<PAGE>
Filed pursuant to Rule 424(b)(2)
Registration No. 333-30048
Prospectus Supplement
(To Prospectus dated February 25, 2000)
$356,559,839
Bay View 2000-LJ-1 Auto Trust
Automobile Receivable Backed Certificates
[LOGO OF BAY VIEW SECURITIZATION CORPORATION]
as depositor
Bay View Acceptance Corporation,
as servicer
We are offering the following classes of automobile receivable backed
certificates:
<TABLE>
<S> <C> <C> <C> <C> <C>
Final
Initial Pass-Through Scheduled Underwriting
Class of Certificate Interest Distribution Price Discount
Certificates Balance Rate Date to Public per Certificate
- ------------ ------------ ------------ ----------------- ----------- ---------------
Class A-1
certificates $64,000,000 6.23524% April 25, 2001 100.00000% .20%
Class A-2
certificates $132,000,000 7.54000% April 25, 2003 99.99299% .20%
Class A-3
certificates $80,000,000 7.64000% April 25, 2004 99.99973% .20%
Class A-4
certificates $80,559,839 7.64000%(1) November 25, 2010 99.98873% .20%
</TABLE>
- --------
(/1/The)pass-through interest rate on the Class A-4 certificates for each
distribution date will be equal to its fixed rate per annum as set forth
in the table above; provided that such pass-through interest rate will not
exceed the Net WAC Cap (as defined in this prospectus supplement) for any
distribution date.
The total price to the public is $356,541,291. The total underwriting
discount is $713,120. The total proceeds to the depositor, including accrued
interest of $1,728,189, are $357,556,360.
[LOGO OF MBIA]
The offered certificates represent interests of the Bay View 2000-LJ-1 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-10 of this
prospectus supplement and on page 7 in the accompanying 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.
-------------------------------
PaineWebber Incorporated
Morgan Stanley Dean Witter
The date of this prospectus supplement is March 24, 2000.
<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.
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-6
Interest on the Class A Certificates................................................................. S-6
Distributions of Principal........................................................................... S-6
The Class IC Certificate............................................................................. S-7
The Trust Assets..................................................................................... S-7
Available Funds; Rights of the Class IC Certificateholder............................................ S-7
The Policy........................................................................................... S-8
Policy Amount........................................................................................ S-8
Insurer.............................................................................................. S-8
Legal Investment..................................................................................... S-8
Optional Redemption.................................................................................. S-9
Book-Entry Registration.............................................................................. S-9
Tax Status........................................................................................... S-9
Ratings.............................................................................................. S-9
ERISA Considerations................................................................................. S-9
RISK FACTORS.............................................................................................. S-10
You May Not be Able to Resell the Offered Certificates............................................... S-10
The Offered Certificates Are Interests in the Trust Only and are Not Guaranteed by any Other Party... S-10
You May Incur a Loss if there is a Default Under the Policy.......................................... S-10
Prepayments May Reduce the Yield on the Class A-4 Certificates....................................... 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-11
BAY VIEW ACCEPTANCE CORPORATION AND AFFILIATES............................................................ S-12
FORMATION OF THE TRUST.................................................................................... S-12
THE RECEIVABLES POOL...................................................................................... S-13
General.............................................................................................. S-13
Composition of the Receivables by Financed Vehicle Type as of February 29, 2000...................... S-14
Distribution of the Receivables by Remaining Term to Stated Maturity as of February 29, 2000......... S-15
Geographic Distribution of the Receivables as of February 29, 2000................................... S-15
Distribution of the Receivables by Financed Vehicle Model Year as of February 29, 2000............... S-16
Distribution of the Receivables by Contract Rate as of February 29, 2000............................. S-16
Delinquency and Net Credit Losses.................................................................... S-17
YIELD AND PREPAYMENT CONSIDERATIONS....................................................................... S-19
THE OFFERED CERTIFICATES.................................................................................. S-19
Sale and Assignment of Receivables................................................................... S-19
Accounts............................................................................................. S-19
Advances............................................................................................. S-20
Distributions on the Offered Certificates............................................................ S-20
Distributions on the Class IC Certificate............................................................ S-24
The Policy........................................................................................... S-24
Rights of the Insurer upon Servicer Default, Amendment or Waiver..................................... S-25
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
THE INSURER................................................................................. S-25
MBIA................................................................................... S-25
MBIA Financial Information............................................................. S-25
Where You Can Obtain Additional Information About MBIA................................. S-26
Financial Strength Ratings of MBIA..................................................... 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
ANNEX A - BOOK-ENTRY REGISTRATION........................................................... A-1
</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-29 in this prospectus supplement or on page 53
of the accompanying prospectus.
Issuer
The Bay View 2000-LJ-1 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 this
prospectus supplement.
Trustee
Bankers Trust Company.
Dates
Cut-off Date
February 29, 2000. 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
On or about March 29, 2000.
The Offered Certificates
On the closing date, the trust will issue the Class A-l certificates, the Class
A-2 certificates, the Class A-3 certificates and the Class A-4 certificates
(collectively we refer to these certificates offered for sale as the "Class A
Certificates" or 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 certificates are
as follows:
<TABLE>
<CAPTION>
Pass-
Through
Interest Initial
Rate (per Certificate
annum) Balance
----------- ------------
<S> <C> <C>
Class A-1 certificates 6.23524% $ 64,000,000
Class A-2 certificates 7.54000% $132,000,000
Class A-3 certificates 7.64000% $ 80,000,000
Class A-4 certificates 7.64000%* $ 80,559,839
</TABLE>
*For any distribution date, the pass-through interest rate on the Class A-4
certificates will be equal to the lesser of (1) the fixed pass-through interest
rate of 7.64000% or (2) a variable pass-through interest rate, the Net WAC Cap,
equal to the per annum weighted average contract rate of the receivables based
on their respective principal balances as of the end of the immediately
preceding collection period (after giving effect to all collections of principal
made during such collection period) minus the per annum rate used to calculate
the premium paid to the insurer and the per annum rate used to calculate the
monthly servicing fee.
See "Risk Factors -- Prepayments May Reduce the Yield on the Class A-4
Certificates" and "The Offered Certificates" in this prospectus supplement.
S-5
<PAGE>
Distribution Date
The trust will distribute interest and principal on the offered certificates on
the twenty-fifth calendar day of each month or, if such day is not a business
day, on the next business day. The distributions will begin on April 25, 2000
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 Securities" in the accompanying prospectus.
