<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 14, 1997
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ADVANTA AUTO FINANCE CORPORATION
(SPONSOR OF THE TRUSTS DESCRIBED HEREIN)
Nevada 300 WELSH ROAD, SUITE 400 23-2826077
(Jurisdiction) HORSHAM, PENNSYLVANIA 19044 (I.R.S. Employer
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) Identification No.)
KEVIN SHIPE, ESQ.
ADVANTA AUTO FINANCE CORPORATION
300 WELSH ROAD, SUITE 400
HORSHAM, PENNSYLVANIA 19044
215-444-4663
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
CHRIS DIANGELO, ESQ.
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.|_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box.|X|
If this Form is filed to register additional securites for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering.|_|
If this Form is filed as a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TITLE OF SECURITIES BEING REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Auto Receivables Asset Backed Securities $1,000,000 100% $1,000,000 $303.03
========================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
CROSS REFERENCE SHEET
TO FORM S-3
<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-3 CAPTION OR LOCATION IN PROSPECTUS
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<S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of Forepart of Registration Statement;
Prospectus ................................. Outside Front Cover Page**
2. Inside Front and Outside Back Cover Page of Inside Front Cover Page**; Outside
Prospectus ................................. Back Cover Page**
3. Summary Information, Risk Factors and Ratio Summary of Prospectus**; Special
of Earnings to Fixed Charges ............... Considerations**;*
4. Use of Proceeds .............................. Use of Proceeds
5. Determination of Offering Price .............. *
6. Dilution ..................................... *
7. Selling Security Holders ..................... *
8. Plan of Distribution ......................... Methods of Distribution**
Outside Front Cover Page**;
Summary of Prospectus**;
Description of the Securities**;
Certain Federal Income Tax
9. Description of Securities to be Registered ... Consequences**
10. Interests of Named Experts and Counsel ....... *
11. Material Changes ............................. *
Inside Front Cover Page**;
12. Incorporation of Certain Information by Incorporation of Certain
Reference .................................. Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ................................ See page II-3
</TABLE>
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* Not applicable or answer is negative.
** To be completed from time to time by Prospectus Supplement.
<PAGE>
PROSPECTUS
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Auto Receivables Backed Securities Issuable in Series
ADVANTA AUTO FINANCE CORPORATION
This Prospectus describes certain Auto Receivables Backed Notes (the
"Notes") and Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time in
one or more series, in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates, which will be issued
either by the Company, a Transferor (as hereinafter defined), or by a trust to
be formed by the Company for the purpose of issuing one or more series of such
Securities (each, a "Trust"). The Company, a Transferor or a Trust, as
appropriate, issuing Securities as described in this Prospectus and the related
Prospectus Supplement shall be referred to herein as the "Issuer."
Each class of Securities of any series will evidence beneficial ownership
in a segregated pool of assets (the "Trust Property") (such Securities,
"Certificates") or will represent indebtedness of the Issuer secured by the
Trust Property (such Securities, "Notes"), as described herein and in the
related Prospectus Supplement. The Trust Property may consist of any combination
of retail installment sales contracts between manufacturers, dealers or certain
other originators and retail purchasers secured by new and used automobiles and
light duty trucks financed thereby, or participation interests therein, together
with all monies received relating thereto (the "Contracts"). The Trust Property
may also include a security interest in the underlying new and used automobiles
and light duty trucks and property relating thereto, together with the proceeds
thereof (the "Vehicles" together with the Contracts, the "Receivables"). If and
to the extent specified in the related Prospectus Supplement, credit enhancement
with respect to the Trust Property or any class of Securities may include any
one or more of the following: a financial guaranty insurance policy (a "Policy")
issued by an insurer specified in the related Prospectus Supplement, a reserve
account, letters of credit, credit or liquidity facilities, third party payments
or other support, cash deposits or other arrangements. In addition to or in lieu
of the foregoing, credit enhancement may be provided by means of subordination,
cross-support among the Receivables or over-collateralization. See "Description
of the Trust Agreements -- Credit and Cash Flow Enhancement." The Receivables in
the Trust Property for a series will have been originated by the Company on or
prior to the date of issuance of the related Securities, as described herein and
in the related Prospectus Supplement. The Receivables included in a Trust Fund
will be serviced by a servicer (the "Servicer") described in the related
Prospectus Supplement.
Each series of Securities may include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, order or priority of payment, interest
rate or amount of distributions of principal or interest or both. Information
regarding each Class of Securities of a series, together with certain
characteristics of the related Receivables, will be set forth in the related
Prospectus Supplement. The rate of payment in respect of principal of the
Securities of any Class will depend on the priority of payment of such a Class
and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" PAGE 15 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT OBLIGATIONS OF THE COMPANY, ANY SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT BENEFICIAL INTERESTS IN
THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE
COMPANY, ANY TRANSFEROR, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY THE COMPANY, ANY
SERVICER, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH
IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS" PAGE 15.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Offers of the Securities may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Securities of any series,
and there can be no assurance that a secondary market for the Securities will
develop, or if it does develop, it will continue.
Retain this Prospectus for future reference. This Prospectus may not
be used to consummate sales of Securities unless accompanied by a Prospectus
Supplement.
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The date of this Prospectus is __________, 1997.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be offered
hereunder, among other things, will set forth with respect to such series of
Securities: (i) a description of the Class or Classes of such Securities, (ii)
the rate of interest, the "Pass-Through Rate" or "Interest Rate" or other
applicable rate (or the manner of determining such rate) and authorized
denominations of such Class of such Securities; (iii) certain information
concerning the Receivables and insurance polices, cash accounts, letters of
credit, financial guaranty insurance policies, third party guarantees or other
forms of credit enhancement, if any, relating to one or more pools of
Receivables or all or part of the related Securities; (iv) the specified
interest, if any, of each Class of Securities in, and manner and priority of,
the distributions from the Trust Property; (v) information as to the nature and
extent of subordination with respect to such series of Securities, if any; (vi)
the payment date to Securityholders; (vii) information regarding the Servicer(s)
for the related Receivables; (viii) the circumstances, if any, under which the
Trust Property may be subject to early termination; (ix) information regarding
tax considerations; and (x) additional information with respect to the method of
distribution of such Securities.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Company with respect to the
Registration Statement, either on its own behalf or on behalf of a Trust,
relating to any series of Securities referred to in the accompanying Prospectus
Supplement, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Prospectus and prior to the termination of any offering of the
Securities issued by the Issuer, shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in the accompanying Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
2
<PAGE>
REPORTS TO SECURITYHOLDERS
So long as the Securities are in book-entry form, monthly and annual
reports concerning the Securities and the Trust will be sent by the Trustee to
Cede & Co., as the nominee of DTC and as registered holder of the Securities
pursuant to the related Pooling and Servicing Agreement. DTC will supply such
reports to Securityholders in accordance with its procedures. To the extent
required by the Securities Exchange Act of 1934, as amended, the Trust will
provide financial information to the Securityholders which has been examined and
reported upon, with an opinion expressed by, an independent public accountant;
to the extent not so required, such financial information will be unaudited. The
Company has determined that the financial statements of no entity other than the
Security Insurer are material to the offering made hereby. The Trust will be
formed to own the Receivables, hold and administer the Pre-Funding Account, to
issue the Securities and to acquire the Subsequent Receivables, if available.
The Trust will have no assets or obligations prior to issuance of the Securities
and will engage in no activities other than those described herein. Accordingly,
no financial statements with respect to the Trust are included in the related
Prospectus Supplement. The audited financial statements of the Certificate
Insurer are set forth in Appendix A to the related Prospectus Supplement, and
the unaudited interim financial statements of the Certificate Insurer are set
forth in Appendix B to the related Prospectus Supplement. The Company intends to
discontinue filing periodic reports at the beginning of the company's next
fiscal year, to the extent permitted by Section 15(d) of the Exchange Act.
3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
Issuer.................. With respect to each series of Securities, either
the Company, a special-purpose finance subsidiary of
the Company which may be organized and established
by the Company with respect to the Trust Property
(each such special-purpose finance subsidiary, a
"Transferor") or a trust (each, a "Trust") to be
formed by the Company. For purposes of this
Prospectus, the term "Company" includes the term
"Transferor". The Company, a Transferor or a Trust
issuing Securities pursuant to this Prospectus and
the related Prospectus Supplement shall be referred
to herein as the "Issuer" with respect to the
related Securities. See "The Issuers."
Company................. Advanta Auto Finance Corporation ("Advanta" or, the
"Company"), a Nevada corporation. The Receivables
will be either (i) originated by various dealers,
which may or may not be affiliated with one or more
manufacturers of vehicles ("Dealers", and together
with such manufacturers, "Vendors") or (ii) acquired
by the Company from other originators or owners of
Receivables. The Company's principal executive
offices are located at 300 Welsh Road, Suite 400,
Horsham, Pennsylvania 19044, and its telephone
number is (215) 283-4200. See "The Company and the
Servicer."
Servicer................ Advanta Auto Finance Corporation ("Advanta" or, in
its capacity as the servicer, the "Servicer"). See
"Advanta's Automobile Financing Program - Servicing
and Collections."
Trustee................. The Trustee for each series of Securities will be
specified in the related Prospectus Supplement. In
addition, a Trust may separately enter into an
Indenture and may issue Notes pursuant to such
Indenture; in any such case the Trust and the
Indenture will be administered by separate,
independent trustees as required by the rules and
regulations under the Trust Indenture Act of 1939
and the Investment Company Act of 1940.
The Securities ......... Each Class of Securities of any series will either
evidence beneficial ownership in a segregated pool
of assets (the "Trust Property") (such Securities,
"Certificates") or will represent indebtedness of
the Issuer secured by the Trust Property (such
Securities, "Notes"), as described herein and in the
related Prospectus Supplement. The Trust Property
may consist of any combination of retail installment
sales contracts between manufacturers, dealers or
certain other originators and retail purchasers
secured by new and used automobiles and light duty
trucks financed thereby, or participation interests
therein, together with all monies received relating
thereto (the "Contracts"). The Trust Property also
may include a security interest in the underlying
new and used automobiles and light duty trucks and
property relating thereto, together with the
proceeds thereof (the "Vehicles" and together with
the Contracts, the "Receivables").
The Trust Property will include Receivables with
respect to which the related Contract or the related
Vehicles is subject to federal or state registration
or titling requirements. No Trust Property will
include Receivables with respect to which the
underlying Contracts or Vehicles relate to office
equipment, aircraft, ships or boats, firearms or
other weapons, railroad rolling stock or facilities
such as factories, warehouses or plants subject to
state laws governing the manner in which title or
security interest in real property is determined or
perfected.
4
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If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to the Trust Property or any class of
Securities may include any one or more of the
following: a financial guaranty insurance policy (a
"Policy") issued by an insurer specified in the
related Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity facilities,
third party payments or other support, cash deposits
or other arrangements. In addition to or in lieu of
the foregoing, credit enhancement may be provided by
means of subordination, cross-support among the
Receivables or over-collateralization. The Company
will originate Receivables or acquire Receivables
from one or more originators on or prior to the date
of issuance of the related Securities, as described
herein and in the related Prospectus Supplement.
With respect to Securities issued by a Trust, each
Trust will be established pursuant to an agreement
(each, a "Pooling Agreement") by and between the
Company and the Trustee named therein. Each Pooling
Agreement will describe the related pool of
Receivables held by the Trust.
With respect to Securities that represent debt
issued by the Issuer, the Issuer will enter into an
indenture (each, an "Indenture") by and between the
Issuer and the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will describe
the related pool of Receivables comprising the Trust
Property and securing the debt issued by the related
Issuer.
The Receivables comprising the Trust Property will
be serviced by the Servicer pursuant to a servicing
agreement (each, a "Servicing Agreement") by and
between the Servicer and the related Issuer.
In the case of the Trust Property of any class of
Securities, the contractual arrangements relating to
the establishment of a Trust, if any, the servicing
of the related Receivables and the issuance of the
related Securities may be contained in a single
agreement, or in several agreements which combine
certain aspects of the Pooling Agreement, the
Servicing Agreement and the Indenture described
above (for example, a pooling and servicing
agreement, or a servicing and collateral management
agreement). For purposes of this Prospectus, the
term "Trust Agreement" as used with respect to Trust
Property means, collectively, and except as
otherwise described in the related Prospectus
Supplement, any and all agreements relating to the
establishment of a Trust, if any, the servicing of
the related Receivables and the issuance of the
related Securities. The term "Trustee" means any and
all persons acting as a trustee pursuant to a Trust
Agreement.
Securities Will Be Non-Recourse.
The Securities will not be obligations, either
recourse or non-recourse (except for certain
non-recourse debt described under "Certain Tax
Considerations"), of the Company, the related
Servicer or any person other than the related
Issuer. The Notes of a given series represent
obligations of the Issuer, and the Certificates of a
given series represent beneficial interests in the
related Issuer only and do not represent interests
in or obligations of the Company, the related
Servicer or any of their respective affiliates other
than the related Issuer. In the case of Securities
that represent beneficial ownership interest in the
related Issuer, such Securities will represent the
beneficial ownership interests in such Issuer and
the sole source of payment will be the assets of
such Issuer. In the case of Securities that
represent debt issued by the related Issuer, such
Securities will be secured by assets in the related
Trust Property. Notwithstanding the foregoing, and
as to be described in the related Prospectus
Supplement, certain types of credit enhancement,
such as a letter of credit, financial guaranty
insurance policy or reserve fund may
5
<PAGE>
constitute a full recourse obligation of the issuer
of such credit enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to this
Prospectus and the related Prospectus Supplement
will be rated in one of the four highest rating
categories by one or more Rating Agencies (as
defined herein).
Additionally, except to the extent provided in the
related Prospectus Supplement, all of the Securities
offered pursuant to this Prospectus and the related
Prospectus Supplement will be of the fixed-income
type ("Fixed Income Securities"). Fixed Income
Securities will generally be styled as debt
instruments, having a principal balance and a
specified interest rate ("Interest Rate"). Fixed
Income Securities may either represent beneficial
ownership interests in the related Receivables held
by the related Trust or debt secured by certain
assets of the related Issuer.
Each series or Class of Fixed Income Securities
offered pursuant to this Prospectus may have a
different Interest Rate, which may be a fixed or
adjustable Interest Rate. The related Prospectus
Supplement will specify the Interest Rate for each
series or Class of Fixed Income Securities described
therein, or the initial Interest Rate and the method
for determining subsequent changes to the Interest
Rate.
A series may include one or more Classes of Fixed
Income Securities ("Strip Securities") entitled (i)
to principal distributions, with disproportionate,
nominal or no interest distributions, or (ii) to
interest distributions, with disproportionate,
nominal or no principal distributions. In addition,
a series of Securities may include two or more
Classes of Fixed Income Securities that differ as to
timing, sequential order, priority of payment,
Interest Rate or amount of distribution of principal
or interest or both, or as to which distributions of
principal or interest or both on any Class may be
made upon the occurrence of specified events, in
accordance with a schedule or formula, or on the
basis of collections from designated portions of the
related pool of Receivables. Any such series may
include one or more Classes of Fixed Income
Securities ("Accrual Securities"), as to which
certain accrued interest will not be distributed but
rather will be added to the principal balance (or
nominal balance, in the case of Accrual Securities
which are also Strip Securities) thereof on each
Payment Date, as hereinafter defined, or in the
manner described in the related Prospectus
Supplement.
If so provided in the related Prospectus Supplement,
a series may include one or more other Classes of
Fixed Income Securities (collectively, the "Senior
Securities") that are senior to one or more other
Classes of Fixed Income Securities (collectively,
the "Subordinate Securities") in respect of certain
distributions of principal and interest and
allocations of losses on Receivables.
In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to other
Classes of Senior (or Subordinate) Securities in
respect of such distributions or losses.
General Payment Terms of Securities.
As provided in the related Trust Agreement and as
described in the related Prospectus Supplement, the
holders of the Securities ("Securityholders") will
be entitled to receive payments on their Securities
on specified dates (each, a "Payment Date"). Payment
Dates with respect to Fixed Income Securities will
occur monthly, quarterly or semi-annually, as
described in the related Prospectus Supplement.
6
<PAGE>
The related Prospectus Supplement will describe a
date (the "Record Date") preceding such Payment
Date, as of which the Trustee or its paying agent
will fix the identity of the Securityholders for the
purpose of receiving payments on the next succeeding
Payment Date. As described in the related Prospectus
Supplement, the Payment Date will be a specified day
of each month, commonly the tenth, twelfth,
fifteenth or twenty-fifth day of each month (or, in
the case of quarterly-pay Securities, the tenth,
twelfth, fifteenth or twenty-fifth day of every
third month; and in the case of semi-annual pay
Securities, the tenth, twelfth, fifteenth or
twenty-fifth day of every sixth month) and the
Record Date will be the close of business as of the
last day of the calendar month that precedes the
calendar month in which such Payment Date occurs.
Each Trust Agreement will describe a period (each, a
"Remittance Period") preceding each Payment Date
(for example, in the case of monthly-pay Securities,
the calendar month preceding the month in which a
Payment Date occurs). As more fully described in the
related Prospectus Supplement, collections received
on or with respect to the related Receivables
constituting Trust Property during a Remittance
Period will be required to be remitted by the
Servicer to the related Trustee prior to the related
Payment Date and will be used to fund payments to
Securityholders on such Payment Date. As may be
described in the related Prospectus Supplement, the
related Trust Agreement may provide that all or a
portion of the payments collected on or with respect
to the related Receivables may be applied by the
related Trustee to the acquisition of additional
Receivables during a specified period (rather than
be used to fund payments of principal to
Securityholders during such period), with the result
that the related Securities will possess an
interest-only period, also commonly referred to as a
revolving period, which will be followed by an
amortization period. Any such interest only or
revolving period may, upon the occurrence of certain
events to be described in the related Prospectus
Supplement, terminate prior to the end of the
specified period and result in the earlier than
expected amortization of the related Securities.
In addition, and as may be described in the related
Prospectus Supplement, the related Trust Agreement
may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in
certain temporary investments, including
Receivables) for a specified period prior to being
used to fund payments of principal to
Securityholders.
Such retention and temporary investment by the
Trustee of such collected payments may be required
by the related Trust Agreement for the purpose of
(a) slowing the amortization rate of the related
Securities relative to the installment payment
schedule of the related Receivables, or (b)
attempting to match the amortization rate of the
related Securities to an amortization schedule
established at the time such Securities are issued.
Any such feature applicable to any Securities may
terminate upon the occurrence of events to be
described in the related Prospectus Supplement,
resulting in distributions to the specified
Securityholders and an acceleration of the
amortization of such Securities.
As more fully specified in the related Prospectus
Supplement, neither the Securities nor the
underlying Receivables will be guaranteed or insured
by any governmental agency or instrumentality or the
Company, the related Servicer, any Trustee, or any
of their affiliates.
No Investment Companies... Neither the Company nor any Trust will register as
an "investment company" under the Investment Company
Act of 1940, as amended (the "Investment Company
Act").
7
<PAGE>
The Residual Interest... With respect to each Trust, the "Residual Interest"
at any time represents the rights to the related
Trust Property in excess of the Securityholders'
interest of all series then outstanding that were
issued by such Trust. The Residual Interest in any
Trust Property will fluctuate as the aggregate Pool
Balance (as hereinafter defined) of such Trust Fund
changes from time to time. A portion of the Residual
Interest in any Trust may be sold separately in one
or more public or private transactions.
Master Trusts; Issuance of
Additional Series ...... As may be described in the related Prospectus
Supplement, the Company may cause one or more of the
Trusts (such a Trust, a "Master Trust") to issue
additional series of Securities from time to time.
Under each Trust Agreement relating to a Master
Trust (each, a "Master Trust Agreement"), the
Company may determine the terms of any such new
series. See "Description of the Securities -- Master
Trusts."
The Company may cause the related Trustee to offer
any such new series to the public or other
investors, in transactions either registered under
the Securities Act or exempt from registration
thereunder, directly or through one or more
underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or
otherwise.
A new series to be issued by a Master Trust which
has a series outstanding may, only be issued upon
satisfaction of the conditions described herein
under "Description of the Securities -- Master
Trusts". Securities secured by Receivables held by a
Master Trust shall be entitled to moneys received
relating to such Receivables on a pari passu basis
with other Securities issued pursuant to the other
Trust Agreements by such Master Trust.
Cross-Collateralization.. As described in the related Trust Agreement and the
related Prospectus Supplement, the source of payment
for Securities of each series will be the assets of
the related Trust Property only.
However, as may be described in the related
Prospectus Supplement, a series or class of
Securities may include the right to receive moneys
from a common pool of credit enhancement which may
be available for more than one series of Securities,
such as a master reserve account, master insurance
policy or a master collateral pool consisting of
similar Receivables. Notwithstanding the foregoing,
and as described in the related Prospectus
Supplement, no payment received on any Receivable
held by any Trust may be applied to the payment of
Securities issued by any other Trust (except to the
limited extent that certain collections in excess of
the amounts needed to pay the related Securities may
be deposited in a common master reserve account or
an overcollateralization account that provides
credit enhancement for more than one series of
Securities issued pursuant to the related Trust
Agreement).
Trust Property.......... As specified in the related Prospectus Supplement,
the Trust Property will consist of the related
Contracts, and may include a security interest in
the related Vehicles. If and to the extent specified
in the related Prospectus Supplement, credit
enhancement with respect to Trust Property or any
class of Securities may include any one or more of
the following: a Policy issued by an insurer
specified in the related Prospectus Supplement, a
reserve account, letters of credit, credit or
liquidity facilities, repurchase obligations, third
party payments or other support, cash deposits or
other arrangements. In addition to or in lieu of the
foregoing, credit enhancement may be provided by
means of subordination, cross-support among the
Receivables or over-collateralization. See
"Description of the Trust Agreement -- Credit and
Cash Flow Enhancement." The Contracts are
obligations for the purchase of the Vehicles, or
evidence borrowings used to acquire the Vehicles. As
specified in the related Prospectus Supplement, the
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Contracts may consist of any combination of Rule of
78s Contracts, Fixed Value Contracts or Simple
Interest Contracts. Generally, "Rule of 78s
Contracts" provide for fixed level monthly payments
which will amortize the full amount of the Contract
over its term. The Rule of 78s Contracts provide for
allocation of payments according to the "sum of
periodic balances" or "sum of monthly payments"
method (the "Rule of 78s"). Each Rule of 78s
Contract provides for the payment by the Obligor of
a specified total amount of payments, payable in
monthly installments on the related due date, which
total represents the principal amount financed and
finance charges in an amount calculated on the basis
of a stated annual percentage rate ("APR") for the
term of such Contract. The rate at which such amount
of finance charges is earned and, correspondingly,
the amount of each fixed monthly payment allocated
to reduction of the outstanding principal balance of
the related Contract are calculated in accordance
with the Rule of 78s. Under the Rule of 78s, the
portion of each payment allocable to interest is
higher during the early months of the term of a
Contract and lower during later months than that
under a constant yield method for allocating
payments between interest and principal.
Notwithstanding the foregoing, as specified in the
related Prospectus Supplement, all payments received
by the related Servicer on or in respect of the Rule
of 78s Contracts may be allocated on an actuarial or
simple interest basis.
Generally, the "Fixed Value Contracts" provide for
monthly payments with a final fixed value payment
which is greater than the scheduled monthly
payments. A Fixed Value Contract provides for
amortization of the loan over a series of fixed
level payment monthly installments, but also
requires a final fixed value payment due after
payment of such monthly installments which may be
satisfied by (i) payment in full in cash of such
amount, (ii) transfer of the vehicle to the Company
provided certain conditions are satisfied or (iii)
refinancing the fixed value payment in accordance
with certain conditions. With respect to Fixed Value
Contracts, as specified in the related Prospectus
Supplement, only the principal and interest payments
due prior to the final fixed value payment and not
the final fixed value payment may be included
initially in the related Trust Property.
"Simple Interest Contracts" provide for the
amortization of the amount financed under the
receivable over a series of fixed level monthly
payments. However, unlike the monthly payment under
Rule of 78s Contracts, each monthly payment consists
of an installment of interest which is calculated on
the basis of the outstanding principal balance of
the receivable multiplied by the stated APR and
further multiplied by the period elapsed (as a
fraction of a calendar year) since the preceding
payment of interest was made. As payments are
received under a Simple Interest Contract, the
amount received is applied first to interest accrued
to the date of payment and the balance is applied to
reduce the unpaid principal balance. Accordingly, if
an Obligor pays a fixed monthly installment before
its scheduled due date, the portion of the payment
allocable to interest for the period since the
preceding payment was made will be less than it
would have been had the payment been made as
scheduled, and the portion of the payment applied to
reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor
pays a fixed monthly installment after its scheduled
due date, the portion of the payment allocable to
interest for the period since the preceding payment
was made will be greater than it would have been had
the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In
either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date,
at which time the amount of the final installment is
increased or decreased as necessary to repay the
then outstanding principal balance.
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If an Obligor elects to prepay a Rule of 78s
Contract in full, it is entitled to a rebate of the
portion of the outstanding balance then due and
payable attributable to unearned finance charges. If
a Simple Interest Contract is prepaid, rather than
receive a rebate, the Obligor is required to pay
interest only to the date of prepayment. The amount
of a rebate under a Rule of 78s Contract calculated
in accordance with the Rule of 78s will always be
less than had such rebate been calculated on an
actuarial basis and generally will be less than the
remaining scheduled payments of interest that would
be due under a Simple Interest Contract for which
all payments were made on schedule. Distributions to
Securityholders may not be affected by Rule of 78s
rebates under the Rule of 78s Contracts because
pursuant to the related Prospectus Supplement such
distributions may be determined using the actuarial
or simple interest method.
The related Prospectus Supplement will further
describe the type and characteristics of the
Contracts included in the Trust Property relating to
the Securities offered pursuant to this Prospectus
and the related Prospectus Supplement.
The Receivables comprising the Trust Property will
be originated by the Company; such Receivables will
have theretofore been either (i) originated by
Vendors and acquired by the Company or (ii) acquired
by the Company from other originators or owners of
Receivables.
The Company will either transfer Receivables to a
Trust pursuant to a Pooling Agreement or pledge the
Company's right, title and interest in and to such
Receivables to a Trustee on behalf of
Securityholders pursuant to an Indenture. The
obligations of the Company, the Servicer, the
related Trustee and the related Indenture Trustee,
if any, under the related Trust Agreement include
those specified below and in the related Prospectus
Supplement.
In addition, if so specified in the related
Prospectus Supplement, the Trust Property will
include monies on deposit in a Pre-Funding Account
(the "Pre-Funding Account") to be established with
the Trustee, which will be used to acquire
Additional Receivables (as hereinafter defined) from
time to time during the "Pre-Funding Period"
specified in the related Prospectus Supplement. The
Pre-Funding Account, if any, will be reduced during
the related Pre-Funding Period by the amount thereof
used to purchase Additional Receivables. Any amount
remaining in the Pre-Funding Account at the end of
the related Pre-Funding Period will be distributed
to the related Securityholders, pro rata, on the
Payment Date immediately following the end of the
Pre-Funding Period.
If and to the extent provided in the related
Prospectus Supplement, the Company will be obligated
(subject only to the availability thereof) to either
transfer to a Trust or pledge to a Trustee on behalf
of Securityholders, additional Receivables (the
"Additional Receivables") from time to time during
any Pre-Funding Period specified in the related
Prospectus Supplement.
Registration of
Securities ............. Securities may be represented by global securities
registered in the name of Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC"), or
another nominee. In such case, Securityholders will
not be entitled to receive definitive securities
representing such Securityholders' interests, except
in certain circumstances described in the related
Prospectus Supplement. See "Description of the
Securities -- Book Entry Registration" herein.
Credit and Cash Flow
Enhancement ............ If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to Trust Property or any class of Securities
may include any one or more of the following: a
Policy issued by an insurer specified in the related
Prospectus Supplement
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(a "Security Insurer"), a reserve account, letters
of credit, credit or liquidity facilities, third
party payments or other support, cash deposits or
other arrangements. Any form of credit enhancement
will have certain limitations and exclusions from
coverage thereunder, which will be described in the
related Prospectus Supplement. See "Description of
the Trust Agreement -- Credit and Cash Flow
Enhancement."
Repurchase Obligations and
the Receivables Acquisition
Agreement............... As more fully described in the related Prospectus
Supplement, the Company will be obligated to acquire
from the related Trust Property any Receivable which
was transferred pursuant to a Pooling Agreement or
pledged pursuant to an Indenture if the interest of
the Securityholders therein is materially adversely
affected by a breach of any representation or
warranty made by the Company with respect to such
Receivable, which breach has not been cured. In
addition, if so specified in the related Prospectus
Supplement, the Company may from time to time
reacquire certain Receivables of the Trust Property,
subject to specified conditions set forth in the
related Trust Agreement.
Servicer's Compensation.. The Servicer shall be entitled to receive a fee for
servicing the Trust Property equal to a specified
percentage of the value of such Trust Property, as
set forth in the related Prospectus Supplement. See
"Description of the Trust Agreements -- Servicing
Compensation" herein and in the related Prospectus
Supplement.
Certain Legal Aspects
of the Contracts........ With respect to the transfer of the Contracts to the
related Trust pursuant to a Pooling Agreement or the
pledge of the related Issuer's right, title and
interest in and to such Contracts on behalf of
Securityholders pursuant to an Indenture, the
Company will warrant, in each case, that such
transfer is either a valid transfer and assignment
of the Contracts to the Trust or the grant of a
security interest in the Contracts. Each Prospectus
Supplement will specify what actions will be taken
by which parties as will be required to perfect
either the Issuer's or the Securityholders' security
interest in the Contracts. The Company may also
warrant that, if the transfer or pledge by it to the
Trust or to the Securityholders is deemed to be a
grant to the Trust or to the Securityholders of a
security interest in the Contracts, then the related
Issuer or the Securityholders will have a first
priority perfected security interest therein, except
for certain liens which have priority over
previously perfected security interests by operation
of law, and, with certain exceptions, in the
proceeds thereof. Similar security interest and
priority representations and warranties, as
described in the related Prospectus Supplement, may
also be made by the Company with respect to the
Vehicles.
Perfection of security interests in automobiles and
light duty trucks is generally governed by the
vehicle registration or titling laws of the state in
which each vehicle is registered or titled. In most
states, a security interest in a vehicle is
perfected by notation of the secured party's lien on
the vehicle's certificate of title. Each Prospectus
Supplement will specify whether the Company, the
Servicer or the Trustee, in light of the
administrative burden and expense, will amend any
certificate of title to identify the Company or the
Trustee as the new secured party on the certificates
of title relating to the Vehicles. See "Certain
Legal Aspects of the Receivables."
Each Prospectus Supplement will specify if the
Company has filed or will be required to file UCC
(as herein defined) financing statements identifying
the Vehicles as collateral pledged in favor of the
related Trust or Trustee on behalf of the
Securityholders. In the absence of such filings any
security interest in the Vehicles will not be
perfected in favor of the related Trust or Trustee.
See "Certain Legal Aspects of the Receivables."
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Optional Termination.... The Servicer, the Company, or, if specified in the
related Prospectus Supplement, certain other
entities may, at their respective options, effect
early retirement of a series of Securities under the
circumstances and in the manner set forth herein
under "Description of The Trust Agreement --
Termination" and in the related Prospectus
Supplement.
Mandatory Termination... The Trustee, the Servicer or certain other entities
specified in the related Prospectus Supplement may
be required to effect early retirement of all or any
portion of a series of Securities by soliciting
competitive bids for the purchase of the Trust
Property or otherwise, under other circumstances and
in the manner specified in "Description of The Trust
Agreement -- Termination" and in the related
Prospectus Supplement.
Tax Considerations...... Securities of each series offered hereby will, for
federal income tax purposes, constitute either (i)
interests in a Trust treated as a grantor trust
under applicable provisions of the Code ("Grantor
Trust Securities"), (ii) debt issued by a Trust or
by the Company ("Debt Securities") or (iii)
interests in a Trust which is treated as a
partnership ("Partnership Interests").
The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations stated therein, federal income tax
considerations relevant to the purchase, ownership
and disposition of such Securities.
Investors are advised to consult their tax advisors
and to review "Certain Federal and State Income Tax
Consequences" in the related Prospectus Supplement.
ERISA Considerations.... The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations discussed therein, considerations under
the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), relevant to the purchase of
such Securities by employee benefit plans and
individual retirement accounts. See "ERISA
Considerations" in the related Prospectus
Supplement.
Ratings................. Each Class of Securities offered pursuant to this
Prospectus and the related Prospectus Supplement
will be rated in one of the four highest rating
categories by one or more "national statistical
rating organizations", as defined in the Securities
Exchange Act of 1934, as amended (the "Exchange
Act"), and commonly referred to as "Rating
Agencies". Such ratings will address, in the opinion
of such Rating Agencies, the likelihood that the
Issuer will be able to make timely payment of all
amounts due on the related Securities in accordance
with the terms thereof. Such ratings will neither
address any prepayment or yield considerations
applicable to any Securities nor constitute a
recommendation to buy, sell or hold any Securities.
