the Agreement shall have been duly authorized by the Seller 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 Seller; and shall evidence a legal,
valid, and binding obligation of the Seller enforceable in accordance with its
terms.
(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
charter or by-laws of the Seller, or any indenture, agreement, or other
instrument to which the Seller 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 Seller's
knowledge, any order, rule, or regulation applicable to the Seller of any court
or of any federal or State regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Seller or its
properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or, to the Seller's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Seller or its properties: (A) asserting the
invalidity of this Agreement, (B) seeking to prevent 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
Seller of its obligations under, or the validity or enforceability of, this
Agreement, or (D) which might adversely affect the federal income tax attributes
of the Trust.
(b) The Seller 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 Insurer on or prior to the Closing Date,
and will not amend its Certificate of Incorporation without the prior
written consent of the Insurer.
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(ii) It will not, without the consent of the Insurer (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 Certificates.
(iii) It will not:
(A) Fail to do all things necessary to maintain its corporate
existence separate and apart from BVAC 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 Seller under the Seller'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 are made, pay its employees, officers and agents
for services performed for the Seller or (VI) maintain a separate
office address with a separate telephone number from those of BVAC
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 Seller has
similar rights and/or obligations, commingle its funds with those
of BVAC or any affiliate thereof or use its funds for other than
the Seller's uses.
SECTION 12.02. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(i) The Seller shall indemnify, defend, and hold harmless the Owner
Trustee, the Indenture Trustee, their respective officers, directors, employees
and agents, the Trust and the Noteholders from and against any taxes that may at
any time be asserted against such parties with respect to, and as of the date
of, the sale of the Receivables to the Owner Trustee or the issuance and
original sale of the Certificates and the Notes, 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 or the Notes) and
costs and expenses in defending against the same.
(ii) The Seller shall indemnify, defend, and hold harmless the Owner
Trustee, its officers, directors, employees and agents and the Trust from and
against any loss, liability, or expense incurred by reason of (a) the Seller's
willful misfeasance, bad faith, or negligence in the performance of its duties
under this Agreement, or by reason of reckless disregard of its obligations and
duties under this Agreement and (b) the Seller'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 counsel and expenses of litigation. If the
Seller shall have made any indemnity payments to the Owner Trustee or the Trust
pursuant to this Section and the Owner Trustee or the Trust thereafter shall
collect any of such amounts from others, the Owner Trustee or the Trust, as the
case may be, shall repay such amounts to the Seller, without interest. This
indemnification shall survive the termination of this Agreement and the
resignation or removal of the Owner Trustee.
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SECTION 12.03. Merger or Consolidation of, or Assumption of the Obligations
of Seller. Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party, or (c) which may succeed to all or substantially all of the
properties and assets of the Seller's business, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under this Agreement, shall be the successor to the Seller
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 Event of
Default shall have happened and be continuing, (ii) the Seller shall have
delivered to the Owner 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 Seller 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
Owner Trustee and the Indenture 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 Seller 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 Insurer, not to be
unreasonably withheld.
SECTION 12.04. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute,
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
ARTICLE XIII
The Servicer
SECTION 13.01. Representations of Servicer. The Servicer makes the
following representations on which the Owner Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates and
executing and delivering the Indenture. The Servicer agrees that the
representations shall also be for the benefit of the Secured Parties. The
representations speak as of the execution and delivery of this Agreement and
shall survive the sale of the Receivables to the Owner Trustee and the pledge to
the Secured Parties pursuant to the Indenture.
(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 Indiana, 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 Owner 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.
(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
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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 charter 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, (B) seeking to prevent 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 (D)
which might adversely affect the federal income tax attributes of the Trust.
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.
(i) The Servicer shall defend, indemnify, and hold harmless the Owner
Trustee, the Indenture Trustee, and their officers, directors, employees and
agents, the Trust, the Certificateholders and the Noteholders 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 Owner
Trustee, the Indenture Trustee, their officers, directors, employees and agents
and the Trust from and against any taxes that may at any time be asserted
against such parties 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, the Notes, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising out of
distributions on the Certificates or the Notes) and costs and expenses in
defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless the Owner
Trustee, the Indenture Trustee, the Insurer, their officers, directors,
employees and agents, and the Trust, the Certificateholders and the Noteholders
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 such parties 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
Owner Trustee.
(iv) The Servicer shall indemnify, defend, and hold harmless the Owner
Trustee, the Indenture Trustee, their respective 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 Owner Trustee
or the Indenture Trustee; (b) relates to any tax other than the taxes with
respect to which either the Seller or Servicer shall be required to indemnify
the Owner Trustee or the Indenture Trustee; (c) shall arise from the breach of
any of representations or warranties of the Owner Trustee set forth in Section
15.13 or by the Indenture Trustee set forth in Section 15.13 of the Indenture;
(d) shall be one as to which the Seller is required to indemnify the Owner
Trustee or
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the Indenture Trustee; or (e) shall arise out of or be incurred in connection
with the acceptance or performance by the Owner Trustee of the duties of
successor Servicer.
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, or (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, 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 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 Owner 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 Owner Trustee and the Secured Parties 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 Insurer, 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, the Indenture Trustee, the
Certificateholders or the Noteholders, 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 Owner Trustee, the Indenture Trustee
and the Insurer. Any determination described above permitting the resignation of
the Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Owner Trustee. No such resignation shall become effective until
the Owner 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 Seller 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
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Servicer) in accordance with the customary procedures of the Servicer. In
connection with such delegation, the Servicer or the Seller 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 Seller or the Servicer
hereunder. Any such delegation shall not relieve the Servicer or the Seller 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 Agencies, the Owner Trustee, the
Indenture Trustee and the Insurer of any such delegation.
ARTICLE XIV
Servicer Default
SECTION 14.01. Events of Servicer Default. If any one of the following
events ("Events of Servicer Default") shall occur and be continuing:
(i) Any failure by the Servicer or BVAC to deliver to the Collection
Account (or to the Indenture Trustee for distribution to the Noteholders) any
proceeds or payment required to be so delivered under the terms of the
Indenture, 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 Owner Trustee, the Indenture Trustee or the
Insurer (so long as the Insurer is not in default of its obligations under the
Policy) or by the holders of Notes evidencing not less than 25% of the aggregate
outstanding balance of the Notes is received by the Servicer or BVAC 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 Seller or BVAC duly to
observe or to perform in any material respect any other covenants or agreements
of the Servicer, the Seller or BVAC, as the case may be, set forth in this
Agreement or the Purchase Agreement, which failure shall (a) materially and
adversely affect the rights of Certificateholders or the Secured Parties 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
to the Servicer, BVAC or the Seller, as the case may be, by the Owner Trustee,
the Indenture Trustee or the Insurer (so long as the Insurer is not in default
of its obligations under the Policy) or by the holders of Notes evidencing not
less than 25% of the aggregate outstanding balance of the Notes; 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, the Insurer (so long as the Insurer is not in default of its
obligations under the Policy), or the Indenture Trustee (upon direction to do so
by the holders of Notes evidencing not less than 25% of the outstanding
principal balance of the Notes if the Insurer is in default under the Policy),
by notice then given in writing to the Servicer may, 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 Insurer
may (A) require that the Owner Trustee deliver a notice of termination to the
Servicer and appoint a successor Servicer designated by the Insurer in such
notice pursuant to Section 14.02; (B) require that the Owner Trustee amend
certificates of title relating to the Financed Vehicles and take other actions
to identify the Indenture Trustee (on behalf of the Secured Parties) 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 Owner Trustee
instruct Obligors in respect of the Receivables to remit payment on the
Receivable directly to the Owner 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 Insurer or to the
successor Servicer designated by the Insurer. 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, the Notes or the
Receivables or otherwise, shall, without further action, pass to and be vested
in the Owner Trustee (except that the Owner Trustee may but shall not be
required to make Advances) or such successor Servicer as may be appointed under
Section 14.02 pursuant to and under this Section 14.01; and, without limitation,
the Owner 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,
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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 Owner Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer 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 Owner Trustee and the Indenture 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 Indenture Trustee shall
appoint a successor Servicer, which successor Servicer shall be reasonably
acceptable to the Insurer (so long as the Insurer is not in default of its
obligations under the Policy), and the successor Servicer shall accept its
appointment by a written assumption in form acceptable to the Owner Trustee and
the Indenture 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 Indenture Trustee without
further action shall automatically be appointed the successor Servicer.
Notwithstanding the above, the Indenture 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 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
Owner Trustee, reasonably acceptable to the Insurer and the Indenture 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 Monthly
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 Owner Trustee may make
such arrangements for the 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 Owner 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. Notice of Events of Servicer Default. Upon any notice of an
Event of Servicer Default or upon any termination of, or appointment of a
successor to, the Servicer pursuant to this Article XIV, the Owner Trustee shall
give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Indenture Trustee for
further notice thereof to the Noteholders.
SECTION 14.04. Waiver of Past Defaults. The Insurer (so long as the Insurer
is not in default of its obligations under the Policy) or the Indenture Trustee
(if the Insurer is in default under the Policy) upon direction from holders of
Notes evidencing not less than 51% of the outstanding principal balance of the
Notes may 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 Collection Account in accordance with
this Agreement; provided, that no waiver of any default or provision of this
Agreement shall become effective without the consent of
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the Insurer (unless the Insurer is in default of its obligations under the
Policy). 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.
ARTICLE XV
The Owner Trustee
SECTION 15.01. Duties of Owner Trustee. The Owner 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 Owner Trustee has
received notice of such Event of Default, the Owner 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 person would exercise
or use under the circumstances in the conduct of his own affairs; provided,
however, that if the Owner Trustee shall assume the duties of the Servicer
pursuant to Section 14.02, the Owner Trustee in performing such duties shall use
the degree of skill and attention customarily exercised by a servicer with
respect to automobile receivables that it services for itself or others.
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged) all its responsibilities pursuant to the terms of this Agreement and
the other documents to which the Trust is a party and to administer the Trust in
the interest of the Certificateholders, subject to and in accordance with the
provisions of this Agreement and the other documents to which the Trust is a
party. Without limiting the foregoing, the Owner Trustee shall on behalf of the
Trust file and prove any claim or claims that may exist on behalf of the Trust
against the Seller in connection with any claims paying procedure as part of an
insolvency or a receivership proceeding involving the Seller. Notwithstanding
the foregoing, the Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the other documents to which the Trust
is a party to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any other document to which the Trust is a party, and the
Owner Trustee shall not be held liable for the default or failure of the
Administrator to carry out its obligations under the Administration Agreement.
Except as expressly provided in the documents to which the Trust is a party, the
Owner Trustee shall have no obligation to administer, service or collect the
Receivables or to maintain, monitor or otherwise supervise the administration,
servicing or collection of the Receivables.
The Owner Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Owner 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 Owner
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 Servicer Default that may have occurred, the duties
and obligations of the Owner Trustee shall be determined solely by the express
provisions of this Agreement, the Owner 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 Owner Trustee and, in the absence of bad faith on the
part of the Owner Trustee, or manifest error, the Owner 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 Owner Trustee and
conforming to the requirements of this Agreement;
(ii) The Owner 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
Owner Trustee shall have been negligent in ascertaining the pertinent facts;
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(iii) The Owner 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 Certificates relating to the time, method,
and place of conducting any proceeding for any remedy available to the Owner
Trustee, or exercising any trust or power conferred upon the Owner Trustee,
under this Agreement;
(iv) The Owner 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 Seller to
comply with the obligations of the Seller referred to in clause (ii) of Section
14.01, unless a Responsible Officer of the Owner 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 Owner Trustee, is not
attributable to the Owner Trustee) from the Servicer or the Seller, as the case
may be; and
(v) Without limiting the generality of this Section or Section 15.04,
the Owner 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 Owner Trustee pursuant to this Agreement believed by the Owner
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 Seller'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 Owner 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 Owner 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 Owner 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 Owner 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. Owner Trustee's Certificate. On or as soon as practicable
after each Payment Date on which Receivables shall be (i) assigned to BVAC
pursuant to Section 7.02 or deemed to be assigned to the Seller as a result of
the application of Available Funds in respect of Defaulted Receivables pursuant
to Sections 9.04 and 9.05 or (ii) assigned to the Servicer pursuant to Section
8.07 or to the Certificateholder pursuant to Section 16.02, the Owner Trustee
shall, at the written request of the Servicer, execute a Owner Trustee's
Certificate, substantially in the form of, in the case of an assignment to BVAC,
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 Collection Account, and notices
received pursuant to this Agreement, identifying the Receivables repurchased or
deemed to be repurchased by BVAC pursuant to Section 7.02 or 9.02 or purchased
by the Servicer pursuant to Section 8.07 or the Certificateholders pursuant to
Section 16.02 during such Collection Period, and shall deliver such Owner
Trustee's Certificate, accompanied by a copy of the Servicer's Certificate for
such Collection Period to BVAC or the Servicer, as the case may be. The Owner
Trustee's Certificate shall be an assignment pursuant to Section 15.03.
SECTION 15.03. Owner Trustee's Assignment of Purchased Receivables. With
respect to each Receivable repurchased by BVAC pursuant to Section 7.02, or
deemed to be so repurchased pursuant to Section 9.02, purchased by the Servicer
pursuant to Section 8.07 or the Certificateholders pursuant to Section 16.02,
the Owner 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 BVAC or purchase by the Servicer or the
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Certificateholders, without recourse, representation, or warranty, to BVAC, the
Servicer or the Certificateholders (as the case may be) all the Owner 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
Owner Trustee shall, at the Servicer's expense, take such steps as the Owner
Trustee deems necessary to enforce the Receivable, including bringing suit in
its name and/or the name of the Indenture Trustee.
SECTION 15.04. Certain Matters Affecting the Owner Trustee. Except as
otherwise provided in Section 15.01:
(i) The Owner 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 Owner 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 Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct,
or defend any litigation under this Agreement or 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 Owner Trustee reasonable security or indemnity reasonably
satisfactory to the Owner Trustee against the costs, expenses, and liabilities
that may be incurred therein or thereby. Nothing contained in this Agreement,
however, shall relieve the Owner 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 Owner 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.
(v) Prior to the occurrence of an Event of Default and after the curing
of all Events of Servicer Default that may have occurred, the Owner 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 the Indenture Trustee or holders of Notes
evidencing not less than 25% of the outstanding principal balance of the Notes;
provided, however, that if the payment within a reasonable time to the Owner
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 Owner Trustee,
not reasonably assured to the Owner Trustee by the security afforded to it by
the terms of this Agreement, the Owner 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 Owner 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 Owner 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 Owner 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 Seller to the
Owner Trustee, the Owner Trustee shall have no duty of independent inquiry,
except as may be required by Section 15.01, and the Owner Trustee may rely upon
the representations and warranties and covenants of the Seller and the Servicer
contained in this Agreement with respect to the Receivables and the Receivable
Files.
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SECTION 15.05. Owner 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 Seller or the Servicer, as the case may be, and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner 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 Owner
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 the Certificateholder or the Noteholders under
this Agreement or the Indenture, including, without limitation: the existence,
condition, location, and ownership of any Financed Vehicle; the existence and
enforceability of any physical damage insurance, lender's single interest
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 Seller 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 Owner 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 Owner Trustee shall remain responsible for any Trust property that it
may hold); the acts or omissions of the Seller, the Servicer, or any Obligor; an
action of the Servicer taken in the name of the Owner Trustee; or any action by
the Owner Trustee taken at the instruction of the Servicer; provided, however,
that the foregoing shall not relieve the Owner Trustee of its obligation to
perform its duties under this Agreement. Except with respect to a claim based on
the failure of the Owner Trustee to perform its duties under this Agreement or
based on the Owner Trustee's negligence or willful misconduct, no recourse shall
be had for any claim based on any provision of this Agreement, the
Certificateholder or the Noteholders, or any Receivable or assignment thereof
against the Owner Trustee in its individual capacity, the Owner Trustee shall
not have any personal obligation, liability, or duty whatsoever to any
Certificateholder or the Noteholders 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 Owner
Trustee shall not be accountable for the use or application by the Seller of any
of the Certificates or Notes or of the proceeds thereof, or for the use or
application of any funds paid to the Seller or the Servicer in respect of the
Receivables.