Interest on the Class A Certificates
Interest on the Class A-1 certificates will be calculated on the basis of a 360-
day year and the actual number of days from the previous distribution date
through the day before the related distribution date. Interest on all other
classes of 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 Securities" in
this prospectus supplement.
Class A-1 Monthly Interest. Generally, the amount of monthly interest
distributable to the Class A-1 certificateholders on each distribution date is
the product of:
(1) 1/360th of the interest rate for the Class A-1 certificates;
(2) the actual number of days from the previous distribution date or, in
the case of the first distribution date, from the closing date,
through the day before the related distribution date; and
(3) the aggregate outstanding certificate balance of the Class A -1
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, the closing date.
Monthly Interest for Other Class A Certificates. Generally, the amount of
monthly interest distributable to each class of Class A certificateholders
(other than the Class A-1 certificateholders) on each distribution date is the
product of:
(1) one-twelfth of the interest rate applicable to such class of
certificates; and
(2) the aggregate outstanding certificate balance of such 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, the closing date.
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.
Generally, principal will be distributed to the Class A certificateholders in
the order of the alpha-numeric designation of each class of the Class A
certificates, starting with the Class A-1 certificates and ending with the Class
A-4 certificates. For example, no principal will be distributed to the Class A-
2 certificateholders until the outstanding certificate balance of the Class A-1
certificates has been reduced to zero.
The trust must distribute an amount equal to the outstanding certificate balance
of each class of Class A certificates, to the extent not previously distributed,
by the final scheduled distribution date for such class of Class A certificates
as follows:
<TABLE>
<CAPTION>
Final Scheduled
Distribution Date
-----------------
<S> <C>
Class A-1 certificates April 25, 2001
Class A-2 certificates April 25, 2003
Class A-3 certificates April 25, 2004
Class A-4 certificates November 25, 2010
</TABLE>
Since the rate of distribution of principal of each class of Class A
certificates depends greatly upon the rate of payment of principal on the
receivables (including voluntary prepayments and principal paid in respect of
defaulted receivables and purchased receivables), the final scheduled
distribution in respect of each class of
S-6
<PAGE>
Class A certificates could occur significantly earlier than the respective final
scheduled distribution dates. 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 IC Certificate
In addition to the Class A 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 and territories of the United
States of America, secured by new and used automobiles, light-duty trucks,
recreational vehicles, sport utility vehicles and vans and used
motorcycles;
. certain monies (including accrued interest) due in respect of the
receivables after February 29, 2000;
. 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 MBIA Insurance
Corporation 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. 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 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 in
the accompanying prospectus under "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables." The underwriting procedures
and standards employed with respect to the receivables are described under "The
Receivables Pools -- Underwriting Procedures" in the accompanying prospectus.
Available Funds; Rights of the Class IC
Certificateholder
The amount of funds available for distribution to Class A 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);
S-7
<PAGE>
(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
certificateholders and principal to the Class A certificate-holders.
If there is a default under the policy, any losses on the receivables will be
borne directly by the Class A certificateholders pro rata (to the extent of the
outstanding class or classes of Class A certificates at such time). 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 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 (as defined in
this prospectus supplement).
In addition, the policy will cover any amount paid or required to be paid by the
trust to the Class A 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 ("Policy Amount") with respect to any distribution date will
be:
the sum of:
(1) the monthly servicing fee;
(2) monthly interest;
(3) the lesser of (a) the outstanding aggregate certificate balance of all
classes of 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 balances of the Class A certificates minus all
amounts drawn on the policy with respect to monthly principal.
Insurer
MBIA Insurance Corporation 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.
Legal Investment
The Class A-1 certificates will be eligible for purchase by money market funds
under Rule 2a-7 of the Investment Company Act of 1940, as amended.
S-8
<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 all classes
of the Class A certificates,
(2) accrued and unpaid interest on the outstanding certificate balances of
all outstanding classes of the offered certificates at the weighted
average interest rate of the receivables, and
(3) any amounts due the insurer.
Book-Entry Registration
Persons acquiring beneficial ownership interests in the Class A certificates
will hold their interests in the Class A certificates through The Depository
Trust Company in the United States or Clearstream Banking, societe anomyne or
the Euroclear System in Europe. See "Book-Entry Registration" in Annex A to
this prospectus supplement and "Description of the Securities -- Book-Entry
Registration" in the accompanying prospectus.
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 Moody's Investors Service, Inc. and Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., as
follows:
<TABLE>
<CAPTION>
Rating
---------------------------
Moodys S&P
----------- -----------
<S> <C> <C>
Class A-1 certificates P-1 A-1+
Class A-2 certificates Aaa AAA
Class A-3 certificates Aaa AAA
Class A-4 certificates Aaa AAA
</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 offered 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 the
offered 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-9
<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.
<TABLE>
<S> <C>
You May Not be Able to Resell the Offered There is currently no secondary market for the offered certificates.
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 offered certificates are interests in the trust only and do not represent
the Trust Only and are Not Guaranteed by any an interest in or obligation of the depositor, BVAC, any of their affiliates
Other Party 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" and "The Insurer" in this prospectus supplement.
You May Incur a Loss if there is a Default If the insurer fails to make a required payment under the policy, the trust will
Under the Policy 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 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 monthly interest, pro rata.
See "The Receivables Pool -- Delinquency and Net Credit Losses" and "The Offered
Certificates --Accounts," --Distributions on the Offered Certificates" and "-- The
Policy" in this prospectus supplement.
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
Prepayments May Reduce the Yield on the For any distribution date, the pass-through interest rate on the Class A-4
Class A-4 certificates Certificates will be equal to the lesser of (1) the fixed pass-through interest rate
of 7.64000% or (2) a variable pass-through interest rate, the Net WAC Cap, equal to
the per annum weighted average contract rate of the receivables based on their
respective principal balances as of the end of the immediately preceding collection
period (after giving effect to all collections of principal made during such
collection period) minus the per annum rate used to calculate the premium paid to
the insurer and the per annum rate used to calculate the monthly servicing fee. If
receivables with a higher contract rate prepay at a rate faster than 1.6% ABS, the
per annum weighted average contract rate for the remaining receivables will be
reduced. To the extent such reduction in the weighted average coupon rate of the
receivables results in a Net WAC Cap which is less than 7.64000%, the yield to
maturity of the Class A-4 certificates will be reduced. You should fully consider
the risks associated with owning the Class A-4 certificates, including the risk that
a rapid rate of prepayments of receivables with a higher contract rate could prevent
you from receiving the stated fixed pass-through interest rate.