The ratings expected to be received with respect to
any Securities will be set forth in the related
Prospectus Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
Limited Liquidity. There can be no assurance that a secondary market for
the Securities of any series or Class will develop or, if it does develop, that
it will provide Securityholders with liquidity of investment or that it will
continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
Ownership of Contracts. In connection with the issuance of any series of
Securities, the Company will originate Contracts. The Company will warrant in a
Trust Agreement (i) if the Company retains title to the Contracts, that the
Trustee for the benefit of Securityholders has a valid security interest in such
Contracts, or (ii) if the Company transfers such Contracts to a Trust, that the
transfer of the Contracts to such Trust is either a valid assignment, transfer
and conveyance of the Contracts to the Trust or the Trustee on behalf of the
Securityholders has a valid security interest in such Contracts. As to be
described in the related Prospectus Supplement, the related Trust Agreement will
provide either that the Trustee will be required to maintain possession of the
original copies of all Contracts that constitute chattel paper or that the
Company or the Servicer will retain possession of such Contracts; provided that
in case the Company retains possession of the related Contracts, the Servicer
may take possession of such original copies as necessary for the enforcement of
any Contract. If any Contracts remain in the possession of the Company, the
related Prospectus Supplement may describe specific trigger events that will
require delivery to the Trustee. If the Company, the Servicer, the Trustee or
other third party, while in possession of the Contracts, sells or pledges and
delivers such Contracts to another party, in violation of the Receivables
Acquisition Agreement or the Trust Agreement, there is a risk that such other
party could acquire an interest in such Contracts having a priority over the
Issuer's interest. Furthermore, if the Company, the Servicer or a third party,
while in possession of the Contracts, is rendered insolvent, such event of
insolvency may result in competing claims to ownership or security interests in
the Contracts. Such an attempt, even if unsuccessful, could result in delays in
payments on the Securities. If successful, such attempt could result in losses
to the Securityholders or an acceleration of the repayment of the Securities.
The Company will be obligated to repurchase any Contract originated by the
Company and currently in the related Trust Property if there is a breach of the
Company's representations and warranties that materially and adversely affects
the interests of the Trust in such Contract and such breach has not been cured.
Security Interests. The transfer of the Receivables by the Company to the
Trustee pursuant to the related Pooling Agreement, Indenture or Trust Agreement,
the perfection of the security interests in the Receivables and the enforcement
of rights to realize on the Vehicles as collateral for the Receivables are
subject to a number of federal and state laws, including the UCC as in effect in
various states. As specified in each Prospectus Supplement, the Servicer will
take such action as is required to perfect the rights of the Trustee in the
Receivables. If, through inadvertence or otherwise, a third party were to
purchase (including the taking of a security interest in) a Receivable for new
value in the ordinary course of its business, without actual knowledge of the
Trust's interest, and take possession of a Receivable, the purchaser would
acquire an interest in such Receivable superior to the interest of the Trust. As
further specified in each Prospectus Supplement, no action will be taken to
perfect the rights of the Trustee in proceeds of a VSI Insurance Policy (as
hereinafter defined) or of any other insurance policies covering individual
Vehicles or Obligors. Therefore, the rights of a third party with an interest in
such proceeds could prevail against the rights of the Trust prior to the time
such proceeds are deposited by the Servicer into a Trust Account (as hereinafter
defined). See "Certain Legal Aspects of the Receivables".
Except to the extent specified in the related Prospectus Supplement, each
Contract will include a perfected security interest in the related Vehicle in
favor of the Trustee or the Company (and, if perfected in the name of the
Company, assigned pursuant to the related Pooling Agreement, Indenture or Trust
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Agreement to the Trustee for the benefit of the Securityholders). However, to
the extent provided in the related Prospectus Supplement, due to the
administrative burden and expense, the certificates of title of the Vehicles
securing certain Contracts which reflect the security interest of the Company in
such Vehicles may not be endorsed to reflect the Trustee's interest therein or
delivered to the Trustee. In the absence of such endorsement and delivery, the
Trustee may not have a perfected security interest in such Vehicles. As a
result, a third party buyer of a Vehicle for value from an Obligor may
extinguish the interest of the Trust in the Vehicle, a subsequent perfected
lienholder may obtain a security interest senior in right to that of the Trust,
and a trustee in bankruptcy of the Company may be able to assert successfully
that the Trust did not have a security interest in the Vehicle. In addition,
statutory liens for repairs or unpaid taxes and other liens arising by operation
of law may have priority even over prior perfected security interests in the
name of the Trustee in the Vehicles.
Restrictions on Recoveries. Unless specific limitations are described on
the related Prospectus Supplement with respect to specific Contracts, all
Contracts will provide that the obligations of the Obligors thereunder are
absolute and unconditional, regardless of any defense, set-off or abatement
which the Obligor may have against the Company or any other person or entity
whatsoever. The Company will warrant that no claims or defenses have been
asserted or threatened with respect to the Contracts and that all requirements
of applicable law with respect to the Contracts have been satisfied.
In the event that the Company or the Trustee must rely on repossession and
disposition of Vehicles to recover scheduled payments due on Defaulted Contracts
(as defined in the related Pooling Agreement), the Issuer may not realize the
full amount due on a Contract (or may not realize the full amount on a timely
basis). Other factors that may affect the ability of the Issuer to realize the
full amount due on a Contract include whether amendments to certificates of
title relating to the Vehicles had been filed, whether financing statements to
perfect the security interest in the Vehicles had been filed, depreciation,
obsolescence, damage or loss of any Vehicle, and the application of Federal and
state bankruptcy and insolvency laws. As a result, the Securityholders may be
subject to delays in receiving payments and suffer loss of their investment in
the Securities.
Insolvency and Bankruptcy Matters. The Company will take steps in
structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by the Company under
the United States Bankruptcy Code or similar applicable state laws ("Insolvency
Laws") will not result in the Trust Property becoming property of the estate of
the Company within the meaning of such Insolvency Laws. Such steps will
generally involve the creation by the Company of one or more separate,
limited-purpose subsidiaries (each, a "Finance Subsidiary") pursuant to articles
of incorporation containing certain limitations (including restrictions on the
nature of such Finance Subsidiary's business and a restriction on such Finance
Subsidiary's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all its
directors). However, there can be no assurance that the activities of any
Finance Subsidiary would not result in a court's concluding that the assets and
liabilities of such Finance Subsidiary should be consolidated with those of the
Company in a proceeding under any Insolvency Law.
With respect to the Trust Property, the Trustee and all Securityholders
will covenant that they will not at any time institute against the Company or
the related Finance Subsidiary any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
While an originator is the Servicer, cash collections held by such
originator may, subject to certain conditions, be commingled and used for the
benefit of such originator prior to each Payment Date and, in the event of the
bankruptcy of such originator, the Company, a Trust or Trustee may not have a
perfected interest in such collections.
The Company believes that the transfer of the Receivables by the Company
to a Finance Subsidiary should be treated as a valid assignment, transfer and
conveyance of such Receivables. However, in the event of an insolvency of the
Company, a court, among other remedies, could attempt to recharacterize the
transfer of the Receivables by the Company to the Finance Subsidiary as a
borrowing
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by the Company from the Finance Subsidiary or the related Securityholders,
secured by a pledge of such Receivables. Such an attempt, even if unsuccessful,
could result in delays in payments on the Securities. If such an attempt were
successful, a court, among other remedies, could elect to accelerate payment of
the Securities and liquidate the Receivables, with the Securityholders entitled
to the then outstanding principal amount thereof and interest thereon at the
applicable Security Interest Rate to the date of payment. Thus, the
Securityholders could lose the right to future payments of interest and might
incur reinvestment losses. As more fully described in the related Prospectus
Supplement, in the event the related Issuer is rendered insolvent, the related
Trustee for a Trust, in accordance with the Trust Agreement, will promptly sell,
dispose of or otherwise liquidate the related Receivables in a commercially
reasonable manner on commercially reasonable terms. The proceeds from any such
sale, disposition or liquidation of such Receivables will be treated as
collections on such Receivables. If the proceeds from the liquidation of the
Receivables and any amount available from any credit enhancement, if any, are
not sufficient to pay Securities of the related series in full, the amount of
principal returned to such Securityholders will be reduced and such
Securityholders will incur a loss.
Obligors of the Vehicles may be entitled to assert against the Company,
the Issuer, or the Trust, if any, claims and defenses which they have against
the Company with respect to the Receivables. The Company will warrant that no
such claims or defenses have been asserted or threatened with respect to the
Receivables and that all requirements of applicable law with respect to the
Receivables have been satisfied.
Insurance on Vehicles. Each Receivable generally requires the Company to
maintain insurance covering physical damage to the Vehicle in an amount not less
than the unpaid principal balance of such Receivable pursuant to which the
Company is named as a loss payee. Since the Obligors select their own insurers
to provide the requisite coverage, the specific terms and conditions of their
policies vary.
In addition, although each Receivable generally gives the Company the
right to force place insurance coverage in the event the required physical
damage insurance on a Vehicle is not maintained by an Obligor, neither the
Company nor the Servicer is obligated to place such coverage. In the event
insurance coverage is not maintained by Obligors and coverage is not force
placed, then insurance recoveries may be limited in the event of losses or
casualties to Vehicles included in the Trust Property, as a result of which
Securityholders could suffer a loss on their investment.
Delinquencies. There can be no assurance that the historical levels of
delinquencies and losses experienced by the Company on its respective loan and
vehicle portfolio will be indicative of the performance of the Contracts
included in the Trust or that such levels will continue in the future.
Delinquencies and losses could increase significantly for various reasons,
including changes in the federal income tax laws, changes in the local, regional
or national economies or due to other events.
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one Class of
Securities of a series may be subordinated in priority of payment to interest
and principal due on other Classes of Securities of a related series. Moreover,
the Trust Property will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the related Receivables and,
to the extent provided in the related Prospectus Supplement, the related reserve
account and any other credit enhancement. The Securities represent obligations
solely of the related Trust or debt secured by the related Trust Property, and
will not represent a recourse obligation to other assets of the Company. No
Securities of any series will be insured or guaranteed by the Company, the
Servicer, or the applicable Trustee. Consequently, holders of the Securities of
any series must rely for repayment primarily upon payments on the Receivables
and, if and to the extent available, the reserve account, if any, and any other
credit enhancement, all as specified in the related Prospectus Supplement.
Master Trusts. As may be described in the related Prospectus Supplement, a
Master Trust may issue from time to time more than one series. While the terms
of any additional series will be specified in a supplement to the related Master
Trust Agreement, the provisions of such supplement and, therefore,
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the terms of any additional series, will not be subject to prior review by, or
consent of, holders of the Securities of any series previously issued by such
Master Trust. Such terms may include methods for determining applicable investor
percentages and allocating collections, provisions creating different or
additional security or credit enhancements and any other provisions which are
made applicable only to such series. The obligation of the related Trustee to
issue any new series is subject to the condition, among others, that such
issuance will not result in any Rating Agency reducing or withdrawing its rating
of the Securities of any outstanding series (any such reduction or withdrawal is
referred to herein as a "Ratings Effect"). There can be no assurance, however,
that the terms of any series might not have an impact on the timing or amount of
payments received by a Securityholder of another series issued by the same
Master Trust. See "Description of the Securities -- Master Trusts."
Book-Entry Registration. Issuance of the Securities in book-entry form may
reduce the liquidity of such Securities in the secondary trading market since
investors may be unwilling to purchase Securities for which they cannot obtain
definitive physical securities representing such Securityholders' interests,
except in certain circumstances described in the related Prospectus Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC and, in such case, DTC
will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities -- Book Entry
Registration."
Security Rating. The rating of Securities credit enhanced by a letter of
credit, financial guaranty insurance policy, reserve fund, credit or liquidity
facilities, cash deposits or other forms of credit enhancement (collectively
"Credit Enhancement") will depend primarily on the creditworthiness of the
issuer of such external Credit Enhancement device (a "Credit Enhancer"). Any
reduction in the rating assigned to the claims-paying ability of the related
Credit Enhancer to honor its obligations pursuant to any such Credit Enhancement
below the rating initially given to the Securities would likely result in a
reduction in the rating of the Securities.
Maturity and Prepayment Considerations. Because the rate of payment of
principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include scheduled
payments as well as partial and full prepayments (to the extent not replaced
with substitute Contracts), payments upon the liquidation of Defaulted
Contracts, payments upon acquisitions by the Servicer or the Company of
Contracts from the related Trust Property on account of a breach of certain
representations and warranties in the related Trust Agreement, payments upon an
optional acquisition by the Servicer or the Company of Contracts from the
related Trust Property (any such voluntary or involuntary prepayment or other
early payment of a Contract, a "Prepayment"), and residual payments. The rate of
early terminations of Contracts due to Prepayments and defaults may be
influenced by a variety of economic and other factors, including, among others,
obsolescence, then current economic conditions and tax considerations. The risk
of reinvesting distributions of the principal of the Securities will be borne by
the Securityholders. The yield to maturity on Strip Securities or Securities
purchased at premiums or discounts to par will be extremely sensitive to the
rate of Prepayments on the related Receivables. In addition, the yield to
maturity on certain other types of classes of Securities, including Strip
Securities, Accrual Securities or certain other Classes in a series including
more than one Class of Securities, may be relatively more sensitive to the rate
of prepayment of the related Contracts than other Classes of Securities.
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The rate of Prepayments of Contracts cannot be predicted and is influenced
by a wide variety of economic, social, and other factors, including prevailing
interest rates, the availability of alternate financing and local and regional
economic conditions. Therefore, no assurance can be given as to the level of
Prepayments that a Trust will experience.
Securityholders should consider, in the case of Securities purchased at a
discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that a
faster than anticipated rate of Prepayments on the Receivables could result in
an actual yield that is less than the anticipated yield.
Limitations on Interest Payments and Foreclosures. Generally, under the
terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act"), or similar state legislation, an Obligor who enters military
service after the origination of the related Receivable (including an Obligor
who is a member of the National Guard or is in reserve status at the time of the
origination of the Receivable and is later called to active duty) may not be
charged interest (including fees and charges) above an annual rate of 6% during
the period of such Obligor's active duty status, unless a court orders otherwise
upon application of the lender. It is possible that such action could have an
effect, for an indeterminate period of time, on the ability of the Servicer to
collect full amounts of interest on certain of the Receivables. In addition, the
Relief Act imposes limitations that would impair the ability of the Servicer to
foreclose on an affected Receivable during the Obligor's period of active duty
status. Thus, in the event that such a Receivable goes into default, there may
be delays and losses occasioned by the inability of the Servicer to realize upon
the Financed Vehicle in a timely fashion.
Financial Condition of Advanta. The Company is generally not obligated to
make any payments in respect of the Securities or the Receivables of a specific
Trust. If the Company were to cease acting as Servicer, delays in processing
payments on the Receivables and information in respect thereof could occur and
result in delays in payments to the Securityholders.
In certain circumstances, the Company will be required to acquire
Receivables from the related Trust Property with respect to which such
representations and warranties have been breached. In the event that the Company
is incapable of complying with its reacquire obligations and no other party is
obligated to perform or satisfy such obligations, Securityholders may be subject
to delays in receiving payments and suffer loss of their investment in the
Securities.
The related Prospectus Supplement will set forth certain information
regarding the Company. In addition, the Company is subject to the information
requirements of the Exchange Act and, in accordance therewith, file reports and
other information with the Commission. For further information regarding the
Company reference is made to such reports and other information which are
available as described under "Available Information."
THE TRUST PROPERTY
The Trust Property will include, as specified in the related Prospectus
Supplement, (i) a pool of Receivables, (ii) all moneys (including accrued
interest) due thereunder on or after the applicable Cut-off Date, (iii) such
amounts as from time to time may be held in one or more accounts established and
maintained by the Servicer pursuant to the related Trust Agreement, as described
below and in the related Prospectus Supplement, (iv) the security interests, if
any, in the Vehicles relating to such pool of Receivables, (v) the right to
proceeds from claims on physical damage policies, if any, covering such Vehicles
or the related Obligors, as the case may be, (vi) the proceeds of any
repossessed Vehicles related to such pool of Receivables, (vii) the rights of
the Company under the related Receivables Acquisition Agreement and (viii)
interest earned on certain short-term investments held in such Trust Property,
unless the related Prospectus Supplement specifies that such earnings may be
paid to the Servicer or the Company. The Trust Property will also include, if so
specified in the related Prospectus Supplement, monies on deposit in a
Pre-Funding Account, which will be used by the Trustee to acquire
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or receive a security interest in Additional Receivables from time to time
during the Pre-Funding Period specified in the related Prospectus Supplement.
See "Description of the Securities -- Forward Commitments; Pre-Funding." In
addition, to the extent specified in the related Prospectus Supplement, some
combination of Credit Enhancements may be issued to or held by the Trustee on
behalf of the related Trust for the benefit of the holders of one ore more
classes of Securities.
The Receivables comprising the Trust Property will, as specifically
described in the related Prospectus Supplement, be either (i) originated by the
Company, (ii) originated by various manufacturers and acquired by the Company,
(iii) originated by various Dealers and acquired by the Company or (iv) acquired
by the Company from originators or owners of Receivables.
The Trust Property will include Receivables with respect to which the
related Contract or the related Vehicles is subject to federal or state
registration or titling requirements. No Trust Property will include Receivables
with respect to which the underlying Contracts or Vehicles relate to office
equipment, aircraft, ships or boats, firearms or other weapons, railroad rolling
stock or facilities such as factories, warehouses or plants subject to state
laws governing the manner in which title or security interest in real property
is determined or perfected.
The Receivables included in the Trust Property will be selected from those
Receivables held by the Company based on the criteria specified in the
applicable Trust Agreement and described herein or in the related Prospectus
Supplement.
With respect to each series of Securities, on or prior to the Closing Date
on which the Securities are delivered to Securityholders, the Company or a
Finance Subsidiary will form a Trust by either (i) transferring the related
Receivables into a Trust pursuant to a Trust Agreement between the Company or a
Finance Subsidiary and the Trustee or (ii) entering into an Indenture with an
Indenture Trustee, relating to the issuance of such Securities, secured by the
related Receivables.
The Receivables comprising the Trust Property will generally have been
originated by the Company or acquired by the Company from Dealers in accordance
with the Company's specified underwriting criteria. The underwriting criteria
applicable to the Receivables included in any Trust Property will be described
in all material respects in the related Prospectus Supplement.
THE ISSUERS
With respect to each series of Securities, the Company will either
establish a separate Trust that will issue such Securities, or the Company will
form a Finance Subsidiary that will issue such Securities, in each case pursuant
to the related Trust Agreement. For purposes of this Prospectus and the related
Prospectus Supplement, the Finance Subsidiary, if the Finance Subsidiary issues
the related Securities, or the related Trust, if a Trust issues the related
Securities, shall be referred to as the "Issuer" with respect to such
Securities.
Upon the issuance of the Securities of a given series, the proceeds from
such issuance will be used by the Company to originate Receivables. The Servicer
will service the related Receivables pursuant to the applicable Servicing
Agreement, and will be compensated for acting as the Servicer. To facilitate
servicing and to minimize administrative burden and expense, the Servicer may be
appointed custodian for the related Receivables by each Trustee and the Company,
as may be set forth in the related Prospectus Supplement.
If the protection provided to the Securityholders of a given class by the
subordination of another Class of Securities of such series and by the
availability of the funds in the reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Issuer must rely solely on the
payments from the Obligors on the related Contracts, and the proceeds from the
sale of Vehicles which secure the Defaulted Contracts. In such event, certain
factors may affect such Issuer's ability to realize on the
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collateral securing such Contracts, and thus may reduce the proceeds to be
distributed to the Securityholders of such series.
THE RECEIVABLES
Receivables Pools
Information with respect to the Receivables in the related Trust Property
will be set forth in the related Prospectus Supplement, including, to the extent
appropriate, the composition of such Receivables and the distribution of such
Receivables by geographic concentration, payment frequency and current principal
balance as of the applicable Cut-off Date.
The Contracts
As specified in the related Prospectus Supplement, the Contracts may
consist of any combination of Rule of 78s Contracts, Fixed Value Contracts or
Simple Interest Contracts. Generally, "Rule of 78s Contracts" provide for fixed
level monthly payments which will amortize the full amount of the Contract over
its term. The Rule of 78s Contracts provide for allocation of payments according
to the "sum of periodic balances" or "sum of monthly payments" method (the "Rule
of 78s"). Each Rule of 78s Contract provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated annual
percentage rate ("APR") for the term of such Contract. The rate at which such
amount of finance charges is earned and, correspondingly, the amount of each
fixed monthly payment allocated to reduction of the outstanding principal
balance of the related Contract are calculated in accordance with the Rule of
78s. Under the Rule of 78s, the portion of each payment allocable to interest is
higher during the early months of the term of a Contract and lower during later
months than that under a constant yield method for allocating payments between
interest and principal. Notwithstanding the foregoing, as specified in the
related Prospectus Supplement, all payments received by the Servicer on or in
respect of the Rule of 78s Contracts may be allocated on an actuarial or simple
interest basis.
Generally, the "Fixed Value Contracts" provide for monthly payments with a
final fixed value payment which is greater than the scheduled monthly payments.
A Fixed Value Contract provides for amortization of the loan over a series of
fixed level payment monthly installments, but also requires a final fixed value
payment due after payment of such monthly installments which may be satisfied by
(i) payment in full in cash of such amount, (ii) transfer of the vehicle to the
Company, provided certain conditions are satisfied or (iii) refinancing the
fixed value payment in accordance with certain conditions. With respect to Fixed
Value Contracts, as specified in the related Prospectus Supplement, only the
principal and interest payments due prior to the final fixed value payment and
not the final fixed value payment may be included initially in the related Trust
Property.
"Simple Interest Contracts" provide for the amortization of the amount
financed under the receivable over a series of fixed level monthly payments.
However, unlike the monthly payment under Rule of 78s Contracts, each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a calendar
year) since the preceding payment of interest was made. As payments are received
under a Simple Interest Contract, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to reduce the
unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had
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the payment been made as scheduled, and the portion of the payment applied to
reduce the unpaid principal balance will be correspondingly less. In either
case, the Obligor pays a fixed monthly installment until the final scheduled
payment date, at which time the amount of the final installment is increased or
decreased as necessary to repay the then outstanding principal balance.
If an Obligor elects to prepay a Rule of 78s Contract in full, it is
entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest Contract
is prepaid, rather than receive a rebate, the Obligor is required to pay
interest only to the date of prepayment. The amount of a rebate under a Rule of
78s Contract calculated in accordance with the Rule of 78s will always be less
than had such rebate been calculated on an actuarial basis and generally will be
less than the remaining scheduled payments of interest that would be due under a
Simple Interest Contract for which all payments were made on schedule.
Distributions to Security holders may not be affected by Rule of 78s rebates
under the Rule of 78s Contract because pursuant to the related Prospectus
Supplement such distributions may be determined using the actuarial or simple
interest method.
Delinquencies, Repossessions, and Net Losses
Certain information relating to the Company's delinquency, repossession
and net loss experience with respect to Contracts it has originated or acquired
will be set forth in each Prospectus Supplement. This information may include,
among other things, the experience with respect to all Contracts in the
Company's portfolio during certain specified periods. There can be no assurance
that the delinquency, repossession and net loss experience on any Trust Property
will be comparable to the Company's prior experience.
Maturity and Prepayment Considerations
As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Securities. The
rate of Prepayments on the Receivables may be influenced by a variety of
economic, financial and other factors. In addition, under certain circumstances,
the Company will be obligated to acquire Receivables from the related Trust
Property pursuant to the applicable Trust Agreement or Receivables Acquisition
Agreement as a result of breaches of representations and warranties. Any
reinvestment risks resulting from a faster or slower amortization of the related
Securities which results from Prepayments will be borne entirely by the related
Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
ADVANTA'S AUTOMOBILE FINANCING PROGRAM
Overview
Advanta Auto Finance, a wholly-owned subsidiary of Advanta Corporation,
was established as an automotive finance company specializing in non-conforming
auto financing. Advanta Auto Finance is engaged in the indirect financing of
automotive purchases by consumers who have experienced credit problems, who are
attempting to re-establish credit, who may not yet have sufficient credit
history or who do not wish to deal with the traditional sources of financing
(i.e. banks).
Advanta Auto Finance offers an array of products to existing originators
in order to establish long-term relationships. Advanta Auto Finance purchases
the closed, non-conforming auto finance contracts,
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which are originated by the existing originators and subsequently assigned to
Advanta Auto Finance, on a flow and pool/bulk basis.
Underwriting
Advanta Auto Finance has policies and procedures in place to address the
controls needed to analyze prospective credit applicants. Such procedures
include verifying and evaluating the credit bureau report as well as other
credit information obtained by the existing originator and the applicant.
Auto finance contracts which are delivered on a flow basis are generally
underwritten in accordance with Advanta Auto Finance's established underwriting
guidelines. These guidelines are reviewed and revised continuously based upon
opportunities and prevailing conditions in the non-conforming auto market, as
well as the expected market for the resulting securities.
The auto finance contract flow underwriting guidelines include the
evaluation of residence stability, employment history, credit history, ability
to pay, amount of income, debt ratio, credit bureau score and the value of the
collateral. As a result, the contracts are underwritten to Advanta Auto
Finance's conservative underwriting guidelines which are generally consistent
for the auto finance contracts delivered on a flow basis.
Auto finance contracts which are delivered on a pool/bulk basis may be
originated by a variety of existing originators under several different
underwriting guidelines. Advanta Auto Finance will generally cause the contracts
acquired in a pool/bulk acquisition to be reunderwritten on a sample basis. Such
reunderwriting may be performed by Advanta Auto Finance or by a third party
acting at the direction of Advanta Auto Finance.
Existing Originators
Existing originators may include, but are not limited to, brokers, finance
companies and banks as well as other sources of non-conforming auto financing.
Prospective existing originators are subject to extensive reviews by
Advanta Auto Finance. The reviews allow Advanta Auto Finance to ascertain
whether or not the prospective existing originator meets Advanta Auto Finance's
requirements. Specifically, Advanta Auto Finance will analyze the existing
originator's financial statements, determine whether they possess adequate net
worth and determine whether they conduct business in accordance with Advanta
Auto Finance established standards.
Upon acceptance as an existing originator, during the initial year,
Advanta Auto Finance will conduct periodic reviews to ensure compliance with the
established performance standards and guidelines. After the initial year,
Advanta Auto Finance will perform annual reviews of the existing originator.
POOL FACTORS
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, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement with
respect to each series of Securities, the related Securityholders of record will
receive reports on or about each Payment Date
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concerning the payments received on the Receivables, the Pool Balance (as such
term is defined in the related Prospectus Supplement, the "Pool Balance"), each
Pool Factor and various other items of information. 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.
USE OF PROCEEDS
Except as provided in the related Prospectus Supplement, the proceeds from
the sale of the Securities of a given series will be used by the Company for the
acquisition of the related Receivables, for general corporate purposes,
including, but not limited to, the purchase of additional Receivables from
Dealers, repayment of indebtedness and general working capital purposes. The
Company expects that it will make additional transfers of Receivables to the
Trust from time to time, but the timing and amount of any such additional
transfers will be dependent upon a number of factors, including the volume of
Contracts originated or acquired by the Company, prevailing interest rates,
availability of funds and general market conditions.
THE COMPANY AND THE SERVICER
Advanta is a wholly-owned subsidiary of Advanta Mortgage Holding Company.
Advanta was incorporated in Nevada on October 20, 1995. Advanta purchases and
services automobile loans which are originated and assigned to Advanta by
automobile dealers. Advanta's executive offices are located at 300 Welsh Road,
Suite 400, Horsham, PA 19044; telephone (215) 283-4200.
THE TRUSTEE
The Trustee for each series of Securities will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the issuance
and sale of the related Securities is limited solely to the express obligations
of such Trustee set forth in the related Trust Agreement.
With respect to each series of Securities, the procedures for the
resignation or removal of the Trustee and the appointment of a successor Trustee
shall be specified in the related Prospectus Supplement.
DESCRIPTION OF THE SECURITIES
General
The Securities will be issued in series. Each series of Securities (or, in
certain instances, two or more series of Securities) will be issued pursuant to
a Trust Agreement. The following summaries (together with additional summaries
under "The Trust Agreement" below) describe all material terms and provisions
relating to the Securities common to each Trust Agreement. The summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Trust Agreement for the related
Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the related
Prospectus Supplement will be rated in one of the four highest rating categories
by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
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Each series or Class of Securities offered pursuant to this Prospectus may
have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for each
series or Class of Securities described therein, or the initial interest rate
and the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Strip Securities entitled (i)
to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate, nominal
or no principal distributions. In addition, a series of Securities may include
two or more Classes of Securities that differ as to timing, sequential order,
priority of payment, Interest Rate or amount of distribution of principal or
interest or both, or as to which distributions of principal or interest or both
on any Class may be made upon the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of collections from designated
portions of the related pool of Receivables. Any such series may include one or
more Classes of Accrual Securities, as to which certain accrued interest will
not be distributed but rather will be added to the principal balance (or nominal
balance, in the case of Accrual Securities which are also Strip Securities)
thereof on each Payment Date, as hereinafter defined, or in the manner described
in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may include
one or more other Classes of Senior Securities that are senior to one or more
other Classes of Subordinate Securities in respect of certain distributions of
principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may be
senior to other Classes of Senior (or Subordinate) Securities in respect of such
distributions or losses.
General Payment Terms of Securities
As provided in the related Trust Agreement and as described in the related
Prospectus Supplement, Securityholders will be entitled to receive payments on
their Securities on the specified Payment Dates. Payment Dates with respect to
the Securities will occur monthly, quarterly or semi-annually, as described in
the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date preceding
such Payment Date, as of which the Trustee or its paying agent will fix the
identity of the Securityholders for the purpose of receiving payments on the
next succeeding Payment Date. As more fully described in the related Prospectus
Supplement, the Payment Date may be the tenth, twelfth, fifteenth or
twenty-fifth day of each month (or, in the case of quarterly-pay Securities, the
tenth, twelfth, fifteenth or twenty-fifth day of every third month; and in the
case of semi-annual pay Securities, the tenth, twelfth, fifteenth or
twenty-fifth day of every sixth month) and the Record Date will be the close of
business as of the last day of the calendar month that precedes the calendar
month in which such Payment Date occurs.
Each Trust Agreement will describe a Remittance Period preceding each
Payment Date (for example, in the case of monthly-pay Securities, the calendar
month preceding the month in which a Payment Date occurs). As more fully
provided in the related Prospectus Supplement, collections received on or with
respect to the related Receivables held by a Trust during a Remittance Period
will be required to be remitted by the Servicer to the related Trustee prior to
the related Payment Date and will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related Prospectus Supplement, the
related Trust Agreement may provide that all or a portion of the payments
collected on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a specified
period (rather than be used to fund payments of principal to Securityholders
during such period) with the result that the related Securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
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In addition, and as may be described in the related Prospectus Supplement,
the related Trust Agreement may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in certain temporary
investments, including Receivables) for a specified period prior to being used
to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such collected
payments may be required by the related Trust Agreement for the purposes of (a)
slowing the amortization rate of the related Securities relative to the
installment payment schedule of the related Receivables, or (b) attempting to
match the amortization rate of the related Securities to an amortization
schedule established at the time such Securities are issued. Any such feature
applicable to any Securities may terminate upon the occurrence of events to be
described in the related Prospectus Supplement, resulting in distributions to
the specified Securityholders and an acceleration of the amortization of such
Securities.
Neither the Securities nor the underlying Receivables will be guaranteed
or insured by any governmental agency or instrumentality or the Company, the
Servicer, any Trustee or any of their respective affiliates unless specifically
set forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interests in the Trust Property or represent debt
secured by the related Trust Property. To the extent that any Trust Property
includes certificates of interest or participations in Receivables, the related
Prospectus Supplement will describe the material terms and conditions of such
certificates or participations.
Master Trusts
As may be described in the related Prospectus Supplement, each Trust
Agreement may provide that, pursuant to any one or more supplements thereto, the
Company may direct the related Trustee to issue from time to time new series
subject to the conditions described below (each such issuance a "Master Trust
New Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Residual Interest in the related Master Trust. Under each such
Master Trust Agreement, the Company may designate, with respect to any newly
issued series: (i) its name or designation; (ii) its initial principal amount
(or method for calculating such amount); (iii) its Interest Rate (or formula for
the determination thereof); (iv) the Payment Dates and the date or dates from
which interest shall accrue; (v) the method for allocating collections to
Securityholders of such series; (vi) any bank accounts to be used by such series
and the terms governing the operation of any such bank accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the provider and
terms of any form of Credit Enhancement with respect thereto; (ix) the terms on
which the Securities of such series may be repurchased or remarketed to other
investors; (x) the number of Classes of Securities of such series, and if such
series consists of more than one Class, the rights and priorities of each such
Class; (xi) the extent to which the Securities of such series will be issuable
in book-entry form; (xii) the priority of such series with respect to any other
series; and (xiii) any other relevant terms. None of the Company, the Servicer,
the related Trustee or any Master Trust is required or intends to obtain the
consent of any Securityholder of any outstanding series to issue any additional
series.
Each Master Trust Agreement provides that the Company may designate terms
such that each Master Trust New Issuance has an amortization period which may
have a different length and begin on a different date than such periods for any
series previously issued by the related Master Trust and then outstanding.
Moreover, each Master Trust New Issuance may have the benefits of Credit
Enhancements issued by enhancement providers different from the providers of the
Credit Enhancement, if any, with respect to any series previously issued by the
related Master Trust and then outstanding. Under each Master Trust Agreement,
the related Trustee shall hold any such Credit Enhancement only on behalf of the
Securityholders to which such Credit Enhancement relates. The Company will have
the option under each Master Trust Agreement to vary among series the terms upon
which a series may be repurchased by the Issuer or remarketed to other
investors. As more fully described in a related Prospectus Supplement, there is
no limit to the number of Master Trust New Issuances that the Company may cause
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under a Master Trust Agreement. Each Master Trust will terminate only as
provided in the related Master Trust Agreement. There can be no assurance that
the terms of any Master Trust New Issuance might not have an impact on the
timing and amount of payments received by Securityholders of another series
issued by the same Master Trust.