SECTION 15.06. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes with
the same rights as it would have if it were not Trustee.
SECTION 15.07. Owner Trustee's and Indenture Trustee's Fees and Expenses.
(a) The Servicer shall pay to the Owner Trustee, and the Owner 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 Owner Trustee's
powers and duties under this Agreement and the Indenture, and the Servicer shall
pay or reimburse the Owner 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 Owner Trustee in accordance with any
provisions of this Agreement and the Indenture, 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 Owner 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 and the Indenture. Additionally, the
Seller, pursuant to Section 12.02, and the Servicer, pursuant to Section 13.02,
respectively, shall indemnify the Owner Trustee with respect to certain matters.
This indemnity shall survive the termination of this Agreement and the Indenture
or the termination of the Trust and the resignation or removal of the Owner
Trustee.
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(b) The Servicer hereby agrees to pay or reimburse the fees and
expenses of the Indenture Trustee as provided in Section 15.07 of the Indenture.
SECTION 15.08. Eligibility Requirements for Owner Trustee. The Owner
Trustee under this Agreement shall at all times be a corporation (i) having an
office in the same State as the location of the Corporate Trust Office as
specified in this Agreement; (ii) organized and doing business under the laws of
such State or the United States of America; (iii) authorized under such laws to
exercise corporate trust powers; (iv) having a net worth of at least
$50,000,000; (v) subject to supervision or examination by federal or State
authorities; and (vi) the long-term unsecured debt of which is rated at least
____ or which is approved by the Insurer and 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 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 Owner Trustee shall cease to be eligible in accordance with the provisions
of this Section 15.08, the Owner Trustee shall resign immediately in the manner
and with the effect specified in Section 15.09.
SECTION 15.09. Resignation or Removal of Owner Trustee. The Owner 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 Insurer, shall
promptly appoint a successor Owner Trustee, by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner 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 Owner Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation, or
liquidation, then the Servicer may remove the Owner Trustee. If it shall remove
the Owner Trustee under the authority of the immediately preceding sentence, the
Servicer shall promptly appoint a successor Owner Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to the Owner
Trustee so removed and one copy to the successor Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 15.09
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 15.10.
SECTION 15.10. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 15.09 shall execute, acknowledge, and deliver to
the Servicer and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed, or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Trustee. The
predecessor Owner Trustee shall deliver to the successor Owner Trustee all
documents and statements held by it under this Agreement; and the Servicer and
the predecessor Owner Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Owner Trustee all such rights, powers, duties,
and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 15.10 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 15.08.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 15.10, the Servicer shall mail notice of the successor of such
Trustee under this Agreement to the Indenture Trustee and to all Holders of
Certificates at their addresses as shown in the Certificate Register. If the
Servicer shall fail to mail such notice
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within 10 days after acceptance of appointment by the successor Owner Trustee,
the successor Owner Trustee shall cause such notice to be mailed at the expense
of the Servicer.
SECTION 15.11. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion, or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner 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 Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any 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
Owner Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Owner Trustee to
act as co-trustee, jointly with the Owner 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 Owner 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 Owner 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 Owner 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 Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee under this Agreement or as successor to the
Servicer under this Agreement), the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties, and obligations (including the holding of title to 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 Owner Trustee;
(ii) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(iii) The Servicer and the Owner Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request, or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article 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 Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Servicer.
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Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall 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 Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor Owner Trustee.
SECTION 15.13. Representations and Warranties of Owner Trustee. The Owner
Trustee shall make the following representations and warranties on which the
Seller, the Certificateholders and the Noteholders may rely:
(i) Organization and Existence. The Owner Trustee is a Delaware banking
corporation duly organized and validly existing under the laws of the State of
Delaware and authorized to engage in a banking and trust business under such
laws.
(ii) Power and Authority. The Owner 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 Owner Trustee and shall constitute the legal, valid, and
binding agreement of the Owner 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 Owner 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 XVI
Termination
SECTION 16.01. Termination of the Trust. The respective obligations and
responsibilities of the Seller, the Servicer and the Owner 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 Certificateholder, at its option, pursuant to Section
16.02, or (ii) the payment to Noteholders and the Insurer of all amounts
required to be paid to them pursuant to this Agreement, the Indenture and the
Insurance Agreement (as set forth in writing by the Insurer) 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 Owner Trustee of any prospective termination pursuant to
this Section 16.01. Notwithstanding the foregoing, the Trust shall continue and
the Owner Trustee shall pursue recovery of any Preference Amounts under the
Policy and the distribution of the same to Noteholders until the Policy
terminates by its own terms.
SECTION 16.02. Optional Disposition of All Receivables. On the last day of
any Collection Period on which the Pool Balance is equal to or less than 10% of
the Original Pool Balance, any Certificateholders owning a majority of interest
in the outstanding Certificates shall have the option to cause the Owner Trustee
to sell (to the Certificateholders or any other person designated by such
Certificateholders) 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 the sum of (x) 100% of the outstanding principal balance of the Notes
(including any overdue principal or interest thereon), (y) accrued and unpaid
interest on such amount computed at a rate equal to the weighted average
Contract Rate, and (z) all amounts due and owing to the Insurer under this
Agreement, the Indenture 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 Collection Account for
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distribution to the Indenture Trustee (and, to the extent applicable, the
Insurer) on the next succeeding Payment Date. In connection with such
disposition, the Certificateholder is required to pay any unpaid fees and
expenses of the Owner Trustee and the Indenture Trustee that it would otherwise
have been entitled to pursuant to this Agreement. The Servicer shall notify the
Owner Trustee and the Certificateholder on or before the Determination Date if
the Pool Balance as of the end of the related Collection Period will be less
than or equal to 10% of the Original Pool Balance. The Certificateholder shall
notify the Owner Trustee on or before the Determination Date if the
Certificateholder intends to exercise its option to purchase the corpus of the
Trust pursuant to this Section 16.02. Such price shall be deposited to the
Collection Account in immediately available funds by 12:00 noon, New York City
time, on the Payment Date and, upon notice to the Owner Trustee of such deposit,
the Owner 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.
ARTICLE XVII
Miscellaneous Provisions
SECTION 17.01. Amendment. This Agreement may be amended by the Seller, the
Servicer and the Owner Trustee, without the consent of any of the
Certificateholders or the Noteholders, 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 Certificateholders or the Secured Parties.
Notwithstanding anything to the contrary in this Agreement (i) no amendment
of this Agreement shall be effective without the prior written consent of the
Insurer and the holders of 51% of the outstanding Note Balances and (ii) 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
Owner Trustee and receipt by the Owner 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 Owner 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 Owner Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement and the Opinion of Counsel referred to in Section 17.02(i)(1). The
Owner Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties, or immunities under this
Agreement.
SECTION 17.02. Protection of Title to Trust.
(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 Trust under this Agreement in the Receivables and in
the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Seller 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 Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Owner Trustee at
least 60 days' prior written notice thereof.
36
<PAGE>
(c) The Seller and the Servicer shall give the Owner 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 Owner Trustee shall be permitted to
waive the 60 day notice period to any shorter period; provided that such UCC
financing statements or amendments have been filed on or before the effective
date of any such waiver. 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 Collection 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 Owner
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 Owner Trustee. Indication
of the Owner 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 Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, 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
Owner Trustee.
(g) The Servicer shall permit the Owner 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 Owner Trustee and
the Indenture 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 Owner Trustee and the Indenture
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 Owner Trustee in the
Receivables and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that,
in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest; and
(2) within 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 Owner 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 a Certificateholder shall not operate to terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal
37
<PAGE>
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 17.01, 17.03 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.
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 Owner Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided, and unless
also the Certificateholder requests in writing to the Owner Trustee to institute
such action, suit, or proceeding in its own name as Trustee under this Agreement
and shall have offered to the Owner Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Owner 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 Owner Trustee.
SECTION 17.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware applicable to agreements
made and to be performed within the State of Delaware, 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 Seller 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, CA 94403, or at such other address as shall be
designated by the Seller 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, Bay View Acceptance Corporation, 818
Oakpark Drive, Covina, California 91724, (c) in the case of the Owner Trustee,
at the Corporate Trust Office, (d) in the case of the Insurer, at
____________________________________ and (e) in the case of the Indenture
Trustee __________________________. 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.
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 Seller or the Servicer
without the prior written consent of the Owner Trustee and the
Certificateholders.
SECTION 17.08. 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 Owner Trustee pursuant to Section 11.02,
Certificates shall be deemed fully paid.
38
<PAGE>
SECTION 17.09. Nonpetition Covenants. Notwithstanding any prior termination
of this Agreement, the Servicer, BVAC and the Owner Trustee shall not, prior to
the date which is one year and one day after the termination of this Agreement
with respect to the Trust or the Seller, acquiesce, petition or otherwise invoke
or cause the Trust or the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Trust or the Seller under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust or the Seller or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust or the Seller.
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 Insurer, the Indenture Trustee and their successors and assigns.
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust 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 Seller
By:______________________________
Title: Vice President
BAY VIEW ACCEPTANCE CORPORATION,
as Servicer
By:______________________________
Title: Vice President
_________________________________,
as Owner Trustee
By:______________________________
Title: Vice President
40
<PAGE>
Owner Trustee's Certificate
pursuant to Section 15.02
of the Trust and Servicing Agreement
________________________, as owner trustee (the "Owner Trustee") of the Bay
View ____- __ Owner Trust created pursuant to the Trust and Servicing Agreement
(the "Trust Agreement") dated as of ________________, among Bay View
Securitization Corporation, as depositor (the "Seller"), Bay View Acceptance
Corporation, as servicer (the "Servicer") and the Owner Trustee, does hereby
sell, transfer, assign, and otherwise convey to Bay View Acceptance Corporation
without recourse, representation, or warranty, all of the Owner Trustee's right,
title, and interest in and to all of the Receivables (as defined in the Trust
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which have been repurchased by the Seller pursuant to Section 7.02
and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this _____ day of
____________, ____.
________________________
41
<PAGE>
Exhibit 2
Owner Trustee's Certificate
pursuant to Section 15.02
of the Trust and Servicing Agreement
________________________, as trustee (the "Owner Trustee") of the Bay View
____-__ Owner Trust created pursuant to the Trust and Servicing Agreement (the
"Trust Agreement") dated as of ________________, among Bay View Securitization
Corporation, as depositor (the "Seller"), Bay View Acceptance Corporation, as
servicer (the "Servicer") and the Owner Trustee, does hereby sell, transfer,
assign, and otherwise convey to the [Servicer or the Certificateholders],
without recourse, representation, or warranty, all of the Owner Trustee's right,
title, and interest in and to all of the Receivables (as defined in the Trust
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which have been purchased by [the Servicer pursuant to Section
8.07 or by the Certificateholders pursuant to Section 16.02], and all security
and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this _____ day of
____________, ____.
________________________
42
<PAGE>
Exhibit 3
Form of Servicer's Certificate
pursuant to Sections 8.09 and 9.02
of the Trust and Servicing Agreement
SERVICER'S CERTIFICATE
EXHIBIT A
CERTIFICATE OF TRUST OF
BAY VIEW OWNER TRUST ______-____
This Certificate of Trust of Bay View Owner Trust ______-____ (the
"Trust"), dated as of ___________________, is being duly executed and filed by
_________________, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section
3801 et seq.).
1. Name. The name of the business trust formed hereby is BAY VIEW
OWNER TRUST __________.
2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is
____________________, (Address), Attention: ________________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
___________________________________,
not in its individual capacity but solely as owner
trustee under a Trust Agreement dated as of
______________________,
By: _________________________
Name: _______________________
Title: ______________________
43
<PAGE>
EXHIBIT B
[Form of Certificate]
BAY VIEW ____-__ OWNER TRUST
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-duty trucks, motorcycles, recreational vehicles and vans. The
contracts were sold to the Owner 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 other government agency).
NUMBER One Unit
R-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 ____-__ Owner Trust (the "Trust"), a Delaware business trust. The
Trust was created pursuant to a Trust and Servicing Agreement dated as of
________________ (the "Agreement"), among Bay View Securitization Corporation as
Seller, Bay View Acceptance Corporation, as Servicer and
________________________ (the "Owner 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 Owner
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 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-duty trucks, motorcycles,
recreational vehicles and vans (the "Receivables"), all monies paid thereon, and
all monies due thereon, including Accrued Interest, after ________________ (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 and certain other property and rights described in the
Agreement and the proceeds of the foregoing.
This 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. The rights of the
Certificateholders in the assets of the Trust are subordinated to the rights of
the Noteholders as set forth in the Indenture and the Agreement.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Owner Trustee, by manual or facsimile signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose. Registration of transfer of this
Certificate to a person may not be effected unless (a) the Insurer consents to
such transfer, (b) such transfer will not adversely affect the tax treatment of
the Trust or the Notes, and (c) the Rating Agency Condition has been satisfied
with respect to such transfer.
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 a majority
in interest of the outstanding Certificates may at its option cause the Owner
Trustee to sell the corpus of the Trust at a price not to be less than the price
specified in the Agreement; however, such right is exercisable only as of the
last day of a Collection Period on
44
<PAGE>
which the Pool Balance is less than or equal to __% of the Original Pool
Balance. The Certificateholders are required to pay any unpaid fees and expenses
of the Owner Trustee and in connection with such disposition.
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 Owner 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 Agreement,
including the agreement to treat the Trust as a partnership for income tax
purposes and the Certificates as an equity interest therein.
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated:______________________
BAY VIEW ____-__ OWNER TRUST
By ________________________, solely in its
capacity as Owner Trustee
By ________________________,
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is the Certificate referred to in the Within-mentioned Agreement.
___________________________,
as Owner Trustee
By ________________________,
Signatory
Dated:______________________
45
<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.
Schedule A
to the Trust and
Servicing Agreement
SCHEDULE OF RECEIVABLES
Seller 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 OWNER TRUSTEE WITH A
COUNTERPART OF THE TRUST AND SERVICING AGREEMENT.