A Change in the Certificate Ratings May Moody's Investors Service and Standard & Poor's Ratings Services are the rating
Adversely Affect the Offered Certificates 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 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 As of February 29, 2000, based upon billing address information provided to BVAC,
May Increase the Losses Realized by the Trust the obligors resided in 46 states, the District of Columbia and Guam, two of
which states, Texas and California, account for approximately 48.35% and 31.07%,
respectively, of the aggregate principal balance of the receivables. Adverse
economic conditions in Texas or California could adversely affect the delinquency,
loan loss or repossession experience of the trust.
</TABLE>
S-11
<PAGE>
BAY VIEW ACCEPTANCE CORPORATION AND AFFILIATES
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 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. For the fiscal years ended
December 31, 1997, 1998 and 1999, BVAC and/or the other Named Lienholders
acquired motor vehicle loans aggregating $312 million, $432 million and $481
million, respectively. At December 31, 1999 the servicing portfolio of BVAC
(consisting of the principal balance of receivables held to maturity and
securitized receivables) totaled approximately $768.5 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 Payment of
Expenses" and "Certain Legal Aspects of the Receivables" in the accompanying
prospectus.
The depositor will obtain the policy for the benefit of the Class A
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.
S-12
<PAGE>
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 stated maturity
of the receivable;
. is a precomputed receivable or a simple interest receivable;
. has an original term to stated maturity of not more than 96 months
and not less than 18 months;
. has a remaining term to stated maturity of not more than 96 months and
not less than 12 months; and
. has a contract rate of interest (exclusive of prepaid finance charges)
of not less than 6.49%.
The weighted average remaining term to stated maturity of the receivables
was approximately 57.08 months as of February 29, 2000.
Approximately 96.42% of the aggregate principal balance of the receivables
as of February 29, 2000 are simple interest contracts which provide for equal
monthly payments. Approximately 3.52% of the aggregate principal balance of the
receivables as of February 29, 2000 are precomputed receivables originated in
the State of California. All of such precomputed receivables are rule of 78's
receivables. Approximately 46.82% of the aggregate principal balance of the
receivables as of February 29, 2000 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 February 29, 2000 were originated in the States of
California and Texas. The performance of the receivables in the aggregate could
be adversely affected in particular by the development of adverse economic
conditions in such states.
S-13
<PAGE>
Composition of the Receivables by Financed Vehicle Type as of February
29, 2000
<TABLE>
<CAPTION>
Weighted
Aggregate Original Average
Number of Principal Principal Contract
Receivables Balance/(4)/ Balance Rate
--------------- ---------------- ------------- ------------
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty
Trucks.............................. 6,661 $118,294,001 $144,319,297 9.28%
Used Automobiles and Light-Duty
Trucks.............................. 8,619 141,814,340 169,336,973 10.21%
Used Motorcycles...................... 4 59,290 67,729 10.91%
New Recreational Vehicles............. 6 95,174 105,152 8.22%
Used Recreational Vehicles............ 9 111,677 121,439 10.33%
New Sport Utility Vehicles............ 1,637 36,434,497 43,490,550 9.22%
Used Sport Utility Vehicles........... 2,009 36,719,812 43,019,076 10.28%
New Vans(1)........................... 632 12,123,614 14,889,421 9.44%
Used Vans(1).......................... 752 10,907,435 13,152,462 10.57%
------ ------------ ------------
All Receivables....................... 20,329 $356,559,840 $428,502,100 9.79%
====== ============ ============
<CAPTION>
Weighted Weighted Percent of
Average Average Aggregate
Remaining Original Principal
Term/(2)/ Term/(3)/ Balance/(5)/
---------------- --------------- ----------------
<S> <C> <C> <C>
New Automobiles and Light-Duty
Trucks............................. 55.82 67.83 33.18%
Used Automobiles and Light-Duty
Trucks............................. 56.93 67.82 39.77
Used Motorcycles..................... 51.09 60.00 0.02
New Recreational Vehicles............ 45.61 50.95 0.03
Used Recreational Vehicles........... 53.68 59.15 0.03
New Sport Utility Vehicles........... 58.76 69.96 10.22
Used Sport Utility Vehicles.......... 59.90 70.40 10.30
New Vans/(1)/........................ 57.97 70.80 3.40
Used Vans/(1)/....................... 56.66 67.66 3.06
------
All Receivables....................... 57.08 68.39 100.00%
======
</TABLE>
_______________________
(1) References to vans include minivans and van conversions.
(2) Expressed in months. Based on stated maturity as of the cut-off 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 the aggregate principal balance of receivables due to
rounding.
(5) Sum may not equal 100% due to rounding.
S-14
<PAGE>
Distribution of the Receivables by Remaining Term to Stated Maturity as of
February 29, 2000
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Remaining Term Range Receivables Balance/(1)/ Balance/(2)/
------------------------------------ --------------- -------------- --------------
<S> <C> <C> <C>
12 months........................... 17 $ 95,876 0.03%
13 to 24 months..................... 666 5,047,476 1.42
25 to 36 months..................... 2,981 32,034,786 8.98
37 to 48 months..................... 5,119 76,895,213 21.57
49 to 60 months..................... 5,855 106,103,169 29.76
61 to 72 months..................... 3,495 76,561,914 21.47
73 to 84 months..................... 1,345 35,900,887 10.07
85 to 96 months..................... 850 23,908,378 6.71
97 months or greater................ 1 12,141 0.00
------- ------------ ------
Total........................... 20,329 $356,559,840 100.00%
======= ============ ======
</TABLE>
_________________________
(1) Sum may not equal the aggregate principal balance of receivables due to
rounding.
(2) Sum may not equal 100% due to rounding.
Geographic Distribution of the Receivables as of February 29, 2000
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
State/(1)(2)/ Receivables Balance/(4)/ Balance/(5)/
------------------------------------ --------------- -------------- --------------
<S> <C> <C> <C>
Texas............................... 11,057 $172,396,438 48.35%
California.......................... 5,589 110,783,845 31.07
Illinois............................ 1,168 25,031,039 7.02
Arizona............................. 509 9,834,708 2.76
Colorado............................ 358 7,468,072 2.09
New Mexico.......................... 280 5,413,285 1.52
Nevada.............................. 265 5,409,409 1.52
Oregon.............................. 228 4,742,461 1.33
Other/(3)/.......................... 875 15,480,583 4.34
------ ------------ ------
Total........................... 20,329 $356,559,840 100.00%
====== ============ ======
</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) Includes military personnel located outside the United States.
(4) Sum may not equal the aggregate principal balance of receivables due to
rounding.
(5) Sum may not equal 100% due to rounding.