Under each Master Trust Agreement and pursuant to a related supplement, a
Master Trust New Issuance may only occur upon the satisfaction of certain
conditions provided in each such Master Trust Agreement. The obligation of the
related Trustee to authenticate the Securities of any such Master Trust New
Issuance and to execute and deliver the supplement to the related Master Trust
Agreement is subject to the satisfaction of the following conditions: (a) on or
before the date upon which the Master Trust New Issuance is to occur, the
Company shall have given the related Trustee, the Servicer, the Rating Agency
and certain related providers of Credit Enhancement, if any, written notice of
such Master Trust New Issuance and the date upon which the Master Trust New
Issuance is to occur; (b) the Company shall have delivered to the related
Trustee a supplement to the related Master Trust Agreement, in form satisfactory
to such Trustee, executed by each party to the related Master Trust Agreement
other than such Trustee; (c) the Company shall have delivered to the related
Trustee any related Credit Enhancement agreement; (d) the related Trustee shall
have received confirmation from the Rating Agency that such Master Trust New
Issuance will not result in any Rating Agency reducing or withdrawing its rating
with respect to any other series or Class of such Trust (any such reduction or
withdrawal is referred to herein as a "Ratings Effect"); (e) the Company shall
have delivered to the related Trustee, the Rating Agency and certain providers
of Credit Enhancement, if any, an opinion of counsel acceptable to the related
Trustee that for federal income tax purposes (i) following such Master Trust New
Issuance the related Master Trust will not be deemed to be an association (or
publicly traded partnership) taxable as a corporation, (ii) such Master Trust
New Issuance will not affect the tax characterization as debt of Securities of
any outstanding series or Class issued by such Master Trust that were
characterized as debt at the time of their issuance and (iii) such Master Trust
New Issuance will not cause or constitute an event in which gain or loss would
be recognized by any Securityholders or the related Master Trust; and (f) any
other conditions specified in any supplement. Upon satisfaction of the above
conditions, the related Trustee shall execute the supplement to the related
Master Trust Agreement and issue the Securities of such new series.
Indexed Securities
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities") in
which the principal amount payable at the final scheduled Payment Date (the
"Indexed Principal Amount") is determined by reference to a measure (the
"Index") which will be related to (i) the difference in the rate of exchange
between United States dollars and a currency or composite currency (the "Indexed
Currency") specified in the applicable Prospectus Supplement (such Indexed
Securities, "Currency Indexed Securities"); (ii) the difference in the price of
a specified commodity (the "Indexed Commodity") on specified dates (such Indexed
Securities, "Commodity Indexed Securities"); (iii) the difference in the level
of a specified stock index (the "Stock Index"), which may be based on U.S. or
foreign stocks, on specified dates (such Indexed Securities, "Stock Indexed
Securities"); or (iv) such other objective price or economic measures as are
described in the applicable Prospectus Supplement. The manner of determining the
Indexed Principal Amount of an Indexed Security and historical and other
information concerning the Indexed Currency, the Indexed Commodity, the Stock
Index or other price or economic measures used in such determination will be set
forth in the applicable Prospectus Supplement, together with information
concerning tax consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes described in the applicable Prospectus Supplement), then
such Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied
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to the original third party. If for any reason such index cannot be calculated
on the same basis and subject to the same conditions and controls as applied to
the original third party, then the Indexed Principal Amount of such Indexed
Security shall be calculated in the manner set forth in the applicable
Prospectus Supplement. Any determination of such independent calculation agent
shall in the absence of manifest error be binding on all parties.
Interest on an Indexed Security will be payable based on the amount
designated in the applicable Prospectus Supplement (the "Face Amount"). The
applicable Prospectus Supplement will describe whether the principal amount of
the related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Distribution Date will be the
Face Amount of such Indexed Security, the Indexed Principal Amount of such
Indexed Security at the time of redemption or repayment or another amount
described in such Prospectus Supplement.
Book-Entry Registration
As may be described in the related Prospectus Supplement, Securityholders
of a given series may hold their Securities through DTC (in the United States)
or CEDEL or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations that are participants in such systems.
Cede, as nominee for DTC, will hold the global Securities in respect of a
given series. CEDEL and Euroclear will hold omnibus positions on behalf of the
CEDEL Participants (as defined below) and the Euroclear Participants (as defined
below) (collectively, the "Participants"), respectively, through customers'
securities accounts in CEDEL'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 laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
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 Participant, either directly or
indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
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securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may do so only
through Participants and Indirect Participants. In addition, Securityholders of
a given series will receive all distributions of principal and interest through
the Participants who in turn will receive them from DTC. Under a book-entry
format, Securityholders of a given series may experience some delay in their
receipt of payments, since such payments will be forwarded by the applicable
Trustee to Cede, as nominee for DTC. DTC will forward such payments to its
Participants, which thereafter will forward them to Indirect Participants or
such Securityholders. It is anticipated that the only "Securityholder" in
respect of any series will be Cede, as nominee of DTC. Securityholders of a
given series will not be recognized as Securityholders of such series, and such
Securityholders will be permitted to exercise the rights of Securityholders of
such series only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess Securities, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each series that it will take
any action permitted to be taken by a Securityholder of the related series only
at the direction of one or more Participants to whose accounts with DTC the
Securities of such series 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.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear System ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical
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movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 28 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office, under contract
with Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the "Euroclear Operator" (as
defined below), 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 the Underwriters. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a series will not
have any liability for any aspect of the records relating to or payments made or
account of beneficial ownership interests of the related Securities held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Definitive Notes
As may be described in the related Prospectus Supplement, the Securities
will be issued in fully registered, certificated form ("Definitive Securities")
to the Securityholders of a given series or their nominees, rather than to DTC
or its nominee, only if (i) the Trustee in respect of the related series advises
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to such Securities and such Trustee
is unable to locate a qualified successor, (ii) such Trustee, at its option,
elects to terminate the book-entry-system through DTC or (iii) after the
occurrence of an "Event of Default" under the related Indenture or a default by
the Servicer under the related Trust Agreements, Securityholders representing at
least a majority of the outstanding principal amount of such Securities advise
the applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in such
Securityholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.
Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement
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directly to holders of Definitive Securities in whose names the Definitive
Securities were registered at the close of business on the applicable Record
Date specified for such Securities in the related Prospectus Supplement. Such
distributions will be made by check mailed to the address of such holder as it
appears on the register maintained by the applicable Trustee. The final payment
on any such Security, however, will be made only upon presentation and surrender
of such Security at the office or agency specified in the notice of final
distribution to the applicable Securityholders.
Definitive Securities in respect of a given series of Securities will be
transferable and exchangeable at the offices of the applicable Trustee or of a
certificate registrar named in a notice delivered to holders of such Definitive
Securities. No service charge will be imposed for any registration of transfer
or exchange, but the applicable Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith.
Reports to Securityholders
With respect to each series of Securities, on or prior to each Payment
Date for such series, the Servicer or the related Trustee will forward or cause
to be forwarded to each holder of record of such class of Securities a statement
or statements with respect to the related Trust Property setting forth the
information specifically described in the related Trust Agreement which
generally will include the following information:
(i) the amount of the distribution with respect to each class of
Securities;
(ii) the amount of such distribution allocable to principal;
(iii) the amount of such distribution allocable to interest;
(iv) the Pool Balance, if applicable, as of the close of business on
the last day of the related Remittance Period;
(v) the aggregate outstanding principal balance and the Pool Factor
for each Class of Securities after giving effect to all payments reported
under (ii) above on such Payment Date;
(vi) the amount paid to the Servicer, if any, with respect to the
related Remittance Period;
(vii) the amount of the aggregate purchase amounts for Receivables
that have been reacquired, if any, for such Remittance Period; and
(viii) the amount of coverage under any letter of credit, financial
guaranty insurance policy, reserve account or other form of credit
enhancement covering default risk as of the close of business on the
applicable Payment Date and a description of any Credit Enhancement
substituted therefor.
Each amount set forth pursuant to subclauses (i), (ii), (iii) and (v) with
respect to the Securities of any series will be expressed as a dollar amount per
$1,000 of the initial principal balance of such Securities, as applicable. The
actual information to be set forth in statements to Securityholders of a series
will be described in the related Prospectus Supplement.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.
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Forward Commitments; Pre-Funding
A Trust may enter into an agreement (each, a "Forward Purchase
Agreement") with the Sponsor whereby the Sponsor will agree to transfer
additional Mortgage Loans to such Trust following the date on which such Trust
is established and the related Certificates are issued. The Trust may enter into
Forward Purchase Agreements to permit the acquisition of additional Mortgage
Loans that could not be delivered by the Sponsor or have not formally completed
the origination process, in each case prior to the date on which the
Certificates are delivered to the Certificateholders (the "Closing Date"). Any
Forward Purchase Agreement will require that any Mortgage Loans so transferred
to the Trust conform to the requirements specified in such Forward Purchase
Agreement.
If a Forward Purchase Agreement is to be utilized, and unless
otherwise specified in the related Prospectus Supplement, the related Trustee
will be required to deposit in a segregated account (each, a "Pre-Funding
Account") up to 100% of the net proceeds received by the Trustee in connection
with the sale of one or more classes of Certificates of the related Series; the
additional Mortgage Loans will be transferred to the related Trust in exchange
for money released to the Sponsor from the related Pre-Funding Account. Each
Forward Purchase Agreement will set a specified period (the "Funding Period")
during which any such transfers must occur; for a Trust which elects federal
income treatment as REMIC or as a grantor trust, the related Funding Period will
be limited to three months from the date such Trust is established; for a Trust
which is treated as a mere security device for federal income tax purposes, the
related Funding Period will be limited to nine months from the date such Trust
is established. The Forward Purchase Agreement or the related Pooling and
Servicing Agreement will require that, if all moneys originally deposited to
such Pre-Funding Account are not so used by the end of the related Funding
Period, then any remaining moneys will be applied as a mandatory prepayment of
the related class or classes of Certificates as specified in the related
Prospectus Supplement.
During the Funding Period the moneys deposited to the Pre-Funding
Account will either (i) be held uninvested or (ii) will be invested in
cash-equivalent investments rated in one of the four highest rating categories
by at least one nationally recognized statistical rating orgnaization and which
will either mature prior to the end of the Funding Period, or will be drawable
on demand and in any event, will not constitute the type of investment which
would require registration of the related Trust as an "investment company" under
the Investment Company Act of 1940, as amended.
DESCRIPTION OF THE TRUST AGREEMENTS
The following summary describes certain terms of each Trust Agreement
pursuant to which a Trust Property will be created and the related Securities in
respect of such Trust Property will be issued. For purposes of this Prospectus,
the term "Trust Agreement" as used with respect to a Trust means, collectively,
and except as otherwise specified, any and all agreements relating to the
establishment of the related Trust, the servicing of the related Receivables and
the issuance of the related Securities, including without limitation the
Indenture, (i.e. pursuant to which any Notes shall be issued). Forms of the
Trust Agreement have been filed as exhibits to the Registration Statement of
which the Prospectus forms a part. The summary does not purport to be complete.
It is qualified in its entirety by reference to the provisions of the Trust
Agreements.
Origination of the Receivables by the Company and Acquisition of the Receivables
Pursuant to a Receivables Acquisition Agreement
On the closing date specified with respect to any given series of
Securities (the "Closing Date"), the Company or a Finance Subsidiary will
transfer Receivables originated by the Company either to a Trust pursuant to a
Pooling Agreement, or will pledge the Company's or the Finance Subsidiary's
right, title and interests in and to such Receivables to a Trustee on behalf of
the Securityholders pursuant to an Indenture. The Company or a Finance
Subsidiary will either transfer the Receivables to a Trust pursuant to a Pooling
Agreement, or will pledge the Company's right, title and interests in and to
such Receivables
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to a Trustee on behalf of Securityholders pursuant to an Indenture. The
obligations of the Company or a Finance Subsidiary and the Servicer under the
related Trust Agreement include those specified below and in the related
Prospectus Supplement.
As more fully described in the related Prospectus Supplement, the Company
will be obligated to acquire from the related Trust Property its interest in any
Receivable transferred to a Trust or pledged to a Trustee on behalf of
Securityholders if the interest of the Securityholders therein is materially
adversely affected by a breach of any representation or warranty made by the
Company with respect to such Receivable, which breach has not been cured
following the discovery by or notice to the Company of the breach. In addition,
if so specified in the related Prospectus Supplement, the Company may from time
to time reacquire certain Receivables or substitute other Receivables for such
Receivable subject to specified conditions set forth in the related Trust
Agreement.
Accounts
With respect to each series of Securities issued by a Trust, the Servicer
will establish and maintain with the applicable Trustee one or more accounts, in
the name of such Trustee on behalf of the related Securityholders, into which
all payments made on or with respect to the related Receivables will be
deposited (the "Collection Account"). The Servicer will also establish and
maintain with such Trustee separate accounts, in the name of such Trustee on
behalf of such Securityholders, in which amounts released from the Collection
Account and the reserve account or other Credit Enhancement, if any, for
distribution to such Securityholders will be deposited and from which
distributions to such Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust, including
any reserve account, will be described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to certain conditions, Eligible Investments may include securities issued by the
Company, the Servicer or their respective affiliates or other trusts created by
the Company or its affiliates. Except as described below or in the related
Prospectus Supplement, Eligible Investments are limited to obligations or
securities that mature not later than the business day immediately preceding the
related Payment Date. However, subject to certain conditions, funds in the
reserve account may be invested in securities that will not mature prior to the
date of the next distribution and will not be sold to meet any shortfalls. Thus,
the amount of cash in any reserve account at any time may be less than the
balance of such reserve account. If the amount required to be withdrawn from any
reserve account to cover shortfalls in collections on the related Receivables
exceeds the amount of cash in such reserve account a temporary shortfall in the
amounts distributed to the related Securityholders could result, which could, in
turn, increase the average life of the Securities of such series. Except as
otherwise specified in the related Prospectus Supplement, investment earnings on
funds deposited in the applicable Trust Accounts, net of losses and investment
expenses (collectively, "Investment Earnings"), shall be deposited in the
applicable Collection Account on each Payment Date and shall be treated as
collections of interest on the related Receivables.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
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applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) (A) has either
(w) a long-term unsecured debt rating acceptable to the Rating Agencies or (x) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) the parent corporation of which has either (y) a
long-term unsecured debt rating acceptable to the Rating Agencies or (z) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies and (ii) whose deposits are insured by the FDIC.
The Servicer
The Servicer under each Trust Agreement will be named in the related
Prospectus Supplement. The entity serving as Servicer may be the Company or an
affiliate of the Company and may have other business relationships with the
Company or the Company's affiliates. The Servicer with respect to each series
will service the Receivables contained in the Trust Fund for such series. Any
Servicer may delegate its servicing responsibilities to one or more
sub-servicers, but will not be relieved of its liabilities with respect thereto.
The Servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the related Trust Agreement. An uncured breach of such a representation or
warranty that in any respect materially and adversely affects the interests of
the Securityholders will constitute a Servicer Default (as hereinafter defined)
by the Servicer under the related Trust Agreement.
Servicing Procedures
Each Trust Agreement will provide that the Servicer will make reasonable
efforts to collect all payments due with respect to the Receivables which are
part of the Trust Fund and, in a manner consistent with the related Trust
Agreement, will continue such collection procedures as the Servicer follows with
respect to the particular type of Receivable in the particular pool it services
for itself and others. Consistent with its normal procedures, the Servicer may,
in its discretion and on a case-by-case basis, arrange with the Obligor on a
Receivable to extend or modify the payment schedule. Some of such arrangements
(including, without limitation any extension of the payment schedule beyond the
final scheduled Payment Date for the related Securities) may result in the
Servicer acquiring such Receivable if such Contract becomes a Defaulted
Contract. The Servicer may sell the Vehicle securing the respective Defaulted
Contract, if any, at a public or private sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the Receivables".
The material aspects of any particular Servicer's collections and other
relevant procedures will be set forth in the related Prospectus Supplement.
Payments on Receivables
With respect to each series of Securities, unless otherwise specified in
the related Prospectus Supplement, the Servicer will deposit into the Collection
Account all payments on the related Receivables (from whatever source) and all
proceeds of such Receivables collected within three (3) business days of receipt
thereof in the related collection facility, such as a lock-box account or
collection account. Moneys deposited in such collection facility for Trust
Property may be commingled with funds from other sources.
Servicing Compensation
As may be described in the related Prospectus Supplement with respect to
any series of securities issued by a Trust, the Servicer will be entitled to
receive a servicing fee for each Collection Period (the "Servicing Fee") in an
amount equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the value of the assets of
the Trust Property, generally as of the first day of such Collection Period.
Each Prospectus Supplement and Servicing
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Agreement will specify the priority of distributions with respect to the
Servicing Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Payment Dates). Generally, the Servicing Fee will be paid
prior to any distribution to the related Securityholders.
The Servicer will also collect and retain any late fees, the penalty
portion of interest paid on past due amounts and 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.
Payments by or on behalf of Obligors will be allocated to scheduled payments and
late fees and other charges in accordance with the Servicer's normal practices
and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of similar types of receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the related Receivables, investigating
delinquencies, sending billing statements to Obligors, reporting tax information
to Obligors, paying costs of collection and disposition of defaults, and
policing the collateral. The Servicing Fee also will compensate the Servicer for
administering the related Receivables, accounting for collections and furnishing
statements to the applicable Trustee and the applicable Indenture Trustee, if
any, with respect to distributions. 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
Receivables.
Distributions
With respect to each series of Securities, beginning on the Payment Date
specified in the related Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each Class of
such Securities entitled thereto will be made by the applicable Indenture
Trustee to the holders of Notes (the "Noteholders") and by the applicable
Trustee to the holders of Certificates (the "Certificateholders") of such
series. The timing, calculation, allocation, order, source, priorities of and
requirements for each class of Noteholders and all distributions to each class
of Certificateholders of such series will be set forth in the related Prospectus
Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
Credit and Cash Flow Enhancements
The amounts and types of Credit Enhancement arrangements, if any, and the
provider thereof, if applicable, with respect to each class of Securities of a
given series will be set forth in the related Prospectus Supplement. If and to
the extent provided in the related Prospectus Supplement, credit enhancement may
be in the form of a Policy, subordination of one or more Classes of Securities,
reserve accounts, overcollateralization, letters of credit, credit or liquidity
facilities, third party payments or other support, surety bonds, guaranteed cash
deposits or such other arrangements as may be described in the related
Prospectus Supplement or any combination of two or more of the foregoing. If
specified in the applicable Prospectus Supplement, Credit 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.
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The presence of Credit Enhancement for the benefit of any Class or series
of Securities is intended to enhance the likelihood of receipt by the
Securityholders or 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. As more specifically provided 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
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
Statements to Indenture Trustees and Trustees
Prior to each Payment Date with respect to each series of Securities, the
Servicer will provide to the applicable Indenture Trustee and/or the applicable
Trustee and Credit Enhancer as of the close of business on the last day of the
preceding related Collection Period a statement setting forth substantially the
same information as is required to be provided in the periodic reports provided
to Securityholders of such series described under "Description of the
Securities--Reports to Securityholders".
Evidence as to Compliance
Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
Servicer during the preceding twelve months (or, in the case of the first such
certificate, the period from the applicable Closing Date) with certain standards
relating to the servicing of the Receivables.
Each Trust Agreement will also provide for delivery to the related Trust
and/or the applicable Indenture Trustee of a certificate signed by an officer of
the Servicer stating that the Servicer either has fulfilled its obligations
under such Trust Agreement in all material respects throughout the preceding 12
months (or, in the case of the first such certificate, the period from the
applicable Closing Date) or, if there has been a default in the fulfillment of
any such obligation in any material respect, describing each such default. The
Servicer also will agree to give each Indenture Trustee and each Trustee notice
of certain Servicer Defaults (as hereinafter defined) under the related Trust
Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
Certain Matters Regarding the Servicers
Each Trust Agreement will provide that the Servicer may not resign from
its obligations and duties as Servicer thereunder, except upon determination
that the performance by the Servicer of such duties is no longer permissible
under applicable law. No such resignation will become effective until the
related Trustee or a successor servicer has assumed the Servicer's servicing
obligations and duties under the Trust Agreement.
Except as otherwise provided in the related Prospectus Supplement, each
Trust Agreement will further provide that neither the Servicer nor any of its
respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided, however, that neither the
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Trust Agreement will
provide that the Servicer is under no obligation to appear in, prosecute, or
defend any legal
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action that is not incidental to its servicing responsibilities under such Trust
Agreement and that, in its opinion, may cause it to incur any expense or
liability.
Under the circumstances specified in any such Trust Agreement, any entity
into which the Servicer may be merged or consolidated, or any entity resulting
from any merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer or, with respect to its obligations
as Servicer, which corporation or other entity in each of the foregoing cases
assumes the obligations of the Servicer, will be the successor to the Servicer
under such Trust Agreement.
Servicer Default
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
Servicer to deliver to the applicable Trustee for deposit in any of the related
Trust Accounts any required payment or to direct such Trustee to make any
required distributions therefrom, which failure continues unremedied for more
than three (3) Business Days after written notice from such Trustee is received
by the Servicer or after discovery by the Servicer; (ii) any failure by the
Servicer duly to observe or perform in any material respect any other covenant
or agreement in such Trust Agreement, which failure materially and adversely
affects the rights of the related Securityholders and which continues unremedied
for more than thirty (30) days after the giving of written notice of such
failure (1) to the Servicer by the applicable Trustee or (2) to the Servicer,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 50% of the voting rights of such
outstanding Securities; (iii) any Insolvency Event; and (iv) any claim being
made on a Policy issued as Credit Enhancement. An "Insolvency Event" shall mean
financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations.
Rights upon Servicer Default
As more fully described in the related Prospectus Supplement, as long as a
Servicer Default under a Trust Agreement remains unremedied, the applicable
Trustee, Credit Enhancer or holders of Securities of the related series
evidencing not less than 50% of the voting rights of such then outstanding
Securities may terminate all the rights and obligations of the Servicer, if any,
under such Trust Agreement, whereupon a successor servicer appointed by such
Trustee or such Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Trust Agreement 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 bankruptcy trustee or official may have the
power to prevent the applicable Trustee or such Securityholders from effecting a
transfer of servicing. In the event that the Trustee is unwilling or unable to
so act, it may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor with a net worth of at least $25,000,000 and whose
regular business includes the servicing of a similar type of receivables. Such
Trustee may make such arrangements for compensation to be paid, which in no
event may be greater than the servicing compensation payable to the Servicer
under the related Trust Agreement.
Waiver of Past Defaults
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Notes evidencing at least a majority of the voting rights of such
then outstanding Securities may, on behalf of all Securityholders of the related
Securities, waive any default by the Servicer in the performance of its
obligations under the related Trust Agreement and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with such Trust Agreement. No such waiver shall impair
the Securityholders' rights with respect to subsequent defaults.
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Amendment
As more fully described in the related Prospectus Supplement, each of the
Trust Agreements may be amended by the parties thereto, without the consent of
the related Securityholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Trust
Agreements or of modifying in any manner the rights of such Securityholders;
provided that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee, materially and adversely affect the interests of any
such Securityholder and subject to the approval of any Credit Enhancer. As may
be described in the related Prospectus Supplement, the Trust Agreements may also
be amended by the Company, the Servicer, and the applicable Trustee with the
consent of the holders of Securities evidencing at least a majority of the
voting rights of such then outstanding Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Trust Agreements or of modifying in any manner the rights of such
Securityholders; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount or priority of, or accelerate or delay the
timing of, collections of payments on the related Receivables or distributions
that are required to be made for the benefit of such Securityholders or (ii)
reduce the aforesaid percentage of the Securities of such series which are
required to consent to any such amendment, without the consent of the
Securityholders of such series.
Insolvency Event
As described in the related Prospectus Supplement, if an Insolvency Event
occurs with respect to a Debtor relating to the applicable Trust Property, the
related Trust will terminate, and the Receivables of the related Trust Property
will be liquidated and each such Trust will be terminated 90 days after the date
of such Insolvency Event, unless, before the end of such 90-day period, the
Trustee of such Trust shall have received written instructions from each of the
related Securityholders (other than the Company) and/or Credit Enhancer to the
effect that such party disapproves of the liquidation of such Receivables.
Promptly after the occurrence of any Insolvency Event with respect to a Debtor,
notice thereof is required to be given to such Securityholders and/or Credit
Enhancer; provided, however, that any failure to give such required notice will
not prevent or delay termination of any Trust. Upon termination of any Trust,
the applicable Trustee shall direct that the assets of such Trust be promptly
sold (other than the related Trust Accounts) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from any such sale,
disposition or liquidation of such Receivables will be treated as collections on
such Receivables and deposited in the related Collection Account. If the
proceeds from the liquidation of such Receivables and any amounts on deposit in
the Reserve Account, if any, and the related Distribution Account are not
sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned to
Securityholders will be reduced and some or all of such Securityholders will
incur a loss.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
any related Trust without the unanimous prior approval of all Certificateholders
(including the Company, if applicable) of such Trust and the delivery to such
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
Termination
With respect to each Trust, the obligations of the Servicer, the Company
and the applicable Trustee pursuant to the related Trust Agreement will
terminate upon the earlier to occur of (i) the maturity or other liquidation of
the last related Receivable and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to
Securityholders of the related series of all amounts required to be paid to them
pursuant to such Trust Agreement. As more fully described in the related
Prospectus Supplement, in order to avoid excessive administrative expense, the
Servicer will be permitted in respect of the applicable Trust Property, unless
otherwise specified in the related Prospectus Supplement, at its option to
purchase from such Trust Property, as of the end of any Collection
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Period immediately preceding a Payment Date, if the Pool Balance of the related
Contracts is less than a specified percentage (set forth in the related
Prospectus Supplement) of the initial Pool Balance in respect of such Trust
Property, all such remaining Receivables at a price equal to the aggregate of
the Purchase Amounts thereof as of the end of such Collection Period. The
related Securities will be redeemed following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to the Trust Property, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust
Property will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement may effect the prepayment of the
Certificates of such series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
General
The transfer of Receivables by the Company or its Finance Subsidiary to
the Trust pursuant to the related Trust Agreement, the perfection of the
security interests in the Receivables and the enforcement of rights to realize
on the Vehicles as collateral for the Receivables are subject to a number of
federal and state laws, including the UCC as in effect in various states. As
specified in each Prospectus Supplement, the Servicer will take such action as
is required to perfect the rights of the Trustee in the Receivables. If, through
inadvertence or otherwise, a third party were to purchase (including the taking
of a security interest in) a Receivable for new value in the ordinary course of
its business, without actual knowledge of the Trust's interest, and take
possession of a Receivable, the purchaser would acquire an interest in such
Receivable superior to the interest of the Trust. As further specified in each
Prospectus Supplement, no action will be taken to perfect the rights of the
Trustee in proceeds of any insurance policies covering individual Vehicles or
Obligors. Therefore, the rights of a third party with an interest in such
proceeds could prevail against the rights of the Trust prior to the time such
proceeds are deposited by the Servicer into a Trust Account.
Security Interests in the Financed Vehicles
General
Retail installment sale contracts such as the Receivables evidence the
credit sale of automobiles and light duty trucks by dealers to consumers. The
contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.
Perfection
Pursuant to the Trust Agreement, the Company will sell and assign the
Receivables it has originated or acquired and its security interests in the
Vehicles to the Trustee. Alternatively, the Company may sell and assign the
Receivables and its interest in the Vehicles to a Finance Subsidiary which will,
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in turn, sell and assign such Receivables and related security interests to the
Trustee. Each of the related Prospectus Supplements will specify whether,
because of the administrative burden and expense, the Company, the Servicer or
the Trustee will amend any certificate of title to identify the Trustee as the
new secured party on the certificates of title relating to the Vehicles. Each of
the related Prospectus Supplements will specify the UCC financing statements to
be filed in order to perfect the transfer to the Finance Subsidiary of
Receivables and the transfer by the Finance Subsidiary to the Trustee of the
Receivables. Further, although the Trustee will not rely on possession of the
Receivables as the legal basis for the perfection of its interest therein or in
the security interests in the Vehicles, the Servicer, as specified in the
related Prospectus Supplement, will continue to hold the Receivables and any
certificates of title relating to the Vehicles in its possession as custodian
for the Trustee pursuant to the related Trust Agreement which, as a practical
matter, should preclude any other party from claiming a competing security
interest in the Receivables on the basis that the security interest is perfected
by possession.
A security interest in a motor vehicle registered in most states may be
perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with the
related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as legal
owner or lienholder thereon, or filing a sworn notice of lien with the related
Department of Motor Vehicles or analogous state office and noting such lien on
the certificate of title, or, if the vehicle has not been previously registered,
filing an application in usual form for an original registration together with
an application for registration of the secured party as legal owner or
lienholder, as the case may be. However, under the laws of most states, a
transferee of a security interest in a motor vehicle is not required to reapply
to the related Department of Motor Vehicles or analogous state office for a
transfer of registration when the security interest is sold or when the interest
of the transferee arises from the transfer of a security interest by the
lienholder to secure payment or performance of an obligation. Accordingly, under
the laws of such states, the assignment by the Company of its interest in the
Receivables to the Trustee under the related Trust Agreement is an effective
conveyance of the security interest of the Company in the Receivables, and
specifically, the Vehicles, without such re-registration and without amendment
of any lien noted on the related certificate of title, and (subject to the
immediately succeeding paragraphs) the Trustee will succeed to the Company's
rights as secured party.
Although re-registration of a Vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error , the notation of the Company's lien
on the certificates of title will be sufficient to protect the Trust against the
rights of subsequent purchasers of a Vehicle or subsequent creditors who take a
security interest in a Vehicle. In the related Trust Agreement, the Company or
its Finance Subsidiary will represent and warrant that it has, or has taken all
action necessary to obtain, a perfected security interest in each Vehicle. If
there are any Vehicles as to which the Company failed to obtain a first priority
perfected security interest, the Company's security interest would be
subordinate to, among others, subsequent purchasers of such Vehicles and holders
of first priority perfected security interests therein. Such a failure, however,
would constitute a breach of the Company's or the Finance Subsidiary's
representations and warranties under the related Trust Agreement. Accordingly,
pursuant to the related Trust Agreement, the Company or Finance Subsidiary would
be required to repurchase the related Receivables from the Trustee unless the
breach were cured.
Continuity of Perfection
Under the laws of most states, a perfected security interest in a motor
vehicle continues for four months after the vehicle is moved to a new state from
the one in which it is initially registered and thereafter until the owner
re-registers such motor vehicle in the new state. A majority of states generally
require surrender of a certificate of title to re-register a vehicle. In those
states that require a secured party to hold possession of the certificate of
title to maintain perfection of the security interest, the secured party would
learn of the re-registration through the request from the Obligor under the
related installment
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sale contract to surrender possession of the certificate of title to assist in
such re-registration. In the case of vehicles registered in states providing for
the notation of a lien on the certificate of title but not requiring possession
by the secured party, the secured party would receive notice of surrender from
the state of reregistration if the security interest is noted on the certificate
of title. Thus, the secured party would have the opportunity to reperfect its
security interest in the vehicle in the state of relocation. However, these
procedural safeguards will not protect the secured party if, through fraud,
forgery or administrative error, the debtor somehow procures a new certificate
of title that does not list the secured party's lien. Additionally, in states
that do not require surrender of a certificate of title for re-registration of a
vehicle, re-registration could defeat perfection. In each of the Trust
Agreements, the Servicer will be required to take 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 will have
an opportunity to require satisfaction of the related Receivable before release
of the lien, either because the Servicer will be required to surrender
possession of the certificate of title in connection with the sale, or because
the Servicer will receive notice as a result of its lien noted thereon. Pursuant
to the related Trust Agreement, the related Servicer will hold the certificates
of title for the related Vehicles as custodian for the Trustee. Under the
related Trust Agreement, the Servicer will be obligated to take appropriate
steps, at its own expense, to maintain perfected security interests in the
Vehicles.
Priority of Certain Liens Arising by Operation of Law
Under the laws of most states, certain statutory liens such as mechanics',
repairmen's and garagemen's liens for repairs performed on a motor vehicle,
motor vehicle accident liens, towing and storage liens, liens arising under
various state and federal criminal statutes and liens for unpaid taxes take
priority over even a first priority perfected security interest in such vehicle
by operation of law. The UCC also grants priority to certain federal tax liens
over the lien of a secured party. The laws of most states and federal law permit
the confiscation of motor vehicles by governmental authorities under certain
circumstances if used in or acquired with the proceeds of unlawful activities,
which may result in the loss of a secured party's perfected security interest in
a confiscated vehicle. The Company will represent and warrant to the Trustee in
the related Trust Agreement that, as of the related Closing Date, each security
interest in a Vehicle shall be a valid, subsisting and enforceable first
priority security interest in such Vehicle. However, liens for repairs or taxes
superior to the security interest of the Trustee in any such Vehicle, or the
confiscation of such Vehicle, could arise at any time during the term of a
Receivable. No notice will be given to the Trustee or any Securityholder in the
event such a lien or confiscation arises and any such lien or confiscation
arising after the related Closing Date would not give rise to the Company's
repurchase obligation under the related Trust Agreement.
Repossession
In the event of default by an Obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is accomplished simply by taking possession
of the related financed vehicle. In cases where the Obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order is obtained from the appropriate state court, and the vehicle must
then be recovered in accordance with that order. In some jurisdictions, the
secured party is required to notify the debtor of the default and the intent to
repossess the collateral and give the debtor a time period within which to cure
the default prior to repossession. Generally, this right of cure may only be
exercised on a limited number of occasions during the term of the related
contract. Other jurisdictions permit repossession without prior notice if it can
be accomplished without a breach of the peace (although in some states, a course
of conduct in which the creditor has accepted late payments has been held to
create a right by the Obligor to receive prior notice).