46
<PAGE>
Schedule B
to the Trust and
Servicing Agreement
1. Location of Receivables:
Bay View Acceptance Corporation
818 Oakpark Drive
Covina, California 91724
47
<PAGE>
Exhibit 4.3
INDENTURE
between
BAY VIEW ____-__ OWNER TRUST
as Issuer
and
___________________
as Indenture Trustee
Dated as of ____________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions...............................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act........10
ARTICLE II
THE NOTES
SECTION 2.01. Form.....................................................11
SECTION 2.02. Execution, Authentication and Delivery...................11
SECTION 2.03. Temporary Notes..........................................12
SECTION 2.04. Registration; Registration of Transfer and Exchange......12
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes...............13
SECTION 2.06. Intentionally Blank......................................14
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest....14
SECTION 2.08. Cancellation.............................................15
SECTION 2.09. Book-Entry Notes.........................................15
SECTION 2.10. Notices to Clearing Agency...............................15
SECTION 2.11. Definitive Notes.........................................16
SECTION 2.12. Release of Pledged Assets................................16
SECTION 2.13. Tax Treatment............................................16
SECTION 2.14. ERISA....................................................16
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest........................16
SECTION 3.02. Maintenance of Office or Agency..........................16
SECTION 3.03. Money for Payments to be Held in Trust...................17
SECTION 3.04. Existence................................................18
SECTION 3.05. Protection of Trust Estate...............................18
SECTION 3.06. Opinions as to Pledged Assets............................19
SECTION 3.07. Performance of Obligations; Servicing of Receivables.....19
SECTION 3.08. Negative Covenants.......................................20
SECTION 3.09. Annual Statement as to Compliance........................20
SECTION 3.10. Issuer May Consolidate, etc..............................21
SECTION 3.11. Successor Transferee.....................................22
SECTION 3.12. No Other Business........................................22
SECTION 3.13. Servicer's Obligations...................................22
SECTION 3.14. Restricted Payments......................................23
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SECTION 3.15. Notice of Events of Default..............................23
SECTION 3.16. Further Instruments and Acts.............................23
SECTION 3.17. Compliance with Laws.....................................23
SECTION 3.18. Amendments of Trust Agreement............................23
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture..................23
SECTION 4.02. Application of Trust Money...............................24
SECTION 4.03. Repayment of Monies Held by Paying Agent.................24
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Events of Default........................................24
SECTION 5.02. Rights Upon Event of Default.............................25
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee........................................26
SECTION 5.04. Remedies.................................................27
SECTION 5.05. Optional Preservation of the Receivables.................28
SECTION 5.06. Priorities...............................................28
SECTION 5.07. Limitation of Suits......................................28
SECTION 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest.............................................29
SECTION 5.09. Restoration of Rights and Remedies.......................29
SECTION 5.10. Rights and Remedies Cumulative...........................29
SECTION 5.11. Delay or Omission Not a Waiver...........................29
SECTION 5.12. Control by Noteholders...................................29
SECTION 5.13. Waiver of Past Defaults..................................30
SECTION 5.14. Undertaking for Costs....................................30
SECTION 5.15. Waiver of Stay or Extension Laws.........................30
SECTION 5.16. Action on Notes..........................................30
SECTION 5.17. Performance and Enforcement of Certain Obligations.......31
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee..............................31
SECTION 6.02. Rights of Indenture Trustee..............................33
SECTION 6.03. Individual Rights of Indenture Trustee...................34
SECTION 6.04. Indenture Trustee's Disclaimer...........................34
SECTION 6.05. Notice of Defaults.......................................34
SECTION 6.06. Reports by Indenture Trustee to Holders..................34
SECTION 6.07. Compensation and Indemnity...............................34
SECTION 6.08. Replacement of Indenture Trustee.........................35
SECTION 6.09. Successor Indenture Trustee by Merger....................35
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee........................................36
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SECTION 6.11. Eligibility..............................................37
SECTION 6.12. Preferential Collection of Claims Against Issuer.........37
SECTION 6.13. Representations and Warranties of Indenture Trustee......37
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders...........................................37
SECTION 7.02. Preservation of Information; Communications to
Noteholders..............................................37
SECTION 7.03. Reports by Issuer........................................38
SECTION 7.04. Reports by Indenture Trustee.............................38
ARTICLE VIII
INTENTIONALLY BLANK
ARTICLE IX
DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDERS
SECTION 9.01. Collection Account.......................................38
SECTION 9.02. Collections..............................................39
SECTION 9.03. Purchase Amounts.........................................39
SECTION 9.04. Distributions to Parties.................................39
SECTION 9.05. Servicer Advances........................................41
SECTION 9.06. Net Deposits.............................................41
SECTION 9.07. Intentionally Blank......................................41
SECTION 9.08. Intentionally Blank......................................41
SECTION 9.09. Payahead Account.........................................41
SECTION 9.10. Release of Pledged Assets................................41
SECTION 9.11. Opinion of Counsel.......................................42
ARTICLE X
CREDIT ENHANCEMENT
SECTION 10.01. Subordination............................................42
SECTION 10.02. Spread Account...........................................42
SECTION 10.03. Policy...................................................43
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.01. Supplemental Indentures Without Consent of Noteholders...44
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SECTION 11.02. Supplemental Indentures With Consent of Noteholders......45
SECTION 11.03. Execution of Supplemental Indentures.....................45
SECTION 11.04. Effect of Supplemental Indenture.........................46
SECTION 11.05. Conformity With Trust Indenture Act......................46
SECTION 11.06. Reference in Notes to Supplemental Indentures............46
ARTICLE XII
REDEMPTION OF NOTES
SECTION 12.01. Redemption...............................................46
SECTION 12.02. Form of Redemption Notice................................46
SECTION 12.03. Notes Payable on Redemption Date.........................47
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Compliance Certificates and Opinions, etc................47
SECTION 13.02. Form of Documents Delivered to Indenture Trustee.........48
SECTION 13.03. Acts of Noteholders......................................49
SECTION 13.04. Notices, etc., to Indenture Trustee, Issuer, Insurer
and Rating Agencies......................................49
SECTION 13.05. Notices to Noteholders; Waiver...........................50
SECTION 13.06. Alternate Payment and Notice Provisions..................50
SECTION 13.07. Conflict With Trust Indenture Act........................50
SECTION 13.08. Effect of Headings and Table of Contents.................50
SECTION 13.09. Successors and Assigns...................................50
SECTION 13.10. Separability.............................................50
SECTION 13.11. Benefits of Indenture....................................50
SECTION 13.12. Legal Holidays...........................................51
SECTION 13.13. Governing Law............................................51
SECTION 13.14. Counterparts.............................................51
SECTION 13.15. Recording of Indenture...................................51
SECTION 13.16. Trust Obligation.........................................51
SECTION 13.17. No Petition..............................................51
SECTION 13.18. Inspection...............................................51
SECTION 13.19. Limitation of Liability of Owner Trustee.................52
SECTION 13.20. Certain Matters Regarding the Insurer....................52
EXHIBITS
Schedule A Form of Depository Agreement
Exhibit A-1 Form of Class A-1 Note
Exhibit A-2 Form of Class A-2 Note
Exhibit A-3 Form of Class A-3 Note
Exhibit A-4 Form of Class A-4 Note
Exhibit B Form of Class B Note
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CROSS-REFERENCE TABLE
310(a)......................................................................6.11
310(b)......................................................................6.11
310(c).......................................................................N/A
311(a)......................................................................6.12
311(b)......................................................................6.12
311(c).......................................................................N/A
312(a)................................................................7.01, 7.02
312(b)......................................................................7.02
312(c)......................................................................7.02
313(a)......................................................................7.04
313(b)......................................................................7.04
313(c)......................................................................7.03
314(a)......................................................................7.03
314(b)......................................................................3.06
314(c).........................................................3.06, 4.01, 13.01
314(d).....................................................................13.01
314(e).....................................................................13.01
314(f).......................................................................N/A
315(a)......................................................................6.01
315(b)......................................................................6.05
315(c)......................................................................6.01
315(d)......................................................................6.01
315(e)......................................................................5.14
316(a)......................................................................5.04
316(b).....................................................................11.02
316(c).....................................................................13.03
317(a)......................................................................5.03
317(b)......................................................................3.03
318(a)......................................................................1.02
-v-
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This INDENTURE, dated as of ____________, ____, is entered into between BAY
VIEW ____- ___ OWNER TRUST, a Delaware business trust, as issuer (the "Issuer"),
and ___________________, a Delaware banking corporation, as indenture trustee
(the "Indenture Trustee").
Each party agrees as follows for the benefit of the other parties and for
the benefit of the Noteholders and the Insurer:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on behalf of the Trust on
the Closing Date, on behalf of and for the benefit of the Noteholders and the
Insurer, without recourse, all of the Issuer's right, title and interest in, to
and under, (i) the Receivables listed on Schedule A to the Trust Agreement, (ii)
the security interests in the Financed Vehicles or in any other property 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
single interest, credit life, disability and hospitalization insurance policies
covering Financed Vehicles or Obligors relating to the Receivables, (iv) funds
deposited in the Spread Account (and any Eligible Investments purchased
therewith), the Collection Account and the Payahead Account with respect to the
Receivables, (v) the interest of the Issuer in any proceeds from recourse to
Dealers relating to the Receivables, (vi) all documents contained in the
Receivable Files relating to the Receivables, (vii) all monies paid and all
monies due, including Accrued Interest, as of and after the Cutoff Date (but
excluding Accrued Interest paid on or prior to the Closing Date), (viii) the
rights of the Seller pursuant to the Purchase Agreement and the rights of the
Issuer pursuant to the Trust Agreement to require BVAC to repurchase any such
Receivables as to which there has been a breach of the representations and
warranties contained therein, (ix) the benefits of the Policy with respect to
the Receivables and (x) all proceeds (including, without limitation, "proceeds"
as defined in the UCC of the jurisdiction the law of which governs the
perfection of the interest in such Receivables so transferred) of any of the
foregoing. Such property described in the preceding sentence, together with (a)
any and all other right, title and interest, including any beneficial interest
the Issuer may have in the Collection Account, the Spread Account and (b) the
funds deposited in and from time to time on deposit in such accounts, and all
Eligible Investments and other securities, instruments and other investments
purchased from such funds, shall hereinafter be referred to as the "Pledged
Assets." The Issuer does not convey to the Indenture Trustee, and the Pledged
Assets do not include, any interest in any contracts with Dealers related to any
"dealer reserve" or any rights to the recapture of any dealer reserve with
respect to such Receivables.
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction (except as provided
herein with respect to the subordination of the Class B Notes), and to secure
compliance with the provisions of this Indenture and the Insurance Agreement,
all as provided in this Indenture and the Insurance Agreement.
The Indenture Trustee, as Indenture Trustee on behalf of the Noteholders
and the Insurer, acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties required in this Indenture to the best of its ability to the
end that the interests of the Noteholders may be adequately and effectively
protected.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
(a) Except as otherwise specified herein or as the context may otherwise
require, (i) capitalized terms that are used herein that are not otherwise
defined herein shall have the meanings assigned to them in the Trust Agreement
(as defined below) and (ii) the following terms have the respective meanings set
forth below for all purposes of this Indenture.
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"Accelerated Principal Amount" means, for any Payment Date after giving
effect to all payments of interest and principal (other than any Accelerated
Principal Amount) to the Noteholders, an amount equal to the lesser of (1) the
Available Excess Funds or (2) the amount necessary to reduce the then aggregate
Note Balances below the Pool Balance as of the end of the related Collection
Period until the aggregate Pool Balance exceeds the aggregate Note Balances by
2.5% of the initial Note Balances or $ .
"Act" shall have the meaning specified in Section 13.03(a).
"Administration Agreement" means the Administration Agreement, dated as of
the date hereof, among the Administrator, the Issuer, the Owner Trustee and the
Indenture Trustee.
"Administrator" means the Servicer, or any successor Administrator under
the Administration Agreement.
"Authorized Officer" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee or to the Indenture Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter) and, so long
as the Administration Agreement is in effect, any Vice President or more senior
officer of the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on a list of
Authorized Officers delivered by the Administrator to the Indenture Trustee on
the Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Available Excess Funds" for any Payment Date means the amount of Available
Funds remaining from such Payment Date after paying the Servicer, the
Noteholders and the Insurer the amounts they are entitled to receive, without
considering the amount of the Monthly Principal payment in respect of the
Accelerated Principal Amount.
"Available Funds" has the meaning provided in the Trust Agreement.
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Administration Agreement, the Depository Agreement, the Insurance Agreement, the
Policy and this Indenture.
"BVAC" means Bay View Acceptance Corporation, a Nevada corporation, and its
successors.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.09.
"Certificateholders" mean the owners or holders of the Certificates
pursuant to the Trust Agreement.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A Monthly Interest" means the sum of Class A-1 Monthly Interest,
Class A-2 Monthly Interest, Class A-3 Monthly Interest and Class A-4 Monthly
Interest.
"Class A Monthly Principal" means the sum of Class A-1 Monthly Principal,
Class A-2 Monthly Principal, Class A-3 Monthly Principal and Class A-4 Monthly
Principal.
"Class A Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note
or a Class A-4 Note.
"Class A-1 Interest Rate" means ____% per annum.
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"Class A-1 Monthly Interest" means, (i) for the first Payment Date, the
product of one-three hundred sixtieth (1/360th) of the Class A-1 Interest Rate,
the actual number of days from the Closing Date through the day before the first
Payment Date and the Class A-1 Note Balance at the Closing Date and (ii) for any
subsequent Payment Date, the product of one-three hundred sixtieth (1/360th) of
the Class A-1 Interest Rate, the actual number of days from the previous Payment
Date through the day before the related Payment Date and the Class A-1 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
"Class A-1 Monthly Principal" means that portion of Monthly Principal to be
paid to Class A-1 Noteholders on each Payment Date in accordance with Section
9.04.
"Class A-1 Note" means a promissory note executed on behalf of the Trust
and authenticated by the Indenture Trustee substantially in the form attached
hereto as Exhibit A-1.
"Class A-1 Note Balance" means, at any time, the Initial Class A-1 Note
Balance minus all payments of Monthly Principal to Class A-1 Noteholders made up
to such time.
"Class A-1 Noteholder" means the Person in whose name the respective Class
A-1 Note shall be registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class A-1 Note registered in the name
of the Issuer, the Seller, the Servicer or BVAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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 Interest Rate" means ____% per annum.
"Class A-2 Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class A-2 Interest Rate, the number of days from
the Closing Date (assuming the month of the Closing Date has 30 days) through
the day before the first Payment Date divided by 30 and the Class A-2 Note
Balance at the Closing Date and (ii) for any subsequent Payment Date, the
product of one-twelfth of the Class A-2 Interest Rate and the Class A-2 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
"Class A-2 Monthly Principal" means that portion of Monthly Principal to be
paid to Class A-2 Noteholders on each Payment Date in accordance with Section
9.04.
"Class A-2 Note" means a promissory note executed on behalf of the Trust
and authenticated by the Indenture Trustee substantially in the form attached
hereto as Exhibit A-2.
"Class A-2 Note Balance" means, at any time, the Initial Class A-2 Note
Balance minus all payments of Monthly Principal to Class A-2 Noteholders made up
to such time.
"Class A-2 Noteholder" means the Person in whose name the respective Class
A-2 Note shall be registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class A-2 Note registered in the name
of the Issuer, the Seller, the Servicer or BVAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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-3 Interest Rate" means ____% per annum.
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<PAGE>
"Class A-3 Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class A-3 Interest Rate, the number of days from
the Closing Date (assuming the month of the Closing Date has 30 days) through
the day before the first Payment Date divided by 30 and the Class A-3 Note
Balance at the Closing Date and (ii) for any subsequent Payment Date, the
product of one-twelfth of the Class A-3 Interest Rate and the Class A-3 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
"Class A-3 Monthly Principal" means that portion of Monthly Principal to be
paid to Class A-3 Noteholders on each Payment Date in accordance with Section
9.04.
"Class A-3 Note" means a promissory note executed on behalf of the Trust
and authenticated by the Indenture Trustee substantially in the form attached
hereto as Exhibit A-3.
"Class A-3 Note Balance" means, at any time, the Initial Class A-3 Note
Balance minus all payments of Monthly Principal to Class A-3 Noteholders made up
to such time.
"Class A-3 Noteholder" means the Person in whose name the respective Class
A-3 Note shall be registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class A-3 Note registered in the name
of the Issuer, the Seller, the Servicer or BVAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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-4 Interest Rate" means ____% per annum; provided, however, the per
annum rate shall be increased by 0.50% beginning on the first Payment Date
following the end of any Collection Period on which the Pool Balance is equal to
or less than 10% of the Original Pool Balance if the Class A-4 Notes will not be
redeemed on such Payment Date.
"Class A-4 Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class A-4 Interest Rate, the number of days from
the Closing Date (assuming the month of the Closing Date has 30 days) through
the day before the first Payment Date divided by 30 and the Class A-4 Note
Balance at the Closing Date and (ii) for any subsequent Payment Date, the
product of one-twelfth of the Class A-4 Interest Rate and the Class A-4 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
"Class A-4 Monthly Principal" means that portion of Monthly Principal to be
paid to Class A-4 Noteholders on each Payment Date in accordance with Section
9.04.
"Class A-4 Note" means a promissory note executed on behalf of the Trust
and authenticated by the Indenture Trustee substantially in the form attached
hereto as Exhibit A-4.
"Class A-4 Note Balance" means, at any time, the Initial Class A-4 Note
Balance minus all payments of Monthly Principal to Class A-4 Noteholders made up
to such time.
"Class A-4 Noteholder" means the Person in whose name the respective Class
A-4 Note shall be registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class A-4 Note registered in the name
of the Issuer, the Seller, the Servicer or BVAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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.
4
<PAGE>
"Class B Interest Rate" means ____% per annum; provided, however, the per
annum rate shall be increased by 0.50% beginning on the first Payment Date
following the end of any Collection Period on which the Pool Balance is equal to
or less than 10% of the Original Pool Balance if the Class B Notes will not be
redeemed on such Payment Date.