S-15
<PAGE>
Distribution of the Receivables by Financed Vehicle Model Year as
of February 29, 2000
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Model Year Receivables Balance/(1)/ Balance/(2)/
----------------------------------------- ------------- -------------- -------------
<S> <C> <C> <C>
1990 or Prior............................ 786 $ 12,580,346 3.53%
1991..................................... 242 4,254,056 1.19
1992..................................... 287 4,739,930 1.33
1993..................................... 445 6,593,092 1.85
1994..................................... 828 12,252,999 3.44
1995..................................... 1,730 26,976,056 7.57
1996..................................... 1,978 29,068,749 8.15
1997..................................... 3,794 59,364,143 16.65
1998..................................... 4,087 69,077,475 19.37
1999..................................... 4,683 97,487,347 27.34
2000..................................... 1,469 34,165,646 9.58
-------- ------------ --------
Total................................ 20,329 $356,559,840 100.00%
======== ============ ========
</TABLE>
- -------------
(1) Sum may not equal the aggregate principal balance of receivables due
to rounding.
(2) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Contract Rate as of February 29, 2000
<TABLE>
<CAPTION>
Percent
Aggregate of Aggregate
Number of Principal Principal
Contract Rate Range Receivables Balance/(1)/ Balance/(2)/
------------------------------------------ ----------- ------------ ------------
<S> <C> <C> <C>
Up to 7.000%.............................
7.001% - 7.500%.......................... 808 $13,756,274 3.86%
7.501% - 8.000%.......................... 1,276 19,374,150 5.43
8.001% - 8.500%.......................... 1,697 27,761,068 7.79
8.501% - 9.000%.......................... 1,620 26,082,121 7.31
9.001% - 9.500%.......................... 2,243 37,061,184 10.39
9.501% - 10.000%......................... 1,792 32,703,855 9.17
10.001% - 10.500%........................ 3,095 56,945,610 15.97
10.501 to 11.000%........................ 2,196 40,501,300 11.36
11.001 to 11.500%........................ 3,019 55,067,705 15.44
11.501 to 12.000%........................ 386 8,306,053 2.33
12.001 to 12.500%........................ 482 10,532,214 2.95
12.501 to 13.000%........................ 302 6,388,564 1.79
13.001 to 13.500%........................ 332 6,256,444 1.75
13.501 to 14.000%........................ 282 4,844,435 1.36
14.001% or greater....................... 238 4,161,778 1.17
561 6,817,084 1.91
Total................................ -------- ------------ ------
20,329 $356,559,840 100.00%
======== ============ ======
</TABLE>
_____________________
(1) Sum may not equal the aggregate principal balance of receivables due to
rounding.
(2) Sum may not equal 100% due to rounding.
S-16
<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.
<TABLE>
<CAPTION>
Delinquency Experience/(1)/
At December 31,
-------------------------------------------------------------------------------------------------
1997 1998 1999
--------------------------------- ------------------------------ ---------------------------
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
------------------ ---------- -------------- --------- ------------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Servicing portfolio........ 32,694 $ 443,028 41,152 $616,445 48,421 $ 768,454
------- --------- ------- -------- --------- ----------
Delinquencies
30-59 days.............. 193 2,403 248 3,208 303 3,493
60-89 days.............. 128 1,576 107 1,378 86 1,132
90 days or more......... 49 462 32 468 51 661
------- --------- -------- -------- --------- ----------
Total delinquencies........ 370 $ 4,441 387 $ 5,053 440 $ 5,286
======= ========= ======== ======== ========= ==========
Total delinquencies
as a percent of servicing
portfolio............... 1.13% 1.00% 0.94% 0.82% 0.91% 0.69%
======= ========= ======== ======== ========= ===========
</TABLE>
________________________
(1) Sums may not total due to rounding.
S-17
<PAGE>
<TABLE>
<CAPTION>
Credit Loss Experience/(1)/
Year Ended December 31,
---------------------------------------------------------------------------------------
1997 1998 1999
---------------------------- -------------------------- -------------------------------
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
------------- ----------- ------------- --------- -------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Avg. servicing portfolio/(2)/.. 28,765 $ 357,551 38,101 $ 546,360 44,626 $ 691,072
------ ---------- ------ ---------- ------ ----------
Gross charge-offs.............. 868 $ 6,645 1,002 $ 11,269 559 $ 8,848
Recoveries/(3)/................ --- 904 --- 3,152 --- 2,045
---------- ---------- ----------
Net losses..................... --- $ 5,741 --- $ 8,117 --- $ 6,803
========== ========== ==========
Gross charge-offs as a %
of average servicing
portfolio/(4)/............... 3.02% 1.86% 2.63% 2.06% 1.25% 1.28%
Recoveries as a % of
gross charge-offs............. --- 13.60% --- 27.97% --- 23.11%
Net losses as a % of average
servicing portfolio/(4)/..... --- 1.61% --- 1.49% --- 0.98%
</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."
S-18
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
Monthly Interest will be distributed to Class A 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 for each class of offered certificates 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
certificateholders should receive interest at their respective interest rates
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 some of the receivables will not exceed the sum of:
(1) the weighted average of the pass-through interest rates on the
Class A 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 to the extent not paid by the policy.
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
We have described the conveyance of the receivables (1) from BVAC to
the depositor pursuant to a purchase agreement between 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."
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
S-19
<PAGE>
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;
. 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 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-20
<PAGE>
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
certificateholders;
(d) Monthly Principal (including any overdue amounts) to the Class A
certificateholders in accordance with the Principal Distribution
Sequence (described below);
(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
2. the additional amount, if any, which is necessary to reduce the
certificate balance of a class of 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.
S-21
<PAGE>
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 depositor or the servicer is obligated to repurchase or
purchase pursuant to the pooling and servicing agreement shall be deemed not to
be a defaulted receivable 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-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 distribution 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 distribution
date or, in the case of the first distribution date, from
the closing date through the day before the related
distribution date, and
(c) the aggregate certificate balance of the Class A-1
certificates as of the immediately preceding distribution
date (after giving effect to any distribution of principal
made on such distribution date) or, in the case of the first
distribution date, the closing date.
"Class A-2 Monthly Interest" means for any distribution date, the
product of the following:
(a) one-twelfth of the Class A-2 interest rate, and
(b) the aggregate certificate balance of the Class A-2
certificates as of the immediately preceding distribution
date (after giving effect to any distribution of principal
made on such distribution date) or, in the case of the first
distribution date, the closing date.