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Notice of Sale; Redemption Rights
The UCC and other state laws require a secured party to provide the
Obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. In
addition, some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In some states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the Vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may not
seek a deficiency judgment from a debtor whose financed vehicle had an initial
cash sales price less than a specified amount, usually $3,000. Some states,
impose prohibitions or limitations or notice requirements on actions for
deficiency judgments. In addition to the notice requirement described above, the
UCC requires that every aspect of the sale or other disposition, including the
method, manner, time, place and terms, be "commercially reasonable". Generally,
courts have held that when a sale is not "commercially reasonable", the secured
party loses its right to a deficiency judgment. In addition, the UCC permits the
debtor or other interested party to recover for any loss caused by noncompliance
with the provisions of the UCC. Also, prior to a sale, the UCC permits the
debtor or other interested person to obtain an order mandating that the secured
party refrain from disposing of the collateral if it is established that the
secured party is not proceeding in accordance with the "default" provisions
under the UCC. 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 or be uncollectible.
Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a subordinate lien with respect
to the vehicle or if no such lienholder exists or if there are remaining funds,
the UCC requires the creditor to remit the surplus to the Obligor under the
contract.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon creditors 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
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 Uniform Consumer Credit Code, state motor vehicle retail installment sale
acts, state "lemon" laws and other similar laws. In addition, the laws of
certain states impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some cases, this
liability could affect the ability of an assignee such as the Trustee to enforce
consumer finance contracts such as the Receivables.
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The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule") has the effect of subjecting any assignee of the seller in a
consumer credit transaction (and certain related creditors and their assignees)
to all claims and defenses which the Obligor in the transaction could assert
against the seller. 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. The FTC
Rule is generally duplicated by the Uniform Consumer Credit Code, other state
statutes or the common law in certain states. To the extent that the Receivables
will be subject to the requirements of the FTC Rule, the Trustee, as holder of
the Receivables, will be subject to any claims or defenses that the purchaser of
the related Vehicle may assert against the seller of such Vehicle. Such claims
will be limited to a maximum liability equal to the amounts paid by the Obligor
under the related Receivable.
Under most state vehicle dealer licensing laws, sellers of automobiles and
light duty trucks are required to be licensed to sell vehicles at retail sale.
In addition, with respect to used vehicles, the Federal Trade Commission's Rule
on Sale of Used Vehicles requires that all sellers of used vehicles prepare,
complete and display a "Buyer's Guide" which explains the warranty coverage for
such vehicles. Furthermore, Federal Odometer Regulations promulgated under the
Motor Vehicle Information and Cost Savings Act and the motor vehicle title laws
of most states require that all sellers of used vehicles furnish a written
statement signed by the seller certifying the accuracy of the odometer reading.
If a seller is not properly licensed or if either a Buyer's Guide or Odometer
Disclosure Statement was not provided to the purchaser of a Vehicle, the Obligor
may be able to assert a defense against the seller of the Vehicle. If an Obligor
on a Receivable were successful in asserting any such claim or defense, the
Servicer would pursue on behalf of the Trust any reasonable remedies against the
seller or manufacturer of the vehicle, subject to certain limitations as to the
expense of any such action to be specified in the related Trust Agreement.
Any such loss, to the extent not covered by credit support (as specified
in the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus Supplement, if an
Obligor were successful in asserting any such claim or defense as described in
this paragraph or the two immediately preceding paragraphs, such claim or
defense may constitute a breach of a representation and warranty under the
related Trust Agreement and may create an obligation of the Company to
repurchase such Receivable unless the breach were cured.
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 of the 14th Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
As specified in the related Prospectus Supplement, the Company (or its
Finance Subsidiary, if any) will represent and warrant under the related Trust
Agreement that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against the Trustee
for violation of any law and such claim materially and adversely affects the
Trustee's interest in a Receivable, such violation would constitute a breach of
representation and warranty under the related Trust Agreement and would create
an obligation of the Company (or its Finance Subsidiary, if any) to repurchase
such Receivable unless the breach were cured.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), an Obligor who enters military service after the
origination of such Obligor's Receivable (including
41
<PAGE>
an Obligor who was in reserve status and is called to active duty after
origination of the Receivable), may not be charged interest (including fees and
charges) above an annual rate of 6% during the period of such Obligor's active
duty status, unless a court orders otherwise upon application of the lender. The
Relief Act applies to Obligors who are members of the Army, Navy, Air Force,
Marines, National Guard, Reserves, Coast Guard, and officers of the U.S. Public
Health Service assigned to duty with the military. Because the Relief Act
applies to Obligors who enter military service (including reservists who are
called to active duty) after origination of the related Receivable, no
information can be provided as to the number of loans that may be effected by
the Relief Act. Application of the Relief Act would adversely affect, for an
indeterminate period of time, the ability of the Servicer to collect full
amounts of interest on certain of the Receivables. Any shortfall in interest
collections resulting from the application of the Relief Act or similar
legislation or regulations, which would not be recoverable from the related
Receivables, would result in a reduction of the amounts distributable to the
holders of the related Securities, and would not be covered by advances, any
form of Credit Enhancement provided in connection with the related series of
Securities. In addition, the Relief Act imposes limitations that would impair
the ability of the Servicer to foreclose on an affected Receivable during the
Mortgagor's period of active duty status, and, under certain circumstances,
during an additional three month period thereafter. Thus, in the event that the
Relief Act or similar legislation or regulations applies to any Receivable which
goes into default, there may be delays in payment and losses on the related
Securities in connection therewith. Any other interest shortfalls, deferrals or
forgiveness of payments on the Receivables resulting from similar legislation or
regulations may result in delays in payments or losses to Securityholders of the
related series.
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 creditor 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
creditor from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle 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. Any such shortfall, to the extent not covered by credit support
(as specified in each Prospectus Supplement), could result in losses to the
Securityholders.
CERTAIN TAX CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition of such Securities.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplement
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each
42
<PAGE>
series will describe the method of offering being utilized for that series and
will state the public offering or purchase price of such series and the net
proceeds to the Company from such sale.
The Company intends that Securities will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of a particular series of
Securities may be made through a combination of two or more of these methods.
Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements by the Company with institutional investors through
dealers;
3. By direct placements by the Company with institutional investors;
and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a series
of Securities may be offered in whole or in part in exchange for the Receivables
(and other assets, if applicable) that would comprise the Trust Property in
respect of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Securities may be deemed to be underwriters in
connection with such Securities, and any discounts or commissions received by
them from the Company and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Prospectus Supplement will describe any such compensation paid by the
Company.
It is anticipated that the underwriting agreement pertaining to the sale
of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Company will indemnify the
several underwriters and the underwriters will indemnify the Company against
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Company and purchasers of
Securities of such series.
Purchasers of Securities, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
43
<PAGE>
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with respect
thereto, will be passed upon by Dewey Ballantine, New York, New York, or other
counsel specified in the related Prospectus Supplement.
FINANCIAL INFORMATION
Certain specified Trust Property will secure each series of Securities, no
Trust will engage in any business activities or have any assets or obligations
prior to the issuance of the related series of Securities, except for serial
issuances by a Master Trust. Accordingly, no financial statements with respect
to any Trust Property will be included in this Prospectus or in the related
Prospectus Supplement.
A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each series
of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
44
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein.
Accrual Securities...........................................................6
Additional Receivables......................................................10
AFS..........................................................................4
APR......................................................................9, 19
Cede........................................................................10
CEDEL Participants..........................................................27
Certificateholders..........................................................33
Certificates..............................................................1, 4
Class........................................................................1
Closing Date................................................................30
Collection Account..........................................................31
Commission...................................................................2
Commodity Indexed Securities................................................25
Company......................................................................4
Contracts.................................................................1, 4
Cooperative ................................................................28
Credit Enhancement..........................................................16
Credit Enhancer.............................................................16
Currency Indexed Securties..................................................25
Dealers......................................................................4
Debt Securities.............................................................12
Definitive Securities.......................................................28
Depositaries................................................................26
Direct Participants.........................................................16
Distribution Account........................................................31
DTC.........................................................................10
Eligible Deposit Account....................................................31
Eligible Institution........................................................31
Eligible Investments........................................................31
ERISA.......................................................................12
Euroclear Operator..........................................................28
Euroclear Participants......................................................27
Event of Default............................................................28
Exchange Act.............................................................2, 12
Face Amount ................................................................26
Finance Subsidiary..........................................................14
Fixed Income Securities......................................................6
Fixed Value Contracts....................................................9, 19
Forward Purchase Agreement..................................................30
FTC Rule....................................................................41
Funding Period..............................................................30
Grantor Trust Securities....................................................12
Holder-in-Due-Course Rule...................................................41
Indenture....................................................................5
Indenture Trustee............................................................5
Index.......................................................................25
Indexed Commodity...........................................................25
Indexed Currency............................................................25
Indexed Principal Amount....................................................25
Indexed Securities..........................................................25
45
<PAGE>
Indirect Participants...................................................16, 26
Insolvency Event............................................................35
Insolvency Laws.............................................................14
Interest Rate.............................................................2, 6
Investment Company Act.......................................................7
Investment Earnings.........................................................31
Issuer ...............................................................1, 4, 18
Master Trust.................................................................8
Master Trust Agreement.......................................................8
Master Trust New Issuance...................................................24
Noteholders ................................................................33
Notes ....................................................................1, 4
Participants................................................................26
Partnership Interests.......................................................12
Pass-Through Rate............................................................2
Payment Date.................................................................6
Policy ...................................................................1, 5
Pool Balance................................................................22
Pool Factor ................................................................21
Pooling Agreement............................................................5
Pre-Funding Account.........................................................10
Pre-Funding Period..........................................................10
Prepayment .................................................................16
Prospectus Supplement........................................................1
Rating Agencies.............................................................12
Ratings Effect..........................................................16, 25
Receivables ...........................................................1, 4, 5
Record Date .................................................................7
Registration Statement.......................................................2
Relief Act .............................................................17, 41
Remittance Period............................................................7
Residual Interest............................................................8
Rule of 78s .............................................................9, 19
Rule of 78s Contracts.......................................................19
Rules ......................................................................27
Securities ..................................................................1
Securities Act...............................................................2
Security Insurer............................................................11
Securityholder..............................................................27
Securityholders..............................................................6
Senior Securities............................................................6
Servicer .................................................................1, 4
Servicer Default............................................................35
Servicing Agreement..........................................................5
Servicing Fee...............................................................32
Servicing Fee Rate..........................................................32
Simple Interest Contracts................................................9, 19
Stock Index ................................................................25
Stock Indexed Securities....................................................25
Strip Securities.............................................................6
Subordinate Securities.......................................................6
Terms and Conditions........................................................28
Transferor ..................................................................4
Trust ....................................................................1, 4
Trust Accounts..............................................................31
46
<PAGE>
Trust Agreement..........................................................5, 30
Trust Property............................................................1, 4
Trustee .....................................................................5
Vehicles .................................................................1, 4
Vendors .....................................................................4
Accrual Securities...........................................................7
Additional Receivables......................................................11
Advanta .....................................................................4
APR ....................................................................10, 21
Cede .......................................................................11
CEDEL Participants..........................................................31
Certificateholders..........................................................36
Certificates..............................................................1, 4
Class .......................................................................1
Closing Date............................................................33, 34
Collection Account..........................................................34
Collectors .................................................................24
Commission ..................................................................2
Commodity Indexed Securities................................................29
Company .....................................................................4
Contracts ............................................................1, 4, 22
Cooperative ................................................................31
Credit Enhancement..........................................................18
Credit Enhancer.............................................................18
Currency Indexed Securities.................................................29
Dealers .....................................................................4
Debt Securities.............................................................13
Definitive Securities.......................................................32
Depositaries................................................................29
Direct Participants.........................................................18
Distribution Account........................................................34
DTC ........................................................................11
Eligible Deposit Account....................................................35
Eligible Institution........................................................35
Eligible Investments........................................................34
ERISA ......................................................................13
Euroclear Operator..........................................................31
Euroclear Participants......................................................31
Event of Default............................................................32
Exchange Act.............................................................2, 14
Face Amount ................................................................29
Finance Subsidiary..........................................................16
Fixed Income Securities......................................................6
Fixed Value Contracts...................................................10, 21
Forward Purchase Agreement..................................................33
FTC Rule ...................................................................44
Funding Period..............................................................33
Grantor Trust Securities....................................................13
Holder-in-Due-Course Rule...................................................44
Indenture ...................................................................5
Indenture Trustee............................................................5
Index ......................................................................28
Indexed Commodity...........................................................29
Indexed Currency............................................................28
Indexed Principal Amount....................................................28
47
<PAGE>
Indexed Securities..........................................................28
Indirect Participants...................................................18, 29
Insolvency Event............................................................38
Insolvency Laws.............................................................16
Interest Rate.............................................................2, 6
Investment Company Act.......................................................8
Investment Earnings.........................................................35
Issuer ...............................................................1, 4, 20
Master Trust.................................................................8
Master Trust Agreement.......................................................8
Master Trust New Issuance...................................................27
Noteholders ................................................................36
Notes ....................................................................1, 4
Participants................................................................29
Partnership Interests.......................................................13
Pass-Through Rate............................................................2
Payment Date.................................................................7
Policy ...................................................................1, 5
Pool Balance................................................................25
Pool Factor ................................................................25
Pooling Agreement............................................................5
Pre-Funding Account.........................................................11
Pre-Funding Period..........................................................11
Prepayment .................................................................18
Prospectus Supplement........................................................1
Rating Agencies.............................................................14
Ratings Effect..........................................................18, 28
Receivables ...........................................................1, 4, 5
Record Date .................................................................7
Registration Statement.......................................................2
Relief Act .............................................................19, 45
Remittance Period............................................................7
Residual Interest............................................................8
Rule of 78s .............................................................9, 21
Rule of 78s Contracts.......................................................21
Rules ......................................................................30
Securities ..................................................................1
Securities Act...............................................................2
Security Insurer............................................................12
Securityholder..............................................................30
Securityholders..............................................................7
Senior Securities............................................................7
Servicer .................................................................1, 4
Servicer Default............................................................38
Servicing Agreement..........................................................5
Servicing Fee...............................................................36
Servicing Fee Rate..........................................................36
Simple Interest Contracts...............................................10, 21
Stock Index ................................................................29
Stock Indexed Securities....................................................29
Strip Securities.............................................................6
Subordinate Securities.......................................................7
Terms and Conditions........................................................31
Transferor ..................................................................4
Trust ....................................................................1, 4
48
<PAGE>
Trust Accounts..............................................................34
Trust Agreement..........................................................5, 34
Trust Property............................................................1, 4
Trustee .....................................................................5
Vehicles .................................................................1, 4
Vendors .....................................................................4
49
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the amount of fees and expenses (other
than underwriting discounts and commissions) to be incurred in connection with
the issuance and distribution of the Offered Certificates.
SEC Filing Fee...................................$ 303
Trustee's Fees and Expenses*..................... 5,000
Legal Fees and Expenses*......................... 212,500
Accounting Fees and Expenses*.................... 30,000
Printing and Engraving Expenses*................. 35,000
Blue Sky Qualification and Legal
Investment Fees and Expenses*.................. 10,000
Rating Agency Fees*.............................. 40,000
Certificate Insurer's Fee*....................... 40,000
Miscellaneous*................................... 200,000
---------
TOTAL....................................... $572,803
- ----------
* Estimated in accordance with Item 511 of Regulation S-K.
Item 15. Indemnification of Directors and Officers.
Indemnification. Under the laws which govern the organization of the
registrant, the registrant has the power and in some instances may be required
to provide an agent, including an officer or director, who was or is a party or
is threatened to be made a party to certain proceedings, with indemnification
against certain expenses, judgments, fines, settlements and other amounts under
certain circumstances.
Section 8 of the Certificate of Incorporation of Advanta Auto
Finance Corporation provides that all officers and directors of the corporation
shall be indemnified by the corporation from and against all expenses,
liabilities or other matters arising out of their status as an officer or
director for their acts, omissions or services rendered in such capacities.
The forms of the Underwriting Agreement, filed as Exhibits 1.1 and
1.2 to this Registration Statement, provide that Advanta Auto Finance
Corporation will indemnify and reimburse the underwriter(s) and each controlling
person of the underwriter(s) with respect to certain expenses and liabilities,
including liabilities under the 1933 Act or other federal or state regulations
or under the common law, which arise out of or are based on certain material
misstatements or omissions in the Registration Statement. In addition, the
Underwriting Agreements provide that the underwriter(s) will similarly indemnify
and reimburse Advanta Auto Finance Corporation with respect to certain material
misstatements or omissions in the Registration Statement which are based on
certain written information furnished by the underwriter(s) for use in
connection with the preparation of the Registration Statement.
Insurance. As permitted under the laws which govern the organization
of the registrant, the registrant's By-laws permit the board of directors to
purchase and maintain insurance on behalf of the registrant's agents, including
its officers and directors, against any liability asserted against them in such
capacity or arising out of such agents' status as such, whether or not such
registrant would have the power to indemnify them against such liability under
applicable law.
II-1
<PAGE>
Item 16. Exhibits.
1.1 --Form of Underwriting Agreement - Notes.
1.2 --Form of Underwriting Agreement - Certificates.
*3.1 --Certificate of Incorporation of Advanta Auto Finance Corporation.
*3.2 --By-Laws of Advanta Auto Finance Corporation.
4.1 --Form of Indenture between the Trust and the Indenture Trustee.
4.2 --Form of Indenture between the Sponsor and the Indenture Trustee.
4.3 --Form of Pooling and Servicing Agreement.
4.4 --Form of Trust Agreement.
5.1 --Opinion of Dewey Ballantine with respect to validity.
8.1 --Opinion of Dewey Ballantine with respect to tax matters.
10.1 --Form of Receivables Acquisition Agreement.
23.1 --Consents of Dewey Ballantine are included in its opinions filed as
Exhibits 5.1 and 8.1 hereto.
99.1 --Form of Prospectus Supplement - Certificates and Notes.
99.2 --Form of Prospectus Supplement - Notes.
99.3 --Form of Prospectus Supplement - Certificates.
99.4 --Form of Prospectus Supplement - Master Trust.
- ----------
* To be filed by Amendment
Item 17. Undertakings.
A. Undertaking in respect of indemnification
Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described above in Item 15, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by them is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such issue.
B. Undertaking pursuant to Rule 415.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change of such information in the Registration Statement; provided,
however, that paragraphs (i) and (ii) do not apply if the information required
to be included in the post-effective amendment is contained in periodic reports
filed by the Issuer pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
C. Undertaking pursuant to Rule 430A.
The Registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in Reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Horsham, State of Pennsylvania on the 14th
day of January, 1997.
ADVANTA AUTO FINANCE CORPORATION
By /s/ David E. Plante
----------------------------
David E. Plante
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ David E. Plante Director and President January 14, 1997
- --------------------------- (Principal Executive Officer)
David E. Plante
Vice President and Treasurer January 14, 1997
(Principal Financial Officer
/s/ Mark T. Dunsheath and Principal Accounting
- --------------------------- Officer)
Mark T. Dunsheath
/s/ Milton Riseman Director and Chairman of the January 14, 1997
- --------------------------- Board of Directors
Milton Riseman
/s/ Richard A. Greenawalt Director and Executive Vice January 14, 1997
- --------------------------- President, Consumer Finance
Richard A. Greenawalt
================================================================================
II-4
<PAGE>
EXHIBIT INDEX
- --------------------------------------------------------------------------------
Exhibit Description of Documents
- --------------------------------------------------------------------------------
1.1 Form of Underwriting Agreement - Notes.
- --------------------------------------------------------------------------------
1.2 Form of Underwriting Agreement - Certificates.
- --------------------------------------------------------------------------------
*3.1 Certificate of Incorporation of Advanta Auto Finance Corporation.
- --------------------------------------------------------------------------------
*3.2 By-Laws of Advanta Auto Finance Corporation.
- --------------------------------------------------------------------------------
4.1 Form of Indenture between the Trust and the Indenture Trustee.
- --------------------------------------------------------------------------------
4.2 Form of Indenture between the Sponsor and the Indenture Trustee.
- --------------------------------------------------------------------------------
4.3 Form of Pooling and Servicing Agreement.
- --------------------------------------------------------------------------------
4.4 Form of Trust Agreement.
- --------------------------------------------------------------------------------
5.1 Opinion of Dewey Ballantine with respect to validity.
- --------------------------------------------------------------------------------
8.1 Opinion of Dewey Ballantine with respect to tax matters.
- --------------------------------------------------------------------------------
10.1 Form of Receivables Acquisition Agreement.
- --------------------------------------------------------------------------------
23.1 Consents of Dewey Ballantine are included in its opinions filed as
Exhibits 5.1 and 8.1 hereto.
- --------------------------------------------------------------------------------
99.1 Form of Prospectus Supplement - Certificates and Notes.
- --------------------------------------------------------------------------------
99.2 Form of Prospectus Supplement - Notes.
- --------------------------------------------------------------------------------
99.3 Form of Prospectus Supplement - Certificates.
- --------------------------------------------------------------------------------
99.4 Form of Prospectus Supplement - Master Trust.
================================================================================
* To be filed by Amendment
II-5
EXHIBIT 1.1
II-6
<PAGE>
$________________
ADVANTA AUTO FINANCE CORPORATION 199_-__
____% Automobile Receivables Backed Notes, Series 199
UNDERWRITING AGREEMENT
_________ __, 199_
[NAME AND ADDRESS OF UNDERWRITER]
Dear Sirs:
1. Introduction. Advanta Auto Finance Corporation 199_-_ , a Nevada
corporation ("Advanta"), has authorized the issuance and sale of ______%
Automobile Receivables Backed Notes, Series 199_-_ (the "Notes"), evidencing
interests in a trust (the "Trust") consisting of a combination of retail
installment sales contracts (the "Receivables") secured by new and used
automobiles and light duty trucks (the "Vehicles") financed thereby, amounts due
or received thereunder on or after ________ __, 199_, (the "Cut-Off Date"), and
security interests in the Vehicles financed thereby. The Notes will be issued
under a Pooling and Servicing Agreement dated as of _______ __, 199_ (the
"Pooling Agreement") between ____________, as seller, _________________________,
as issuer, Advanta Auto Finance Corporation, in its individual capacity,
__________________ as Back-up Servicer and _______________, as trustee (the
"Trustee").
The Notes will evidence fractional undivided interests in the Trust.
[The Trustee, on behalf of the holders of the Notes (the "Noteholders"), will
have the benefit of a cash collateral account (the "Cash Collateral Account")].
The Notes will be issued in an aggregate principal amount of $__________, which
is equal to the original pool balance of the Receivables, exclusive of accrued
interest, as of the opening of business on the Cut-Off Date. The forms of the
Pooling Agreement and the Cash Collateral Trust Agreement (as such term is
hereinafter defined) have been timely filed as exhibits to the Registration
Statement (as such term is hereinafter defined). Capitalized terms used but not
defined herein shall have the meanings given to them in the Pooling Agreement.
<PAGE>
The Trustee, _________________________________, as cash collateral
trustee (the "Cash Collateral Trustee"), ____________, and a financial
institution as cash collateral depositor (the "Cash Collateral Depositor"), will
enter into a cash collateral trust agreement to be dated as of _______, __ 199_
(the "Cash Collateral Trust Agreement") pursuant to which the Cash Collateral
Account will be established for the benefit of the Trustee and the Cash
Collateral Depositor, as secured parties. In addition, __________, the Cash
Collateral Trustee, the lenders named therein and the Cash Collateral Depositor
will enter into a loan agreement to be dated as of the Closing Date (the "Loan
Agreement"), pursuant to which the Cash Collateral Depositor and the Bank will
deposit the Initial Cash Collateral Amount (as defined in the Cash Collateral
Trust Agreement) into the Cash Collateral Account.
Advanta hereby agrees with the Underwriter named in Schedule 1
hereto (the "Underwriter") as follows:
2. Representations and Warranties of Advanta. Advanta represents and
warrants to, and agrees with, each of the Underwriters that:
(a) A Registration Statement on Form S-3 (No. 33-________) relating
to the Certificates, including a form of Prospectus, has been filed with the
Securities and Exchange Commission (the "Commission") and either (i) has been
declared effective under the Act of 1933 (the "Act") and is not proposed to be
amended or (ii) is proposed to be amended by amendment or post-effective
amendment. If Advanta does not propose to amend such Registration Statement or
if any post-effective amendment to such Registration Statement has been filed
with the Commission prior to the execution and delivery of this Agreement, such
Registration Statement or such post-effective amendment, as the case may be, has
been declared effective by the Commission. For purposes of this Agreement,
"Effective Time" means (i) if Advanta has advised the Underwriter that it does
not propose to amend such Registration Statement, the date and time as of which
such Registration Statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission, or (ii) if Advanta has advised the
Underwriter that it proposes to file an amendment or post-effective amendment to
such Registration Statement, the date and time as of which such Registration
Statement, as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such Registration Statement, as amended at the Effective
Time, including all material incorporated by reference therein and including all
information, if any, deemed to be a part of such Registration Statement as of
the Effective Time pursuant to Rule 430A(b)
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under the Act, is referred to herein as the "Registration Statement", and the
form of prospectus relating to the Certificates, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) under the Act or, if
no such filing is required, as included in the Registration Statement, including
all material incorporated by reference in such prospectus, is hereinafter
referred to as the "Prospectus".
(b) If the Effective Time is prior to the execution and delivery of
this Agreement: (i) on the Effective Date, the Registration Statement conformed,
and on the date of this Agreement the Registration Statement conforms, in all
material respects with the requirements of the Act and the rules and regulations
of the Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) on the date of this Agreement, the Prospectus conforms, and at the time of
filing of the Prospectus pursuant to Rule 424(b) and at the Closing Date, the
Prospectus will conform, in all material respects to the requirements of the Act
and the Rules and Regulations, and the Prospectus does not include and does not
omit, and will not include, any untrue statement of a material fact, and does
not omit, to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If the Effective Time is subsequent to the execution and delivery of
this Agreement: on the Effective Date, the Registration Statement and the
Prospectus will conform in all material respects to the requirements of the Act
and the Rules and Regulations, and (i) the Registration Statement will not
include any untrue statement of a material fact or will not omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and (ii) the Prospectus will not include an untrue
statement of a material fact or will not omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The two preceding sentences do not apply
to statements in or omissions from the Registration Statement or Prospectus
based upon written information furnished to Advanta by the Underwriter
specifically for use therein, it being understood the only such information is
that described as such in Section 8(b). The conditions to the use by Advanta of
a Registration Statement on Form S-3 under the Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the Registration
Statement and the Prospectus. There are no contracts or documents which are
required to be filed as exhibits to the Registration Statement pursuant to the
Act or the Rules and Regulations which have not been so filed on or prior to the
Effective Date.
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(c) Since the respective dates as of which information is given in
the Prospectus, or the Prospectus as amended and supplemented, there has not
been any material adverse change in the general affairs, management, or results
of operations of Advanta or of its subsidiaries otherwise than as set forth or
contemplated in the Prospectus or the Prospectus as amended and supplemented,
nor has there been any adverse change in the general affairs, management, or
results of operations of any other affiliate of Advanta which could have a
material adverse effect on the general affairs, management or results of
operations of Advanta or its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus or the Prospectus as amended and supplemented.
(d) Advanta is a corporation duly organized and validly existing
under the laws of the State of Nevada, and has full corporate power, authority
and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement, the Pooling
Agreement, the Cash Collateral Trust Agreement, and the Loan Agreement, and to
cause the Certificates to be issued. Advanta has conducted and is conducting its
business so as to comply in all material respects with all applicable statutes
and regulations. Advanta is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification.
(e) (i) There are no legal, governmental or regulatory proceedings
pending to which Advanta is a party or to which any of its property is the
subject, which, if determined adversely to Advanta, would individually or in the
aggregate have a material adverse effect on the performance by Advanta of this
Agreement, the Pooling Agreement, the Loan Agreement or the Cash Collateral
Trust Agreement or the consummation of the transactions contemplated hereunder
or thereunder and (ii) to the best of its knowledge, no such proceedings are
threatened or contemplated by governmental or regulatory authorities or
threatened by others.
(f) This Agreement has been duly authorized and validly executed and
delivered by Advanta and constitutes a valid and binding agreement of Advanta,
enforceable against Advanta in accordance with its terms, except to the extent
that (i) the enforceability hereof may be subject to insolvency, reorganization,
moratorium, receivership, conservatorship, or other similar laws, regulations or
procedures of general applicability now or hereafter in effect, (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
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which any proceeding therefor may be brought and (iii) rights to indemnification
and contribution under this Agreement may be limited by state or federal
securities laws or the policies underlying such laws.
(g) The Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement have been duly authorized by Advanta and, when
executed and delivered by Advanta and assuming the due authorization, execution
and delivery of the Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement by the other parties thereto, will constitute valid
and binding obligations of Advanta enforceable against Advanta in accordance
with their respective terms, except to the extent that (i) the enforceability
thereof may be subject to insolvency, reorganization, moratorium, receivership,
conservatorship, or other similar laws, regulations or procedures of general
applicability now or hereafter in effect, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(h) The issuance and delivery of the Certificates, the consummation
of any other of the transactions contemplated herein, in the Pooling Agreement,
the Loan Agreement, or in the Cash Collateral Trust Agreement, or the
fulfillment of the terms of this Agreement, the Pooling Agreement, the Loan
Agreement or the Cash Collateral Trust Agreement, do not and will not conflict
with or violate any term or provision of the Certificate of Incorporation
By-Laws of Advanta, any statute, order or regulation applicable to Advanta of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over Advanta and do not and will not conflict with, result in a
breach or violation or the acceleration of or constitute a default under or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of Advanta pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Advanta is a party or by which Advanta may be bound or to which any of the
property or assets of Advanta may be subject except for conflicts, violations,
breaches, accelerations and defaults which would not, individually or in the
aggregate, be materially adverse to Advanta or materially adverse to the
transactions contemplated by this Agreement.
(i) ________________________________ is an independent public
accountant with respect to Advanta as required by the Act and the Rules and
Regulations.
(j) The direction by Advanta to the Trustee to execute, countersign,
issue and deliver the Notes has been duly authorized by Advanta, and, assuming
the Trustee has been
5
<PAGE>
duly authorized to do so, when executed, countersigned, issued and delivered by
the Trustee in accordance with the Pooling Agreement, the Notes will be validly
issued and outstanding and will be entitled to the benefits of the Pooling
Agreement.
(k) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance and sale of the Notes, or the consummation
by Advanta of the other transactions contemplated by this Agreement, the Pooling
Agreement, the Loan Agreement or the Cash Collateral Trust Agreement, except the
registration under the Act of the Notes and such consents, approvals,
authorizations, registrations or qualifications as may have been obtained or
effected or as may be required under securities or Blue Sky laws in connection
with the purchase and distribution of the Notes by the Underwriter.
(l) Advanta possesses all material licenses, certificates,
authorizations or permits issued by the appropriate state, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus and Advanta has not received notice of
proceedings relating to the revocation or modification of any such license,
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations, financial condition or
income.
(m) At the time of execution and delivery of the Pooling Agreement,
Advanta (i) will not have assigned to any person any of its right, title or
interest in the Receivables or in the Pooling Agreement or the Notes and (ii)
will have the power and authority to sell the Receivables to the Trustee and to
sell the Notes to the Underwriter, and upon execution and delivery of the
Pooling Agreement by the Trustee, the Trustee will have acquired beneficial
ownership of all of Advanta's right, title and interest in and to the
Receivables, and upon delivery to the Underwriter of the Notes the Underwriter
will have good and marketable title to the Notes.
(n) As of the Cut-Off Date, the Receivables will meet the
eligibility criteria described in the Prospectus.
(o) The Trust created by the Pooling Agreement is not, and
immediately following the issuance and sale of the Notes will not be, required
to be registered as an "investment company" under the Investment Company Act of
1940, as amended (the "1940 Act"), as in effect on the date hereof.
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<PAGE>
(p) Advanta has authorized the conveyance of the Receivables to the
Trust, and Advanta has authorized the Trust to issue the Notes.
(q) Each of the Notes, the Pooling Agreement and the Cash Collateral
Account conforms in all material respects to the descriptions thereof contained
in the Prospectus.
(r) Any taxes, fees and other governmental charges in connection
with the execution, delivery and issuance of this Agreement, the Pooling
Agreement, the Cash Collateral Trust Agreement, the Loan Agreement, the Cash
Collateral Account and the Notes that are required to be paid by Advanta at or
prior to the Closing Date have been paid or will be paid at or prior to the
Closing Date.
(s) Advanta will not apply the proceeds of the sale of the Notes
pursuant to this Agreement to purchase securities (which term does not include
the Receivables) within the meaning of Regulation T promulgated by the Federal
Reserve Board.
(t) As of the Closing Date, the representations and warranties of
Advanta in the Pooling Agreement will be true and correct.
Any certificate signed by an officer of Advanta and delivered to the
Underwriter or the Underwriter's counsel in connection with an offering of the
Notes shall be deemed, and shall state that it is, a representation and warranty
as to the matters covered thereby to each person to whom the representations and
warranties in this Section 2 are made.
3. Purchase, Sale, Delivery and Payments. The Underwriter's
commitment to purchase the Notes pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth.
Advanta agrees to instruct the Trustee to issue and agrees to sell to the
Underwriter, and the Underwriter, severally and not jointly, agree, to purchase
from Advanta at the purchase price for the Notes set forth opposite the names of
the Underwriter on Schedule 1 hereto, the respective principal amount of Notes
set forth on Schedule 1 hereto. Payment of the purchase price for, and delivery
of, any Notes to be purchased by the Underwriter shall be made at the office of
Dewey Ballantine, 1301 Avenue of the Americas, New York, New York, or at such
other place as shall be agreed upon by the Underwriter and Advanta, at 10:00
a.m. New York City time on __________ __, 199_ (the "Closing Date"), or at such
other time or date or time as shall be agreed upon in writing by the Underwriter
and Advanta. On the Closing Date, payment shall be made to Advanta by wire
transfer of same day funds payable
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<PAGE>
to the account of Advanta against delivery to the Trustee as custodian for The
Depository Trust Company ("DTC") of the Notes in the form of one or more global
securities in definitive form (the "Global Certificates") and registered in the
name of Cede & Co., as nominee for DTC. The Global Certificates will be made
available for checking at Dewey Ballantine at least 24 hours prior to the
Closing Date.