"Class B Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class B Interest Rate, the number of days from the
Closing Date (assuming the month of the Closing Date has 30 days) through the
day before the first Payment Date divided by 30 and the Class B Note Balance at
the Closing Date and (ii) for any subsequent Payment Date, the product of
one-twelfth of the Class B Interest Rate and the Class B Note Balance as of the
immediately preceding Payment Date (after giving effect to any distribution of
Monthly Principal made on such immediately preceding Payment Date).
"Class B Monthly Principal" means that portion of Monthly Principal to be
paid to Class B Noteholders on each Payment Date in accordance with Section
9.04.
"Class B Note" means a promissory note executed on behalf of the Trust and
authenticated by the Indenture Trustee substantially in the form attached hereto
as Exhibit B.
"Class B Note Balance" means, at any time, the Initial Class B Note Balance
minus all payments of Monthly Principal to Class B Noteholders made up to such
time.
"Class B Noteholder" means the Person in whose name the respective Class B
Note shall be registered in the Note Register, except that, solely for the
purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class B Note registered in the name of
the Issuer, the Seller, the Servicer or BVAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlling Party" means the Insurer, so long as no Insurer Default shall
have occurred and be continuing, and the Indenture Trustee, for so long as an
Insurer Default shall have occurred and be continuing.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.09.
"Depository Agreement" means the agreement dated ___________, ____, among
the Issuer, the Indenture Trustee and DTC, as the initial Clearing Agency,
relating to the Notes, substantially in the form of Schedule A hereto.
"Event of Default" shall have the meaning specified in Section 5.01.
"Executive Officer" means, with respect to any corporation or bank, the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation or bank; and with respect to any partnership, any
general partner thereof.
"Final Maturity Date" means ______________ with respect to the Class A-1
Notes, ______________ with respect to the Class A-2 Notes, ______________ with
respect to the Class A-3 Notes, ______________ with respect to the Class A-4
Notes and ______________ with respect to the Class B Notes.
5
<PAGE>
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Pledged Assets or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Pledged Assets and all other monies
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Issuer" means Bay View _____-_____ Owner Trust as the issuer of the Notes
under this Indenture and its permitted successors and assigns.
"Indebtedness" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (iv)
obligations issued for or liabilities incurred on the account of such Person;
(v) obligations or liabilities of such Person arising under acceptance
facilities; (vi) obligations of such Person under any guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (vii) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such Person;
or (viii) obligations of such Person under any interest rate or currency
exchange agreement.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indenture Trustee" means ____________________, a _______________ banking
corporation as the Indenture Trustee under this Indenture and its permitted
successors and assigns.
"Independent" when used with respect to any specified Person, means such a
Person who (i) is in fact independent of the Issuer, the Seller and any of their
respective Affiliates, (ii) is not a director, officer or employee of the
Issuer, the Seller or any of their respective Affiliates, (iii) is not a person
related to any officer or director of the Issuer, the Seller or any of their
respective Affiliates, (iv) is not a holder (directly or indirectly) of more
than 10% of any voting securities of the Issuer, the Seller or any of their
respective Affiliates, and (v) is not connected with the Issuer, the Seller or
any of their respective Affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 13.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Initial Class A-1 Note Balance" means $_____________________.
"Initial Class A-2 Note Balance" means $_____________________.
"Initial Class A-3 Note Balance" means $_____________________.
"Initial Class A-4 Note Balance" means $_____________________.
6
<PAGE>
"Initial Class B Note Balance" means $_____________________.
"Initial Note Balances" means $_____________________.
"Insurance Premium" means for any Payment Date, an amount equal to the
product of (i) [__%] per annum calculated for the actual number of days elapsed
during the Collection Period on the basis of a 360- day year and (ii) the Note
Balances as of the Payment Date to which such Payment Date relates, payable
monthly in arrears.
"Insurer Default" means the Insurer is in default under the Policy or the
Insurance Agreement after the expiration of any applicable cure period.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by an Authorized Officer and delivered to the
Indenture Trustee.
"Monthly Interest" means the sum of Class A Monthly Interest and Class B
Monthly Interest.
"Monthly Principal" for any Payment Date will equal the sum of the
following:
(i) the amount by which the Pool Balance declined during the
related Collection Period;
(ii) the amount, if any, which is necessary to reduce the Note
Balance of a class of Notes to zero on its Final Maturity Date; and
(iii) the Available Excess Funds or, if less, the portion thereof,
that will cause the Pool Balance to exceed the Note Balances by the
Accelerated Principal Amount.
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.
"Net Principal Policy Amount" means the Initial Note Balances as of the
first Payment Date minus all amounts previously drawn on the Policy or from the
Spread Account with respect to Monthly Principal.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note, a Class
A-4 Note or a Class B Note.
"Note Balances" means, at any time the Initial Note Balances minus all
payments of Monthly Principal made to the Noteholders up to such time. The term
"Note Balance" means the Outstanding principal balance of a particular Class of
Notes, depending upon the context. When the term "Note Balances" is used herein
with respect to an issue relating to the consent of or voting of Noteholders,
such term shall refer only to the classes of Notes then Outstanding such that
the Notes will vote as a single class.
"Noteholder" means the owner of a note.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.04.
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<PAGE>
"Officer's Certificate" means a certificate signed by an Authorized Officer
of the Issuer, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 13.01, and delivered to, the
Indenture Trustee.
"Opinion of Counsel" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Depositor or the Issuer and who shall be satisfactory to the
Indenture Trustee and, if addressed to the Insurer, satisfactory to the Insurer,
and which shall comply with any applicable requirements of Section 13.01, and
shall be in form and substance satisfactory to the Indenture Trustee, and if
addressed to the Insurer, satisfactory to the Insurer.
"Original Pool Balance" means $_____________________.
"Outstanding" or "Outstanding Notes" means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee or
any Paying Agent in trust for the Holders of such Notes (provided, however, that
if such Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision for such notice has been made,
satisfactory to the Indenture Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof satisfactory
to the Indenture Trustee is presented that any such Notes are held by a bona
fide purchaser; provided, however, that in determining whether the Holders of
the requisite Outstanding Note Balances have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any other
Basic Document, Notes owned by the Issuer, the Seller or any of their respective
Affiliates shall be disregarded and deemed not to be Outstanding, except that,
in determining whether the Indenture Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Notes that the Indenture Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, the Seller or any of their respective Affiliates.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
and is authorized by the Issuer to make the distributions from the Collection
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer.
"Pledged Assets" has the meaning provided in the Granting Clause of this
Indenture.
"Policy" means the irrevocable financial guaranty insurance policy dated as
of ______, ____, issued by the Insurer to the Indenture Trustee for the benefit
of the Noteholders and having a maximum amount available to be drawn in respect
of Monthly Interest and Monthly Principal equal to the Policy Amount.
"Policy Amount" means with respect to any Payment Date:
(x) the sum of (A) the lesser of (i) the Note Balances (after giving
effect to any distribution of Available Funds and any funds withdrawn from
the Spread Account to pay Monthly Principal on such Payment Date) and (ii)
the Net Principal Policy Amount, plus (B) Monthly Interest, plus (C) the
Monthly Servicing Fee; less
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<PAGE>
(y) all amounts on deposit in the Spread Account on such Payment Date
(after giving effect to any amounts withdrawn from the Spread Account to
pay Monthly Principal on such Payment Date).
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Principal Payment Sequence" means the order in which Monthly Principal
shall be distributed among the Noteholders. The order of distribution of Monthly
Principal is:
(1) to the Class A-1 Noteholders until the Class A-1 Note Balance has been
reduced to zero;
(2) to the Class A-2 Noteholders until the Class A-2 Note Balance has been
reduced to zero;
(3) to the Class A-3 Noteholders until the Class A-3 Note Balance has been
reduced to zero;
(4) to the Class A-4 Noteholders until the Class A-4 Note Balance has been
reduced to zero; and
(5) to the Class B Noteholders until the Class B Note Balance has been
reduced to zero.
However, if the amount of Available Funds (together with amounts withdrawn from
the Spread Account and/or the Policy) are not sufficient on any Payment Date to
pay the required payment of Class A Monthly Principal to Class A Noteholders in
full, the amount of such funds available to pay Class A Monthly Principal to
Class A Noteholders will be distributed pro rata to the Class A Noteholders
based upon the relative Note Balance of each class of Class A Notes.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency Condition" means, with respect to any action, that (i)
_________________ shall have been given ten Business Days (or such shorter
period as is acceptable to _________________) prior notice thereof and that
_________________ shall have notified the Seller, the Servicer, the Insurer and
the Issuer in writing that such action will not result in a qualification,
reduction or withdrawal of its then-current rating of any Class of Notes, (ii)
_______ shall have been given ten Business Days (or such shorter period as is
acceptable to _______) prior notice thereof and copies of all documentation
relating to the event requiring such Rating Agency Condition and (iii) each
Rating Agency shall have confirmed to the Insurer that the shadow risk of the
Insurer with respect to the Notes is investment grade.
"Rating Event" means the qualification, reduction or withdrawal by either
Rating Agency of its then-current rating of any Class of Notes.
"Record Date" means, with respect to a Payment Date or Redemption Date, the
close of business on the Business Day immediately preceding such Payment Date or
Redemption Date, or, in the event that Definitive Notes are issued, the close of
business on the last day of the related Collection Period.
"Redemption Date" means the Payment Date specified by the Servicer or the
Issuer pursuant to Section 12.01.
"Redemption Price" means an amount equal to the unpaid principal amount of
the Notes redeemed plus accrued and unpaid interest thereon at the respective
interest rates of each Class of Notes being so redeemed to but excluding the
Redemption Date.
"Holder" means the Person in whose name a Note is registered on the Note
Register on the applicable Record Date.
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"Required Spread Amount" means on each Payment Date, the lesser of (x) __%
of the Initial Note Balances and (y) the Note Balances as of the previous
Distribution Date (after giving effect to any payment of Monthly Principal on
such Payment Date); provided, that, upon and during the continuance of an
Indenture Default or a Trigger Event, the Required Spread Amount shall be equal
to the Policy Amount as of such Payment Date, without giving effect to amounts
on deposit in the related Spread Account, after giving effect to any draws on
the Policy, draws on the related Spread Account and other distributions pursuant
to Section 9.04 on such Payment Date. Once such Indenture Default or Trigger
Event has been cured or discontinued, the Required Spread Amount shall be
determined as set forth above.
"Servicer Default" means an Event of Servicer Default under the Trust
Agreement.
"State" means any one of the 50 states of the United States or the District
of Columbia.
"Successor Servicer" shall have the meaning specified in Section 3.07(e).
"Termination Date" means the latest of (i) the expiration of the Policy and
the return of the Policy to the Insurer for cancellation, (ii) the date on which
the Insurer shall have received payment and performance of all amounts and
obligations which the Issuer may owe to or on behalf of the Insurer under this
Indenture and (iii) the date on which the Indenture Trustee shall have received
payment and performance of all amounts and obligations which the Issuer may owe
to or on behalf of the Indenture Trustee for the benefit of the Noteholders
under this Indenture or the Notes.
"Trust Agreement" means the Trust and Servicing Agreement, dated as of the
date hereof, between the Seller, the Servicer and the Owner Trustee.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force on the date hereof, unless otherwise specifically provided.
"United States" means the United States of America.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
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"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Indenture Trustee.
"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular;
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns; and
(vii) the words "hereof," "herein" and "hereunder" and words of
similar import when used in this Indenture shall refer to this Indenture as
a whole and not to any particular provision of this Indenture; Section,
subsection and Schedule references contained in this Indenture are
references to Sections, subsections and Schedules in or to this Indenture
unless otherwise specified.
ARTICLE II
THE NOTES
SECTION 2.01. Form. The Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes and Class B Notes, in each case together with the Indenture
Trustee's certificate of authentication, shall be in substantially the forms set
forth as Exhibits A-1, A-2, A-3, A-4 and B to this Indenture with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may, consistently herewith, be determined by the officers executing such Notes,
as evidenced by their execution of the Notes. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in the exhibits hereto are part of the terms of this Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by the Owner Trustee, as provided in the Trust
Agreement. The signature of any such Authorized Officer on the Notes may be
manual or facsimile. Notes bearing the manual or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased
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to hold such offices prior to the authentication and delivery of such Notes or
did not hold such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order, authenticate
and deliver for original issue Notes in the amount of the Initial Class A-1 Note
Balance, the Initial Class A-2 Note Balance, the Initial Class A-3 Note Balance,
the Initial Class A-4 Note Balance and the Initial Class B Note Balance. The
aggregate principal amount of the Notes outstanding at any time may not exceed
such respective amounts, except as otherwise provided in Section 2.05. Each Note
shall be dated the date of its authentication. The Notes shall be issuable as
registered Notes in the minimum denomination of $1,000 and in integral multiples
of $1,000 in excess thereof, except that one Note of each Class may be issued in
a different denomination.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for in the forms of Notes
attached as exhibits to this Indenture executed by the Indenture Trustee by the
manual signature of one of its authorized signatories, and such certificate upon
any Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of definitive Notes,
the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes that are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes to be
prepared without unreasonable delay. After the preparation of definitive Notes,
the temporary Notes shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver in exchange therefor a like
tenor and principal amount of definitive Notes of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Noteholders and the principal
amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or
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agency. Whenever any Notes are so surrendered for exchange, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder shall
obtain from the Indenture Trustee, the Notes which the Noteholder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in the city of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 or 11.06 not
involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee and the Insurer
(unless an Insurer Default shall have occurred and be continuing) such security
or indemnity as may be required by them to hold the Issuer, the Indenture
Trustee and the Insurer harmless, then, in the absence of notice to the Issuer,
the Note Registrar or the Indenture Trustee that such Note has been acquired by
a bona fide purchaser, the Issuer shall execute and upon its request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of the
same Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer, the Insurer and the Indenture Trustee
shall be entitled to recover such replacement Note (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Note from
such Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer, the Insurer or the Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer or
the Indenture Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes. In the case of the
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Insurer and any of their respective agents may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Insurer, the Indenture Trustee nor any of
their respective agents shall be affected by notice to the contrary.
SECTION 2.06. Intentionally Blank.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest as provided in the Indenture
at the related interest rate for such Class, and such interest shall be payable
on each Payment Date as specified therein, subject to Section 3.01. Interest
accrued on any Note but not paid on any Payment Date will be due on the
immediately succeeding Payment Date, together with, to the extent permitted by
applicable law, interest on such shortfall at the related interest rate. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.11, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a Payment
Date, a Redemption Date or on the related Final Maturity Date, as the case may
be (and except for the Redemption Price for any Note called for redemption
pursuant to Section 12.01), which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
(b) The principal of each Note shall be payable on each Payment Date to the
extent provided in the form of the related Note set forth as an Exhibit hereto.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
of a Class of Notes shall be due and payable, if not previously paid, on the
earlier of:
(i) the Final Maturity Date of such Class;
(ii) the Redemption Date;
(iii) if an Event of Default shall have occurred and be continuing,
so long as an Insurer Default shall not have occurred and be continuing,
the date on which the Insurer shall have declared the Notes to be
immediately due and payable in the manner provided in Section 5.02; or
(iv) if an Event of Default shall have occurred and be continuing
and an Insurer Default has occurred and is continuing, the date on which
the Noteholders representing not less than 66 2/3% of the Note Balances
have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02.
All principal payments on each Class of Notes shall be made pro rata to the
Noteholders of such Class entitled thereto. The Indenture Trustee shall notify
the Person in whose name a Note is registered at the close of business on the
Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed within five Business Days of such Payment Date (or, in
the case of Notes registered in the name of Cede & Co., as nominee of DTC, such
notice shall be provided within one Business Day of such Payment Date) or
receipt of notice of termination of the Trust pursuant to Section 16.01 of
the Trust Agreement and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 12.02. In
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addition, the Administrator shall notify the Insurer and the Rating Agencies
upon the final payment of interest and principal of each Class of Notes, and
upon the termination of the Trust, in each case pursuant to the Administration
Agreement.