"Class A-3 Monthly Interest" means for any distribution date, the
product of the following:
(a) one-twelfth of the Class A-3 interest rate, and
(b) the aggregate certificate balance of the Class A-3
certificates as of the immediately preceding distribution
date (after giving effect to any distribution of principal
made on such distribution date) or, in the case of the first
distribution date, the closing date.
"Class A-4 Monthly Interest" means for any distribution date, the
product of the following:
(a) one-twelfth of the Class A-4 interest rate, and
(b) the aggregate certificate balance of the Class A-4
certificates as of the immediately preceding distribution
date (after giving effect to any distribution of principal
made on such distribution date) or, in the case of the first
distribution date, the closing date.
For each distribution date, the Class A-4 interest rate will be
the lesser of 7.64000% or the Net WAC Cap.
"Net WAC Cap" means for any distribution date, the per annum weighted
average contract rate of interest of the receivables based on their respective
principal balances as of the end of the immediately preceding collection period
(after giving effect to all collections of principal made during such collection
period), minus the per annum rate used to calculate the premium paid to the
insurer and the per annum rate used to calculate the monthly servicing fee.
S-22
<PAGE>
"Principal Distribution Sequence" means the order in which Monthly
Principal will be distributed among the Class A certificateholders. The order of
distribution of Monthly Principal is:
(1) to the Class A-1 certificateholders until the aggregate
certificate balance of the Class A-1 certificates has been
reduced to zero;
(2) to the Class A-2 certificateholders until the aggregate
certificate balance of the Class A-2 certificates has been
reduced to zero;
(3) to the Class A-3 certificateholders until the aggregate
certificate balance of the Class A-3 certificates has been
reduced to zero; and
(4) to the Class A-4 certificateholders until the aggregate
certificate balance of the Class A-4 certificates has been
reduced to zero.
However, if the amount of Available Funds (together with amounts drawn on the
policy) are not sufficient to pay the required distribution of Monthly Principal
to Class A certificateholders in full on any distribution date, the amount of
such funds available to pay Monthly Principal to Class A certificateholders will
be distributed pro rata to the Class A certificateholders based upon the
relative aggregate certificate balance of each class of Class A certificates.
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 April 25, 2000:
March 1 - March 31, 2000................ 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.
April 10, 2000.......................... 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.
March 31, 2000.......................... 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.
April 25, 2000.......................... Distribution Date. The distribution
date is the twenty-fifth 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, then draws on the policy
to pay Monthly Interest and Monthly
Principal to the Class A
certificateholders, pays the
monthly servicing fee to the extent
not previously paid, pays the
insurance premium and all other
amounts owing to the insurer.
S-23
<PAGE>
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 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 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;
(2) Monthly Interest;
(3) the lesser of (a) the outstanding aggregate certificate
balance of all classes of 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 balances of the Class A
certificates minus all amounts drawn on the policy with
respect to principal.
The policy will also cover any amount paid or required to be paid by
the trust to Class A 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 sixteenth (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
balances 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
certificateholders. The insurer's obligation under the policy is irrevocable and
unconditional. The insurer will have no obligation to the 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 certificateholders may suffer a
corresponding loss. Any such losses by the Class A certificateholders will be
borne pro rata based upon the relative certificate balances of the outstanding
classes of Class A certificates. See "-- Distributions on the Offered
Certificates" above.
S-24
<PAGE>
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
MBIA
MBIA Insurance Corporation ("MBIA"), the insurer, is the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the
"Company"). The Company is not obligated to pay the debts of or claims against
MBIA. MBIA is domiciled in the State of New York and licensed to do business in
and subject to regulation under the laws of all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, the Virgin Islands of the United States and the Territory of
Guam. MBIA has two European branches, one in the Republic of France and the
other in the Kingdom of Spain. New York has laws prescribing minimum capital
requirements, limiting classes and concentrations of investments and requiring
the approval of policy rates and forms. State laws also regulate the amount of
both the aggregate and individual risks that may be insured, the payment of
dividends by MBIA, changes in control and transactions among affiliates.
Additionally, MBIA is required to maintain contingency reserves on its
liabilities in certain amounts and for certain periods of time.
MBIA does not accept any responsibility for the accuracy or
completeness of this prospectus supplement or any information or disclosure
contained in, or omitted from, this prospectus supplement, other than with
respect to the accuracy of the information regarding the policy and MBIA set
forth under the heading "The Insurer." Additionally, MBIA makes no
representation regarding the offered certificates or the advisability of
investing in the offered certificates.
The policy issued by MBIA as insurer is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
MBIA Financial Information
The consolidated financial statements of MBIA, a wholly owned
subsidiary of the Company, and its subsidiaries as of December 31, 1998 and
December 31, 1997 and for each of the three years in the period ended December
31, 1998, prepared in accordance with generally accepted accounting principles
("GAAP"), included in the Annual Report on Form 10-K of the Company for the year
ended December 31, 1998, and the consolidated financial statements of MBIA and
its subsidiaries as of September 30, 1999 and for the nine month periods ended
September 30, 1999 and September 30, 1998 included in the Quarterly Report on
Form 10-Q of the Company for the period ended September 30, 1999, are hereby
incorporated by reference into this prospectus supplement and shall be deemed to
be a part of this prospectus supplement. Any statement contained in a document
incorporated by reference in this prospectus supplement shall be modified or
superseded for purposes of this prospectus supplement to the extent that a
statement contained in this prospectus supplement or in any other subsequently
filed document which also is incorporated by reference in this prospectus
supplement modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus supplement.
All financial statements of MBIA and its subsidiaries included in
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, subsequent to the date of this
S-25
<PAGE>
prospectus supplement and prior to the termination of the offering of the
offered certificates shall be deemed to be incorporated by reference into this
prospectus supplement and to be a part of this prospectus supplement from the
respective dates of filing such documents.
The tables below present selected financial information of MBIA
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities ("SAP") and GAAP:
<TABLE>
<CAPTION>
SAP
------------------------------------
December 31, September 30,
1998 1999
---------------- --------------
(Audited) (Unaudited)
(in millions)
<S> <C> <C>
Admitted Assets.............................. $6,521 $6,930
Liabilities.................................. 4,231 4,571
Capital and Surplus.......................... 2,290 2,359
</TABLE>
<TABLE>
<CAPTION>
GAAP
------------------------------------
December 31, September 30,
1998 1999
---------------- --------------
(Audited) (Unaudited)
(in millions)
<S> <C> <C>
Assets....................................... $7,488 $7,422
Liabilities.................................. 3,211 3,234
Shareholder's Equity......................... 4,277 4,188
</TABLE>
Where You Can Obtain Additional Information About MBIA
Copies of the financial statements of MBIA incorporated by reference
in this prospectus supplement and copies of MBIA's 1998 year-end audited
financial statements prepared in accordance with statutory accounting practices
are available, without charge, from MBIA. The address of MBIA is 113 King
Street, Armonk, New York 10504. The telephone number of MBIA is (914) 273-4545.