4. Offering by Underwriters. It is understood that the Underwriter
propose to offer the Notes for sale to the public (which may include selected
dealers) as set forth in the Prospectus.
5. Covenants of Advanta. Advanta covenants with the Underwriter as
follows:
(a) To prepare a Prospectus setting forth any price related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act within the time period prescribed by Rule
430A, and to transmit such Prospectus to the Commission for filing pursuant to
Rule 424(b) under the Act within the prescribed time period, and prior to the
Closing Date to provide evidence satisfactory to the Underwriter of such timely
filing, or to prepare and timely file a post-effective amendment to the
Registration Statement providing such information, which post-effective
amendment shall have been declared effective in accordance with the requirements
of Rule 430A under the Act and to provide evidence satisfactory to the
Underwriter of the effectiveness thereof.
(b) If at any time when the Prospectus as amended or supplemented is
required by the Act to be delivered in connection with sales of the Notes by the
Underwriter, any event shall occur or condition exist as a result of which it is
necessary, in the opinion of the Underwriter's counsel or counsel for Advanta,
further to amend or supplement the Prospectus as then amended or supplemented in
order that the Prospectus as amended or supplemented will not include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of circumstances existing at the time
it is delivered to a purchaser, not misleading or if it shall be necessary, in
the opinion of any such counsel, at any such time to amend or supplement the
Registration Statement or the Prospectus as then amended or supplemented in
order to comply with the requirements of the Act or the Rules and Regulations,
or if required by such Rules and Regulations, including Rule 430A thereunder, to
file a post-effective amendment to such Registration Statement (including an
amended Prospectus), Advanta will promptly notify the Underwriter of such event
and will prepare and file with the Commission (subject to the Underwriter's
prior review), at its own expense, such
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<PAGE>
amendment or supplement as may be necessary to correct such untrue statement or
omission or to make the Registration Statement comply with such requirements,
and within two Business Days will furnish to the Underwriter as many copies of
the Prospectus, as amended or supplemented, as the Underwriter shall reasonably
request. Neither the Underwriter's consent to, nor the Underwriter's delivery
of, any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6 of this Agreement.
(c) Advanta will give the Underwriter reasonable notice of its
intention to file any amendment to the Registration Statement, the Prospectus or
the Prospectus as amended or supplemented, pursuant to the Act, and will furnish
the Underwriter with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any such
amendment or supplement to which the Underwriter or the Underwriter's counsel
shall object.
(d) Advanta will notify the Underwriter immediately, and confirm the
notice in writing, (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing of
any supplement to the Prospectus or the Prospectus as amended or supplemented,
(iii) of the receipt and contents of any comments from the Commission with
respect to the Registration Statement or the Prospectus or the Prospectus as
amended or supplemented, (iv) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the Prospectus
or for additional information and (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. Advanta will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(e) Advanta will deliver to the Underwriter as many signed and as
many conformed copies of the Registration Statement (as originally filed) and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus),
each related preliminary prospectus, and so long as delivery of a Prospectus
relating to the Notes is required to be delivered under the Act in connection
with sales by the Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as the Underwriter may reasonably request. Advanta will also furnish
to the
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Underwriter copies of any report on Form SR required by Rule 463 under the Act.
(f) Advanta will make generally available to holders of the Notes as
soon as practicable, but in any event not later than the Availability Date (as
defined below), earning statements of the Trust (which need not be audited)
complying with Section 11(a) of the Act and the Rules and Regulations (including
Rule 158) and covering a period of at least twelve consecutive months beginning
after the Effective Date which will satisfy the provisions of Section 11(a) of
the Act. For the purposes of the preceding sentence, the "Availability Date"
means the 45th day after the end of the Trust's fourth fiscal quarter following
the fiscal quarter that includes the Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Trust's fiscal year, "Availability
Date" means the 90th day after the end of such fourth fiscal quarter.
(g) Advanta will endeavor, in cooperation with the Underwriter, to
qualify the Notes for sale and the determination of their eligibility for
investment under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriter may designate, and will
maintain or cause to be maintained such qualifications in effect for as long as
may be required for the distribution of the Notes. Advanta will file or cause
the filing of such statements and reports as may be required by the laws of each
jurisdiction in which the Certificates have been qualified as above provided.
(h) Advanta will not, directly or indirectly, without the
Underwriter's prior consent, publicly offer or sell or contract to sell or
attempt to offer, sell or dispose of any certificates or other similar
securities representing interests in or secured by the Receivables for a period
of 30 days following the commencement of the offering of the Notes to the
public.
(i) For a period from the date of this agreement until the
retirement of the Notes, Advanta Financial Services, Inc., as Servicer, will
deliver to the Underwriter, as soon as practicable, copies of each certificate,
report or notice and the annual statements of compliance delivered by Advanta
Financial Services, Inc., as Servicer, to the Trustee pursuant to Section ____
of the Pooling Agreement, the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Section ____ of the Pooling
Agreement; and such other information concerning the Receivables, Advanta
Financial Services, Inc. or the Notes, as the Underwriter may from time to time
reasonably request.
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(j) On or before the Closing Date, Advanta shall furnish or make
available to the Underwriter or its counsel such additional documents and
information regarding Advanta Financial Services, Inc. and its affairs as the
Underwriter may from time to time reasonably request, including any and all
documentation reasonably requested in connection with their due diligence
efforts regarding information in the Prospectus and in order to evidence the
accuracy or completeness of any of the conditions contained in this Agreement.
(k) So long as any Note is outstanding, Advanta shall furnish to the
Underwriter by first-class mail as soon as practicable, all documents (A)
distributed, or caused to be distributed, by Advanta to Noteholders, (B) filed,
or caused to be filed, by Advanta with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (C) any order of the
Commission under the Exchange Act or pursuant to a "no-action" letter from the
staff of the Commission and (D) from time to time, such other information in the
possession of Advanta concerning the Trust as the Underwriter may reasonably
request.
(l) Advanta shall apply the net proceeds from the sale of the Notes
in the manner set forth in the Prospectus.
(m) If, between the date hereof or, if earlier, the dates as of
which information is given in the Prospectus and the Closing Date, to the
knowledge of Advanta there shall have been any material change, or any
development involving a prospective material change in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of Advanta, Advanta will give prompt written notice thereof to the
Underwriter.
(n) To the extent, if any, that any rating provided with respect to
the Notes set forth in Section 6(j) hereof is conditional upon the furnishing of
documents reasonably available to Advanta or the taking of any other reasonable
actions by Advanta, Advanta shall furnish such documents or take any such other
actions.
6. Conditions of the Obligations of the Underwriter. The obligations
of the Underwriter to purchase the Notes pursuant to this Agreement are subject
to the accuracy on and as of the Closing Date of the representations and
warranties on the part of Advanta herein contained, to the accuracy of the
statements of officers of Advanta made pursuant hereto, to the performance by
Advanta of all of its obligations hereunder and to the following conditions at
the Closing Date:
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(a) The Underwriter shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or post-effective
amendment to the Registration Statement to be filed shortly prior to the
Effective Time), from _____________________________ LLP, in form and substance
satisfactory to the Underwriter and counsel for the Underwriter, confirming that
they are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating in effect that
(i) they have performed certain specified procedures as a result of which they
have determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Trust and Advanta
set forth in the Registration Statement and the Prospectus), agrees with the
accounting records of the Trust and Advanta, excluding any questions of legal
interpretation, and (ii) they have performed certain specified procedures with
respect to the computer programs used to select the Receivables and to generate
information with respect to the Receivables set forth in the Registration
Statement and the Prospectus.
For purposes of this subsection (a), if the Effective Time is
subsequent to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be amended by
the amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean the prospectus included in such
Registration Statement. All financial statements included in material
incorporated by reference into the Prospectus shall be deemed included in the
Registration Statement for purposes of this subsection (a).
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than 10:00
p.m., New York time, on the date of this Agreement or such later date as shall
have been consented to by the Underwriter. If the Effective Time is prior to the
execution and delivery of this Agreement, the Prospectus shall have been filed
with the Commission in accordance with the Rules and Regulations and Section
5(a) of this Agreement.
(c) The Registration Statement shall have been declared effective by
the Commission and no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Act or proceedings
therefor initiated or threatened by the Commission, any price-related
information previously omitted from the effective Registration
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Statement pursuant to Rule 430A under the Act shall have been included in the
Prospectus and transmitted to the Commission for filing pursuant to Rule 424
under the Act within the prescribed time period, and Advanta shall have provided
evidence satisfactory to the Underwriter of such timely filing, or a
post-effective amendment to the Registration Statement providing such
information shall have been promptly filed with the Commission and declared
effective in accordance with the requirements of Rule 430A under the Act, and
prior to the Closing Date, Advanta shall have provided evidence satisfactory to
the Underwriter of such effectiveness and there shall not have come to the
attention of the Underwriter facts that would cause the Underwriter to believe
that the Prospectus, at the time it was required to be delivered to a purchaser
of the Notes, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at such time, not misleading.
(d) The Underwriter shall have received the favorable opinion, dated
the Closing Date, of _________, counsel to Advanta, or other counsel to Advanta,
acceptable to the Underwriter and its counsel, addressed to the Underwriter and
in form and scope satisfactory to the Underwriter's counsel, to the effect that:
i) Advanta has been duly incorporated and is validly
existing as a corporation under the laws of the State of Nevada and has
full corporate power and authority to own its properties and conduct its
business as described in the Prospectus; Advanta has full corporate power
and authority to execute, deliver, and perform its obligations under this
Agreement, the Pooling Agreement, the Loan Agreement, and the Cash
Collateral Trust Agreement and to cause the Notes to be issued and to
consummate the transactions contemplated hereby and thereby.
ii) Advanta has duly authorized and executed this
Agreement, the Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement and each such agreement constitutes the valid,
legal and binding obligation of Advanta enforceable against Advanta in
accordance with its terms.
iii) The execution and delivery, and performance of the
Pooling Agreement, the Cash Collateral Trust Agreement, this Agreement,
the transfer of the Receivables to the Trust, the issuance and sale of the
Notes and consummation of any other of the transactions contemplated
herein or in the Pooling Agreement do not conflict with or result in a
violation of (a) any law or regulation of the United States of America or
the State
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of New York or Delaware, (b) the Certificate of Incorporation or By-laws
of Advanta, (c) any order, writ, judgment or decree known to such counsel
to which Advanta is a party or is subject, or (d) result in any lien,
charge or encumbrance upon any of the properties or assets of Advanta.
iv) The Notes have been duly authorized and, when executed
and authenticated in accordance with the terms of the Pooling Agreement
and delivered to and paid for by the Underwriter pursuant to this
Agreement, will be duly and validly issued and outstanding and will be
entitled to the benefits of the Pooling Agreement.
v) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental agency
or body of the United States of America is required for the issuance of
the Notes and the sale of the Notes to the Underwriter or the consummation
of the other transactions contemplated by this Agreement, the Pooling
Agreement, the Loan Agreement, or the Cash Collateral Trust Agreement
except for (x) the filing of a Uniform Commercial Code financing statement
in the State of _______________ with respect to the transfer of the
Receivables to the Trust, (y) such as have been obtained and made under
the Act and (z) such as may be required under state securities laws.
vi) The Registration Statement was declared effective under
the Act as of the date and time specified in such opinion, the Prospectus
either was filed with the Commission pursuant to the subparagraph of Rule
424(b) specified in such opinion on the date specified therein or was
included in the Registration Statement (as the case may be), and, to the
best of the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been
instituted or is pending or contemplated under the Act, and the
Registration Statement and the Prospectus, and each amendment or
supplement thereof, as of their respective effective or issue dates,
complies as to form in all material respects with the requirements of the
Act and the Rules and Regulations; such counsel have no reason to believe
that the Registration Statement or any amendment thereto, as of its
Effective Date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Registration Statement as of the Closing Date, or the Prospectus, as of
its issue date or as of such Closing Date, contained any untrue statement
of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the
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light of the circumstances under which they were made, not misleading; it
being understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the Registration
Statement or the Prospectus.
vii) The conditions to the use by Advanta of a registration
statement on Form S-3 under the Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus. There are no contracts or
documents of Advanta which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations
thereunder which have not been so filed.
viii) There are no actions, proceedings or investigations
pending or threatened before any court, administrative agency or other
tribunal to which Advanta is a named party or to which its assets are
subject (A) asserting the invalidity of the Pooling Agreement, the Loan
Agreement, the Cash Collateral Trust Agreement, this Agreement or the
Notes, (B) seeking to prevent the issuance of the Notes or the
consummation by Advanta of any of the transactions contemplated by the
Pooling Agreement, the Loan Agreement, the Cash Collateral Trust Agreement
or this Agreement, (C) that might adversely affect the validity or
enforceability of the Pooling Agreement, the Loan Agreement, the Cash
Collateral Trust Agreement, this Agreement or the Notes, or (D) seeking to
adversely affect the federal income tax attributes of the Notes as
described in the Prospectus under the heading "Certain Federal Income Tax
Consequences."
ix) The Registration Statement at the time it became
effective, and any amendment thereto at the time such amendment became
effective, complied as to form in all material respects with the
applicable requirements of the Act and the Rules and Regulations.
x) The Pooling Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended.
xi) The Trust is not required to be registered under the
1940 Act, and immediately following the issuance and sale of the Notes in
the manner contemplated by the Pooling Agreement and this Agreement, the
Trust will not be required to be so registered.
xii) The Notes, this Agreement, the Pooling Agreement and
the Cash Collateral Account conform in all
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material respects to the respective descriptions thereof in the
Registration Statement and the Prospectus.
xiii) The statements in the Prospectus under the heading
"Certain Legal Aspects of the Receivables," "SUMMARY OF TERMS -- Certain
Legal Aspects of the Receivables," "SUMMARY OF TERMS -- Certain Federal
Tax Considerations," "Certain Federal Income Tax Consequences," "ERISA
Considerations," and "SPECIAL CONSIDERATIONS -- Certain Legal Aspects," to
the extent that they constitute matters of law or legal conclusions with
respect thereto, have been prepared or reviewed by such counsel and are
correct in all material respects.
xiv) No filing or other action, except the filing of a Uniform
Commercial Code financing statement on Form UCC-1 with the ________ [State
Department of Assessments and Taxation] naming Advanta as "debtor" and the
Trustee as "secured party," is necessary to perfect the transfer of the
Receivables and proceeds (as defined in Section 9-306 of the __________
Uniform Commercial Code) thereof against the claims of creditors of, and
transferees from, Advanta.
xv) The Receivables constitute "chattel paper" as defined
in Section 9-105 of the Uniform Commercial Code as in effect in the State
of _____________.
In addition, such counsel shall state that nothing has come to their
attention that would lead them to believe that the Registration Statement, at
the time it became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus, as of its
date and as of the Closing Date, contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(e) The Underwriter shall have received the favorable opinion of
counsel to the Trustee, dated the Closing Date, addressed to the Underwriter and
in form and scope satisfactory to the Underwriter's counsel, to the effect that:
i) The Trustee has duly authorized, executed and delivered the
Pooling Agreement and the Cash Collateral Trust Agreement.
ii) The Trustee has been duly organized and is validly existing
as a ______________________ in good standing under the laws of ___________
of __________ and has full power and authority to execute and deliver
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the Pooling Agreement and the Cash Collateral Trust Agreement and to
perform its obligations thereunder and each such Agreement constitutes the
valid, legal and binding obligation of the Trustee, enforceable against
the Trustee in accordance with its terms.
iii) The Notes have been duly executed and countersigned by the
Trustee.
iv) The execution and delivery by the Trustee of the Pooling
Agreement and the Cash Collateral Trust Agreement and the performance by
the Trustee of its duties thereunder do not conflict with or result in a
violation of (a) any law or regulation of the United States of America or
the State of ___________, (b) the charter or by-laws of the Trustee, (c)
any order, writ, judgment or decree or (d) any agreement, instrument,
order, writ, judgment or decree known to such counsel to which the Trustee
is a party or is subject.
v) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body of
the United States of America or any state thereof is required for the
execution, delivery or performance by the Trustee of the Pooling Agreement
and the Cash Collateral Trust Agreement.
(f) The Underwriters shall have received the favorable opinion or
opinions, dated the Closing Date, of the Underwriter's counsel, _______________,
with respect to the issuance and sale of the Notes, the Registration Statement,
this Agreement, the Prospectus and such other related matters as the Underwriter
may require.
(g) The Underwriter shall have received an opinion, dated the
Closing Date, of Dewey Ballantine, special counsel to Advanta, addressed to, and
satisfactory to, Standard & Poor's Corporation ("S&P"), Moody's Investors
Service, Inc. ("Moody's") and the Underwriter's counsel, relating to the sale of
the Receivables to the Trustee, and such counsel to Advanta shall have consented
to reliance by the Underwriter on such opinion as though such opinion had been
addressed to the Underwriter.
(h) Advanta shall have furnished to the Underwriter a certificate
signed on behalf of Advanta by any two of the chairman of the board, the
president, any vice-chairman of the board, any executive vice president, any
senior vice president, any vice president, the treasurer, or the controller of
the Seller or the Servicer, as appropriate, dated the Closing Date, as to (i)
the accuracy of the representations and warranties of Advanta herein and in the
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Pooling Agreement at and as of the Closing Date, (ii) the performance by Advanta
of all of its obligations hereunder to be performed at or prior to the Closing
Date and (iii) such other matters as the Underwriter may reasonably request.
(i) The Trustee shall have furnished to the Underwriter a
certificate of the Trustee, signed by one or more duly authorized officers of
the Trustee, dated the Closing Date, as to the due acceptance of the Pooling
Agreement by the Trustee and the due execution and delivery of the Notes by the
Trustee thereunder and such other matters as the Underwriter shall reasonably
request.
(j) The Notes shall have been rated "___" by S&P and "___" by
Moody's, and such ratings shall not have been rescinded.
(k) The Underwriter shall have received from _____________________,
or other independent certified public accountants acceptable to the Underwriter,
a letter, dated as of the date of the Closing Date, delivered at such time in
form satisfactory to the Underwriter.
(l) Prior to the Closing Date the Underwriter's counsel, _________,
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Notes as herein contemplated and related proceedings or in order
to evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by Advanta in connection with the issuance and sale of the
Notes as herein contemplated shall be satisfactory in form and substance to the
Underwriter and ________________.
(m) Since the respective dates as of which information is given in
the Prospectus, there shall not have been any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of Advanta
otherwise than as set forth in the Prospectus, the effect of which is in the
Underwriter's judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Notes on
the terms and in the manner contemplated in the Prospectus or which, in the
judgment of the Underwriter, materially impairs the investment quality of the
Notes or the ability of the Servicer to service the Receivables.
(n) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, development or event involving a
prospective change, in the
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condition (financial or other), business, properties or results of operations of
Advanta or its automobile loan business or the Cash Collateral Depositor which,
in the judgment of the Underwriter, is material and adverse and makes it
impracticable or inadvisable to proceed with the completion of the public
offering or the sale of and payment for the Notes or (ii) any downgrading in the
rating of any securities of Advanta or the Cash Collateral Depositor by any
nationally recognized statistical rating organization (as defined for purposes
of Rule 436(g) under the Act) or any public announcement that any such
organization has under surveillance or review its rating of any securities of
Advanta or the Cash Collateral Depositor (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); or (iv) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity, emergency
or change in financial markets if, in the Representative's judgment, the effect
of any such outbreak, escalation, declaration, calamity, emergency or change
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Notes.
(o) The Cash Collateral Trust Agreement and the Loan Agreement shall
have been duly authorized, executed and delivered by each party thereto; on or
prior to the Closing Date, the Cash Collateral Trustee shall have established
the Cash Collateral Account pursuant to the Cash Collateral Trust Agreement and
the Cash Collateral Depositor and Advanta shall have deposited the Initial Cash
Collateral Amount in the Cash Collateral Account pursuant to the Loan Agreement;
and all fees due and payable to the Cash Collateral Depositor as of the Closing
Date shall have been paid in full by Advanta on or prior to the Closing Date.
(p) The Underwriter shall have received evidence satisfactory to the
Underwriter and its counsel that (i) on or before the Closing Date, UCC-1
financing statements have been filed in the offices of the __________________
[State Department of Assessments and Taxation], reflecting the interest of the
Trust in the Receivables and the proceeds thereof and (ii) the Trust will have a
first priority perfected security interest in the amounts on deposit from time
to time in the Cash Collateral Account.
(q) The Underwriter shall have received an opinion from
______________ counsel for the Cash Collateral Depositor, addressed to the
Underwriter, dated the Closing Date and
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reasonably satisfactory in form and substance to the Underwriter and its
counsel, to the effect that:
i) the Cash Collateral Depositor is a corporation duly
organized and validly existing under the laws of ______________ and has
the corporate power and authority under the laws of ______________ to
execute, deliver and perform its obligations under the Cash Collateral
Trust Agreement and the Loan Agreement through its New York branch (the
"Branch"), including the obligation of the Cash Collateral Depositor to
deposit the Initial Cash Collateral Amount in the Cash Collateral Account
in accordance with the terms of the Loan Agreement;
ii) each of the Cash Collateral Trust Agreement and the Loan
Agreement have been duly authorized and, when executed and delivered by
the Cash Collateral Depositor through the Branch, each as the Cash
Collateral Trust Agreement and the Loan Agreement, including the
obligation of the Cash Collateral Depositor, acting through the Branch, to
deposit the Initial Cash Collateral Amount in the Cash Collateral Account
in accordance with the terms of the Loan Agreement, will constitute the
valid and legally binding obligation of the Cash Collateral Depositor
enforceable against the Branch in accordance with its terms subject, as to
enforcement, to (A) bankruptcy, insolvency, reorganization, liquidation,
readjustment of debt and other laws and equitable principles relating to
or affecting the enforcement of creditors' rights generally as they may be
applied in the event of the bankruptcy, insolvency, reorganization,
liquidation or readjustment of debt of, or the appointment of a receiver
with respect to the property of, or a similar event applicable to, the
Branch, and (B) the effect of any moratorium or similar occurrence
affecting the Branch;
iii) each of the Cash Collateral Trust Agreement and the Loan
Agreement, including the obligation of the Cash Collateral Depositor,
acting through the Branch, to deposit the Initial Cash Collateral Amount
in the Cash Collateral Account in accordance with the terms of the Loan
Agreement, is enforceable in accordance with its terms against the Cash
Collateral Depositor's head office in ___________ if the Branch defaults
in its obligations thereunder, subject, as to enforcement, to (A)
bankruptcy, insolvency, reorganization, liquidation, readjustment of
debt and other laws and equitable principles relating to or affecting
the enforcement of creditors' rights generally as they may be applied in
the event of the bankruptcy, insolvency, reorganization, liquidation or
readjustment of debt of, or the
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<PAGE>
appointment of a receiver with respect to the property of, or a similar
event applicable to, the Cash Collateral Depositor, and (B) the effect of
any moratorium or similar occurrence affecting the Cash Collateral
Depositor; and
iv) any judgment for a fixed and definite sum of money
rendered by the courts of the State of New York or the United States of
America located in the State of New York, in respect of any suit, action
or other proceeding against the Cash Collateral Depositor for the
enforcement of the Cash Collateral Trust Agreement or the Loan Agreement
will, upon request, be declared valid and enforceable against the Cash
Collateral Depositor by the competent courts of _________, usually without
reexamination of the matters adjudicated upon, if such judgment is not
subject to appeal and is enforceable according to the laws of the State of
New York or United States Federal law. However, such judgment will not be
enforced if its contents are in violation of fundamental principles of the
____________ legal system (order public) or if it has been rendered in
violation of such principles. In addition, enforcement may be refused if
the foreign state does not observe reciprocity. According to the approach
of ____________ courts, reciprocity is affirmed with regard to judgments
of United States Federal courts and courts of the State of New York. As a
general rule it can be stated that judgments of United States Federal
courts and courts of the State of New York are enforceable in
_________________, and such counsel knows of no reason why such judgments
would be a violation of the fundamental principles of the ____________
legal system.
(r) The Underwriter shall have received an opinion from __________,
special United States counsel for the Cash Collateral Depositor, addressed to
the Underwriter, dated the Closing Date and reasonably satisfactory in form and
substance to the Underwriter and its counsel, to the effect that:
i) the Cash Collateral Depositor is licensed by the
Superintendent of Banks of the State of New York to maintain a branch for
the conduct of a banking business at ___________________________________,
ii) no authorization, consent or approval of or by any
governmental authority of the United States or the State of New York is
necessary for the execution, delivery and performance by the Branch as the
Cash Collateral Depositor of the Cash Collateral Trust Agreement and the
Loan Agreement, including the obligation of the Cash Collateral Depositor,
acting through the Branch, to deposit the Initial Cash
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Collateral Amount in the Cash Collateral Account in accordance with the
terms of the Loan Agreement, except such authorizations, consents and
approvals as are in full force and effect;
iii) each of the Cash Collateral Trust Agreement and the Loan
Agreement has been duly authorized, executed and delivered by the Branch;
and
iv) each of the Cash Collateral Trust Agreement and the Loan
Agreement, including the obligation of the Cash Collateral Depositor,
acting through the Branch, to deposit the Initial Cash Collateral Account
in the Cash Collateral Account in accordance with the terms of the Loan
Agreement, constitutes the legal, valid and binding obligation of the Cash
Collateral Depositor and the Branch, enforceable against the Cash
Collateral Depositor and the Branch in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium, readjustment of debt
or other similar laws affecting the enforcement of creditors' rights
generally, as such laws may be applied in the event of a bankruptcy,
insolvency, reorganization, liquidation, moratorium, readjustment of debt
or other similar proceedings of or affecting the Cash Collateral Depositor
or the Branch, and subject to the application of general principles of
equity regardless of whether such enforceability is considered in a
proceeding at law or in equity.
(s) The Underwriter shall have received the favorable opinion of
counsel to the Cash Collateral Trustee, addressed to the Underwriter, dated the
Closing Date and reasonably satisfactory in form and substance to the
Underwriter and its counsel, to the effect that:
i) the Cash Collateral Trustee is an association duly
organized, validly existing and in good standing as a licensed national
banking association under the laws of the United States, and has the power
and authority (corporate and other) to enter into, and to take all action
required of it under the Cash Collateral Trust Agreement and the Loan
Agreement; and
ii) the Cash Collateral Trust Agreement and the Loan Agreement
have each been duly authorized, executed and delivered by the Cash
Collateral Trustee and each constitutes a legal, valid and binding
agreement of the Cash Collateral Trustee, enforceable in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar laws
affecting the enforcement of rights of creditors against the Cash
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Collateral Trustee generally, and the application of general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(t) The Underwriter shall have received from the Cash Collateral
Trustee a certificate dated the Closing Date of an authorized officer of the
Cash Collateral Trustee reasonably acceptable to the Underwriter in which such
officer shall state that, to the best of such officer's knowledge:
i) the execution and delivery of the Cash Collateral Trust
Agreement and the Loan Agreement by the Cash Collateral Trust and the
performance by the Cash Collateral Trustee of the terms thereof do not
conflict with or result in a violation of (A) the charter or by-laws of
the Cash Collateral Trustee or (B) any law of the United States of America
or the State of New York or any regulation governing the banking or trust
powers of the Cash Collateral Trustee; and
ii) no approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or the
State of New York having jurisdiction over the banking or trust powers of
the Cash Collateral Trustee is required in connection with its execution
and delivery of the Cash Collateral Trust Agreement and the Loan Agreement
or the performance by the Cash Collateral Trustee of the terms of the Cash
Collateral Trust Agreement and the Loan Agreement.
(u) Advanta will provide or cause to be provided to the
Representative such conformed copies of such opinions, certificates, letters and
documents being provided pursuant hereto and such further information,
certificates and documents as the Underwriter may reasonably request. The
Underwriter may in its sole discretion waive compliance with any conditions to
the obligations of the Underwriter hereunder.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriter by notice to Advanta at any time at or prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Section 7.
7. Payment of Expenses. Advanta agrees to pay all expenses incident
to the performance of its obligations under this Agreement, and will reimburse
the Underwriter (if and to the extent incurred by them) for any filing fees and
other expenses (including fees and disbursements of counsel), including without
limitation those related to (i) the filing
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of the Registration Statement and all amendments thereto, (ii) the duplication
and delivery to the Underwriter, in such quantities as the Underwriter may
reasonably request, of copies of this Agreement, (iii) the preparation, issuance
and delivery of the Notes and the determination of their eligibility for
investment under the laws of such jurisdictions as the Underwriter designates,
(iv) the fees and disbursements of __________________, counsel for Advanta, 50%
of the fees of ________________, special counsel for Advanta, and the fees and
disbursements of __________, accountants of Advanta, (v) the qualification of
the Notes under securities and Blue Sky laws and the determination of the
eligibility of the Notes for investment in accordance with the provisions of
Section 5(g), including filing fees and disbursements and the fees of
_______________, the Underwriter's counsel, in connection therewith and in
connection with the preparation of any Blue Sky Survey, (vi) the printing and
delivery to the Underwriter, in such quantities as the Underwriter may
reasonably request, hereinabove stated, of copies of the Registration Statement
and Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey, (vii) for the filing fee of the National Association of Securities
Dealers, Inc., (viii) the duplication and delivery to the Underwriter in such
quantities as the Underwriter may reasonably request, of copies of the Pooling
Agreement and the Collateral Trust Agreement, (ix) the fees charged by
nationally recognized statistical rating agencies for rating the Notes, (x) the
fees and expenses of the Trustee and its counsel, (xi) the fees and expenses of
the Cash Collateral Trustee and its counsel, (xii) the fees and expenses of the
Cash Collateral Depositor and its counsel.
8. Indemnification. Advanta agrees to indemnify and hold harmless
the Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Act or the Exchange Act, as follows:
(a) Advanta will indemnify and hold harmless the Underwriter against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus or any amendment or
supplement thereto, in the light of the circumstances under which they were
made) and will reimburse the Underwriter for any legal or other expenses
reasonably incurred by such
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Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that Advanta will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to Advanta by the Underwriter specifically for use
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(b) below.
(b) The Underwriter will indemnify and hold harmless Advanta against
any losses, claims, damages or liabilities to which Advanta may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading (in the case of the Prospectus, in the light of the circumstances
under which they were made), in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to Advanta by the Underwriter specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by Advanta in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by the Underwriter consists of
(i) the following information in the Prospectus furnished on behalf of the
Underwriter: [the last paragraph at the bottom of the cover page concerning the
terms of the offering by the Underwriter, the legend concerning overallotments
and stabilizing on the inside front cover page and the concession and
reallowance figures appearing in the third paragraph under the caption
"Underwriting."]
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than
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under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
9. Contribution. (a) If the indemnification provided for in Section
8 is unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) of Section 8 above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in such subsection (a)
or (b) (i) in such proportion as is appropriate to reflect the relative benefits
received by Advanta on the one hand and the Underwriter on the other from the
offering of the Notes or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of Advanta on the one hand and the Underwriter on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by Advanta on the one hand and
the Underwriter on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
Advanta bear to the total underwriting discounts and commissions received by the
Underwriter. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by Advanta or the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or
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prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this Section 9 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
Section 9. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(b) The obligations of Advanta under this Section 9 shall be in
addition to any liability which Advanta may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act; and the obligations of the
Underwriter under this Section 9 shall be in addition to any liability which the
Underwriter may otherwise have and shall extend, upon the same terms and
conditions, to each director of Advanta, to each officer of Advanta who has
signed the Registration Statement and to each person, if any, who controls
Advanta within the meaning of the Act.
The Underwriter, with respect to the Notes, agrees that it will not
prepare or distribute to any proposed purchaser of any Notes any Derived
Information (as such term is hereinafter defined), unless it shall have provided
to the Servicer a copy of such Derived Information a sufficient time prior to
its proposed distribution to permit the Servicer to review and comment upon such
Derived Information, and the Underwriter shall have obtained the prior written
consent of the Servicer thereto following its review. In addition, the
Underwriter agrees to provide the Servicer, no later than the date on which the
Prospectus is required to be filed pursuant to Rule 424, with a definitive copy
of its Derived Information with respect to such Notes provided by the
Underwriter for filing with the Commission on Form 8-K.
The Underwriter agrees, assuming all CompaniesProvided Information
(as such term is hereinafter defined) provided by Advanta is accurate and
complete in all material respects, to indemnify and hold harmless Advanta, each
of Advanta's officers and directors and each person who controls Advanta within
the meaning of the Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in the Derived Information provided by the Underwriter,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
27
<PAGE>
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred.
The obligations of the Underwriter under this Section 8 shall be in addition to
any liability which the Underwriter may otherwise have.
For purposes of this Section 9, the term "Derived Information" means
such portion, if any, of the information delivered to Advanta for filing with
the Commission on Form 8-K as:
i) is not contained in the Prospectus without taking into
account information incorporated therein by reference;
ii) does not constitute Companies-Provided Information; and
iii) is not information provided by the Cash Collateral
Depositor or the Cash Collateral Trustee.
"Companies-Provided Information" means any computer tape furnished to the
Underwriter by Advanta concerning the Receivables assigned to the Trust.
Notwithstanding the provisions of Sections 8 and 9, the Underwriter
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Notes underwritten by the Underwriter and
distributed to the public were offered to the public exceeds the amount of any
damages which the Underwriter has otherwise been required to pay in respect of
such losses, liabilities, claims, damages and expenses. For purposes of this
Section 9, each person, if any, who controls the Underwriter within the meaning
of the Act or the Exchange Act shall have the same rights to contribution as the
Underwriter and each director of Advanta, each officer of Advanta who signed the
Registration Statement, and each person, if any, who controls Advanta within the
meaning of the Act or the Exchange Act shall have the same rights to
contribution as Advanta.