SECTION 2.08. Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it; provided that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance, will be
issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Depository, by, or on behalf of, the
Issuer (except for any fractional units which cannot be accepted by DTC). Such
Notes shall initially be registered on the Note Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Note Owner will receive
a Definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.11. Unless and until definitive, fully registered Notes
(the "DEFINITIVE NOTES") have been issued to Note Owners pursuant to Section
2.11:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole holder of the
Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Depository Agreement, unless
and until Definitive Notes are issued pursuant to Section 2.11, the
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest
on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders evidencing a specified
percentage of the Note Balances, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Clearing Agency, and shall
have no obligation to the Note Owners.
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SECTION 2.11. Definitive Notes. If (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities as described in the Depository
Agreement, and the Administrator or the Indenture Trustee is unable to locate a
qualified successor, or (ii) after the occurrence of an Event of Default or a
Servicer Default, Note Owners representing in the aggregate more than 50% of the
Note Balances of all Classes of Notes advise the Indenture Trustee through the
Clearing Agency Participants in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
related Note Owners, then the Indenture Trustee shall notify all Note Owners,
through the Clearing Agency, of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the Note
or Notes evidencing the Book Entry Notes by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes and deliver such
Definitive Notes in accordance with the instructions of the Clearing Agency.
None of the Issuer, the Note Registrar or the Indenture Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Notes of a Class, the Indenture Trustee shall recognize the Holders
of the Definitive Notes as Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee or the
Administrator is unable to locate a qualified successor Clearing Agency. The
Definitive Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
SECTION 2.12. Release of Pledged Assets. Subject to Section 13.01 and the
terms of the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt of an Issuer Request accompanied by
an Officer's Certificate, an Opinion of Counsel and Independent Certificates in
accordance with Sections 314(c) and 314(d)(l) of the TIA or an Opinion of
Counsel in lieu of such Independent Certificates to the effect that the TIA does
not require any such Independent Certificates.
SECTION 2.13. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Issuer secured by the Pledged Assets. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
(and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
SECTION 2.14. ERISA. Each purchaser or transferee of a Note that is a
Benefit Plan shall be deemed to have represented that the relevant conditions
for exemptive relief under Prohibited Transaction Class Exemption ("PTCE")
84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60 or PTCE 96-23 or other applicable
exemption providing substantially similar relief have been satisfied.
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest. The Issuer will duly and
punctually pay Monthly Interest and Monthly Principal on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to Section 9.04(a), the Issuer will cause to be distributed the amount
of Available Funds on a Payment Date. The Issuer will cause the deposits
received on Receivables to be deposited into the Collection Account pursuant to
the Trust Agreement for the benefit of the Noteholders. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the Issuer
to such Noteholder for all purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will or will
cause the Administrator or the Indenture Trustee to maintain in The City of New
York, an office or agency where Notes may be surrendered for
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registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
SECTION 3.03. Money for Payments to be Held in Trust.
(a) As provided in Section 9.02 of the Trust Agreement, all payments of
amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the Collection Account, the Spread Account and the
Payahead Account shall be made on behalf of the Issuer by the Indenture Trustee
or by another Paying Agent, and no amounts so withdrawn from the Collection
Account, the Spread Account and the Payahead Account for payments of Notes shall
be paid over to the Issuer except as provided in this Section.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Pledged Assets and the
Policy as provided in this Indenture and the Issuer shall not otherwise be
liable for payments on the Notes. No Person shall be personally liable for any
amounts payable under the Notes. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this paragraph, the
provisions of this paragraph shall control.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee and the Insurer an instrument in
which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer
(or any other obligor upon the Notes) in the making of any payment required
to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
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Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer upon receipt of an Issuer Request; and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to the Issuer
for payment thereof, and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
that the Indenture Trustee or such Paying Agent, before being required to make
any such repayment, shall at the expense and direction of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to or for the
account of the Issuer. The Indenture Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in monies due and payable but not
claimed is determinable from the records of the Indenture Trustee or of any
Paying Agent, at the last address of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, and the Pledged Assets.
SECTION 3.05. Protection of Trust Estate. The Issuer intends the security
interest Granted pursuant to this Indenture in favor of the Indenture Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the
Pledged Assets, and the Issuer shall take all actions necessary to obtain and
maintain, for the benefit of the Indenture Trustee on behalf of the Noteholders,
a first lien on and a first priority, perfected security interest in the Pledged
Assets. The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
all as prepared by the Servicer and delivered to the Issuer, and will take such
other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Pledged Assets;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any of the Pledged Assets;
(v) preserve and defend title to the Pledged Assets and the rights of
the Indenture Trustee and the Noteholders in such Pledged Assets against
the claims of all persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the Pledged
Assets when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute all financing statements, continuation statements or
other instruments required to be executed pursuant to this Section.
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SECTION 3.06. Opinions as to Pledged Assets.
(a) Promptly after the execution and delivery of this Indenture, the Issuer
shall furnish to the Indenture Trustee and the Insurer an Opinion of Counsel to
the effect that, in the opinion of such counsel, either (i) all financing
statements and continuation statements have been executed and filed that are
necessary to create and continue the Indenture Trustee's first priority
perfected security interest in the Pledged Assets (subject to the rights of the
Insurer under the Insurance Agreement) for the benefit of the Noteholders, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (ii) no such action shall be necessary to
perfect such security interest.
(b) 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,
the Issuer shall furnish to the Indenture Trustee and the Insurer an Opinion of
Counsel, dated as of a date during such 90-day period, to the effect that, in
the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Indenture Trustee's first priority perfected security
interest in the Pledged Assets (subject to the rights of the Insurer under the
Insurance Agreement) for the benefit of the Noteholders, and reciting the
details of such filings or referring to prior Opinions of Counsel in which such
details are given, or (ii) no such action shall be necessary to perfect such
security interest.
SECTION 3.07. Performance of Obligations; Servicing of Receivables.
(a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Pledged Assets or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties and obligations
under this Indenture, and any performance of such duties by a Person identified
to the Indenture Trustee and the Insurer in an Officer's Certificate shall be
deemed to be action taken by the Issuer. The Indenture Trustee shall not be
responsible for the action or inaction of the Servicer or the Administrator.
Initially, the Issuer has contracted with the Servicer as the Administrator to
assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the other Basic Documents and in the
instruments and agreements included in the Pledged Assets, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Trust Agreement in accordance with and within the time periods provided for
herein and therein. Except as otherwise expressly provided therein, the Issuer
shall not waive, amend, modify, supplement or terminate any Basic Document or
any provision thereof without the consent of the Indenture Trustee, the Insurer
(unless an Insurer Default has occurred and is continuing) and the Holders of at
least a majority of the Note Balances of the Notes.
(d) If the Issuer shall have actual knowledge of the occurrence of a
Servicer Default, the Issuer shall promptly notify the Indenture Trustee, the
Insurer and each Rating Agency thereof, and shall specify in such notice the
action, if any, the Issuer is taking with respect of such default. If a Servicer
Default shall arise from the failure of the Servicer to perform any of its
duties or obligations under the Trust Agreement with respect to the Receivables,
the Issuer shall take all reasonable steps available to it to remedy such
failure.
(e) Upon the resignation or termination of the Servicer pursuant to
Sections 13.05 or 14.01 of the Trust Agreement, the Indenture Trustee shall
appoint a successor servicer ("Successor Servicer") acceptable to the Insurer.
If the Indenture Trustee shall succeed to the Servicer's duties as servicer of
the Receivables as provided in 14.02 of the
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Trust Agreement, it shall do so in its individual capacity and not in its
capacity as Indenture Trustee and, accordingly, the provisions of Article Six
shall be inapplicable to the Indenture Trustee in its duties as the successor to
the Servicer and the servicing of the Receivables. In case the Indenture Trustee
shall become successor to the Servicer under the Trust Agreement, the Indenture
Trustee shall be entitled to appoint as Servicer one of its Affiliates, provided
that it shall not be liable for the actions and omissions of any such Affiliate
in such capacity as successor Servicer appointed with due care.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Trust Agreement, the Issuer shall promptly notify the Indenture Trustee and
the Insurer. As soon as a Successor Servicer is appointed, the Issuer shall
notify the Indenture Trustee and the Insurer of such appointment, specifying in
such notice the name and address of such Successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents: (i) without the prior consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) or (ii) if the effect thereof
would adversely affect the Noteholders.
SECTION 3.08. Negative Covenants. Until the Termination Date, the Issuer
shall not:
(i) except as expressly permitted by the Basic Documents, sell,
transfer, exchange or otherwise dispose of any of the properties or assets
of the Issuer, including those included in the Pledged Assets, unless
directed to do so by the Indenture Trustee with the prior written consent
of the Insurer (unless an Insurer Default has occurred and is continuing);
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code or applicable state law) or
assert any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Pledged
Assets;
(iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien created by this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Pledged Assets or any
part thereof or any interest therein or the proceeds thereof (other than
tax liens, mechanics' liens and other liens that arise by operation of law,
in each case on a Financed Vehicle and arising solely as a result of an
action or omission of the related Obligor), (C) permit the lien created by
this Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in the
Pledged Assets; or
(iv) dissolve or liquidate in whole or in part.
SECTION 3.09. Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee and the Insurer, 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 Officer's Certificate dated as of December 31 of the preceding year
stating, as to the Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in
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the compliance of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Conditions. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States or any State and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee and the Insurer, in form and substance satisfactory to the
Indenture Trustee and the Insurer (so long as no Insurer Default has
occurred and is continuing), the due and punctual payment of the principal
of and interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture and each other Basic Document on
the part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such consolidation or merger,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such consolidation or merger;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Indenture Trustee and the
Insurer to the effect that such consolidation or merger will not have any
material adverse tax consequence to the Trust, the Insurer, any Noteholder
or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and the
Insurer an Officer's Certificate and an Opinion of Counsel (which shall
describe the actions taken as required by clause (v) above or that no such
actions will be taken) each stating that such consolidation or merger and
such supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction have
been compiled with (including any filings required by the Exchange Act);
and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of such
consolidation or merger at least 20 Business Days prior to the consummation
of such action and shall have received the prior written approval of the
Insurer of such consolidation or merger and the Issuer or the Person (if
other than the Issuer) formed by or surviving such consolidation or merger
has a net worth, immediately after such consolidation or merger, that is
(A) greater than zero and (B) not less than the net worth of the Issuer
immediately prior to giving effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of its
properties or assets, including those included in the Pledged Assets, to any
Person (except as expressly permitted by the Basic Documents), unless:
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States or any State,
(B) expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee and the Insurer, in form and substance
satisfactory to the Indenture Trustee and the Insurer (so long as no
Insurer Default has occurred and is continuing), the due and punctual
payment of the principal of and interest on all Notes and the performance
or observance of every agreement and covenant of this Indenture and each
other Basic Document on the part of the Issuer to be performed or observed,
all as provided herein, (C) expressly agree by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Noteholders, (D) unless
otherwise provided in such
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supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense arising
under or related to this Indenture and the Notes and (E) expressly agree by
means of such supplemental indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange Act
in connection with the Notes;
(ii) immediately after giving effect to such conveyance or
transference, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such conveyance or transference;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Indenture Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing) to the effect that such conveyance or transference will not
have any material adverse tax consequence to the Trust, the Insurer, any
Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and the
Insurer an Officer's Certificate and an Opinion of Counsel (which shall
describe the actions taken as required by clause (v) above or that no such
actions will be taken) each stating that such conveyance or transference
and such supplemental indenture comply with this Article Three and that all
conditions precedent herein provided for relating to such transaction have
been complied with (including any filings required by the Exchange Act);
and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of such
conveyance or transfer of properties or assets at least 20 Business Days
prior to the consummation of such action and shall have received the prior
written approval of the Insurer of such conveyance or transfer and the
Person acquiring by conveyance or transference the properties or assets of
the Issuer has a net worth, immediately after such conveyance or transfer,
that is (A) greater than zero and (B) not less than the net worth of the
Issuer immediately prior to giving effect to such conveyance or transfer.
SECTION 3.11. Successor Transferee. (a) Upon any consolidation or merger of
the Issuer in accordance with Section 3.10(a), the Person formed by or surviving
such consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the assets or
properties of the Issuer pursuant to Section 3.10(b), the Issuer will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery of written notice to the Indenture Trustee and the Insurer stating
that the Issuer is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in (i) any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto or (ii) any other business or
activities as contemplated by Section 1.03 of the Trust Agreement.
SECTION 3.13. Servicer's Obligations. The Issuer shall cause the Servicer
to comply with the Servicer's obligations under the Trust Agreement.
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SECTION 3.14. Restricted Payments. Except as expressly permitted by the
Basic Documents, the Issuer shall not, directly or indirectly, (i) pay any
dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (A) distributions to the Servicer, the
Indenture Trustee, the Owner Trustee, the Insurer, the Noteholders and the
Certificateholders as contemplated by, and to the extent funds are available for
such purpose under, the Trust Agreement and (B) payments to the Indenture
Trustee and the Owner Trustee pursuant to Section 1(a)(ii) of the Administration
Agreement. The Issuer will not, directly or indirectly, make payments to or
distributions from the Collection Account except in accordance with this
Indenture and the other Basic Documents.
SECTION 3.15. Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee, the Insurer and each Rating Agency prompt written notice of
each Event of Default hereunder and each default on the part of the Servicer or
the Seller of their respective obligations under the Trust Agreement.
SECTION 3.16. Further Instruments and Acts. Upon request of the Indenture
Trustee or the Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
SECTION 3.17. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
SECTION 3.18. Amendments of Trust Agreement. The Issuer shall not agree to
any amendment to Section 17.01 of the Trust Agreement to eliminate the
requirements thereunder that the Noteholders consent to amendments thereto as
provided therein.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.07,
3.08, 3.10, 3.11, 3.12, 3.17 and 3.18, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.02), (vi) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them and (vii) the obligation of the Indenture Trustee
to make claims under the Policy, which shall survive the Final Maturity Date of
the Class B Notes and extend through any preference period applicable with
respect to the Notes or any payments made in respect of the Notes, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.05 and (ii) Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.03) have been delivered to the Indenture
Trustee for cancellation and the Policy has expired and been returned to
the Insurer for cancellation; or
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(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at the Final Maturity Date of the
Class B Notes within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice
of redemption by the Indenture Trustee in the name, and at the expense, of
the Issuer,
and the Issuer, in the case of clauses (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee cash
or Eligible Investments for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the Final Maturity Date of the
Class A-4 Notes and the Class B Notes or Redemption Date (if Notes shall have
been called for redemption pursuant to Section 12.01), as the case may be;
(B) the Issuer has paid or performed or caused to be paid or performed all
amounts and obligations which the Issuer may owe to or on behalf of (1) the
Indenture Trustee for the benefit of the Noteholders under this Indenture or the
Notes and (2) the Insurer under this Indenture and the Basic Documents; and
(C) the Issuer has delivered to the Indenture Trustee and the Insurer an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA, the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 13.01(a) and,
subject to Section 13.02, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with and the Rating Agency Condition has been satisfied.
SECTION 4.02. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.01 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
monies need not be segregated from other funds except to the extent required
herein or in the Trust Agreement or required by law.
SECTION 4.03. Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Events of Default. "Event of Default," wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Note when the same
becomes due and payable and such default shall continue for a period of five
days after notice thereof is given to the Issuer, the Insurer and the Servicer;
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(b) default in the payment of any principal due and payable on a Class of
Notes on the Final Maturity Date for such Class of Notes and such default shall
continue for a period of five days after notice thereof is given to the Issuer,
the Insurer and the Servicer;
(c) (i) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section specifically dealt with), and such default shall continue or not be
cured for a period of 90 days after notice thereof shall have been given, by
registered or certified mail, to the Issuer by the Indenture Trustee or the
Insurer or to the Issuer and the Indenture Trustee by the Holders of at least25%
of the Note Balances, acting together as a single class or (ii) any
representation or warranty made by the Issuer in this Indenture or in any
certificate delivered pursuant hereto or in connection herewith having been
incorrect in a material respect as of the time made, and such breach not having
been cured within 30 days after notice thereof is given to the Issuer by the
Indenture Trustee or the Insurer, or to the Issuer and the Indenture Trustee by
the holders of at least 25% of the Note Balances of the Notes acting together as
a single class;
(d) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Pledged Assets in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Pledged
Assets, or ordering the winding-up or liquidation of the Issuer's affairs, and
such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(e) the commencement by the Issuer of a voluntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to the
appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or for any substantial
part of the Pledged Assets, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of action by the Issuer
in furtherance of any of the foregoing; provided, however that so long as no
Insurer Default has occurred and is continuing, neither the Indenture Trustee
nor the Noteholders may declare an Event of Default under the Indenture. So long
as an Insurer Default has not occurred and is continuing, an Event of Default
shall occur only upon delivery by the Insurer to the Indenture Trustee of notice
of the occurrence of an Event of Default. The failure to pay principal on a
class of Notes shall not result in the occurrence of an Event of Default until
the Final Maturity Date for such class of Notes.