Financial Strength Ratings of MBIA
Moody's Investors Service, Inc. rates the financial strength of MBIA
"Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. rates the financial strength of MBIA "AAA."
Fitch IBCA, Inc. (formerly known as Fitch Investors Service, L.P.)
rates the financial strength of MBIA "AAA."
Each rating of MBIA should be evaluated independently. The ratings
reflect the respective rating agency's current assessment of the
creditworthiness of MBIA and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the
offered certificates, and such ratings may be subject to revision or withdrawal
at any time by the rating agencies. Any downward revision or withdrawal of any
of the above ratings may have an adverse effect on the market price of the
offered certificates. MBIA does not guaranty
S-26
<PAGE>
the market price of the offered certificates nor does it guaranty that the
ratings on the offered certificates will not be revised or withdrawn.
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur
only under the limited circumstances described in the accompanying prospectus),
Bankers Trust Company, 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 below and under "ERISA
Considerations" in the accompanying prospectus, the offered certificates 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 determine that the purchase of an offered 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. 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 Code imposes certain excise taxes (or, in some
cases, a civil penalty may be assessed pursuant to section 502(i) or
section 502(l) of ERISA) on Parties in Interest which engage in non-exempt
prohibited transactions or breaches of fiduciary duties. The U.S. Department of
Labor has granted to PaineWebber Incorporated an Exemption (as defined in the
accompanying prospectus), PTE 90-36, 55 Fed. Reg. 25,903 (1990), from certain of
the prohibited transaction provisions of Section 406 of ERISA and the excise
taxes imposed pursuant to Section 4975 of the Code, provided that certain
conditions set forth in the Exemption are met. See "ERISA Considerations" in the
accompanying prospectus. Before purchasing an offered certificate, a fiduciary
of a Benefit Plan should itself confirm that (i) the offered certificates
constitute "certificates" for purposes of the Exemption and (ii) the specific
and general conditions and the other requirements set forth in the Exemption
would be satisfied. In addition to making its own determinations to the
availability of the exemptive relief provided in the Exemption, a Benefit Plan
fiduciary should consider the availability of any other prohibited transaction
exemptions, including, with respect to governmental plans, any exemptive relief
afforded under any federal, state or local law that is, to a material extent,
similar to Title I of ERISA or Section 4975 of the Code. A purchaser of an
offered certificate should be aware, however, that even if the conditions
specified in one or more exemptions are satisfied, the scope of relief provided
by an exemption may not cover all acts which might be construed as prohibited
transactions.
For additional information regarding treatment of the 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 March 24,
2000, the underwriters, PaineWebber Incorporated and Morgan Stanley & Co.
Incorporated, 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 .12% of the denominations of the Class A-1 certificates, .12%
of the denominations of the Class A-2 certificates, .12% of the denominations of
the Class A-3 certificates and .12% of the denominations of the Class A-4
certificates. The underwriters may allow and such dealers may reallow a
concession not in excess of .08% of the denominations of the Class A-l
certificates, .08% of the denominations of the Class A-2 certificates, .08% of
the denominations of the Class A-3 certificates and .08% of the denominations of
the Class A-4 certificates.
S-27
<PAGE>
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 $357,556,360 from the sale of the offered
certificates, before deducting our net expenses estimated to be $500,000.
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 Cadwalader, Wickersham & Taft. 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
The consolidated balance sheets of MBIA Insurance Corporation and
Subsidiaries as of December 31, 1998 and December 31, 1997 and the related
consolidated statements of income, changes in shareholder's equity, and cash
flows for each of the three years in the period ended December 31, 1998,
incorporated by reference in this prospectus supplement, have been incorporated
into this prospectus supplement in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
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.
Available Funds............................................... S-20
Bank.......................................................... S-5
Benefit Plan.................................................. S-27
BVAC.......................................................... S-5
BVC........................................................... S-7
BVCC.......................................................... S-5
BVFC.......................................................... S-12
CTL........................................................... S-7
Class A Certificates.......................................... S-5
Class A-1 Monthly Interest.................................... S-22
Class A-2 Monthly Interest.................................... S-22
Class A-3 Monthly Interest.................................... S-22
Class A-4 Monthly Interest.................................... S-22
Closing Date.................................................. S-5
Collection Period............................................. S-23
Company....................................................... S-25
Cut-off Date.................................................. S-5
Determination Date............................................ S-23
Distribution Date............................................. S-6
ERISA......................................................... S-9
GAAP.......................................................... S-25
MBIA.......................................................... S-25
Monthly Interest.............................................. S-22
Monthly Principal............................................. S-21
Named Lienholders............................................. S-7
Net WAC Cap................................................... S-22
Offered Certificates.......................................... S-5
Parties in Interest........................................... S-27
Policy Amount................................................. S-8
Principal Distribution Sequence............................... S-23
Record Date................................................... S-23
SAP........................................................... S-26
Ultra......................................................... S-7
S-29
<PAGE>
ANNEX A
BOOK-ENTRY REGISTRATION
Persons acquiring beneficial ownership interests in the offered
certificates may hold their certificates through The Depository Trust Company
("DTC") in the United States, or Clearstream Banking, societe anomyne
("Clearstream") or Euroclear in Europe if they are participants of such systems,
or indirectly through organizations that are participants in such systems. Cede
& Co., as nominee for DTC, will hold the physical offered certificates.
Clearstream and Euroclear will hold omnibus positions on behalf of the
Clearstream participants and the Euroclear participants, respectively, through
customers' securities accounts in Clearstream's and Euroclear's names on the
books of their respective depositaries (collectively, the "Depositaries") which
in turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions between
participants through electronic computerized 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 others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC participant, either directly or indirectly
(so-called "indirect participants").
Transfers between DTC participants will occur in accordance with DTC
rules. Transfers between Clearstream participants and Euroclear participants
will occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through Clearstream participants or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Clearstream participants and Euroclear
participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Clearstream
or Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Clearstream participant or Euroclear participant on such business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream participant or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC. For additional information regarding
clearance and settlement procedures of the offered certificates and for
information with respect to tax documentation procedures relating to the offered
certificates, see "Global Clearance, Settlement and Tax Documentation
Procedures" below in this Annex A.