10. Default of Underwriter. If the Underwriter defaults in its
obligations to purchase Notes hereunder on the Closing Date and the aggregate
principal amount of Notes that such defaulting Underwriter has agreed but failed
to purchase does not exceed 10% of the total principal amount of Notes that the
Underwriter is obligated to purchase on such Closing Date, the Underwriter may
make arrangements satisfactory to Advanta for the purchase of such Notes by
other persons. If
28
<PAGE>
the Underwriter so defaults and the aggregate principal amount of Notes with
respect to which such default occurs exceeds % of the total principal amount of
Notes that the Underwriter is obligated to purchase on such Closing Date and
arrangements satisfactory to Advanta for the purchase of such Notes by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of Advanta, except as provided in
Section 11. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of Advanta or its officers and of the Underwriter set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation, or statement as to the results thereof, made by or on
behalf of the Underwriter, Advanta or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Notes. If this Agreement is terminated or if for any reason
the purchase of the Notes by the Underwriter is not consummated, Advanta shall
remain responsible for the expenses to be paid or reimbursed by it pursuant to
Section 7 and the respective obligations of Advanta and the Underwriter pursuant
to Section 8 and 9 shall remain in effect, and if any Notes have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 and 6 shall also remain in effect. If the purchase of the Notes
by the Underwriter is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 10 or the occurrence of
any event specified in clause (ii), (iv) or (v) of Section 6(n), Advanta will
reimburse the Underwriter for all out-of-pocket expenses (including fees and
disbursements of _______________, Underwriter's counsel) reasonably incurred by
them in connection with the offering of the Notes.
12. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the Underwriter shall be
directed to the address set forth on the first page hereof, or sent by facsimile
machine which produces an electronic confirmation of receipt to ____________,
attention: ________________________________________. Notices to Advanta shall be
directed to Advanta Auto Finance Corporation 199_-_ 500 Office Center Drive,
Fort Washington, Pennsylvania 19034, or sent by facsimile machine which
29
<PAGE>
produces an electronic confirmation of receipt to _____________, attention:
______________________________.
13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriter and Advanta, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended nor shall it be
construed to give any person, firm or corporation, other than the parties hereto
or thereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties and their respective successors and such
controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Notes from the Underwriter shall be deemed to be a
successor by reason merely of such purchase.
14. GOVERNING LAW AND TIME; CONSENT TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Advanta HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE
COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
15. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but together they shall
constitute but one instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and Advanta in accordance with its terms.
Very truly yours,
ADVANTA AUTO FINANCE CORPORATION
30
<PAGE>
By: _______________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
___________________________,
as the Underwriter.
By: __________________________________
Name:
Title:
31
<PAGE>
Schedule 1
Underwriting
Class -
-----------------------
Proceeds to
Advanta
Purchase (includes
Price Principal accrued Accrued
Underwriters Percentage Amount interest) Interest
- ------------ ---------- --------- ------------ --------
$ $
<PAGE>
$
ADVANTA AUTO FINANCE CORPORATION 199 -
% Automobile Receivables Backed Certificates, Series 199
UNDERWRITING AGREEMENT
, 199
[NAME AND ADDRESS OF UNDERWRITER]
Dear Sirs:
1. Introduction. Advanta Auto Finance Corporation 199 - , a
Nevada corporation ("Advanta"), has authorized the issuance and sale of %
Automobile Receivables Backed Certificates, Series 199 - (the "Certificates"),
evidencing interests in a trust (the "Trust") consisting of a combination of
retail installment sales contracts (the "Receivables") secured by new and used
automobiles and light duty trucks (the "Vehicles") financed thereby, amounts due
or received thereunder on or after , 199 , (the "Cut-Off Date"), and
security interests in the Vehicles financed thereby. The Certificates will be
issued under a Pooling and Servicing Agreement dated as of , 199 (the
"Pooling Agreement") between , as
seller, , as issuer, Advanta Auto Finance Corporation, in its
individual capacity, as Back-up Servicer and ,
as trustee (the "Trustee").
The Certificates will evidence fractional undivided interests
in the Trust. [The Trustee, on behalf of the holders of the Certificates (the
"Certificateholders"), will have the benefit of a cash collateral account (the
"Cash Collateral Account")]. The Certificates will be issued in an aggregate
principal amount of $ , which is equal to the original pool
balance of the Receivables, exclusive of accrued interest, as of the opening of
business on the Cut-Off Date. The forms of the Pooling Agreement and the Cash
Collateral Trust Agreement (as such term is hereinafter defined) have been
timely filed as exhibits to the Registration Statement (as such term is
hereinafter defined). Capitalized terms used but not defined herein shall have
the meanings given to them in the Pooling Agreement.
<PAGE>
The Trustee, , as cash collateral trustee (the
"Cash Collateral Trustee"), , and a financial institution as cash
collateral depositor (the "Cash Collateral Depositor"), will enter into a cash
collateral trust agreement to be dated as of , 199 (the "Cash
Collateral Trust Agreement") pursuant to which the Cash Collateral Account will
be established for the benefit of the Trustee and the Cash Collateral Depositor,
as secured parties. In addition, , the Cash Collateral Trustee,
the lenders named therein and the Cash Collateral Depositor will enter into a
loan agreement to be dated as of the Closing Date (the "Loan Agreement"),
pursuant to which the Cash Collateral Depositor and the Bank will deposit the
Initial Cash Collateral Amount (as
defined in the Cash Collateral Trust Agreement) into the Cash Collateral
Account.
Advanta hereby agrees with the Underwriter named in Schedule 1
hereto (the "Underwriter") as follows:
2. Representations and Warranties of Advanta. Advanta
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A Registration Statement on Form S-3 (No. 33- )
relating to the Certificates, including a form of Prospectus, has been filed
with the Securities and Exchange Commission (the "Commission") and either (i)
has been declared effective under the Act of 1933 (the "Act") and is not
proposed to be amended or (ii) is proposed to be amended by amendment or
post-effective amendment. If Advanta does not propose to amend such Registration
Statement or if any post-effective amendment to such Registration Statement has
been filed with the Commission prior to the execution and delivery of this
Agreement, such Registration Statement or such post-effective amendment, as the
case may be, has been declared effective by the Commission. For purposes of this
Agreement, "Effective Time" means (i) if Advanta has advised the Underwriter
that it does not propose to amend such Registration Statement, the date and time
as of which such Registration Statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of this
Agreement, was declared effective by the Commission, or (ii) if Advanta has
advised the Underwriter that it proposes to file an amendment or post-effective
amendment to such Registration Statement, the date and time as of which such
Registration Statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission.
"Effective Date" means the date of the Effective Time. Such Registration
Statement, as amended at the Effective Time, including all material incorporated
by reference therein and including all information, if any, deemed to be a part
of such Registration
2
<PAGE>
Statement as of the Effective Time pursuant to Rule 430A(b) under the Act, is
referred to herein as the "Registration Statement", and the form of prospectus
relating to the Certificates, as first filed with the Commission pursuant to and
in accordance with Rule 424(b) under the Act or, if no such filing is required,
as included in the Registration Statement, including all material incorporated
by reference in such prospectus, is hereinafter referred to as the "Prospectus".
(b) If the Effective Time is prior to the execution and
delivery of this Agreement: (i) on the Effective Date, the Registration
Statement conformed, and on the date of this Agreement the Registration
Statement conforms, in all material respects with the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations") and
did not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) on the date of this Agreement, the Prospectus
conforms, and at the time of filing of the Prospectus pursuant to Rule 424(b)
and at the Closing Date, the Prospectus will conform, in all material respects
to the requirements of the Act and the Rules and Regulations, and the Prospectus
does not include and does not omit, and will not include, any untrue statement
of a material fact, and does not omit, to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If the Effective Time is subsequent to the
execution and delivery of this Agreement: on the Effective Date, the
Registration Statement and the Prospectus will conform in all material respects
to the requirements of the Act and the Rules and Regulations, and (i) the
Registration Statement will not include any untrue statement of a material fact
or will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii) the Prospectus
will not include an untrue statement of a material fact or will not omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The two
preceding sentences do not apply to statements in or omissions from the
Registration Statement or Prospectus based upon written information furnished to
Advanta by the Underwriter specifically for use therein, it being understood the
only such information is that described as such in Section 8(b). The conditions
to the use by Advanta of a Registration Statement on Form S-3 under the Act, as
set forth in the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus. There are no contracts
or documents which are required to be filed as exhibits to the Registration
Statement pursuant to the Act or
3
<PAGE>
the Rules and Regulations which have not been so filed on or prior to the
Effective Date.
(c) Since the respective dates as of which information is
given in the Prospectus, or the Prospectus as amended and supplemented, there
has not been any material adverse change in the general affairs, management, or
results of operations of Advanta or of its subsidiaries otherwise than as set
forth or contemplated in the Prospectus or the Prospectus as amended and
supplemented, nor has there been any adverse change in the general affairs,
management, or results of operations of any other affiliate of Advanta which
could have a material adverse effect on the general affairs, management or
results of operations of Advanta or its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus or the Prospectus as amended and
supplemented.
(d) Advanta is a corporation duly organized and validly
existing under the laws of the State of Nevada, and has full corporate power,
authority and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement, the Pooling
Agreement, the Cash Collateral Trust Agreement, and the Loan Agreement, and to
cause the Certificates to be issued. Advanta has conducted and is conducting its
business so as to comply in all material respects with all applicable statutes
and regulations. Advanta is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification.
(e) (i) There are no legal, governmental or regulatory
proceedings pending to which Advanta is a party or to which any of its property
is the subject, which, if determined adversely to Advanta, would individually or
in the aggregate have a material adverse effect on the performance by Advanta of
this Agreement, the Pooling Agreement, the Loan Agreement or the Cash Collateral
Trust Agreement or the consummation of the transactions contemplated hereunder
or thereunder and (ii) to the best of its knowledge, no such proceedings are
threatened or contemplated by governmental or regulatory authorities or
threatened by others.
(f) This Agreement has been duly authorized and validly
executed and delivered by Advanta and constitutes a valid and binding agreement
of Advanta, enforceable against Advanta in accordance with its terms, except to
the extent that (i) the enforceability hereof may be subject to insolvency,
reorganization, moratorium, receivership, conservatorship, or other similar
laws, regulations or procedures of general applicability now or hereafter in
4
<PAGE>
effect, (ii) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought and (iii)
rights to indemnification and contribution under this Agreement may be limited
by state or federal securities laws or the policies underlying such laws.
(g) The Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement have been duly authorized by Advanta and, when
executed and delivered by Advanta and assuming the due authorization, execution
and delivery of the Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement by the other parties thereto, will constitute valid
and binding obligations of Advanta enforceable against Advanta in accordance
with their respective terms, except to the extent that (i) the enforceability
thereof may be subject to insolvency, reorganization, moratorium, receivership,
conservatorship, or other similar laws, regulations or procedures of general
applicability now or hereafter in effect, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(h) The issuance and delivery of the Certificates, the
consummation of any other of the transactions contemplated herein, in the
Pooling Agreement, the Loan Agreement, or in the Cash Collateral Trust
Agreement, or the fulfillment of the terms of this Agreement, the Pooling
Agreement, the Loan Agreement or the Cash Collateral Trust Agreement, do not and
will not conflict with or violate any term or provision of the Certificate of
Incorporation By-Laws of Advanta, any statute, order or regulation applicable to
Advanta of any court, regulatory body, administrative agency or governmental
body having jurisdiction over Advanta and do not and will not conflict with,
result in a breach or violation or the acceleration of or constitute a default
under or result in the creation or imposition of any lien, charge or encumbrance
upon any of the property or assets of Advanta pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Advanta is a party or by which Advanta may be bound or to
which any of the property or assets of Advanta may be subject except for
conflicts, violations, breaches, accelerations and defaults which would not,
individually or in the aggregate, be materially adverse to Advanta or materially
adverse to the transactions contemplated by this Agreement.
(i) is an independent
public accountant with respect to Advanta as required by the Act and the Rules
and Regulations.
5
<PAGE>
(j) The direction by Advanta to the Trustee to execute,
countersign, issue and deliver the Certificates has been duly authorized by
Advanta, and, assuming the Trustee has been duly authorized to do so, when
executed, countersigned, issued and delivered by the Trustee in accordance with
the Pooling Agreement, the Certificates will be validly issued and outstanding
and will be entitled to the benefits of the Pooling Agreement.
(k) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body of the
United States is required for the issuance and sale of the Certificates, or the
consummation by Advanta of the other transactions contemplated by this
Agreement, the Pooling Agreement, the Loan Agreement or the Cash Collateral
Trust Agreement, except the registration under the Act of the Certificates and
such consents, approvals, authorizations, registrations or quali- fications as
may have been obtained or effected or as may be required under securities or
Blue Sky laws in connection with the purchase and distribution of the
Certificates by the Underwriter.
(l) Advanta possesses all material licenses, certificates,
authorizations or permits issued by the appropriate state, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus and Advanta has not received notice of
proceedings relating to the revocation or modification of any such license,
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations, financial condition or
income.
(m) At the time of execution and delivery of the Pooling
Agreement, Advanta (i) will not have assigned to any person any of its right,
title or interest in the Receivables or in the Pooling Agreement or the
Certificates and (ii) will have the power and authority to sell the Receivables
to the Trustee and to sell the Certificates to the Underwriter, and upon
execution and delivery of the Pooling Agreement by the Trustee, the Trustee will
have acquired beneficial ownership of all of Advanta's right, title and interest
in and to the Receivables, and upon delivery to the Underwriter of the
Certificates the Underwriter will have good and marketable title to the
Certificates.
(n) As of the Cut-Off Date, the Receivables will meet the
eligibility criteria described in the Prospectus.
(o) The Trust created by the Pooling Agreement is
6
<PAGE>
not, and immediately following the issuance and sale of the Certificates will
not be, required to be registered as an "investment company" under the
Investment Company Act of 1940, as amended (the "1940 Act"), as in effect on the
date hereof.
(p) Advanta has authorized the conveyance of the Receivables
to the Trust, and Advanta has authorized the Trust to issue the Certificates.
(q) Each of the Certificates, the Pooling Agreement and the
Cash Collateral Account conforms in all material respects to the descriptions
thereof contained in the Prospectus.
(r) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this Agreement, the
Pooling Agreement, the Cash Collateral Trust Agreement, the Loan Agreement, the
Cash Collateral Account and the Certificates that are required to be paid by
Advanta at or prior to the Closing Date have been paid or will be paid at or
prior to the Closing Date.
(s) Advanta will not apply the proceeds of the sale of the
Certificates pursuant to this Agreement to purchase securities (which term does
not include the Receivables) within the meaning of Regulation T promulgated by
the Federal Reserve Board.
(t) As of the Closing Date, the representations and warranties
of Advanta in the Pooling Agreement will be true and correct.
Any certificate signed by an officer of Advanta and delivered
to the Underwriter or the Underwriter's counsel in connection with an offering
of the Certificates shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to each person to
whom the representations and warranties in this Section 2 are made.
3. Purchase, Sale, Delivery and Payments. The Underwriter's
commitment to purchase the Certificates pursuant to this Agreement shall be
deemed to have been made on the basis of the representations and warranties
herein contained and shall be subject to the terms and conditions herein set
forth. Advanta agrees to instruct the Trustee to issue and agrees to sell to the
Underwriter, and the Underwriter, severally and not jointly, agree, to purchase
from Advanta at the purchase price for the Certificates set forth opposite the
names of the Underwriter on Schedule 1 hereto, the respective principal amount
of Certificates set forth on Schedule 1 hereto. Payment of the purchase price
7
<PAGE>
for, and delivery of, any Certificates to be purchased by the Underwriter shall
be made at the office of Dewey Ballantine, 1301 Avenue of the Americas, New
York, New York, or at such other place as shall be agreed upon by the
Underwriter and Advanta, at 10:00 a.m. New York City time on ,
199 (the "Closing Date"), or at such other time or date or time as shall be
agreed upon in writing by the Underwriter and Advanta. On the Closing Date,
payment shall be made to Advanta by wire transfer of same day funds payable to
the account of Advanta against delivery to the Trustee as custodian for The
Depository Trust Company ("DTC") of the Certificates in the form of one or more
global securities in definitive form (the "Global Certificates") and registered
in the name of Cede & Co., as nominee for DTC. The Global Certificates will be
made available for checking at Dewey Ballantine at least 24 hours prior to the
Closing Date.
4. Offering by Underwriters. It is understood that the
Underwriter propose to offer the Certificates for sale to the public (which may
include selected dealers) as set forth in the Prospectus.
5. Covenants of Advanta. Advanta covenants with the
Underwriter as follows:
(a) To prepare a Prospectus setting forth any price related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act within the time period prescribed by Rule
430A, and to transmit such Prospectus to the Commission for filing pursuant to
Rule 424(b) under the Act within the prescribed time period, and prior to the
Closing Date to provide evidence satisfactory to the Underwriter of such timely
filing, or to prepare and timely file a post-effective amendment to the
Registration Statement providing such information, which post-effective
amendment shall have been declared effective in accordance with the requirements
of Rule 430A under the Act and to provide evidence satisfactory to the
Underwriter of the effectiveness thereof.
(b) If at any time when the Prospectus as amended or
supplemented is required by the Act to be delivered in connection with sales of
the Certificates by the Underwriter, any event shall occur or condition exist as
a result of which it is necessary, in the opinion of the Underwriter's counsel
or counsel for Advanta, further to amend or supplement the Prospectus as then
amended or supplemented in order that the Prospectus as amended or supplemented
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
circumstances existing at the time it is delivered to a purchaser, not
misleading or if it shall be necessary, in the opinion of any such counsel, at
any such
8
<PAGE>
time to amend or supplement the Registration Statement or the Prospectus as then
amended or supplemented in order to comply with the requirements of the Act or
the Rules and Regulations, or if required by such Rules and Regulations,
including Rule 430A thereunder, to file a post-effective amendment to such
Registration Statement (including an amended Prospectus), Advanta will promptly
notify the Underwriter of such event and will prepare and file with the
Commission (subject to the Underwriter's prior review), at its own expense, such
amendment or supplement as may be necessary to correct such untrue statement or
omission or to make the Registration Statement comply with such requirements,
and within two Business Days will furnish to the Underwriter as many copies of
the Prospectus, as amended or supplemented, as the Underwriter shall reasonably
request. Neither the Underwriter's consent to, nor the Underwriter's delivery
of, any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6 of this Agreement.
(c) Advanta will give the Underwriter reasonable notice of its
intention to file any amendment to the Registration Statement, the Prospectus or
the Prospectus as amended or supplemented, pursuant to the Act, and will furnish
the Underwriter with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any such
amendment or supplement to which the Underwriter or the Underwriter's counsel
shall object.
(d) Advanta will notify the Underwriter immediately, and
confirm the notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the Commission
for filing of any supplement to the Prospectus or the Prospectus as amended or
supplemented, (iii) of the receipt and contents of any comments from the
Commission with respect to the Registration Statement or the Prospectus or the
Prospectus as amended or supplemented, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. Advanta will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(e) Advanta will deliver to the Underwriter as many signed and
as many conformed copies of the Registration Statement (as originally filed) and
of each amendment thereto (including exhibits filed therewith or incorporated by
9
<PAGE>
reference therein and documents incorporated by reference in the Prospectus),
each related preliminary prospectus, and so long as delivery of a Prospectus
relating to the Certificates is required to be delivered under the Act in
connection with sales by the Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Underwriter may reasonably request. Advanta will
also furnish to the Underwriter copies of any report on Form SR required by Rule
463 under the Act.
(f) Advanta will make generally available to holders of the
Certificates as soon as practicable, but in any event not later than the
Availability Date (as defined below), earning statements of the Trust (which
need not be audited) complying with Section 11(a) of the Act and the Rules and
Regulations (including Rule 158) and covering a period of at least twelve
consecutive months beginning after the Effective Date which will satisfy the
provisions of Section 11(a) of the Act. For the purposes of the preceding
sentence, the "Availability Date" means the 45th day after the end of the
Trust's fourth fiscal quarter following the fiscal quarter that includes the
Effective Date, except that, if such fourth fiscal quarter is the last quarter
of the Trust's fiscal year, "Availability Date" means the 90th day after the end
of such fourth fiscal quarter.
(g) Advanta will endeavor, in cooperation with the
Underwriter, to qualify the Certificates for sale and the determination of their
eligibility for investment under the applicable securities laws of such states
and other jurisdictions of the United States as the Underwriter may designate,
and will maintain or cause to be maintained such qualifications in effect for as
long as may be required for the distribution of the Certificates. Advanta will
file or cause the filing of such statements and reports as may be required by
the laws of each jurisdiction in which the Certificates have been qualified as
above provided.
(h) Advanta will not, directly or indirectly, without the
Underwriter's prior consent, publicly offer or sell or contract to sell or
attempt to offer, sell or dispose of any certificates or other similar
securities representing interests in or secured by the Receivables for a period
of 30 days following the commencement of the offering of the Certificates to the
public.
(i) For a period from the date of this agreement until the
retirement of the Certificates, Advanta Financial Services, Inc., as Servicer,
will deliver to the Underwriter, as soon as practicable, copies of each
certificate, report or notice and the annual statements of compliance delivered
by Advanta Financial Services, Inc., as Servicer, to the Trustee
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pursuant to Section of the Pooling Agreement, the annual statement of a
firm of independent public accountants furnished to the Trustee pursuant to
Section of the Pooling Agreement; and such other information concerning the
Receivables, Advanta Financial Services, Inc. or the Certificates, as the
Underwriter may from time to time reasonably request.
(j) On or before the Closing Date, Advanta shall furnish or
make available to the Underwriter or its counsel such additional documents and
information regarding Advanta Financial Services, Inc. and its affairs as the
Underwriter may from time to time reasonably request, including any and all
documentation reasonably requested in connection with their due diligence
efforts regarding information in the Prospectus and in order to evidence the
accuracy or completeness of any of the conditions contained in this Agreement.
(k) So long as any Note is outstanding, Advanta shall furnish
to the Underwriter by first-class mail as soon as practicable, all documents (A)
distributed, or caused to be distributed, by Advanta to Certificateholders, (B)
filed, or caused to be filed, by Advanta with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (C) any order
of the Commission under the Exchange Act or pursuant to a "no-action" letter
from the staff of the Commission and (D) from time to time, such other
information in the possession of Advanta concerning the Trust as the Underwriter
may reasonably request.
(l) Advanta shall apply the net proceeds from the sale of the
Certificates in the manner set forth in the Prospectus.
(m) If, between the date hereof or, if earlier, the dates as
of which information is given in the Prospectus and the Closing Date, to the
knowledge of Advanta there shall have been any material change, or any
development involving a prospective material change in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of Advanta, Advanta will give prompt written notice thereof to the
Underwriter.
(n) To the extent, if any, that any rating provided with
respect to the Certificates set forth in Section 6(j) hereof is conditional upon
the furnishing of documents reasonably available to Advanta or the taking of any
other reasonable actions by Advanta, Advanta shall furnish such documents or
take any such other actions.
6. Conditions of the Obligations of the Underwriter. The
obligations of the Underwriter to purchase
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the Certificates pursuant to this Agreement are subject to the accuracy on and
as of the Closing Date of the representations and warranties on the part of
Advanta herein contained, to the accuracy of the statements of officers of
Advanta made pursuant hereto, to the performance by Advanta of all of its
obligations hereunder and to the following conditions at the Closing Date:
(a) The Underwriter shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the Registration Statement to be filed shortly prior
to the Effective Time), from LLP, in form and substance
satisfactory to the Underwriter and counsel for the Underwriter, confirming that
they are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating in effect that
(i) they have performed certain specified procedures as a result of which they
have determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Trust and Advanta
set forth in the Registration Statement and the Prospectus), agrees with the
accounting records of the Trust and Advanta, excluding any questions of legal
interpretation, and (ii) they have performed certain specified procedures with
respect to the computer programs used to select the Receivables and to generate
information with respect to the Receivables set forth in the Registration
Statement and the Prospectus.
For purposes of this subsection (a), if the Effective Time is
subsequent to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be amended by
the amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean the prospectus included in such
Registration Statement. All financial statements included in material
incorporated by reference into the Prospectus shall be deemed included in the
Registration Statement for purposes of this subsection (a).
(b) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not later
than 10:00 p.m., New York time, on the date of this Agreement or such later date
as shall have been consented to by the Underwriter. If the Effective Time is
prior to the execution and delivery of this Agreement, the Prospectus shall have
been filed with the
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Commission in accordance with the Rules and Regulations and Section 5(a) of this
Agreement.
(c) The Registration Statement shall have been declared
effective by the Commission and no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Act or proceedings
therefor initiated or threatened by the Commission, any price-related
information previously omitted from the effective Registration Statement
pursuant to Rule 430A under the Act shall have been included in the Prospectus
and transmitted to the Commission for filing pursuant to Rule 424 under the Act
within the prescribed time period, and Advanta shall have provided evidence
satisfactory to the Underwriter of such timely filing, or a post-effective
amendment to the Registration Statement providing such information shall have
been promptly filed with the Commission and declared effective in accordance
with the requirements of Rule 430A under the Act, and prior to the Closing Date,
Advanta shall have provided evidence satisfactory to the Underwriter of such
effectiveness and there shall not have come to the attention of the Underwriter
facts that would cause the Underwriter to believe that the Prospectus, at the
time it was required to be delivered to a purchaser of the Certificates,
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at such time, not misleading.
(d) The Underwriter shall have received the favorable opinion,
dated the Closing Date, of , counsel
to Advanta, or other counsel to Advanta, acceptable to the Underwriter and its
counsel, addressed to the Underwriter and in form and scope satisfactory to the
Underwriter's counsel, to the effect that:
i) Advanta has been duly incorporated and is
validly existing as a corporation under the laws of the State of Nevada
and has full corporate power and authority to own its properties and
conduct its business as described in the Prospectus; Advanta has full
corporate power and authority to execute, deliver, and perform its
obligations under this Agreement, the Pooling Agreement, the Loan
Agreement, and the Cash Collateral Trust Agreement and to cause the
Certificates to be issued and to consummate the transactions
contemplated hereby and thereby.
ii) Advanta has duly authorized and executed
this Agreement, the Pooling Agreement, the Loan Agreement and the Cash
Collateral Trust Agreement and each such agreement constitutes the
valid, legal
13
<PAGE>
and binding obligation of Advanta enforceable against Advanta in
accordance with its terms.
iii) The execution and delivery, and
performance of the Pooling Agreement, the Cash Collateral Trust
Agreement, this Agreement, the transfer of the Receivables to the
Trust, the issuance and sale of the Certificates and consummation of
any other of the transactions contemplated herein or in the Pooling
Agreement do not conflict with or result in a violation of (a) any law
or regulation of the United States of America or the State of New York
or Delaware, (b) the Certificate of Incorporation or By-laws of
Advanta, (c) any order, writ, judgment or decree known to such counsel
to which Advanta is a party or is subject, or (d) result in any lien,
charge or encumbrance upon any of the properties or assets of Advanta.
iv) The Certificates have been duly authorized
and, when executed and authenticated in accordance with the terms of
the Pooling Agreement and delivered to and paid for by the Underwriter
pursuant to this Agreement, will be duly and validly issued and
outstanding and will be entitled to the benefits of the Pooling
Agreement.
v) No consent, approval or authorization of,
or registration, declaration or filing with, any court or governmental
agency or body of the United States of America is required for the
issuance of the Certificates and the sale of the Certificates to the
Underwriter or the consummation of the other transactions contemplated
by this Agreement, the Pooling Agreement, the Loan Agreement, or the
Cash Collateral Trust Agreement except for (x) the filing of a Uniform
Commercial Code financing statement in the State of with
respect to the transfer of the Receivables to the Trust, (y) such as
have been obtained and made under the Act and (z) such as may be
required under
state securities laws.
vi) The Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Prospectus either was filed with the Commission pursuant
to the subparagraph of Rule 424(b) specified in such opinion on the
date specified therein or was included in the Registration Statement
(as the case may be), and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been instituted or is pending or
contemplated under the Act, and the Registration
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Statement and the Prospectus, and each amendment or supplement thereof,
as of their respective effective or issue dates, complies as to form in
all material respects with the requirements of the Act and the Rules
and Regulations; such counsel have no reason to believe that the
Registration Statement or any amendment thereto, as of its Effective
Date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Registration
Statement as of the Closing Date, or the Prospectus, as of its issue
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data contained in the Registration Statement or the
Prospectus.
vii) The conditions to the use by Advanta of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to
the Registration Statement and the Prospectus. There are no contracts
or documents of Advanta which are required to be filed as exhibits to
the Registration Statement pursuant to the Act or the Rules and
Regulations thereunder which have not been so filed.
viii) There are no actions, proceedings or
investigations pending or threatened before any court, administrative
agency or other tribunal to which Advanta is a named party or to which
its assets are subject (A) asserting the invalidity of the Pooling
Agreement, the Loan Agreement, the Cash Collateral Trust Agreement,
this Agreement or the Certificates, (B) seeking to prevent the issuance
of the Certificates or the consummation by Advanta of any of the
transactions contemplated by the Pooling Agreement, the Loan Agreement,
the Cash Collateral Trust Agreement or this Agreement, (C) that might
adversely affect the validity or enforceability of the Pooling
Agreement, the Loan Agreement, the Cash Collateral Trust Agreement,
this Agreement or the Certificates, or (D) seeking to adversely affect
the federal income tax attributes of the Certificates as described in
the Prospectus under the heading "Certain Federal Income Tax
Consequences."
ix) The Registration Statement at the time it
became effective, and any amendment thereto at the
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<PAGE>
time such amendment became effective, complied as to form in all
material respects with the applicable requirements of the Act and the
Rules and Regulations.
x) The Pooling Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended.
xi) The Trust is not required to be registered
under the 1940 Act, and immediately following the issuance and sale of
the Certificates in the manner contemplated by the Pooling Agreement
and this Agreement, the Trust will not be required to be so registered.
xii) The Certificates, this Agreement, the
Pooling Agreement and the Cash Collateral Account conform in all
material respects to the respective descriptions thereof in the
Registration Statement and the Prospectus.
xiii) The statements in the Prospectus under
the heading "Certain Legal Aspects of the Receivables," "SUMMARY OF
TERMS -- Certain Legal Aspects of the Receivables," "SUMMARY OF TERMS
-- Certain Federal Tax Considerations," "Certain Federal Income Tax
Consequences," "ERISA Considerations," and "SPECIAL CONSIDERATIONS --
Certain Legal Aspects," to the extent that they constitute matters of
law or legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material respects.
xiv) No filing or other action, except the
filing of a Uniform Commercial Code financing statement on Form UCC-1
with the [State Department of Assessments and Taxation]
naming Advanta as "debtor" and the Trustee as "secured party," is
necessary to perfect the transfer of the Receivables and proceeds (as
defined in Section 9-306 of the Uniform Commercial Code)
thereof against the claims of creditors of, and transferees from,
Advanta.
xv) The Receivables constitute "chattel paper"
as defined in Section 9-105 of the Uniform Commercial Code as in effect
in the State of .
In addition, such counsel shall state that nothing has come to
their attention that would lead them to believe that the Registration Statement,
at the time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not
16
<PAGE>
misleading, or that the Prospectus, as of its date and as of the Closing Date,
contains an untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) The Underwriter shall have received the favorable opinion
of counsel to the Trustee, dated the Closing Date, addressed to the Underwriter
and in form and scope satisfactory to the Underwriter's counsel, to the effect
that:
i) The Trustee has duly authorized, executed and
delivered the Pooling Agreement and the Cash Collateral Trust
Agreement.
ii) The Trustee has been duly organized and is validly
existing as a in good standing under the laws of
of and has full power and authority
to execute and deliver the Pooling Agreement and the Cash Collateral
Trust Agreement and to perform its obligations thereunder and each such
Agreement constitutes the valid, legal and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms.
iii) The Certificates have been duly executed and
countersigned by the Trustee.
iv) The execution and delivery by the Trustee of the
Pooling Agreement and the Cash Collateral Trust Agreement and the
performance by the Trustee of its duties thereunder do not conflict
with or result in a violation of (a) any law or regulation of the
United States of America or the State of , (b) the charter
or by-laws of the Trustee, (c) any order, writ, judgment or decree or
(d) any agreement, instrument, order, writ, judgment or decree known to
such counsel to which the Trustee is a party or is subject.
v) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental
agency or body of the United States of America or any state thereof is
required for the execution, delivery or performance by the Trustee of
the Pooling Agreement and the Cash Collateral Trust Agreement.
(f) The Underwriters shall have received the favorable opinion
or opinions, dated the Closing Date, of the Underwriter's counsel, ,
with respect to the issuance and sale of the Certificates, the Registration
17
<PAGE>
Statement, this Agreement, the Prospectus and such other related matters as the
Underwriter may require.
(g) The Underwriter shall have received an opinion, dated the
Closing Date, of Dewey Ballantine, special counsel to Advanta, addressed to, and
satisfactory to, Standard & Poor's Corporation ("S&P"), Moody's Investors
Service, Inc. ("Moody's") and the Underwriter's counsel, relating to the sale of
the Receivables to the Trustee, and such counsel to Advanta shall have consented
to reliance by the Underwriter on such opinion as though such opinion had been
addressed to the Underwriter.
(h) Advanta shall have furnished to the Underwriter a
certificate signed on behalf of Advanta by any two of the chairman of the board,
the president, any vice-chairman of the board, any executive vice president, any
senior vice president, any vice president, the treasurer, or the controller of
the Seller or the Servicer, as appropriate, dated the Closing Date, as to (i)
the accuracy of the representations and warranties of Advanta herein and in the
Pooling Agreement at and as of the Closing Date, (ii) the performance by Advanta
of all of its obligations hereunder to be performed at or prior to the Closing
Date and (iii) such other matters as the Underwriter may reasonably request.