The Issuer shall deliver to the Indenture Trustee and the Insurer, within
five days after obtaining knowledge of the occurrence thereof, written notice in
the form of an Officer's Certificate of any event which with the giving of
notice or the lapse of time would become an Event of Default, its status and
what action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02. Rights Upon Event of Default. (a) So long as no Insurer
Default has occurred and is continuing, if an Event of Default shall have
occurred and is continuing, then the Insurer shall have the right, but not the
obligation, upon prior written notice to each Rating Agency, to declare by
written notice to the Issuer, the Servicer and the Indenture Trustee that the
Notes become immediately due and payable, and upon any such declaration the
unpaid principal amount of the Notes, together with accrued and unpaid interest
thereon, shall become immediately due and payable. The Indenture Trustee will
have no discretion with respect to the acceleration of the Notes under the
foregoing circumstances. In the event of any such acceleration of the Notes, the
Indenture Trustee shall continue to make claims under the Policy with respect to
the Notes.
(b) If an Insurer Default shall have occurred and be continuing and an
Event of Default specified in Section 5.01(a), (b), (c), (d) or (e) shall have
occurred and be continuing, the Indenture Trustee shall, if so requested in
writing by the Noteholders representing at least 66 2/3% of the aggregate Note
Balances of the Notes, upon prior written notice
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to each Rating Agency, declare that the Notes become immediately due and
payable, and upon any such declaration the unpaid principal amount of the Notes,
together with accrued and unpaid interest thereon, shall become immediately due
and payable.
(c) Following any Event of Default, the Insurer may elect to pay all or any
portion of the outstanding amount of the Notes, plus accrued interest thereon to
the date of payment.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that, if the Notes are accelerated
following the occurrence of an Event of Default, the Issuer will, upon demand of
the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the whole amount then due and payable on such Notes for principal
and interest, with interest upon the overdue principal, and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the applicable interest rates and in addition
thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses and
disbursements of the Indenture Trustee and its agents and counsel.
(b) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall (i) if no Insurer Default has occurred and is
continuing, at the direction of the Insurer, or (ii) if an Insurer Default shall
have occurred and be continuing, at the direction of the Noteholders
representing at least 66 2/3% of the Note Balances of the Notes, as more
particularly provided in Section 5.04, proceed to protect and enforce the rights
of the Noteholders, by such appropriate Proceedings as the Indenture Trustee
shall deem most effective to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.
(c) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Pledged Assets, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Noteholders in any election of a trustee, a standby trustee
or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
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(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Noteholders allowed in any judicial proceedings relative to
the Issuer, its creditors and its property; and any trustee, receiver,
liquidator, custodian or other similar official in any such Proceeding is
hereby authorized by each of such Noteholders to make payments to the
Indenture Trustee, and, in the event that the Indenture Trustee shall
consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred by the Indenture Trustee and
each predecessor Indenture Trustee except as a result of negligence or bad
faith.
(d) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(e) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Noteholders.
(f) In any Proceedings brought by the Indenture Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all the Noteholders, and it
shall not be necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.04. Remedies. (a) If (i) an Event of Default shall have occurred
and be continuing, the Indenture Trustee shall (subject to Section5.04(b) below
and Section 5.05), if no Insurer Default has occurred and is continuing, at the
direction of the Insurer, or (ii) if an Event of Default specified in Section
5.01(a), (b), (c), (d) or (e) shall have occurred and be continuing, the
Indenture Trustee shall (subject to Section 5.04(b) below and Section 5.05), if
an Insurer Default has occurred and is continuing, at the direction of the
Noteholders representing at least 66 2/3% of the Note Balances of the Notes,
take one or more of the following actions as so directed:
(i) institute Proceedings in its own name and as or on behalf of a
trustee of an express trust for the collection of all amounts then payable
on the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Pledged Assets;
(iii) exercise any remedies of a secured party under the UCC and any
other remedy available to the Indenture Trustee and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee on behalf of the Noteholders under this Indenture or the
Notes;
(iv) sell or cause the Servicer to otherwise liquidate the Pledged
Assets or any portion thereof or rights or interests therein, at one or
more public or private sales called and conducted in any manner permitted
by law and deliver the proceeds of such sale or liquidation to the
Indenture Trustee for distribution in accordance with the terms of this
Indenture; and
(v) maintain possession of the Pledged Assets.
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(b) Notwithstanding the foregoing,
(i) in the event that the Indenture Trustee is acting at the
direction of the Insurer, so long as an Insurer Default has occurred and is
continuing, if an Event of Default specified in Section 5.01(a), (b) or (c)
shall have occurred and be continuing, the Insurer shall not have the right
to cause the Indenture Trustee or the Servicer to, and neither the
Indenture Trustee nor the Servicer shall, liquidate the Pledged Assets in
whole or in part if the proceeds of such sale or liquidation would not be
sufficient to pay all outstanding principal of and accrued interest on the
Notes; and
(ii) in the event that the Indenture Trustee is acting at the
direction of the Noteholders representing at least 66 2/3% of the Note
Balances of the Notes, the Noteholders shall not have the right to direct
the Indenture Trustee or the Servicer to, and neither the Indenture Trustee
nor the Servicer shall, liquidate the Pledged Assets in whole or in part
unless an Event of Default as specified in Section 5.01(d) or (e) shall
have occurred and be continuing and in any case the Insurer shall have
failed to make a payment required under the Policy in accordance with its
terms.
(c) In determining the sufficiency or insufficiency of the proceeds of a
sale or liquidation of the Pledged Assets to pay all amounts required pursuant
to Section 5.04(b)(i) above, the Indenture Trustee may, but need not, at the
sole expense of the Issuer obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Pledged
Assets for such purpose.
SECTION 5.05. Optional Preservation of the Receivables. If the Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee shall, absent direction to the contrary from the
Insurer or the Noteholders pursuant to Section 5.04, maintain possession of the
Pledged Assets.
SECTION 5.06. Priorities. (a) If the Notes have been declared to be due and
payable under Section 5.02 following an Indenture Event of Default and such
declaration and its consequences have not been rescinded and annulled, any money
collected by the Indenture Trustee with respect to the Pledged Assets, the Notes
or the Certificates pursuant to this Article or otherwise and any money that may
then be held or thereafter received by the Indenture Trustee with respect to the
Pledged Assets, the Notes or the Certificates (excluding any payments made under
the Policy), shall be applied pursuant to Section 9.04(a).
(b) The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Note Balances of the
Notes have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
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(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings;
(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Holders of a
majority of the Note Balances of the Notes, voting together as a single
class; and
(vi) an Insurer Default shall have occurred and be continuing.
It is understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
representing less than a majority of the Note Balances of the Notes, the
Indenture Trustee in its sole discretion may determine that action, if any,
shall be taken, notwithstanding any other provisions of this Indenture and any
such action shall be binding on all parties.
SECTION 5.08. Unconditional Rights of Noteholders to Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payments of Monthly Interest and Monthly Principal on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Indenture Trustee,
the Insurer or any Noteholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee, the Insurer or to such Noteholder, then and in every such case the
Issuer, the Indenture Trustee, the Insurer and the Noteholders shall, subject to
any determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Insurer or any Holder of any Note to exercise any right
or remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of Default
or an acquiescence therein. Every right and remedy given by this Article Five or
by law to the Indenture Trustee, the Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Insurer or by the Noteholders, as the case may be.
SECTION 5.12. Control by Noteholders. The Holders of a majority of the Note
Balances of the Notes shall have the right to direct the time, method and place
of conducting any Proceeding for any remedy available to the Indenture Trustee
with respect to the Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that:
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(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) any direction to the Indenture Trustee to sell or liquidate the
Pledged Assets shall be subject to the terms of Section 5.04; and
(iii) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines,
in its sole discretion, might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Insurer or the Noteholders representing not less than a majority of the Note
Balances of the Notes with the consent of the Insurer may waive any past Default
or Event of Default and its consequences except a Default (a) in the payment of
or interest on any of the Notes or (b) in respect of a covenant or provision
hereof that cannot be modified or amended without the consent of the Holder of
each Note, as applicable. In the case of any such waiver, the Issuer, the
Indenture Trustee, the Insurer and the Noteholders shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee, (ii) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Note
Balances of the Notes or (iii) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture (or, in
the case of redemption, on or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in and manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantages of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
SECTION 5.16. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Pledged Assets or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.06.
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SECTION 5.17. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller and the Servicer as applicable, of each of their obligations to
the Issuer under or in connection with the Trust Agreement in accordance with
the terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Trust Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Seller or the Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Seller or the
Servicer of each of their obligations under the Trust Agreement.
(b) If the Indenture Trustee is the Controlling Party and if an Event of
Default has occurred and is continuing, the Indenture Trustee may, and at the
direction (which direction shall be given in writing and may include a
facsimile) of the Holders of 66 2/3% of the Note Balances of the Notes shall,
exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Seller or the Servicer under or in connection with the Trust
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Seller or the Servicer of each of their
obligations to the Issuer thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Trust Agreement, and any
right of the Issuer to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, and of which the Indenture Trustee shall have actual
knowledge, the Indenture Trustee shall exercise the rights and powers vested in
it by this Indenture and with the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs; provided, however, that if the
Indenture Trustee shall assume the duties of the Servicer pursuant to Section
3.07(e), the Indenture Trustee in performing such duties shall use the degree of
care and skill customarily exercised by a prudent institutional servicer with
respect to automobile retail installment sales contracts that it services for
itself or others.
(b) Except during the continuance of an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual knowledge or
written notice:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and the other Basic Documents
to which the Indenture Trustee is a party; provided, however, that the
Indenture Trustee shall not be responsible for the accuracy or content of
any of the aforementioned documents and the Indenture Trustee shall have no
obligation to verify, re-compute or recalculate any numerical information
provided to it pursuant to the Basic Documents.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of Section 6.01(b);
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(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Trust Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) The Indenture Trustee shall, and hereby agrees that it will (i) perform
all of the obligations and duties required of it under the Trust Agreement and
(ii) hold the Policy in trust, and will hold any proceeds of any claim on the
Policy in trust solely for application as provided in the Trust Agreement.
(j) Except as otherwise required or permitted by the TIA, nothing contained
herein shall be deemed to authorize the Indenture Trustee to engage in any
business operations or any activities other than those set forth in this
Indenture. Specifically, the Indenture Trustee shall have no authority to engage
in any business operations, acquire any assets other than those specifically
included in the Pledged Assets under this Indenture or otherwise vary the assets
held by the Trust. Similarly, the Indenture Trustee shall have no discretionary
duties other than performing those ministerial acts set forth above necessary to
accomplish the purpose of this Trust as set forth in this Indenture.
(k) The Indenture Trustee shall not be liable in its individual capacity
with respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with this Indenture or at the direction of a majority of the
Note Balances of Notes, relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising or
omitting to exercise any trust or power conferred upon the Indenture Trustee,
under this Indenture.
(l) The Indenture Trustee shall not be required to take notice or be deemed
to have notice or knowledge of any Default or Event of Default unless a
Responsible Officer of the Indenture Trustee shall have received written notice
thereof. In the absence of receipt of such notice, the Indenture Trustee may
conclusively assume that there is no Default or Event of Default.
(m) Subject to the other provisions of this Indenture, the Indenture
Trustee shall have no duty (i) to see to any recording, filing, or depositing of
this Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (ii) to see to any insurance, (iii) 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 Pledged Assets, or (iv) to confirm or verify the
contents
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of any reports or certificates delivered to the Indenture Trustee pursuant to
this Indenture believed by the Indenture Trustee to be genuine and to have been
signed or presented by the proper party or parties.
(n) Anything in this Agreement to the contrary notwithstanding, in no event
shall the Indenture Trustee be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Indenture Trustee has been advised of the likelihood of
such loss or damage regardless of the form of action.
SECTION 6.02. Rights of Indenture Trustee.
(a) Except as otherwise provided in the second succeeding sentence, the
Indenture Trustee may conclusively rely and shall be protected in acting upon or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, note, direction, demand,
election or other paper or document believed by it to be genuine and to have
been signed or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document. Notwithstanding the
foregoing, the Indenture Trustee, subject to Section 6.01(b)(ii) upon receipt of
all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the Indenture Trustee that shall be
specifically required to be furnished pursuant to any provision of this
Indenture, shall examine them to determine whether they comply as to form to the
requirements of this Indenture.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable. The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney, custodian or nominee appointed by the Indenture Trustee with due care.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order or
direction of any of the Noteholders, pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Indenture Trustee of the obligation, during the continuance
of an Event of Default of which a Responsible Officer of the Indenture Trustee
shall have actual knowledge, to exercise such of the rights and powers vested in
it by this Indenture, and to use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(g) The Indenture Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by a majority of
Noteholders; provided, however, that if the payment within a reasonable time to
the Indenture Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Indenture Trustee, not reasonably assured to the Indenture
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Trustee by the security afforded to it by the terms of this Agreement, the
Indenture Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to taking any such action.
(h) The right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and the Indenture
Trustee shall not be answerable for other than its willful misconduct,
negligence or bad faith in the performance of such act.
SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Indenture Trustee is required to comply with Sections 6.11 and 6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Pledged Assets or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing and
a Responsible Officer of the Indenture Trustee has actual knowledge or has
received written notice thereof, the Indenture Trustee shall mail to each
Noteholder and the Insurer notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on any
Note (including payments pursuant to the redemption of Notes), the Indenture
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall cause the
Servicer to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall cause the Servicer to reimburse the Indenture Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses and disbursements and advances of the
Indenture Trustee's agents, counsel, accountants and experts. The Issuer shall,
or shall cause the Administrator to, indemnify the Indenture Trustee against any
and all loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder. The Indenture Trustee shall notify the Issuer and the
Administrator promptly of any claim for which it may seek indemnity. Failure by
the Indenture Trustee to so notify the Issuer and the Administrator shall not
relieve the Issuer or the Administrator of its obligations hereunder. The Issuer
shall, or shall cause the Administrator to, defend any such claim, and the
Indenture Trustee may have separate counsel and the Issuer shall, or shall cause
the Administrator to, pay the fees and expenses of such counsel. Neither the
Issuer nor the Administrator need reimburse any expense or indemnify against any
loss, liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's obligations to the Indenture Trustee pursuant to this Section
shall survive the resignation or removal of the Indenture Trustee and the
discharge of this Indenture. When the Indenture Trustee incurs expenses after
the occurrence of a Default specified in Section 5.01(e) or (f) with respect to
the Issuer, the expenses are intended to constitute expenses of administration
under Title 11 of the United States Code or any other applicable federal or
state bankruptcy, insolvency or similar law.
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SECTION 6.08. Replacement of Indenture Trustee. The Indenture Trustee
may resign at any time by so notifying the Issuer, the Servicer and the Insurer.
The Issuer, may, with the consent of the Insurer, and, at the request of the
Insurer shall, remove the Indenture Trustee, unless an Insurer Default shall
have occurred and be continuing, if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect
of the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or similar official) for
the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the
Indenture Trustee's affairs, provided any such decree or order shall
have continued unstayed and in effect for a period of 30 consecutive
days;
(iii) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator or other similar official for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due
or takes any corporate action in furtherance of any of the foregoing;
or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable to the Insurer.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights, powers
and duties of the Indenture Trustee under this Indenture. The Issuer or the
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of the Note Balances
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee pursuant to the provisions of this Section shall
not become effective until acceptance of appointment by the successor Indenture
Trustee pursuant to this Section and payment of all fees and expenses owed to
the outgoing Indenture Trustee. Notwithstanding the replacement of the Indenture
Trustee pursuant to this Section, the retiring Indenture Trustee shall be
entitled to payment or reimbursement of such amounts as such Person is entitled
pursuant to Section 6.07.