The beneficial owners of offered certificates that are not
participants or indirect participants but desire to purchase, sell or otherwise
transfer ownership of, or other interests in, offered certificates may do so
only through participants or indirect participants. In addition, owners of
offered certificates will receive all distributions of principal and interest
from the trustee through the participants who in turn will receive them from
DTC. Under a book-entry format, owners of offered certificates may experience
some delay in their receipt of payments, since such payments will be forwarded
by the trustee to Cede & Co., as nominee for DTC. DTC will forward such payments
to its participants, which thereafter will forward them to indirect participants
or owners of offered certificates.
A-1
<PAGE>
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers of offered
certificates among participants on whose behalf it acts with respect to the
offered certificates and to receive and transmit distributions of principal of,
and interest on, the offered certificates. Participants and indirect
participants with which the owners of offered certificates have accounts with
respect to the offered certificates similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
holders of offered certificates. Accordingly, although the beneficial owners of
offered certificates will not possess the offered certificates, the DTC rules
provide a mechanism by which participants will receive payments on offered
certificates and will be able to transfer their interest.
Because DTC can only act on behalf of its participants, who in turn
act on behalf of indirect participants and certain banks, the ability of
beneficial owners of offered certificate to pledge such certificates to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such certificates, may be limited due to the lack of a physical
certificate for such certificates.
DTC has advised the depositor that it will take any action permitted
to be taken by a holder of an offered certificate under the pooling and
servicing agreement only at the direction of one or more participants to whose
accounts with DTC the offered certificates are credited. DTC may take
conflicting actions with respect to other undivided interests to the extent that
such actions are taken on behalf of participants whose holdings include such
undivided interests. Except as required by law, neither the depositor, the
servicer, nor the trustee will have any liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
offered certificates held by Cede & Co., as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Clearstream is incorporated under the laws of Luxembourg as a
professional depository. Clearstream holds securities for its participating
organizations and facilitates the clearance and settlement of securities
transactions between Clearstream participants through electronic book-entry
changes in accounts of Clearstream participants, thereby eliminating the need
for physical movement of certificates. Transactions may be settled in
Clearstream in any of 32 currencies, including United States dollars.
Clearstream provides to its participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream interfaces with
domestic markets in several countries. As a professional depositary, Clearstream
is subject to regulation by the Luxembourg Monetary Institute. Clearstream
participants are recognized financial institutions around the world including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include any underwriters,
agents or dealers with respect to the offered certificates. Indirect access to
Clearstream is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Clearstream participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System and to clear and settle transactions
between Euroclear participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 32 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. The Euroclear System is operated by Morgan Guaranty Trust
Company of New York, Brussels, Belgium office (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance Systems, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of Euroclear participants. Euroclear participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries and may include any underwriters, agents or dealers
with respect to the offered certificates. Indirect access to the Euroclear
System is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
A-2
<PAGE>
Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawals of
securities and cash from the Euroclear System and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear participants and has no record
of or relationship with persons holding through Euroclear participants.
Distributions with respect to offered certificates held through
Clearstream or Euroclear will be credited to the cash accounts of Clearstream
participants or Euroclear participants in accordance with the relevant system's
rules and procedures, to the extent received by its Depositary. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. Clearstream or the Euroclear Operator,
as the case may be, will take any other action permitted to be taken by a
beneficial owner of offered certificates under the pooling and servicing
agreement on behalf of a Clearstream participant or Euroclear participant only
in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of interests in the offered
certificates among participants of DTC, Clearstream and Euroclear, they are
under no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
The information herein concerning DTC, Clearstream and Euroclear and
their book-entry systems has been obtained from sources believed to be reliable,
but the depositor takes no responsibility for the accuracy or completeness
thereof.
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A
certificates ("Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such global securities through any
of The Depository Trust Company ("DTC"), Clearstream or Euroclear. The Global
Securities will be tradable as home market instruments in both the European and
U.S. domestic markets. Initial settlement and all secondary trades will settle
in same-day funds.
Secondary market trading between investors holding Global Securities
through Clearstream and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar days settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream or Euroclear and
DTC participants holding offered certificates will be effected on a delivery
against payment basis through the respective Depositaries of Clearstream and
Euroclear (in such capacity) and as DTC participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations of their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, Clearstream and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC participants.
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Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Clearstream
or Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading Between DTC Participants. Secondary market trading between DTC
participants will be settled in same-day funds.
Trading between Clearstream and/or Euroclear participants. Secondary
market trading between Clearstream participants or Euroclear participants will
be settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading Between DTC seller and Clearstream or Euroclear purchaser.
When Global Securities are to be transferred from the account of a DTC
participant to the account of a Clearstream participant or a Euroclear
participant, the purchaser will send instructions to Clearstream or Euroclear
through a Clearstream participant or Euroclear participant at least one business
day prior to settlement. Clearstream or Euroclear will instruct the respective
Depositary, as the case may be, to receive the Global Securities against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date,
calculated on the basis of a year of 360 days, in each case for the actual
number of days occurring in the period for which such interest is payable.
Payment will then be made by the respective depositary to the DTC participant's
account against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Clearstream participant's or Euroclear participant's account. The securities
credit will appear the next day (European time) and the cash debit will be back-
valued to, and the interest on the Global Securities will accrue from, the value
date (which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Clearstream or Euroclear cash debit will be valued instead as of the actual
settlement date.
Clearstream participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream participants can elect not to pre-position funds and
allow that credit line to be drawn upon to finance settlement. Under this
procedure, Clearstream participants or Euroclear participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Clearstream Participant's or
Euroclear participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Clearstream participants or
Euroclear participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently than a trade between two DTC participants.
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Trading between Clearstream or Euroclear seller and DTC purchaser. Due
to time zone differences in their favor, Clearstream participants and Euroclear
participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream participant or
Euroclear participant at least one business day prior to settlement. In these
cases, Clearstream or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the bonds to the DTC participant's account against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date,
calculated on the basis of a year of 360 days, in each case for the actual
number of days occurring in the period for which such interest is payable. The
payment will then be reflected in the account of the Clearstream participant or
Euroclear participant the following day, and receipt of the cash proceeds in the
Clearstream participant's or Euroclear participant's account would be back-
valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Clearstream participant or Euroclear
participant have a line of credit with its respective clearing system and elect
to be in debit in anticipation of receipt of the sale proceeds in its account,
the back- valuation will extinguish any overdraft charges incurred over the one-
day period. If settlement is not completed on the intended value day (i.e., the
trade fails) receipt of the cash proceeds in the Clearstream participant's or
Euroclear participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Clearstream or Euroclear and that
purchase Global Securities from DTC participants for delivery to Clearstream
participants or Euroclear participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
(a) borrowing through Clearstream or Euroclear for one day (until the
purchase side of the day trade is reflected in their Clearstream
or Euroclear accounts) in accordance with the clearing system's
customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
participant no later than one day prior to settlement, which
would give the Global Securities sufficient time to be reflected
in their Clearstream or Euroclear account in order to settle the
sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchaser from the DTC
participant is at least one day prior to the value date for the
sale to Clearstream participant or Euroclear participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
Clearstream or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest (including original issue discount) on registered debt
issued by U.S. Persons (as defined herein), unless (i) each clearing system,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business in the chain or intermediaries between
such beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate.