(i) The Trustee shall have furnished to the Underwriter a
certificate of the Trustee, signed by one or more duly authorized officers of
the Trustee, dated the Closing Date, as to the due acceptance of the Pooling
Agreement by the Trustee and the due execution and delivery of the Certificates
by the Trustee thereunder and such other matters as the Underwriter shall
reasonably request.
(j) The Certificates shall have been rated " " by
S&P and " " by Moody's, and such ratings shall not have been rescinded.
(k) The Underwriter shall have received from
, or other independent certified public
accountants acceptable to the Underwriter, a letter, dated as of the date of the
Closing Date, delivered at such time in form satisfactory to the Underwriter.
(l) Prior to the Closing Date the Underwriter's counsel,
, shall have been furnished with such documents and opinions
as they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Certificates as herein contemplated and related
proceedings or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by Advanta in connection with the
18
<PAGE>
issuance and sale of the Certificates as herein contemplated shall be
satisfactory in form and substance to the Underwriter and .
(m) Since the respective dates as of which information is
given in the Prospectus, there shall not have been any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
Advanta otherwise than as set forth in the Prospectus, the effect of which is in
the Underwriter's judgment so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Certificates on the terms and in the manner contemplated in the Prospectus or
which, in the judgment of the Underwriter, materially impairs the investment
quality of the Certificates or the ability of the Servicer to service the
Receivables.
(n) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, development or event
involving a prospective change, in the condition (financial or other), business,
properties or results of operations of Advanta or its automobile loan business
or the Cash Collateral Depositor which, in the judgment of the Underwriter, is
material and adverse and makes it impracticable or inadvisable to proceed with
the completion of the public offering or the sale of and payment for the
Certificates or (ii) any downgrading in the rating of any securities of Advanta
or the Cash Collateral Depositor by any nationally recognized statistical rating
organization (as defined for purposes of Rule 436(g) under the Act) or any
public announcement that any such organization has under surveillance or review
its rating of any securities of Advanta or the Cash Collateral Depositor (other
than an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); or (iv) any suspension
or limitation of trading in securities generally on the New York Stock Exchange,
or any setting of minimum prices for trading on such exchange; or (v) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial national
or international calamity, emergency or change in financial markets if, in the
Representative's judgment, the effect of any such outbreak, escalation,
declaration, calamity, emergency or change makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the Certificates.
(o) The Cash Collateral Trust Agreement and the Loan Agreement
shall have been duly authorized, executed and delivered by each party thereto;
on or prior to the Closing
19
<PAGE>
Date, the Cash Collateral Trustee shall have established the Cash Collateral
Account pursuant to the Cash Collateral Trust Agreement and the Cash Collateral
Depositor and Advanta shall have deposited the Initial Cash Collateral Amount in
the Cash Collateral Account pursuant to the Loan Agreement; and all fees due and
payable to the Cash Collateral Depositor as of the Closing Date shall have been
paid in full by Advanta on or prior to the Closing Date.
(p) The Underwriter shall have received evidence satisfactory
to the Underwriter and its counsel that (i) on or before the Closing Date, UCC-1
financing statements have been filed in the offices of the [State
Department of Assessments and Taxation], reflecting the interest of the Trust in
the Receivables and the proceeds thereof and (ii) the Trust will have a first
priority perfected security interest in the amounts on deposit from time to time
in the Cash Collateral Account.
(q) The Underwriter shall have received an opinion from
counsel for the Cash Collateral Depositor, addressed to the
Underwriter, dated the Closing Date and reasonably satisfactory in form and
substance to the Underwriter and its counsel, to the effect that:
i) the Cash Collateral Depositor is a corporation duly
organized and validly existing under the laws of and has the
corporate power and authority under the laws of to execute,
deliver and perform its obligations under the Cash Collateral Trust
Agreement and the Loan Agreement through its New York branch (the
"Branch"), including the obligation of the Cash Collateral Depositor to
deposit the Initial Cash Collateral Amount in the Cash Collateral
Account in accordance with the terms of the Loan Agreement;
ii) each of the Cash Collateral Trust Agreement and
the Loan Agreement have been duly authorized and, when executed and
delivered by the Cash Collateral Depositor through the Branch, each as
the Cash Collateral Trust Agreement and the Loan Agreement, including
the obligation of the Cash Collateral Depositor, acting through the
Branch, to deposit the Initial Cash Collateral Amount in the Cash
Collateral Account in accordance with the terms of the Loan Agreement,
will constitute the valid and legally binding obligation of the Cash
Collateral Depositor enforceable against the Branch in accordance with
its terms subject, as to enforcement, to (A) bankruptcy, insolvency,
reorganization, liquidation, readjustment of debt and other laws and
equitable principles relating to or affecting the enforcement of
creditors'
20
<PAGE>
rights generally as they may be applied in the event of the
bankruptcy, insolvency, reorganization, liquidation or readjustment of
debt of, or the appointment of a receiver with respect to the property
of, or a similar event applicable to, the Branch, and (B) the effect of
any moratorium or similar occurrence affecting the Branch;
iii) each of the Cash Collateral Trust Agreement and
the Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Amount in the Cash Collateral Account in accordance with the
terms of the Loan Agreement, is enforceable in accordance with its
terms against the Cash Collateral Depositor's head office in
if the Branch defaults in its obligations thereunder, subject, as to
enforcement, to (A) bankruptcy, insolvency, reorganization,
liquidation, readjustment of debt and other laws and equitable
principles relating to or affecting the enforcement of creditors'
rights generally as they may be applied in the event of the bankruptcy,
insolvency, reorganization, liquidation or readjustment of debt of, or
the appointment of a receiver with respect to the property of, or a
similar event applicable to, the Cash Collateral Depositor, and (B) the
effect of any moratorium or similar occurrence affecting the Cash
Collateral Depositor; and
iv) any judgment for a fixed and definite sum of money
rendered by the courts of the State of New York or the United States of
America located in the State of New York, in respect of any suit,
action or other proceeding against the Cash Collateral Depositor for
the enforcement of the Cash Collateral Trust Agreement or the Loan
Agreement will, upon request, be declared valid and enforceable against
the Cash Collateral Depositor by the competent courts of
, usually without re-examination of the matters adjudicated
upon, if such judgment is not subject to appeal and is enforceable
according to the laws of the State of New York or United States Federal
law. However, such judgment will not be enforced if its contents are in
violation of fundamental principles of the legal system
(order public) or if it has been rendered in violation of such
principles. In addition, enforcement may be refused if the foreign
state does not observe reciprocity. According to the approach of
courts, reciprocity is affirmed with regard to judgments
of United States Federal courts and courts of the State of New York. As
a general rule it can be stated that judgments of United States Federal
courts and courts of the State of New
21
<PAGE>
York are enforceable in , and such counsel knows of no
reason why such judgments would be a violation of the fundamental
principles of the legal system.
(r) The Underwriter shall have received an opinion from
, special United States counsel for the Cash Collateral
Depositor, addressed to the Underwriter, dated the Closing Date and reasonably
satisfactory in form and substance to the Underwriter and its counsel, to the
effect that:
i) the Cash Collateral Depositor is licensed by the
Superintendent of Banks of the State of New York to maintain a branch
for the conduct of a banking business at ,
ii) no authorization, consent or approval of or by
any governmental authority of the United States or the State of New
York is necessary for the execution, delivery and performance by the
Branch as the Cash Collateral Depositor of the Cash Collateral Trust
Agreement and the Loan Agreement, including the obligation of the Cash
Collateral Depositor, acting through the Branch, to deposit the Initial
Cash Collateral Amount in the Cash Collateral Account in accordance
with the terms of the Loan Agreement, except such authorizations,
consents and approvals as are in full force and effect;
iii) each of the Cash Collateral Trust Agreement and
the Loan Agreement has been duly authorized, executed and delivered by
the Branch; and
iv) each of the Cash Collateral Trust Agreement and
the Loan Agreement, including the obligation of the Cash Collateral
Depositor, acting through the Branch, to deposit the Initial Cash
Collateral Account in the Cash Collateral Account in accordance with
the terms of the Loan Agreement, constitutes the legal, valid and
binding obligation of the Cash Collateral Depositor and the Branch,
enforceable against the Cash Collateral Depositor and the Branch in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other similar laws affecting the
enforcement of creditors' rights generally, as such laws may be applied
in the event of a bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other similar proceedings of or
affecting the Cash Collateral Depositor or the Branch, and subject to
the application
22
<PAGE>
of general principles of equity regardless of whether such
enforceability is considered in a proceeding at law or in equity.
(s) The Underwriter shall have received the favorable opinion
of counsel to the Cash Collateral Trustee, addressed to the Underwriter, dated
the Closing Date and reasonably satisfactory in form and substance to the
Underwriter and its counsel, to the effect that:
i) the Cash Collateral Trustee is an association duly
organized, validly existing and in good standing as a licensed national
banking association under the laws of the United States, and has the
power and authority (corporate and other) to enter into, and to take
all action required of it under the Cash Collateral Trust Agreement and
the Loan Agreement; and
ii) the Cash Collateral Trust Agreement and the Loan
Agreement have each been duly authorized, executed and delivered by the
Cash Collateral Trustee and each constitutes a legal, valid and binding
agreement of the Cash Collateral Trustee, enforceable in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, liquidation, reorganization, moratorium or
other similar laws affecting the enforcement of rights of creditors
against the Cash Collateral Trustee generally, and the application of
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(t) The Underwriter shall have received from the Cash
Collateral Trustee a certificate dated the Closing Date of an authorized officer
of the Cash Collateral Trustee reasonably acceptable to the Underwriter in which
such officer shall state that, to the best of such officer's knowledge:
i) the execution and delivery of the Cash Collateral
Trust Agreement and the Loan Agreement by the Cash Collateral Trust and
the performance by the Cash Collateral Trustee of the terms thereof do
not conflict with or result in a violation of (A) the charter or by-
laws of the Cash Collateral Trustee or (B) any law of the United States
of America or the State of New York or any regulation governing the
banking or trust powers of the Cash Collateral Trustee; and
ii) no approval, authorization or other action by, or
filing with, any governmental authority of the
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<PAGE>
United States of America or the State of New York having jurisdiction
over the banking or trust powers of the Cash Collateral Trustee is
required in connection with its execution and delivery of the Cash
Collateral Trust Agreement and the Loan Agreement or the performance by
the Cash Collateral Trustee of the terms of the Cash Collateral Trust
Agreement and the Loan Agreement.
(u) Advanta will provide or cause to be provided to the
Representative such conformed copies of such opinions, certificates, letters and
documents being provided pursuant hereto and such further information,
certificates and documents as the Underwriter may reasonably request. The
Underwriter may in its sole discretion waive compliance with any conditions to
the obligations of the Underwriter hereunder.
If any condition specified in this Section 6 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to Advanta at any time at or prior to
the Closing Date, and such termination shall be without liability of any party
to any other party except as provided in Section 7.
7. Payment of Expenses. Advanta agrees to pay all expenses
incident to the performance of its obligations under this Agreement, and will
reimburse the Underwriter (if and to the extent incurred by them) for any filing
fees and other expenses (including fees and disbursements of counsel), including
without limitation those related to (i) the filing of the Registration Statement
and all amendments thereto, (ii) the duplication and delivery to the
Underwriter, in such quantities as the Underwriter may reasonably request, of
copies of this Agreement, (iii) the preparation, issuance and delivery of the
Certificates and the determination of their eligibility for investment under the
laws of such jurisdictions as the Underwriter designates, (iv) the fees and
disbursements of
, counsel for Advanta, 50% of the fees of
, special counsel for Advanta, and the fees and disbursements
of , accountants of Advanta, (v) the qualification of the
Certificates under securities and Blue Sky laws and the determination of the
eligibility of the Certificates for investment in accordance with the provisions
of Section 5(g), including filing fees and disbursements and the fees of
, the Underwriter's counsel, in connection therewith and in
connection with the preparation of any Blue Sky Survey, (vi) the printing and
delivery to the Underwriter, in such quantities as the Underwriter may
reasonably request, hereinabove stated, of copies of the Registration Statement
and Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey, (vii) for
24
<PAGE>
the filing fee of the National Association of Securities Dealers, Inc., (viii)
the duplication and delivery to the Underwriter in such quantities as the
Underwriter may reasonably request, of copies of the Pooling Agreement and the
Collateral Trust Agreement, (ix) the fees charged by nationally recognized
statistical rating agencies for rating the Certificates, (x) the fees and
expenses of the Trustee and its counsel, (xi) the fees and expenses of the Cash
Collateral Trustee and its counsel, (xii) the fees and expenses of the Cash
Collateral Depositor and its counsel.
8. Indemnification. Advanta agrees to indemnify and hold
harmless the Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act or the Exchange Act, as follows:
(a) Advanta will indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus or any amendment or
supplement thereto, in the light of the circumstances under which they were
made) and will reimburse the Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that Advanta will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to Advanta by the Underwriter specifically
for use therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in
subsection (b) below.
(b) The Underwriter will indemnify and hold harmless Advanta
against any losses, claims, damages or liabilities to which Advanta may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration
25
<PAGE>
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of the Prospectus, in the light of the circumstances under which they were
made), in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to Advanta
by the Underwriter specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by Advanta in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred, it being understood and agreed that the only such information
furnished by the Underwriter consists of (i) the following information in the
Prospectus furnished on behalf of the Underwriter: [the last paragraph at the
bottom of the cover page concerning the terms of the offering by the
Underwriter, the legend concerning overallotments and stabilizing on the inside
front cover page and the concession and reallowance figures appearing in the
third paragraph under the caption "Underwriting."]
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such
26
<PAGE>
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
9. Contribution. (a) If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) of Section 8 above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in such
subsection (a) or (b) (i) in such proportion as is appropriate to reflect the
relative benefits received by Advanta on the one hand and the Underwriter on the
other from the offering of the Certificates or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of Advanta on the one hand and the Underwriter
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by Advanta on the one
hand and the Underwriter on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by Advanta bear to the total underwriting discounts and
commissions received by the Underwriter. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by Advanta or the Underwriter and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 9 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this Section 9. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(b) The obligations of Advanta under this Section 9 shall be
in addition to any liability which Advanta may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act; and the obligations of the
Underwriter under this Section 9 shall be in addition to any liability which the
Underwriter may
27
<PAGE>
otherwise have and shall extend, upon the same terms and conditions, to each
director of Advanta, to each officer of Advanta who has signed the Registration
Statement and to each person, if any, who controls Advanta within the meaning of
the Act.
The Underwriter, with respect to the Certificates, agrees that
it will not prepare or distribute to any proposed purchaser of any Certificates
any Derived Information (as such term is hereinafter defined), unless it shall
have provided to the Servicer a copy of such Derived Information a sufficient
time prior to its proposed distribution to permit the Servicer to review and
comment upon such Derived Information, and the Underwriter shall have obtained
the prior written consent of the Servicer thereto following its review. In
addition, the Underwriter agrees to provide the Servicer, no later than the date
on which the Prospectus is required to be filed pursuant to Rule 424, with a
definitive copy of its Derived Information with respect to such Certificates
provided by the Underwriter for filing with the Commission on Form 8-K.
The Underwriter agrees, assuming all Companies-Provided
Information (as such term is hereinafter defined) provided by Advanta is
accurate and complete in all material respects, to indemnify and hold harmless
Advanta, each of Advanta's officers and directors and each person who controls
Advanta within the meaning of the Act against any and all losses, claims,
damages or liabilities, joint or several, to which they may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of a material fact contained in the Derived Information provided by the
Underwriter, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and agrees to reimburse each such indemnified party
for any legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred. The
obligations of the Underwriter under this Section 8 shall be in addition to any
liability which the Underwriter may otherwise have.
For purposes of this Section 9, the term "Derived Information"
means such portion, if any, of the information delivered to Advanta for filing
with the Commission on Form 8-K as:
i) is not contained in the Prospectus without taking
into account information incorporated therein by
28
<PAGE>
reference;
ii) does not constitute Companies-Provided
Information; and
iii) is not information provided by the Cash
Collateral Depositor or the Cash Collateral Trustee.
"Companies-Provided Information" means any computer tape furnished to the
Underwriter by Advanta concerning the Receivables assigned to the Trust.
Notwithstanding the provisions of Sections 8 and 9, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Certificates underwritten by the
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages which the Underwriter has otherwise been required to pay
in respect of such losses, liabilities, claims, damages and expenses. For
purposes of this Section 9, each person, if any, who controls the Underwriter
within the meaning of the Act or the Exchange Act shall have the same rights to
contribution as the Underwriter and each director of Advanta, each officer of
Advanta who signed the Registration Statement, and each person, if any, who
controls Advanta within the meaning of the Act or the Exchange Act shall have
the same rights to contribution as Advanta.
10. Default of Underwriter. If the Underwriter defaults in its
obligations to purchase Certificates hereunder on the Closing Date and the
aggregate principal amount of Certificates that such defaulting Underwriter has
agreed but failed to purchase does not exceed 10% of the total principal amount
of Certificates that the Underwriter is obligated to purchase on such Closing
Date, the Underwriter may make arrangements satisfactory to Advanta for the
purchase of such Certificates by other persons. If the Underwriter so defaults
and the aggregate principal amount of Certificates with respect to which such
default occurs exceeds % of the total principal amount of Certificates
that the Underwriter is obligated to purchase on such Closing Date and
arrangements satisfactory to Advanta for the purchase of such Certificates by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of Advanta, except as provided in
Section 11. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements,
29
<PAGE>
representations, warranties and other statements of Advanta or its officers and
of the Underwriter set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of the Underwriter, Advanta or any of
their respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Certificates. If this
Agreement is terminated or if for any reason the purchase of the Certificates by
the Underwriter is not consummated, Advanta shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 7 and the respective
obligations of Advanta and the Underwriter pursuant to Section 8 and 9 shall
remain in effect, and if any Certificates have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
and 6 shall also remain in effect. If the purchase of the Certificates by the
Underwriter is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 10 or the occurrence of any
event specified in clause (ii), (iv) or (v) of Section 6(n), Advanta will
reimburse the Underwriter for all out-of-pocket expenses (including fees and
disbursements of , Underwriter's counsel) reasonably
incurred by them in connection with the offering of the Certificates.
12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to the address set forth on the first page hereof,
or sent by facsimile machine which produces an electronic confirmation of
receipt to 212/318-0532, attention: Investment Banking Department, Transactions
Advisory Group. Notices to Advanta shall be directed to Advanta Receivables
Finance Corporation 199 - 500 Office Center Drive, Fort Washington,
Pennsylvania 19034, or sent by facsimile machine which produces an electronic
confirmation of receipt to , attention: .
13. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter and Advanta, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended nor shall it be
construed to give any person, firm or corporation, other than the parties hereto
or thereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the
30
<PAGE>
sole and exclusive benefit of the parties and their respective successors and
such controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Certificates from the Underwriter shall be deemed
to be a successor by reason merely of such purchase.
14. GOVERNING LAW AND TIME; CONSENT TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND SHALL BE
CONSTRUED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS. ADVANTA HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL
AND STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
15. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but together they
shall constitute but one instrument.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and Advanta in accordance with its terms.
Very truly yours,
ADVANTA AUTO FINANCE CORPORATION
By:
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
- ---------------------------,
as the Underwriter.
31
<PAGE>
By:
--------------------------------
Name:
Title:
32
<PAGE>
Schedule 1
Underwriting
Class -
Proceeds to
Purchase Advanta
Price Principal (includes accrued Accrued
Underwriters Percentage Amount interest) Interest
------------ ---------- --------- --------------------- --------------
% $ $
<PAGE>
EXHIBIT 4.1
<PAGE>
- --------------------------------------------------------------------------------
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
Class A-1 [Floating Rate] Auto Receivables Backed Notes
Class A-1 [Floating Rate] Auto Receivables Backed Notes
------------------------
INDENTURE
Dated as of _____________, 199__
------------------------
------------------
Indenture Trustee
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions and Incorporation by Reference............... 2
SECTION 1.1 (a) Definitions.......................................... 2
SECTION 1.2 Incorporation by Reference of Trust
Indenture Act............................................ 11
SECTION 1.3 Rules of Construction.................................... 11
SECTION 1.4 Calculations of Interest................................. 12
ARTICLE II The Notes................................................ 12
SECTION 2.1 Form..................................................... 12
SECTION 2.2 Execution, Authentication and Delivery................... 12
SECTION 2.3 Temporary Notes.......................................... 13
SECTION 2.4 Registration; Registration of Transfer
Exchange................................................. 13
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen
Notes.................................................... 15
SECTION 2.6 Persons Deemed Owner..................................... 16
SECTION 2.7 Payment of Principal and Interest;
Defaulted Interest....................................... 16
SECTION 2.8 Cancellation............................................. 17
SECTION 2.9 Release of Collateral.................................... 17
SECTION 2.10 Book-Entry Notes......................................... 18
SECTION 2.11 Notices to Clearing Agency............................... 19
SECTION 2.12 Definitive Notes......................................... 19
ARTICLE III Covenants................................................ 19
SECTION 3.1 Payment of Principal and Interest........................ 19
SECTION 3.2 Maintenance of Office or Agency.......................... 20
SECTION 3.3 Money for Payments To Be Held in Trust................... 20
SECTION 3.4 Existence................................................ 22
SECTION 3.5 Protection of Trust Estate............................... 22
SECTION 3.6 Opinions as to Trust Estate.............................. 23
SECTION 3.7 Performance of Obligations; Servicing of
Receivables............................................... 23
SECTION 3.8 Negative Covenants....................................... 26
SECTION 3.9 Annual Statement as to Compliance........................ 26
SECTION 3.10 Issuer May Consolidate, etc., Only on
Certain Term............................................. 27
SECTION 3.11 Successor or Transferee.................................. 29
SECTION 3.12 No Other Business........................................ 29
SECTION 3.13 No Borrowing............................................. 29
SECTION 3.14 Servicer's Obligations................................... 29
SECTION 3.15 Guarantees, Loans, Advances and Other
Liabilities.............................................. 29
SECTION 3.16 Capital Expenditures..................................... 29
SECTION 3.17 Removal of Administrator................................. 30
i
<PAGE>
SECTION 3.18 Restricted Payments...................................... 30
SECTION 3.19 Notice of Events of Default.............................. 30
SECTION 3.20 Further Instruments and Acts............................. 30
ARTICLE IV Satisfaction and Discharge............................... 30
SECTION 4.1 Satisfaction and Discharge of Indenture.................. 30
SECTION 4.2 Application of Trust Money............................... 32
SECTION 4.3 Repayment of Moneys Held by Paying
Agent.................................................... 32
ARTICLE V Remedies................................................. 32
SECTION 5.1 Events of Default........................................ 32
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment................................................ 33
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee......................... 34
SECTION 5.4 Remedies; Priorities..................................... 37
SECTION 5.5 Optional Preservation of the
Receivables.............................................. 38
SECTION 5.6 Limitation of Suits...................................... 38
SECTION 5.7 Unconditional Rights of Noteholders To
Receive Principal and Interest........................... 39
SECTION 5.8 Restoration of Rights and Remedies....................... 39
SECTION 5.9 Rights and Remedies Cumulative........................... 40
SECTION 5.10 Delay or Omission Not a Waiver........................... 40
SECTION 5.11 Control by Noteholders................................... 40
SECTION 5.12 Waiver of Past Defaults.................................. 41
SECTION 5.13 Undertaking for Costs.................................... 41
SECTION 5.14 Waiver of Stay or Extension Laws......................... 41
SECTION 5.15 Action on Notes.......................................... 42
SECTION 5.16 Performance and Enforcement of Certain
Obligations.............................................. 42
ARTICLE VI Indenture Trustee........................................ 43
SECTION 6.1 Duties of Indenture Trustee.............................. 43
SECTION 6.2 Rights of Indenture Trustee.............................. 45
SECTION 6.3 Individual Rights of Indenture Trustee................... 45
SECTION 6.4 Indenture Trustee's Disclaimer........................... 45
SECTION 6.5 Notice of Defaults....................................... 46
SECTION 6.6 Reports by Indenture Trustee to Holders.................. 46
SECTION 6.7 Compensation and Indemnity............................... 46
SECTION 6.8 Replacement of Indenture Trustee......................... 47
SECTION 6.9 Successor Indenture Trustee by Merger.................... 48
SECTION 6.10 Appointment of Co-Trustee or Separate
Trustee.................................................. 48
SECTION 6.11 Eligibility; Disqualification............................ 50
SECTION 6.12 Preferential Collection of Claims
Against Issuer........................................... 50
ARTICLE VII Noteholders' Lists and Reports........................... 50
ii
<PAGE>
SECTION 7.1 Issuer to Furnish Indenture Trustee
Names and Addresses to Noteholders....................... 50
SECTION 7.2 Preservation of Information;
Communications to Noteholders............................ 50
SECTION 7.3 Reports by Issuer........................................ 51
SECTION 7.4 Reports by Indenture Trustee............................. 51
ARTICLE VIII Accounts, Disbursements and Releases..................... 52
SECTION 8.1 Collection of Money...................................... 52
SECTION 8.2 Trust Accounts........................................... 52
SECTION 8.3 General Provisions Regarding Accounts.................... 53
SECTION 8.4 Release of Trust Estate.................................. 54
SECTION 8.5 Opinion of Counsel....................................... 54
ARTICLE IX Supplemental Indentures.................................. 55
SECTION 9.1 Supplemental Indentures Without Consent
of Noteholders........................................... 55
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders.............................................. 56
SECTION 9.3 Execution of Supplemental Indentures..................... 58
SECTION 9.4 Effect of Supplemental Indenture......................... 58
SECTION 9.5 Conformity with Trust Indenture Act...................... 58
SECTION 9.6 Reference in Notes to Supplemental
Indentures............................................... 59
ARTICLE X Redemption of Notes...................................... 59
SECTION 10.1 Redemption............................................... 59
SECTION 10.2 Form of Redemption Notice................................ 59
SECTION 10.3 Notes Payable on Redemption Date......................... 60
ARTICLE XI Miscellaneous............................................ 60
SECTION 11.1 Compliance Certificates and Opinions,
etc...................................................... 60
SECTION 11.2 Form of Documents Delivered to Indenture
Trustee.................................................. 62
SECTION 11.3 Acts of Noteholders...................................... 63
SECTION 11.4 Notices, etc., to Indenture Trustee,
Issuer and Rating Agencies............................... 64
SECTION 11.5 Notices to Noteholders; Waiver........................... 64
SECTION 11.6 Alternate Payment and Notice Provisions.................. 65
SECTION 11.7 Conflict with Trust Indenture Act........................ 65
SECTION 11.8 Effect of Headings and Table of
Contents................................................. 65
SECTION 11.9 Successors and Assigns................................... 66
SECTION 11.10 Separability............................................. 66
SECTION 11.11 Benefits of Indenture.................................... 66
SECTION 11.12 Legal Holidays........................................... 66
SECTION 11.13 GOVERNING LAW............................................ 66
SECTION 11.14 Counterparts............................................. 66
SECTION 11.15 Recording of Indenture................................... 66
iii
<PAGE>
SECTION 11.16 Trust Obligation......................................... 67
SECTION 11.17 No Petition.............................................. 67
SECTION 11.18 Inspection............................................... 67
iv
<PAGE>
EXHIBITS
Testimonium, Signatures and Seals
Acknowledgments
Exhibit A Schedule of Receivables
Exhibit B Form of Pooling and Servicing Agreement
Exhibit C Form of Depository Agreement
Exhibit D Form of [Class A-1] Note
Exhibit E Form of [Class A-2] Note
v
<PAGE>
This INDENTURE dated as of _____________, 199_, between [ADVANTA AUTO
RECEIVABLES TRUST 199_-_], a Nevada business trust (the "Issuer"), and
_____________, a ________________ [banking corporation], solely as trustee and
not in its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Issuer's Class A-1 [Floating
Rate] Auto Receivables Backed Notes (the "Class A-1 Notes", Class A-2 [Floating
Rate] Auto Receivables Backed Notes (the "Class A-2 Notes") and Class B Auto
Receivables Backed Notes (the "Class B Notes") (collectively, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
trustee for the benefit of the Holders of the Notes, all of the Issuer's right,
title and interest in and to (a) the Receivables and all moneys due thereon on
or after the Cut-off Date; (b) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables and any other interest of the
Issuer in the Financed Vehicles; (c) any proceeds with respect to the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors; (d) the Receivables
Acquisition Agreement, including the right assigned to the Issuer to cause the
Originator to repurchase Receivables from the Depositor under certain
circumstances; (e) all funds on deposit from time to time in the Trust Accounts,
including the Reserve Account Initial Deposit, and in all investments and
proceeds thereof (including all income thereon); (f) the Pooling and Servicing
Agreement (including all rights of the Depositor under the Receivables
Acquisition Agreement assigned to the Issuer pursuant to the Pooling and
Servicing Agreement); and (g) all present and future claims, demands, causes and
chooses in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in respect of any
or all of the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with
<PAGE>
the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of the
Notes, acknowledges such Grant, and accepts the trusts under this Indenture in
accordance with the provisions of this Indenture for the use and benefit of such
Holders.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 (a) Definitions. Except as otherwise specified herein or as the
context may otherwise require, the following terms have the respective meanings
see forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers,
containing the specimen signature of each such Person, delivered by the Owner
Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Receivables Acquisition Agreement, the Pooling and Servicing Agreement, the
Depository Agreement and other documents and certificates delivered in
connection therewith.
"Book Entry Notes" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions or trust companies
2
<PAGE>
in the City of New York are authorized or obligated by law, regulation or
executive order to remain closed.
"Certificate" has the meaning assigned to it in the Trust Agreement.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit A to the Trust Agreement.
"[Class A-1] Note" means a [Class A-1] [Floating Rate] Auto Receivables
Backed Note, substantially in the form of Exhibit D.
"[Class A-l] Note Interest Rate" means, for a Payment Date, [the lesser of
(i) LIBO for such Payment Date minus __% and (ii)] __%; provided that if the
weighted average Net APR for the Receivables during the Collection Period
immediately preceding such Payment Date is less than the interest rate computed
without giving effect to this proviso, then the [Class A-1] Note Interest Rate
for such Payment Date shall not exceed such weighted average Net APR.
"[Class A-2] Note" means a [Class A-2] [Floating Rate] Auto Receivables
Backed Note, substantially in the form of Exhibit E.
"[Class A-2] Note Interest Rate" means, for a Payment Date, [the lesser of
(i) LIBO for such Payment Date plus and (ii)] __%; provided that if the weighted
average Net APR or the Receivables during the Collection Period immediately
receding such Payment Date is less than the interest rate computed without
giving effect to this proviso plus [0.25]%, then the [Class A-2] Note Interest
Rate for such Payment Date shall not exceed such weighted average Net APR less
[0.25]%.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means ___________________, 199_.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations Promulgated thereunder.
"Collateral" has the meaning specified in the granting Clause of this
Indenture.
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"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered which office to date of the execution of this Agreement is located
at _____________________________________________________________________________
____________________________________________________________, Attention:
Corporate Trustee Administration; or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders and the
Issuer, or the principal corporate trust office of any successor Indenture
Trustee (the addresses of which the successor Indenture Trustee will notify the
Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Depository Agreement" means the agreement among the Issuer, the Indenture
Trustee, and The Depository Trust Company, as the initial Clearing Agency, dated
as of the Closing Date, substantially in the form of Exhibit C.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, and Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive hereunder or with respect thereto.
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<PAGE>
"Holder" or "Noteholder" means the Person in whose name a [Class A-1] Note
or a [Class A-2] Note is registered on the Note Register.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Indenture Trustee" means _____________________, a _____________ [banking
corporation], as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Depositor and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Depositor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Depositor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, made by an
Independent appraiser or other expert appointed by an Issuer order and approved
by the Indenture Trustee, and such opinion or certificate shall state that the
signer has read the definition of "Independent" in this Indenture and that the
signer is Independent within the meaning thereof.
"Issuer" means [Advanta Auto Receivables Trust 199_-_] until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
["LIBO" with respect to any Payment Date shall be established by the
Indenture Trustee and shall equal the arithmetic mean (rounded upwards, if
necessary, to the nearest one-sixteenth of a percent) of the offered rates for
United States dollar deposits for three months which appear on the Reuters
Screen LIBO Page (as defined below) as of 11:00 A.M., London time, on the second
LIBO Business Day prior to the immediately preceding Payment Date (or the
Closing Date in the case of the first Payment Date); provided that at least two
such
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<PAGE>
offered rates appear on the Reuters Screen LIBO Page on such date. If fewer than
two offered rates appear, LIBO will be determined on such date as described in
the paragraph below. "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on that service for the purpose of displaying London
inter-bank offered rates of major banks). "LIBO Business Day" is a day that is
both a Business Day and a day on which banking institutions in the City of
London, England are not required or authorized by law to be closed.
If on such date fewer than two offered rates appear on the Reuters Screen
LIBO Page, the Indenture Trustee will request of each of the Reference Banks
(which shall be major banks that are engaged in transactions in the London
inter-bank market, selected by the Indenture Trustee after consultation with the
Depositor) to provide the Indenture Trustee with its offered quotation for
United States dollar deposits for three months to prime banks in the London
inter-bank market as of 11:00 A.M., London time, on such date. If at least two
Reference Banks provide the Indenture Trustee with such offered quotations, LIBO
on such date will be the arithmetic mean (rounded upwards, if necessary, to the
nearest one-sixteenth of a percent) of all such quotations. If on such date
fewer than two of the Reference Banks provide the Indenture Trustee with such an
offered quotation, LIBO on such date will be the arithmetic mean (rounded
upwards, if necessary, to the nearest one-sixteenth of a percent) of the offered
per annum rates which one or more leading banks in the City of New York selected
by the Indenture Trustee (after consultation with the Depositor) are quoting as
of 11:00 A.M., New York City time, on such date to leading European banks for
United States dollar deposits for one month, provided, however, that if such
banks are not quoting as described above, LIBO will be the LIBO applicable to
the immediately preceding Payment Date.]