SECTION 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under
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Section 6.11. The Indenture Trustee shall provide the Insurer and each Rating
Agency prompt notice of any such transaction.
In case at the time such successor by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force and effect of the certificate of the Indenture Trustee
pursuant to the Notes or this Indenture.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Pledged Assets may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, jointly with the
Indenture Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Noteholders, such title to the Pledged Assets, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor Indenture Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to 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 Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of co-appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision relating to the
conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in
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respect of this Indenture 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 Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding anything to the
contrary in this Indenture, the appointment of any separate trustee or
co-trustee shall not relieve the Indenture Trustee of its obligations and duties
under this Indenture.
SECTION 6.11. Eligibility. The Indenture Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Indenture Trustee hereunder
shall at all times be a financial institution organized and doing business under
the laws of the United States of America or any state, authorized under such
laws to exercise corporate trust powers, whose long term unsecured debt is rated
at least ____ by _______ and shall have a combined capital and surplus of at
least $50,000,000 or shall be a member of a bank holding system to the aggregate
combined capital and surplus of which is $50,000,000 and subject to supervision
or examination by federal or state authority, provided that the Trustee's
separate capital and surplus shall at all times be at least the amount required
by Section 310(a)(2) of the TIA. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section 6.11, the combined
capital and surplus of such Person 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 6.11, the Trustee shall resign immediately in the
manner and with the effect specified in Section 6.08. The Indenture Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Sections 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to Section 311(a) to the extent indicated.
SECTION 6.13. Representations and Warranties of Indenture Trustee. The
Indenture Trustee hereby makes the following representations and warranties on
which the Issuer and Noteholders shall rely:
(a) the Indenture Trustee is a corporation duly organized, validly
existing and in good standing under the laws of its place of incorporation; and
(b) the Indenture Trustee has full power, authority and legal right to
execute, deliver, and perform this Indenture and shall have taken all necessary
action to authorize the execution, delivery and performance by it of this
Indenture.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (i) not more than five days after the earlier of (a) each
Record Date and (b) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Noteholders as of such Record Date and (ii) at such other times as the
Indenture Trustee may request in writing, within 10 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than ten days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished. The Indenture Trustee or, if the Indenture Trustee
is not the Note Registrar, the Issuer shall furnish to the Insurer in writing at
such times as the Insurer may reasonably request a copy of the list.
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SECTION 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.01 and the names and addresses of Noteholders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) which the
Issuer may be required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04. Reports by Indenture Trustee. To the extent that any of
the events described in TIA Section 313(a) shall have occurred, the Indenture
Trustee shall, within 60 days after each June 15 beginning with June 15,
____, mail to the Issuer, the Insurer and each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
ARTICLE VIII
INTENTIONALLY BLANK
ARTICLE IX
DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDERS
SECTION 9.01. Collection Account. The Issuer shall cause the Servicer
to establish the Collection Account with the Indenture Trustee or another
Eligible Bank as a segregated trust account in the name of the Indenture Trustee
for the benefit of the Secured Parties. The amounts in the Collection Account
shall be invested in Eligible Investments
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that mature not later than the Business Day prior to the next succeeding Payment
Date and such Eligible Investments shall be held to maturity. The Indenture
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 Indenture Trustee or
registered in the name of the Indenture Trustee and (ii) cause any Eligible
Investment represented by an uncertificated security to be registered in the
name of the Indenture Trustee.
SECTION 9.02. Collections. The Indenture Trustee shall review the
Servicer's Certificate prepared by the Servicer immediately upon receipt thereof
pursuant to Section 9.02 of the Trust Agreement.
For any Payment Date on which there will not be sufficient Available
Funds to make the distributions required pursuant to Sections 9.04(a)(i) through
(vi), the Indenture Trustee shall withdraw or direct the Servicer to 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 Collection
Account. If such deficiency exceeds the Available Spread Amount, the Indenture
Trustee shall notify the Insurer of the amount of such excess deficiency. The
Indenture Trustee shall promptly (and in any event not later than 1:00 p.m., New
York City time, on the Business Day preceding the Payment Date) deliver a Notice
for Payment as defined in the Policy (appropriately completed) to the Fiscal
Agent with respect to the Policy. The Insurer is required pursuant to Section
10.03 and the terms of the Policy to pay the amount of such excess deficiency of
Monthly Interest and Monthly Principal, up to the Policy Amount.
The Indenture Trustee shall, immediately upon receipt, deposit in the
Collection Account any funds received by the Indenture Trustee in respect of
funds drawn under the Policy from the Insurer.
If the Available Funds for a Payment Date are insufficient to pay
current and past due Insurance Premiums on the Policy, or any amounts owing to
the Insurer pursuant to the Insurance Agreement including, without limitation,
reimbursements, indemnities, fees and expenses, plus accrued interest thereon,
to the Insurer, the Servicer shall notify the Indenture Trustee of such
deficiency, and the applicable 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. Pursuant to the Trust Agreement, the
Servicer and the Seller have agreed to remit to the Collection Account not later
than the Determination Date, the aggregate Purchase Amount for such Collection
Period pursuant to Sections 7.02 and 8.07 of the Trust Agreement.
SECTION 9.04. Distributions to Parties. (a) On each Payment Date, the
Indenture Trustee shall apply or cause to be applied the Available Funds in the
Collection Account for the prior Collection Period, (plus any amounts withdrawn
from the Spread Account or drawn on the Policy pursuant to Section 9.02), to
make the following payments in the listed order of priority:
(i) Without duplication, an amount equal to the sum of (y)
Outstanding Advances on all Receivables that became Defaulted
Receivables during the prior Collection Period, plus (z) Outstanding
Advances which the Servicer determines to be unrecoverable pursuant to
Section 9.05 of the Trust Agreement, to the Servicer;
(ii) To the extent not previously distributed to the
Servicer, the Monthly Servicing Fee, including any such overdue Monthly
Servicing Fee, to the Servicer;
(iii) Class A Monthly Interest to the Class A Noteholders;
(iv) Monthly Principal to the Class A Noteholders, in
accordance with the Principal Payment Sequence;
(v) Class B Monthly Interest to the Class B Noteholders;
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(vi) Monthly Principal to the Class B Noteholders in
accordance with the Principal Payment Sequence (only after the
Principal Balances of the Class A Notes have been repaid in full);
(vii) The Insurance Premium, including any overdue Insurance
Premium, plus accrued interest thereon at the rate provided in the
Insurance Agreement, to the Insurer;
(viii) The amount of Recoveries of Advances, to the Servicer
(to the extent not applied pursuant to (i) above on or prior to such
Payment Date);
(ix) The aggregate amount of all unreimbursed draws made on
the Policy in respect of Monthly Interest and Monthly Principal and any
other amounts payable to the Insurer under the Insurance Agreement,
plus accrued interest thereon at the rate provided in the Insurance
Agreement, to the Insurer;
(x) The balance for deposit in the Spread Account. The
rights of the Certificateholders to receive distributions from the
Spread Account are described in Sections 10.02(e) and (f).
(b)(i) If on any Payment Date there are not sufficient Available Funds (together
with amounts withdrawn from the applicable Spread Account and/or the Policy) to
pay the distributions required by Section 9.04(a)(iii) through (vi), the
Available Funds payable under Section 9.04(a)(iii) through (vi) shall be
allocated first to Class A Noteholders pari passu for the payment of Class A
Monthly Interest, and second for Class A Monthly Principal. The amount of
Monthly Interest allocated to Class A Noteholders shall be based upon the amount
of interest due each class of Class A Noteholders and the amount of Monthly
Principal allocated to Class A Noteholders shall be based upon the relative
outstanding Note Balance of each class of Class A Notes then Outstanding.
(ii) Notwithstanding the foregoing, if on any Payment Date,
the Certificateholder exercises its option to cause a disposition of
the remaining corpus of the Trust pursuant to Section 16.02 of the
Trust Agreement: (a) the Available Funds and amounts withdrawn from the
Spread Account or drawn on the Policy in respect only of Monthly
Interest and Monthly Principal with respect to the immediately
preceding Payment Date as determined in accordance with Sections 9.02
and 9.04 shall be distributed to the Noteholders on such Payment Date;
(b) the Policy will not be available to pay any shortfall of Monthly
Interest or Monthly Principal after a prepayment of the Note Balances
pursuant to this Section 9.04(a)(ii); and (c) any remaining Pledged
Assets (including all remaining Available Spread Amounts) shall be paid
to the Noteholders on such Payment Date until the Note Balances shall
have been reduced to zero. Any amounts in excess thereof shall be
remitted to the Certificateholder pursuant to the Trust Agreement.
(iii) In making such payments the Indenture Trustee shall be
entitled to rely (without investigation, confirmation or recalculation)
upon all information and calculations contained in the Servicer's
Certificate delivered to the Indenture Trustee pursuant to Section 8.09
of the Trust Agreement.
(iv) All monthly payments shall be made by wire transfer of
immediately available funds to the Noteholder of record on the
preceding Record Date. Notwithstanding the foregoing, the final payment
on the Notes shall be made only against presentation and surrender of
the Notes at the office or agency then maintained by the Indenture
Trustee in accordance with Section 3.02 of this Indenture.
(c) On each Payment Date, if the Servicer has reported to the Indenture
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 to such Obligor for monies
previously collected and remitted to the Indenture Trustee and not otherwise
netted against collections pursuant to Section 9.02, the Indenture Trustee shall
make all payments in respect of such claims or defenses out of the amounts on
deposit in the Collection Account with respect to such Collection Period before
making the distributions required by paragraph (a) of this Section 9.04.
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(d) If the Servicer has failed to provide the Indenture Trustee with
the notice required pursuant to Section 9.02, the Indenture Trustee may
calculate Monthly Interest and Monthly Principal and apply funds, if any, in the
Collection Account as of the last day of the Collection Period, to make a
distribution of Monthly Interest and Monthly Principal to the Noteholders.
SECTION 9.05. Servicer Advances. The Servicer is required to make
certain Advances pursuant to Section 9.05 of the Trust Agreement. If the
Servicer shall determine that an Outstanding Advance with respect to any
Receivable shall not be recoverable, the Servicer shall be entitled to
reimbursement from any collections made on other Receivables pursuant to Section
9.04(a)(i), and Outstanding Advances with respect to such Receivable shall be
reduced accordingly.
SECTION 9.06. Net Deposits. For so long as BVAC is the Servicer, BVAC
(in whatever capacity) may make the remittances with respect to any Payment 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 Payment Date. Nonetheless, the Servicer shall account
for all of the above described amounts as if such amounts were deposited and
distributed.
SECTION 9.07. Intentionally Blank.
SECTION 9.08. Intentionally Blank.
SECTION 9.09. Payahead Account. The Servicer shall establish the
Payahead Account with the Indenture Trustee or another Eligible Bank in the name
of the Indenture Trustee on behalf of the Obligors and the Noteholders as their
interests may appear pursuant to Section 9.09 of the Trust Agreement. 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 Payment Date, the Servicer shall transfer or the
Indenture 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 and previously deposited
to the Collection Account during the Collection Period as described in Section
8.02(b) of the Trust Agreement; 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 the related Scheduled Payments
on Precomputed Receivables for the related Collection Period or prepayments for
the related Collection Period, pursuant to Section 8.02(b) of the Trust
Agreement, 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 any
Payahead Account shall not constitute Available Funds under Section 9.02. Any
amount deposited to the Collection Account from a Payahead Account pursuant to
Section 9.09(b) shall be included in Available Funds under Section 9.02.
SECTION 9.10. Release of Pledged Assets. (a) Subject to the payment of
its fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and
when required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article shall
be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Pledged Assets that secured the
Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 9.10(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 13.01.
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SECTION 9.11. Opinion of Counsel. The Indenture Trustee shall receive
at least seven days' notice when requested by the Issuer to take any action
pursuant to Section 9.10(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee
(and not at the expense of the Indenture Trustee), stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Pledged
Assets. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE X
CREDIT ENHANCEMENT
SECTION 10.01. Subordination. The payment of Monthly Interest and
Monthly Principal to Class B Noteholders shall be subordinated to the payment of
Class A Monthly Interest and Class A Monthly Principal on any Payment Date.
SECTION 10.02. Spread Account. (a) On or prior to the Closing Date, the
Indenture Trustee shall establish and maintain a segregated trust account with
the Indenture Trustee or in the corporate trust department of another Eligible
Bank referred to herein as the "Spread Account." The Spread Account shall be
maintained in the name of the Indenture Trustee. The Spread Account and any
amounts on deposit therein shall be part of the Pledged Assets and shall be for
the benefit of Secured Parties, as their respective interests may appear herein;
provided, however, that the interest of the Insurer therein shall be
subordinated to the interests of the Noteholders 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 Collection Account pursuant to
Section 9.01, including the limitation that Eligible Investments mature not
later than the Business Day prior to the next succeeding Payment Date; provided,
however, that no such limitation on the maturity of Eligible Investments shall
apply if the Indenture Trustee 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 Insurer and the Administrative
Agent, with respect to funds in the Spread Account (a "Spread Account Facility")
and _________________ and _______ confirm in writing that the rating of the
Notes will not be lowered or withdrawn as a result of eliminating or modifying
the limitation on the maturity of Eligible 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 Indenture, 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 such Spread Account,
do not exceed the Required Spread Amount.
(c) If on any Payment Date the amount of Available Funds is
insufficient to make the distributions required by Sections 9.04(a)(i) through
(vi), the Indenture Trustee shall withdraw or cause to be withdrawn from the
Spread Account and deposited in the Collection 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 permitted reimbursements of Outstanding
Advances pursuant to Section 9.04(a)(i), the Monthly Servicing Fee, Monthly
Interest and Monthly Principal (prior to making any draw on the Policy), all as
provided in Sections 9.02 and 9.04 and the Policy.
(d) On each Payment Date, all distributions made pursuant to Section
9.04(a)(x) shall be deposited into the Spread Account; provided, however, that
the Accelerated Principal Amount has been paid in full to the Noteholders.
(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 Insurer) is greater than the Required
Spread Amount on such Payment Date (after giving effect to the payment of the
Accelerated Principal Amount in
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Monthly Principal), the amount of such excess shall be distributed by the
Indenture Trustee to the Owner Trustee, or as the Owner Trustee shall direct in
accordance with the Trust Agreement to the Certificateholders. Amounts properly
distributed to the Owner Trustee or Certificateholders 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 security interest of the
Indenture Trustee on behalf of the Secured Parties.
(f) The Certificateholders are permitted to purchase the Receivables
from the Issuer when the Pool Balance has been reduced to ___% or less of the
Original Pool Balance pursuant to Section 16.02 of the Trust Agreement. Upon
discharge and satisfaction of this Indenture pursuant to Section 16.01, amounts
remaining in the Spread Account, after payment of any amounts due and owing to
the Noteholders and to the Insurer, shall be distributed by the Indenture
Trustee to the Owner Trustee, or as the Owner Trustee shall direct in accordance
with the Trust Agreement to the Certificateholders and such amounts shall not be
subject to any claims or rights of any Noteholder.
SECTION 10.03. Policy. (a) The Insurer is required under the terms of
the Policy to pay Monthly Interest and Monthly Principal up to the Policy Amount
in the event of any deficiency of Available Funds to pay such amounts (after
permitted reimbursements of related Outstanding Advances and payment of the
related Monthly Servicing Fee) not covered by amounts withdrawn from the Spread
Account, as determined pursuant to Section 9.02 to the Indenture Trustee for
credit to the Collection Account on the later of (a) 12:00 noon, New York City
time, on the Payment Date and (b) 12:00 noon, New York City time, on the
Business Day immediately succeeding presentation to the Fiscal Agent of the
Indenture Trustee's demand therefor. Any demand for payment pursuant to Section
9.02 to the Fiscal Agent received by the Fiscal Agent 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 Fiscal Agent at 9:00 a.m., New York City time, on
the next Business Day. Notwithstanding the foregoing, on a Dissolution Payment
Date, the obligations of the Insurer under the Policy shall be limited in
accordance with Section 9.04(b)(ii). The Indenture Trustee hereby agrees on
behalf of the Noteholders (and each Noteholder, by its acceptance of its Notes,
hereby agrees) for the benefit of the Insurer that the Indenture Trustee shall
recognize that to the extent the Insurer makes a payment under the Policy,
either directly or indirectly (as by paying through the Indenture Trustee), to
the Noteholders, the Insurer will be entitled to be subrogated to the rights of
the Noteholders to the extent of such payments under the Policy. Any rights of
subrogation acquired by the Insurer as a result of any payment made under the
Policy shall, in all respects, be subordinate and junior in right of payment to
the prior indefeasible payment in full of all amounts due the Indenture Trustee
on account of payments due under the Notes pursuant to Section 9.04 hereof.