Exception for non-U.S. Persons (Form W-8). Beneficial owners of
offered certificates that are exempt foreign persons can qualify for a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status). If the information shown on Form W-8 changes, a new Form W-8
must be filed within 30 days of such change.
Exception for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax
on Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
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Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of offered
certificates and reside in a country that has a tax treaty with the United
States can qualify for an exemption or reduced tax rate (depending on the treaty
terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate).
If the treaty provides only for a reduced rate, withholding tax will be imposed
at that rate unless the filer alternatively qualifies for an exemption by filing
Form W-8. Form 1001 may be filed by the holder of offered certificates or his
agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The owner of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds the
certificates (the clearing agency, in the case of persons holding directly on
the books of the clearing agency).
The procedures described above would be changed under new Treasury
regulations which are effective for payments made after December 31, 2000. The
new Treasury regulations would combine several existing forms, including Form
W-8, Form 4224 and Form 1001, into a single, expanded Form W-8. The new Forms
W-8 are Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for U.S.
Tax Withholding, that replaces the existing Form W-8; Form W-8ECI, Certificate
of Foreign Person's Claim for Exemption From Withholding on Income Effectively
Connected With the Conduct of a Trade or Business in the United States, that
replaces the existing Form 4224; Revised Form W-8 used as a substitute for
existing Form 1001 to secure treaty benefits; Form W-8EXP, Certificate of
Foreign Government or Other Foreign Organization for United States Tax
Withholding; and Form W- 81MY, Certificate of Foreign Intermediary, Foreign
Partnership, or Certain U.S. Branches for U.S. Tax Withholding.
Certifications currently made on Forms W-8, 4224 or 1001 remain valid
until they expire under the existing regulations, but not after December 31,
2000, and a beneficial owner of a Global Certificate would have to timely sign
the appropriate W-8 Form to avoid withholding at a rate of 30% in respect of
payments of interest (including original issue discount) made after December 31,
2000, or after the expiration of the current certificate.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate the income
of which is includible in gross income for United States tax purposes,
regardless of its source or, (iv) a trust if a U.S. Court is able to exercise
primary supervision over the administration of such trust and one or more U.S.
persons have the authority to control all substantial decisions of the trust.
This summary does not deal with all aspects of U.S. Federal income tax
withholding that may be relevant to foreign holders of the Global Securities.
Further, the U.S. Treasury Department has recently finalized new regulations
that will revise some aspects of the current system for withholding on amounts
paid to foreign persons. Under these regulations, which are generally effective
for payments made on or after January 1, 1999, interest or original issue
discount paid to a beneficial owner of Global Securities that is a non-U.S.
Person would continue to be exempt from U.S. withholding taxes (including backup
withholding) provided that the beneficial owner complies with the new
certification procedures. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.
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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 7 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 February 25, 2000.
<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................................................................... 1
Depositor................................................................ 1
Servicer................................................................. 1
Trustee.................................................................. 1
Indenture Trustee........................................................ 1
The Notes................................................................ 1
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>
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<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>
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<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>
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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 53 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;
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. 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:
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<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
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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--A Change in the Certificate Ratings May Adversely Affect the Offered
Certificates" 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 collection fees, if any, then to any applicable late
charges, then to pay 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 75 basis points (0.75%) 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 two 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 any assignee of a seller (and
certain related lenders and their assignees) in a consumer credit transaction
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, and the assumption that the nature of the income of the trust
will exempt it from the rule that certain publicly traded partnerships are
taxable as corporations.
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 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,
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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.
As noted above under "Possible Alternate Treatment of the Notes," a holder
of a partnership interest in the trust, such as the certificates, which is a
tax-exempt entity will be subject to tax on the trust's income. The trust's
income will be treated as "unrelated business taxable income," because such
income will be "unrelated debt-financed income."
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
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the holder's cost increased by the holder's share of trust income (includible
in income) and decreased by any distributions received with respect to such
certificate. In addition, both the tax basis in the certificates and the amount
realized on a sale of a certificate would include the holder's share of the
liabilities of the trust. A holder acquiring certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
certificates and, upon sale or other disposition of some of the certificates,
to allocate a portion of such aggregate tax basis to the certificates sold
(rather than maintaining a separate tax basis in each certificate for purposes
of computing gain or loss on a sale of that certificate).
Any gain on the sale of a certificate attributable to the holder's share of
unrecognized accrued market discount on the related receivables would generally
be treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the trust will elect to include market discount
in income as it accrues.
If a 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
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identification number of such person, (b) whether such person is a U.S. Person
(as defined under "Trusts 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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<PAGE>
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
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<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
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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 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 and so the assets
underlying the trust would not be considered plan assets for Code and ERISA
purposes. 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 under the Code or ERISA.
The U.S. Department of Labor may have granted to the underwriter (or in the
case of series offered by more than one underwriter, a managing 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 can 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.
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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").
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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.).
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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: Joseph Catalano, Secretary (telephone: 650-573-
7300).
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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>
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$356,559,839
BAY VIEW 2000-LJ-1 AUTO TRUST
Bay View Securitization Corporation,
as depositor
Bay View Acceptance Corporation,
as servicer
<TABLE>
<C> <S>
Class A-1 Automobile Receivable Backed
$64,000,000 Certificates
Class A-2 Automobile Receivable Backed
$132,000,000 Certificates
Class A-3 Automobile Receivable Backed
$80,000,000 Certificates
Class A-4 Automobile Receivable Backed
$80,559,839 Certificates
</TABLE>
---------------------
Prospectus Supplement
---------------------
PaineWebber Incorporated Morgan Stanley Dean Witter
---------------------
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 offered certificates in any state where the
offer is not permitted.
Dealers will deliver this prospectus supplement and the accompanying
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
the accompanying prospectus until June 22, 2000.