(b) The Insurer shall pay any Preference Amounts, but only after there
shall have been delivered to the Insurer (x) a certified copy of a final order
of the court exercising jurisdiction in the Insolvency Proceeding to the effect
that the Indenture Trustee is required to return any such payment or portion
thereof prior to the Termination Date (as defined in the Policy) of the Policy
because such payment was voided under applicable law, with respect to which
order the appeal period has expired without an appeal having been filed (the
"Final Order"), (y) an assignment, in the form of Exhibit D to the Policy,
irrevocably assigning to the Insurer all rights and claims of such Indenture
Trustee relating to or arising under such Avoided Payment and (z) a Notice for
Payment in the form of Exhibit A to the Policy appropriately completed and
executed by the Indenture Trustee. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Final Order and not to the Indenture Trustee directly. In no event shall the
Insurer pay more than one Insured Payment in respect of any Preference Amount.
The Indenture Trustee, for itself and on behalf of the Noteholders,
agrees that the Insurer may at any time during the continuation of any
proceeding relating to a Final Order direct all matters relating to such Final
Order, including, without limitation, the direction of any appeal of any order
relating to such Final Order and the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without limitation of
the foregoing, the Insurer shall be subrogated, to the extent of the Insured
Payments, to the rights of BVAC, the Servicer, the Seller, the Issuer, the
Indenture Trustee and the Noteholders in the conduct of any preference claim,
including, without limitation, all rights of any party to any adversarial
proceeding or action with respect to any court order issued in connection with
any such preference claim.
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ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with the
consent of the Insurer and with prior notice to each Rating Agency, the Issuer
and the Indenture Trustee, when authorized by an Issuer Order, and the other
parties hereto at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien created by this Indenture, or to
subject to the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or the Basic Documents or to make any other provisions with
respect to matters or questions arising under this Indenture or in any
supplemental indenture; provided that such action shall not adversely
affect the interests of the Noteholders;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article Six; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Noteholders but with the
consent of the Insurer and with prior notice to each Rating Agency, enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Noteholders
under this Indenture; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Noteholder.
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SECTION 11.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to each Rating Agency, with the consent of the Insurer and
with the consent of the Holders of not less than a majority of the Note Balances
of the Notes, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Noteholders under this Indenture; provided, however, that, subject
to the express rights of the Insurer under the Basic Documents, no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest rate
thereon or the Redemption Price with respect thereto, or change any place of
payment where, or the coin or currency in which, any Note or the interest
thereon is payable;
(b) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due on the
Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(c) reduce the percentage of the Note Balances of the Notes, the
consent of the Holders of which is required for any such supplemental indenture,
or the consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(d) modify or alter the provisions of the second proviso to the
definition of the term "Outstanding";
(e) reduce the percentage of the Note Balances of the Notes, the
consent of the Holders of which is required to direct the Indenture Trustee to
sell or liquidate the Pledged Assets pursuant to Section 5.04;
(f) decrease the percentage of the Note Balances of the Notes required
to amend this Indenture or the other Basic Documents;
(g) permit the creation of any lien ranking prior to or on a parity
with the lien created by this Indenture with respect to any part of the Pledged
Assets or, except as otherwise permitted or contemplated herein, terminate the
lien created by this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien created by
this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Noteholders to which such amendment or supplemental indenture relates a notice
setting forth in general terms the substance of such supplemental indenture. Any
failure of the Indenture Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
SECTION 11.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully
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protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 11.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Noteholders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
SECTION 11.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 11.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE XII
REDEMPTION OF NOTES
SECTION 12.01. Redemption. In the event that the Certificateholder
pursuant to Section 16.02 of the Trust Agreement purchases the corpus of the
Trust, the Notes are subject to redemption in whole, but not in part, on the
Payment Date on which such repurchase occurs, for a purchase price equal to the
Redemption Price; provided, however, that the Issuer has available funds
sufficient to pay the Redemption Price. The Seller, the Servicer or the Issuer
shall furnish the Insurer and each Rating Agency notice of such redemption. If
the Notes are to be redeemed pursuant to this Section 12.01, the Servicer or the
Issuer shall furnish notice of such election to the Indenture Trustee not later
than 20 days prior to the Redemption Date and the Issuer shall deposit with the
Indenture Trustee in the Collection Account the Redemption Price of the Notes to
be redeemed whereupon all such Notes shall be due and payable on the Redemption
Date upon the furnishing of a notice complying with Section 12.02 to each Holder
of the Notes.
SECTION 12.02. Form of Redemption Notice. Notice of redemption under
Section 12.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register. In addition, the Administrator shall notify the
Insurer and Rating Agencies upon the redemption of any Class of Notes, pursuant
to Section 1(a)(i)(AA) of the Administration Agreement.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
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(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
SECTION 12.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 12.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section and TIA
Sections 314(c) and 314(d)(1). Notwithstanding the foregoing, in the case of any
such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Pledged Assets or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property subject to the lien created by this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 13.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee and the Insurer an
Officer's Certificate certifying or stating the opinion of the signer thereof as
to the fair value (within 90 days of such deposit) to the Issuer of the Pledged
Assets or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying
or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to the
Indenture Trustee and the Insurer an Independent Certificate as to the
named
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matters, if the fair value to the Issuer of the property to be so
deposited and of all other such property made the basis of any such
withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the Officer's Certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or
more of the Note Balances of the Notes, but such Officer's Certificate
need not be furnished with respect to any property so deposited, if the
fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Note
Balances of the Notes.
(iii) Whenever any property or securities are to be released
from the lien created by this Indenture, the Issuer shall also furnish
to the Indenture Trustee and the Insurer an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of
the property or securities proposed to be released and stating that in
the opinion of such person the proposed release will not impair the
security created by this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying
or stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Issuer shall also furnish to the
Indenture Trustee and the Insurer an Independent Certificate as to the
same matters if the fair value of the property or securities and of all
other property or securities released from the lien created by this
Indenture since the commencement of the then current fiscal year, as
set forth in the Officer's Certificate required by clause (iii) above
and this clause (iv), equals 10% or more of the Note Balances of the
Notes, but such Officer's Certificate need not be furnished in the case
of any release of property or securities if the fair value thereof as
set forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the then Note Balances of the Notes.
SECTION 13.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article Six.
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SECTION 13.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register and the
record date applicable to any solicitation for an Act of the Noteholders shall
comply with Section 316(c) of the TIA.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 13.04. Notices, etc., to Indenture Trustee, Issuer, Insurer and
Rating Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if in writing,
personally delivered, sent by facsimile transmission and confirmed or
mailed by overnight service, to or with the Indenture Trustee at its
Corporate Trust Office;
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing,
personally delivered, sent by facsimile transmission and confirmed or
mailed by overnight service, to the Issuer addressed to: Bay View
____-_ ____-_, in care of ______ _____ (Delaware), as Owner Trustee,
___________________________, ______________, _____________
_______________, Attention: _________________________________________,
or at any other address furnished in writing to the Indenture Trustee
by the Issuer; or
(iii) the Insurer by the Issuer or the Indenture Trustee shall
be sufficient for any purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the Insurer addressed to:
_________________________, _______________, ______________________.
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by overnight
service, to (i) in the case of _____________, at the following address:
_______________________________, ______________, ________________, ________,
________ _____ and (ii) in the case of _________________, at the following
address: __________________________________,_________________________,
_________, ________, Attention: ____________________________________; or as to
each of the foregoing, at such other address as shall be designated by written
notice to the other parties.
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SECTION 13.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 13.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 13.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 13.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 13.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
SECTION 13.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 13.11. Benefits of Indenture. The Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and
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the Noteholders, and any other party secured hereunder, and any other Person
with an ownership interest in any part of the Pledged Assets, any benefit or any
legal or equitable right, remedy or claim under this Indenture. The Insurer may
disclaim any of its rights and powers under this Indenture, but not its duties
and obligations under the Policy, upon delivery of a written notice to the
Indenture Trustee.
SECTION 13.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 13.13. Governing Law. This Indenture shall be construed in
accordance with the laws of the state of New York and the obligations, rights,
and remedies of the parties under this Indenture shall be determined in
accordance with such laws.
SECTION 13.14. Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 13.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee and the Insurer) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 13.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.
SECTION 13.17. No Petition. The parties hereto, by entering into this
Indenture, and each Noteholder, by accepting a Note or a beneficial interest in
a Note, hereby covenant and agree that they will not at any time institute
against the Seller or the Issuer, or join in any institution against the Seller
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the other Basic Documents.
SECTION 13.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or of the
Insurer, during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee and the Insurer shall and shall cause their
respective representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and
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all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Indenture Trustee or the Insurer may reasonably
determine that such disclosure is consistent with its obligations hereunder.
SECTION 13.19. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by the Owner Trustee not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall the
Owner Trustee in its individual capacity or any beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles Eight, Nine, Thirteen and Fifteen of the Trust Agreement.
SECTION 13.20. Certain Matters Regarding the Insurer. So long as an
Insurer Default shall not have occurred and be continuing, the Insurer shall
have the right to exercise all rights, including voting rights, which the
Noteholders or Certificateholders are entitled to exercise pursuant to this
Indenture, without any consent of such Noteholders or Certificateholders;
provided, however, that without the consent of each Noteholder and
Certificateholder affected thereby, the Insurer shall not exercise such rights
to amend this Indenture in any manner that would (i) reduce the amount of, or
delay the timing of, collections of payments on the Receivables or distributions
which are required to be made on any Note or Certificate, (ii) adversely affect
in any material respect the interests of the Holders of any Notes or
Certificates Instruments, or (iii) alter the rights of any such Holder to
consent to such amendment.
Notwithstanding any provision in this Indenture to the contrary, in the
event an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Seller, the Indenture Trustee or the
Owner Trustee pursuant to the terms of this Indenture, nor shall the consent of
the Insurer be required with respect to any action (or waiver of a right to take
action) to be taken by the Trust, the Seller, the Indenture Trustee, the Owner
Trustee or the Noteholders or the Certificateholders; provided, that the consent
of the Insurer shall be required at all times with respect to any amendment of
this Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
BAY VIEW ____-_ OWNER TRUST
By:
not in its individual capacity but solely on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By:
Name:
Title:
[INDENTURE TRUSTEE]
not in its individual capacity but solely as Indenture Trustee
By:
Name:
Title:
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EXHIBIT A-1
[FORM OF CLASS A-1 NOTE]
PRINCIPAL IN RESPECT OF THIS CLASS A-1 NOTE 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 Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any 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.
PRINCIPAL IN RESPECT OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
BAY VIEW ______ OWNER TRUST
_____% CLASS A-1 AUTOMOBILE RECEIVABLE BACKED NOTE
Evidencing the indebtedness of the Bay View ____-___ Owner Trust, a
Delaware Business Trust, secured by the Pledged Assets, as defined
below, including 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.
(This Note does not represent an interest in BVAC Securitization
Corporation nor an interest in or obligation of any of its affiliates.
Neither this Note nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER ____ $_____________
CUSIP ________________
Bay View ____-___ Owner Trust , a Delaware Business Trust, for value
received, hereby promises to pay to the order of [____________] ("the
Noteholder") or its registered assigns, the principal sum of
____________________ dollars ($___________), which amount shall be payable in
the amounts and at the times set forth in the Indenture dated as of ______ ____,
____ (the "Indenture"; such term to include any amendment, restatement,
supplement or other modification thereof or thereto) provided, however, that the
entire unpaid amount of this Note shall be due and payable on or
before__________, ____. However, principal with respect to the Notes may be paid
earlier or later under certain limited circumstances under the Indenture. The
Issuer will pay interest on this Note at the Class A-1 Interest Rate. Such
interest shall be payable in the manner and at the times set forth in the
Indenture. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Indenture. This Note is
issued under and is subject to the terms, provisions, and conditions of the
Indenture, to which the holder of this Note by virtue of the acceptance hereof
assents and by which such holder is bound.
This Note is secured by the Pledged Assets. The Pledged Assets consist
of a pool of simple and precomputed interest loan and security agreements and
installment sales contracts for new and used automobiles, light-duty trucks,
motorcycles, recreational vehicles and vans (the "Receivables"), all monies paid
thereon, and all monies due thereon, including Accrued Interest (but excluding
Accrued Interest paid on or prior to the Closing Date with respect to such
Receivables), security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, all
A-1
<PAGE>
documents contained in the Receivable Files, any property that shall have
secured a Receivable and that shall have been acquired by the Indenture Trustee
on behalf of the Noteholder, any Liquidation Proceeds, any rights of the Issuer
in 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, the
interest of the Issuer 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 Noteholder, and the
Policy for the benefit of the Noteholder.
Under the Indenture, the Issuer will pay, on the fifteenth calendar day
of each month, or if such day is not a Business Day, on the first Business Day
thereafter (the " Payment Date"), commencing ____________, ____, to the person
in whose name this Note is registered on the Record Date, the portion of Monthly
Interest and Monthly Principal to which the Noteholder is entitled pursuant to
the Indenture.
Payments on this Note will be made by the Indenture Trustee by wire
transfer through the facilities of the Depository Trust Company if this note is
held by Cede & Co. and otherwise by check mailed to the Person entitled thereto
without the presentation or surrender of this Note or the making of any notation
hereon. Except as otherwise provided in the Indenture and notwithstanding the
above, the final payment on this Note will be made only upon presentation and
surrender of this Note at the office or agency maintained for that purpose by
the Indenture Trustee.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Indenture Trustee, by manual or
facsimile signature, this Note shall not entitle the holder hereof to any
benefit under the Indenture or be valid for any purpose.
The Note does not represent an interest in the Issuer nor an interest
in or obligation of any affiliate of the Issuer, including BVAC Securitization
Corporation or Bay View Acceptance Corporation. The Note is limited in right of
payment to certain collections and recoveries respecting the Receivables, all as
more specifically set forth in the Indenture. In addition to the Class A-1
Notes, the Issuer has also issued Class A-2 Notes, Class A-3 Notes, Class A-4
Notes and Class B Notes. The Class B Notes are subordinated to the Class A Notes
as provided in the Indenture. The Indenture 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 payments relating to this Note
and the other notes issued by the Issuer, the Indenture Trustee will draw on the
Policy up to the Policy Amount to pay such deficiency.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholder under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the Noteholder. Any such
consent by the holder of this Note shall be conclusive and binding on the
Noteholder.
This Note is transferrable solely in accordance with Section 2.04 of
the Indenture.
The obligations and responsibilities to the Noteholder created by the
Indenture shall terminate upon the payment to Noteholder of all amounts required
to be paid to it pursuant to the Indenture. The Certificateholder may at its
option cause the Indenture Trustee to sell the Pledged Assets at a price not to
be less than the price specified in the Trust Agreement, and such sale of the
Receivables and other property may effect early retirement of the Note.
Although this Note summarizes certain provisions of the Indenture, this
Note does not purport to summarize the Indenture and reference is made to the
Indenture for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Indenture Trustee. In the event of any inconsistency or
conflict between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.
A-2
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated:
BAY VIEW ____-___ OWNER TRUST
By _____________ Bank as Indenture Trustee
By
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Note referred to in the within-mentioned Indenture.
__________________________________, solely in its capacity as Indenture Trustee,
By
Name:
Title:
Dated:
A-3
<PAGE>
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, __________________________ attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated:_________________
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A-4