"Net APR" means, with respect to a Receivable, its APR less the Servicing
Fee Rate.
"Note Interest Rate" means the per annum interest rate borne by a Note.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected all the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.4.
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<PAGE>
"Notes" means the [Class A-l] Notes and the [Class A-2] Notes.
"Officers' Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, and delivered to
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officers' Certificate shall be to an Officers' Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be acceptable to the Indenture Trustee, and
which opinion or opinions shall be addressed to the Indenture Trustee as
Indenture Trustee, and shall comply with ny applicable requirements of Section
11.1.
"Originator" means __________________, a _______________ corporation, and
its successor.
"Outstanding" means, as of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to the
Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the necessary
amount has been theretofore deposited wi.h the Indenture Trustee or any Paying
Agent in trust for the Holders of such Notes (provided, however, that if such
Notes are to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor, satisfactory to the Indenture Trustee):
and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof satisfactory
to the Indenture Trustee is presented that any such Notes are held by a bona
fide purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any Depositor obligor upon the Notes, the Depositor or any Affiliate
of any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Indenture Trustee knows to be so
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<PAGE>
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Depositor or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
a Class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means not in its individual capacity but solely as Owner
Trustee under the Agreement, or any successor Owner Trustee under the Agreement.
"Paying Agent" means the [Indenture Trustee] or any Person that meets the
eligibility standards for the Indenture Trustee specified in Section 6.11 a
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means the _th day of each and [___________________,
______________, and ______________], or, if any such date is not a Business Day,
the next succeeding Business Day, commencing ______________, 199__.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement
dated as of __________, 199_ among the Issuer, the Depositor and the Servicer,
in the form of Exhibit B.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law other judicial or
administrative proceeding.
"Rating Agency" means [Moody's], [Standard & Poor's] and [Duff & Phelps].
If no such organization or successor is any longer in existence, "Rating Agency"
shall be a nationally recognized statistical rating organization or other
comparable Person designated by the Issuer, notice of which designation
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<PAGE>
shall be given to the Indenture Trustee, Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given [10] days or notice thereof and that each of
the Rating Agencies will have notified the Depositor, the Servicer and the
Issuer in writing that such action will not result in a reduction or withdrawal
of the then current rating of the Notes.
"Record Date" means, with respect to a Payment Date Redemption Date, the
close of business on the [fourteenth] day or of the calendar month in which such
Payment Date or Redemption Date occurs.
"Redemption Date" means the Payment Date specified by the Servicer or the
Issuer pursuant to Section 10.1(a) or , as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the principal amount of the
Notes redeemed plus accrued and unpaid interest thereon at the related Note
Interest Rate to but excluding the Redemption Date, or (b) in the case of a
payment made to Noteholders pursuant to Section 10.1(b), the amount on deposit
in the Note Distribution Account, but not in excess of the amount specified in
clause (a) above.
"Registered Holder" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Secretary, Assistant Secretary, or
any other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Schedule of Receivables" means the listing of the Receivables set forth in
Exhibit A (which Exhibit may be in form of microfiche).
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
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"Successor Servicer" has the meaning specified in Section 3.7(e).
"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject the lien and security interest of this
Indenture for the benefit of the Noteholders (including, without limitation, all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
(b) Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth in the
Pooling and Servicing Agreement as in effect on the Closing Date for all
purposes of this Indenture, and the definitions of such terms are equally
applicable both to the singular and plural forms of such terms:
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===============================================================================
Section of Pooling and
Term Servicing Agreement
---- -------------------
===============================================================================
APR Section 1.1
- -------------------------------------------------------------------------------
Certificate Section 1.1
- -------------------------------------------------------------------------------
Certificateholders Section 1.1
- -------------------------------------------------------------------------------
[Class A-2] Final Section 1.1
Scheduled Payment Date
===============================================================================
Collection Account Section 1.1
- -------------------------------------------------------------------------------
Collection Period Section 1.1
- -------------------------------------------------------------------------------
Contract Section 1.1
- -------------------------------------------------------------------------------
Cut-off Date Section 1.1
- -------------------------------------------------------------------------------
Dealers Section 1.1
- -------------------------------------------------------------------------------
Depositor Section 1.1
- -------------------------------------------------------------------------------
[Duff & Phelps Section 1.1]
- -------------------------------------------------------------------------------
Eligible Deposit Account Section 1.1
- -------------------------------------------------------------------------------
Eligible Investments Section 1.1
- -------------------------------------------------------------------------------
Financed Vehicles Section 1.1
- -------------------------------------------------------------------------------
[Fitch Section 1.1]
- -------------------------------------------------------------------------------
Originator Section 1.1
- -------------------------------------------------------------------------------
[Moody's Section 1.1]
- -------------------------------------------------------------------------------
Note Distribution Account Section 1.1
- -------------------------------------------------------------------------------
Noteholders Distributable Amount Section 1.1
- -------------------------------------------------------------------------------
Obligor Section 1.1
- -------------------------------------------------------------------------------
Pool Balance Section 1.1
- -------------------------------------------------------------------------------
Receivables Acquisition Agreement Section 1.1
- -------------------------------------------------------------------------------
Purchased Receivable Section 1.1
- -------------------------------------------------------------------------------
Receivable Section 1.1
- -------------------------------------------------------------------------------
Recoveries Section 1.1
- -------------------------------------------------------------------------------
Reserve Account Section 1.1
- -------------------------------------------------------------------------------
Reserve Account Initial Deposit Section 1.1
- --------------------------------------------------------------------------------
11
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===============================================================================
Section of Pooling and
Term Servicing Agreement
---- -------------------
===============================================================================
Servicer Section 1.1
- -------------------------------------------------------------------------------
Servicer Default Section 1.1
- -------------------------------------------------------------------------------
Servicing Fee Rate Section 1.1
- -------------------------------------------------------------------------------
Specified Reserve Account Balance Section 1.1
- -------------------------------------------------------------------------------
[Standard & Poor's Section 1.1]
- -------------------------------------------------------------------------------
Total Distribution Amount Section 1.1
- -------------------------------------------------------------------------------
Transfer Date Section 1.1
- -------------------------------------------------------------------------------
Trust Accounts Section 1.1
- -------------------------------------------------------------------------------
Trust Agreement Section 1.1
===============================================================================
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision the TIA, the provision is incorporated by
reference in and made a part of this Indenture. The following TIA terms used
this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means Indenture Trustee.
"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in effect from
time to time;
(iii) "or" is not exclusive;
(iv) "including" means "including without limitation"; and
(v) words in the singular include the plural and words in the plural
include the singular.
SECTION 1.4 Calculations of Interest. All calculations of interest made
hereunder shall be made on the is of a year of 360 days, in each case for the
actual number of days in the period for which such interest is payable.
ARTICLE II
The Notes
SECTION 2.1 Form. The [Class A-1] and [Class A-2] Notes, in each case
together with the Indenture Trustee's certificate of authentication, shall be in
substantially the forms set forth in Exhibits D and E, respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may, consistently herewith, be determined by the officers executing such Notes,
as evidenced by their execution of the Notes. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of methods (with or without steel
engraved borders), all determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibits are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individual's who were at
any time Authorized Officers of the
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<PAGE>
Issuer shall bind the Issuer, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Notes or did not hold such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and deliver
[Class A-1] Notes for original issue in an aggregate principal amount of
$____________________ and [Class A-2] Notes for an original issue in an
aggregate principal amount of $______________. The aggregate principal amount of
[Class A-1] and [Class A-2] Notes outstanding at any time may not exceed such
amounts, respectively, except as provided Section 2.5.
Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered the minimum denomination of $ and in integral multiples
thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of definitive Notes,
the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes to be
prepared without unreasonable delay. After preparation of definitive Notes, the
temporary Notes shall be exchangeable for definitive Notes upon surrender of the
temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer execute and the
Indenture Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
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<PAGE>
SECTION 2.4 Registration; Registration of Transfer Exchange. The Issuer
shall cause to be kept a register (the "Note Register") in which, subject to
such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute,
and the Indenture Trustees shall authenticate and the Noteholders shall obtain
from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met the Issuer shall execute, and the Indenture
Trustee authenticate and the Noteholder shall obtain from the Indenture Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in the form of Exhibit F hereto, duly executed by, the Holder thereof
or such Holder's
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<PAGE>
attorney duly authorized in writing, with such signature guaranteed by a
commercial bank or trust company located, or having a correspondent located, in
the City of New York or the city in which the Corporate Trust Office is located,
or by a member firm of a national securities exchange, and such other documents
as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this Section 2.4 notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of
[15] days preceding the due date for any payment with respect to the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and provided that the requirements of Section 8-405 of the UCC are met, the
Issuer shall execute and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense
16
<PAGE>
incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of such Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other reasonable expenses (including the fees and expenses of the Indenture
Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for registration
of transfer of any Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the
Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the [Class
A-1] Note and [Class A-2] Note set forth in Exhibits D and E, respectively, and
such interest shall be payable on each Payment Date as specified therein. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.12, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency [(initially, such nominee
to be Cede & Co.)], payment will
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be made by wire transfer in immediately available funds to the account
designated by such nominee and except for the final installment of principal
payable with respect to such Note on a Payment Date (and except for the
Redemption Price for any Note called for redemption pursuant to Section 10.1(a))
which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the forms of the [Class A-1] Note and [Class A-2]
Note set forth in Exhibits D and E, respectively. Notwithstanding the foregoing,
the entire unpaid principal amount of the Notes shall be due and payable, if not
previously paid, on the date on which an Event of Default shall have occurred
and be continuing, if the Indenture Trustee or the Holders of the Notes
representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2. All principal payments on each Class of Notes shall be made pro
rata to the Noteholders of such Class entitled thereto. Upon notice to the
Indenture Trustee by the Issuer, the Indenture Trustee shall notify the Person
in whose name a Note is registered at the close of business on the Record Date
preceding the Payment Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such notice
shall be mailed no later than [five] Business Days prior to such final Payment
Date and shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) in any lawful manner. The Issuer may pay such defaulted
interest to the persons who are Noteholders on a subsequent special record date,
which date shall be at least [five] Business Days prior to the payment date. The
Issuer shall fix or cause to be fixed any such special record date and payment
date, and, at least [10] days before any such special record date, the Issuer
shall mail to each Noteholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.8 Cancellation. All notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes
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previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu of
or in exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Notes may be held or
disposed of by the Indenture Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by an
Issuer Order that they be destroyed or returned to it; provided that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, the Indenture
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officers' Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA ss.ss. 314(c) and
314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will be
issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. Such Note shall initially be registered
on the Note Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Note Owner will receive a Definitive Note (as
hereinafter defined) representing such Note Owner's interest in such Note,
except as provided in Section 2.12. Unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including
the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
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(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Depository Agreement, unless
and until Definitive Notes are issued pursuant to Section 2.12, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest
on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required or other communication to the
Noteholders is required under this Indenture, unless and until Definitive Notes
shall have been issued to Note Owners pursuant to Section 2.12, the Indenture
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Notes to the Clearing Agency, and shall have no
obligation to the Note Owners or other Holders of the Notes.
SECTION 2.12 Definitive Notes. If (i) the Indenture Trustee is notified in
writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes, and the Indenture
Trustee is unable to locate a qualified successor, (ii) the Indenture Trustee
elects to terminate the book-entry system through the Clearing Agency or (iii)
after the occurrence of an Event of Default or a Servicer Default, Note Owners
representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Clearing Agency in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Clearing Agency shall notify all
Note Owners and the Indenture Trustee of the occurrence of any such event and of
the availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Note or Notes representing
the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall
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execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and
punctually pay the principal of and interest, if any, on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
the Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Payment Date. Amounts properly withheld under the Code
by any Person from a payment to any Noteholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain in
the [County of _____________, State of ______________], an office or agency
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints __________________
to serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Indenture Trustee of the location, and of any change in
the location, of any such office or agency. If at any time the Issuer shall fail
to maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in Section
8.02(a) and (b), all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account and
the Note Distribution Account pursuant to Section 8.02(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Collection Account and the Note Distribution
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section.
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On or before [noon (New York time)] on each Payment Date and Redemption
Date, the Issuer shall deposit or cause to be deposited in the Note Distribution
Account an aggregate sum sufficient to pay the amounts then becoming due under
the Notes, such sum to be held in trust for the benefit of the Persons entitled
thereto and (unless the Paying Agent is the Indenture Trustee) shall promptly
notify the Indenture Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent, it hereby so agrees), subject to the provisions of this
Section, that such Paying Agent will:
(i) hold sums held by it for the payment of amounts due with respect
to the Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer of
which it has actual knowledge (or any other obligor upon the Notes) in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same terms
as those upon which the sums were held by such Paying
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Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for [two] years
after such amount has become due and payable shall be discharged from such
trust, and the Indenture Trustee or such Paying Agent, as the case may be, shall
give prompt notice of such occurrence to the Issuer and shall release such money
to the Issuer on Issuer Request; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof
(but only to the extent of the amounts so paid to the Issuer), and all liability
of the Indenture Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Indenture Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Issuer cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the City of _____________, notice that such money remains
unclaimed and that, after the date specified therein, which shall not be less
than [30] days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Issuer. The Indenture Trustee may
also adopt and employ, at the expense of the Issuer, any other reasonable means
of notification of such repayment (including, but not limited to, mailing notice
of such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.4 Existence. The Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
[Nevada] (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer will from time to time
prepare, execute, deliver and file all such supplements and amendments hereto
and all such financing
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statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties. The Issuer hereby designates the
Indenture Trustee, and hereby authorizes the Indenture Trustee as its agent
and attorney-in-fact, to execute any financing statement, continuation
statement or other instrument required by the Indenture Trustee pursuant to
this Section.
SECTION 3.6 Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee
an Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto, and other requisite documents,
and with respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the lien
and security interest of this Indenture and reciting the details of such action,
or stating that, in the opinion of such counsel, no such action is necessary to
make such lien and security interest effective.
(b) On or before _______________ in each calendar year, beginning in 199_,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest created by
this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
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hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until _________________ in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables.
(a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Pooling and Servicing Agreement or
such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee in an Officers' Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Pooling and Servicing Agreement in accordance with and within the time
periods provided for herein and therein. Except as otherwise expressly provided
therein, the Issuer shall not waive, amend, modify, supplement or terminate any
Basic Document or any provision thereof without the consent of the Indenture
Trustee or the Holders of at least a majority of the Outstanding Amount of the
Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Pooling and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Rating Agencies thereof, and shall specify
in such notice the action, if any, the Issuer is taking with respect to such
default. If a Servicer Default shall arise from the failure of the Servicer to
perform any of its duties or obligations under
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the Pooling and Servicing Agreement with respect to the Receivables, the Issuer
shall take all reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section ____ of the
Pooling and Servicing Agreement, the Issuer shall appoint a successor servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Servicer has not been appointed and
accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer, subject to Section ____ of the Pooling and
Servicing Agreement. The Indenture Trustee may resign as the Servicer by giving
written notice of such resignation to the Issuer and in such event will be
released from such duties and obligations, such release not to be effective
until the date a new servicer enters into a servicing agreement with the Issuer
as provided below. Upon delivery of any such notice to the Issuer, the Issuer
shall obtain a new servicer as the Successor Servicer under the Pooling and
Servicing Agreement. Any Successor Servicer other than the Indenture Trustee
shall (i) be an established financial institution having a net worth of not less
than $_______________ and whose regular business includes the servicing of
automobile receivables and (ii) enter into a servicing agreement with the Issuer
having substantially the same provisions as the provisions of the Pooling and
Servicing Agreement applicable to the Servicer. If within [30] days after the
delivery of the notice referred to above, the Issuer shall not have obtained
such a new servicer, the Indenture Trustee may appoint, or may petition a court
of competent jurisdiction to appoint, a Successor Servicer. In connection with
any such appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the Pooling and Servicing Agreement, and
in accordance with Section ____ of the Pooling and Servicing Agreement, the
Issuer shall enter into an agreement with such successor for the servicing of
the Receivables (such agreement to be in form and substance satisfactory to the
Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer's
duties as servicer of the Receivables as provided herein, it shall do so in its
capacity as servicer and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the
Indenture Trustee in its duties as the successor to the Servicer and the
servicing of the Receivables. In case the Indenture Trustee shall become
successor to the Servicer under the Pooling and Servicing Agreement, the
Indenture Trustee shall be entitled to appoint as Servicer any one of its
affiliates, provided that it shall be
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fully liable for the actions and omissions of such affiliate in such capacity as
Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Pooling and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee. As soon as a Successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee of such appointment, specifying in such
notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees that it will not, without the prior written
consent of the Indenture Trustee or the Holders of a least a majority in
Outstanding Amount of the Notes, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of any Collateral (except to the extent
otherwise provided in the Pooling and Servicing Agreement) or the Basic
Documents, or waive timely performance or observance by the Servicer or the
Depositor under the Pooling and Servicing Agreement or the Originator under the
Receivables Acquisition Agreement; provided, however, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Receivables or distributions that are
required to be made for the benefit of the Noteholders or (ii) reduce the
aforesaid percentage of the Notes which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes. If
any such amendment, modification, supplement or waiver shall be so consented to
by the Indenture Trustee or such Holders, the Issuer agrees, promptly following
a request by the Indenture Trustee to do so, to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may reasonably deem necessary or appropriate
in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not:
(i) except as expressly permitted by this Indenture, the Receivables
Acquisition Agreement or the Pooling and Servicing Agreement, sell,
transfer, exchange or otherwise dispose of any of the properties or assets
of the Issuer, including those included in the Trust Estate, unless
directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from
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such payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Trust Estate;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics'
liens and other liens that arise by operation of law, in each case on a
Financed Vehicle and arising solely as a result of an action or omission of
the related Obligor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 199_), an Officers' Certificate stating,
as to the Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during the 12-month
period ending at the end of such fiscal year (or in the case of the fiscal
year ending [October 31, 199_,] the period from the Closing Date to
[October 31, 199_)] and of performance under this Indenture has been made
under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in the
compliance of any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
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SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Term. (a) The
Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture
on the part of the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer the conveyance or transfer of which is hereby
restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United
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States of America or any State, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee, in
form satisfactory to the Indenture Trustee, the due and punctual payment of
the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as provided herein, (C)
expressly agrees by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D) unless otherwise
provided in such supplemental indenture, expressly agrees to indemnify,
defend and hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and (E)
expressly agrees by means of such supplemental indenture that such Person
(or if a group of Persons, then one specified Person) shall make all
filings with the Commission (and any other appropriate Person) required by
the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
SECTION 3.11 Successor or Transferee.
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(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery to and
acceptance by the Indenture Trustee of the Officer's Certificate and Opinion of
Counsel specified in Section 3.10(b)(vi) stating that the Issuer is to be so
released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any business
other than financing, purchasing, owning, selling and managing the Receivables
in the manner contemplated by this Indenture and the Basic Documents, issuing
the Notes and Certificates and activities incidental thereto.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause the Servicer to
comply with Sections 4.9, 4.10, 4.11 and 5.06 of the Pooling and Servicing
Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by the Pooling and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly another's payment or performance on any obligation or capability
of so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or dividends
of, or own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 Removal of Administrator. So long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection with such
removal.
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SECTION 3.18 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee and the Certificateholders as permitted by,
and to the extent funds are available for such purpose under, the Pooling and
Servicing Agreement. The Issuer will not, directly or indirectly, make payments
to or distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and, within [five] days after obtaining knowledge of any of
the following occurrences, written notice of each default on the part of the
Servicer or the Depositor of its obligations under the Pooling and Servicing
Agreement and each default on the part of the Originator of its obligations
under the Receivables Acquisition Agreement.
SECTION 3.20 Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.7 and the obligations of the Indenture Trustee under Section 4.2) and (vi) the
rights of Noteholders as beneficiaries hereof with respect to the property so
deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and
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at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.5 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated
and held in trust or discharged form such trust, as provided in
Section 3.3) have been delivered to the Indenture Trustee for
cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
(i) have become due and payable.
(ii) will become due and payable at the [Class A-2] Final
Schedule Payment Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) and the Issuer, in
the case of (i), (ii) or (iii) above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United States
of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay
and discharge the entire indebtedness on such Notes not theretofore
delivered to the Indenture Trustee for cancellation when due on the
[Class A-2] Final Scheduled Payment Date or Redemption Date (if Notes
shall have been called for redemption pursuant to Section 10.1(a)), as
the case may be;
(B) The Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officers'
Certificate, an Opinion of Counsel and (if required by the TIA) an
Independent Certificate from a firm of certified public accountants, each
meeting the applicable requirements of Section 11.1(a) and each stating
that all
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conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Pooling and Servicing Agreement or required by
law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
moneys then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.3 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of
[five] days; or
(ii) default in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
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elsewhere in this Section specifically dealt with), or any representation
or warranty of the Issuer made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in connection herewith proving
to have been incorrect in any material respect as of the time when the same
shall have been made, and such default shall continue or not be cured, or
the circumstance or condition in respect of which such representation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of [30] days after there shall have been given, by registered
or certified mail, to the Issuer by the Indenture Trustee or to the Issuer
and the Indenture Trustee by the Holders of at least [____%] of the
Outstanding Amount of the Notes, a written notice specifying such default
or incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the Issuer or for
any substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of [90] consecutive days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Trust Estate, or the
making by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of action by the Issuer in furtherance of
any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within [five] days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event which with the giving of notice and the lapse of time would become
an Event
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of Default under clause (iii), its status and what action the Issuer is taking
or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an Event
of Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of Notes representing a majority of the
Outstanding Amount of the Notes may declare all the Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the Indenture Trustee
if given by Noteholders), and upon any such declaration the unpaid principal
amount of the Notes, together with accrued and unpaid interest thereon through
the date of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes,
by written notice to the Issuer and the Indenture Trustee, may rescind and annul
such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay
(A) all payment of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes if
the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been
cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of any
interest on any Note when the same becomes due and payable, and such default
continues for a period of [five] days, or (ii) default is made in the payment of
the
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principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Indenture Trustee,
pay to it, for the benefit of the Holders of the Notes, the whole amount then
due and payable on such Notes for principal and interest, with interest upon the
overdue principal, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest, at the respective
Note Interest Rate borne by the Notes and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture may, as
more particularly provided in Section 5.4, in its discretion, proceed to protect
and enforce its rights and the rights of the Noteholders, by such appropriate
Proceedings as the Indenture Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
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(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to
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vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial of other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing, the Indenture Trustee may do one or more of the
following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, other than an
Event of Default
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described in Section 5.01(i) or (ii), unless (A) the Holders of 100% of the
Outstanding Amount of the Notes consent thereto, (B) the proceeds of such
sale or liquidation distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon such Notes for
principal and interest or (C) the Indenture Trustee determines that the
Trust Estate will not continue to provide sufficient funds for the payment
of principal of and interest on the Notes as they would have become due if
the Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Holders of [66-2/3%] of the Outstanding Amount of
the Notes. In determining such sufficiency or insufficiency with respect to
clause (B) and (C), the Indenture Trustee may, but need not, obtain and
rely upon an opinion of an independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed action
and as to the sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section 6.7;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectably; and
THIRD: to the Issuer for distribution to the Certificateholders.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least [15] days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.5 Optional Preservation of the Receivables. If the Notes have
been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
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account when determining whether or not to maintain possession of the Trust
Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any right
to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than [____%] of the Outstanding Amount of
the Notes have made written request to the Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request;
(iv) the Indenture Trustee for [60] days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such [60-day] period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture, and
shall have no liability to any person for such action or inaction.
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SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of the interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; provided that
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(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by the
Holders of Notes representing not less than [____%] of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been satisfied
and the Indenture Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the Indenture Trustee by Holders of
Notes representing less than [____%] of the Outstanding Amount of the Notes
to sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
the Issuer, the Indenture Trustee and the Holders of the Notes shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the
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enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than [____%] of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent it may lawfully do so) that it will not at any time insist upon, or plead
or in any manner whatsoever, claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, that
may affect the covenants or the performance of this Indenture; and the Issuer
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Indenture Trustee, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.4(b).
SECTION 5.16 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so, the Issuer
agrees to take all such lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by the Depositor and the
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Pooling and Servicing Agreement or to the Originator under
or in connection with the
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Receivables Acquisition Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Pooling and Servicing Agreement to
the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Depositor or the Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Depositor or the Servicer of each of
their obligations under the Pooling and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of [___%] of the
Outstanding Amount of the Notes shall exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Depositor or the Servicer under
or in connection with the Pooling and Servicing Agreement, including the right
or power to take any action to compel or secure performance or observance by the
Depositor or the Servicer of each of their obligations to the Issuer thereunder
and to give any consent, request, notice, direction, approval, extension or
waiver under the Pooling and Servicing Agreement, and any right of the Issuer to
take such action shall be suspended.
(c) Promptly following a request from the Indenture Trustee to do so, the
Issuer agrees to take all such lawful action as the Indenture Trustee may
request to compel or secure the performance and observance by the Originator of
each of its obligations to the Depositor under or in connection with the
Receivables Acquisition Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Receivables Acquisition Agreement
to the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Depositor thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Originator of each of its obligations under the
Receivables Acquisition Agreement.
(d) If an Event of Default has occurred and is continuing, the Indenture
Trustee at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of [___%] of the
Outstanding Amount of the Notes shall exercise all rights, remedies, powers,
privileges and claims of the Depositor against the Originator under or in
connection with the Receivables Acquisition Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Originator of each of its obligations to the Depositor thereunder
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and to give any consent, request, notice, direction, approval, extension or
waiver under the Receivables Acquisition Agreement, and any right of the
Depositor to take such action shall be suspended.
ARTICLE VI
Indenture Trustee
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
Except for its calculation of LIBO, the Indenture Trustee shall not be required
to determine, confirm or recalculate the information contained in the Servicer's
Certificate delivered to it pursuant to the Pooling and Servicing Agreement.
(c) the Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
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(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11 or otherwise from Holders
under the Indenture.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Pooling and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity satisfactory to it against such loss,
liability or expense is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any
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action it takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its affiliates with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Indenture Trustee must comply with Sections 6.10 and 6.11.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall not
be responsible for and makes no representation as to the validity or adequacy of
the Trust Estate, this Indenture or the Notes, it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if it is actually known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Note (including payments pursuant to the mandatory redemption
provision of such Note), the Indenture Trustee may withhold the notice if and so
long as a
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committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders; and provided that in the case of
any default of the character specified in Section 5.1(iii), no such notice to
Holders shall be given until at least [30] days after the occurrence thereof.
SECTION 6.6 Reports by Indenture Trustee to Holders. The Indenture Trustee
shall deliver to each Noteholder such information as may be required to enable
such holder to prepare its Federal and state income tax returns. The Indenture
Trustee shall only be required to provide to the Noteholders the information
given to it by the Servicer. The Indenture Trustee shall not be required to
determine, confirm or recompute any such information.
SECTION 6.7 Compensation and Indemnity. The Issuer shall or shall cause the
Servicer to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall or shall cause the Servicer to reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts.
The Issuer shall or shall cause the Servicer to indemnify the Indenture Trustee
against any and all loss, liability or expense (including the fees of either
in-house counsel or outside counsel, but not both) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Indenture Trustee shall notify the Issuer and the Servicer
promptly of any claim for which it may seek indemnity. Failure by the Indenture
Trustee to so notify the Issuer and the Servicer shall not relieve the Issuer or
the Servicer of its obligations hereunder. The Issuer shall or shall cause the
Servicer to defend the claim and the Indenture Trustee may have separate counsel
and the Issuer shall or shall cause the Servicer to pay the fees and expenses of
such counsel. Neither the Issuer nor the Servicer need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own wilful misconduct, negligence or bad
faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or similar law.
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SECTION 6.8 Replacement of Indenture Trustee. No resignation or removal of
the Indenture Trustee and no appointment of a successor Indenture Trustee shall
become effective until the acceptance of appointment by the successor Indenture
Trustee pursuant to this Section 6.8. The Indenture Trustee may resign at any
time by so notifying the Issuer. The Holders of a majority in Outstanding Amount
of the Notes may remove the Indenture Trustee by so notifying the Indenture
Trustee and may appoint a successor Indenture Trustee. The Issuer shall remove
the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee, which successor shall be,
if the Originator is the Servicer, reasonably acceptable to the Depositor.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within [60] days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent
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jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's obligations under Section 6.7 shall continue for the
benefit of the retiring Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Indenture Trustee.
The Indenture Trustee shall provide the Rating Agencies prior written notice of
any such transaction, provided that such corporation or banking association
shall be otherwise qualified and eligible under Section 6.11.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust may at the time be located, the Indenture Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons reasonably acceptable to the Depositor to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
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notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Indenture
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by
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law, to do any lawful act under or in respect of this Agreement on its behalf
and in its name. If any separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Indenture
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $__________ as set forth
in its most recent published annual report of condition and its long-term
unsecured debt shall be rated at least [Baa3] by [Moody's.] The Indenture
Trustee shall comply with TIA ss. 310(b), including the optional provision
permitted by the second sentence of TIA ss. 310(b)(9); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or
indentures under which other securities of the issuer are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An indenture trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer to Furnish Indenture Trustee Names and Addresses to
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
trustee (a) not more than [five] days after the earlier of (i) each Record Date
and (ii) [three] months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Holders of Notes as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within [30] days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than [10] days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
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SECTION 7.2 Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within [15] days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
be required by rules and regulations prescribed from time to time by the
Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on __________ of each year.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA ss. 313(a),
within [60] days after each [February 1] beginning with [February 1, 199__,] the
Indenture Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a
brief report dated as of such date that complies with TIA ss. 313(a). The
Indenture Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Servicer to
establish and maintain, in the name of the Indenture Trustee, for the benefit of
the Noteholders and the Certificateholders, the Trust Accounts as provided in
Section [5.01] of the Pooling and Servicing Agreement.
(b) Not less than [two] Business Days prior to each Payment Date, the Total
Distribution Amount with respect to the preceding Collection Period will be
deposited in the Collection Account as provided in Section [5.02] of the Pooling
and
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Servicing Agreement. On or before each Payment Date, the Noteholders'
Distributable Amount with respect to the preceding Collection Period will be
transferred from the Collection Account and/or the Reserve Account to the Note
Distribution Account as provided in Sections [5.04] and [5.05] of the Pooling
and Servicing Agreement.
(c) On each Payment Date and Redemption Date, the Indenture Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)):
(i) accrued and unpaid interest on the Notes; provided that if there
are not sufficient funds in the Note Distribution Account to pay the entire
amount of accrued and unpaid interest then due on the Notes, the amount in
Note Distribution Account shall be applied to the payment of such interest
on the Notes pro rata on the basis of the total such interest due on the
Notes;
(ii) to the [Class A-1] Noteholders until the Outstanding Amount of
the [Class A-1] Notes is reduced to zero; and
(iii) to the [Class A-2] Noteholders until the Outstanding Amount of
the [Class A-2] Notes is reduced to zero.
(d) The Indenture Trustee shall calculate LIBO for each Payment Date (other
than the first Payment Date) as soon as such calculation can be made. Upon
telephone request, the Indenture Trustee shall inform, by telephone (confirmed
in writing), a representative of each of the Issuer, [and the Underwriter] of
LIBO for a Payment Date.
SECTION 8.3 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Trust Accounts shall be
invested in Eligible Investments and reinvested by the Indenture Trustee upon
Issuer Order, subject to the provisions of Section [5.01(b)] of the Pooling and
Servicing Agreement. All income or other gain from investments of monies
deposited in the Trust Accounts net of any investment expenses and any losses
resulting from such investments shall be deposited by the Indenture Trustee in
the Collection Account. The Issuer will not direct the Indenture Trustee to make
any investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest granted and perfected in
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such account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as Indenture Trustee, in accordance with their
terms.
(c) If (i) the issuer shall have failed to give investment directions for
any funds on deposit in the Trust Accounts to the Indenture Trustee by [12:00
noon New York Time] (or such other time as may be agreed by the Issuer and
Indenture Trustee) on any Business Day; or (ii) a Default or Event of Default
shall have occurred and be continuing with respect to the Notes but the Notes
shall not have been declared due and payable pursuant to Section 5.2, or, if
such Notes shall have been declared due and payable following an Event of
Default, amounts collected or receivable from the Trust Estate are being applied
in accordance with Section 5.3 as if there had not been such a declaration; then
the Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Trust Accounts in one or more Eligible Investments.
SECTION 8.4 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.7, the Indenture Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7 have
been paid, release any remaining portion of the Trust Estate that secured the
Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts.
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The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.4(b) only upon receipt of an Issuer Request
accompanied by an Officers' Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA ss.ss. 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall receive at
least [seven] days' notice when requested by the Issuer to take any action
pursuant to Section 8.4(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by
an Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Indenture Trustee,
for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another
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person to the Issuer, and the assumption by any such successor of the
covenants of the Issuer herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar Federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however,
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that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The Issuer
and the Indenture Trustee, when authorized by an Issuer Order, also may, with
prior notice to the Rating Agencies and with the consent of the Holders of not
less than a majority of the Outstanding Amount of the Notes, by Act of such
Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the right of the Holders of the
Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of principal amount
thereof, the interest rate thereon or the Redemption Price with respect
thereto, change the provision of this Indenture relating to the application
of collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of the provisions of this Indenture requiring the application
of funds available therefor, as provided in Article V, to the payment of
any such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
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(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of
any of the individual components of such calculation) or to affect the
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture,
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the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01
and 6.02, shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption. (a) The Notes are subject to redemption in whole,
but not in part, at the written direction of the Servicer pursuant to Section
[9.01(a)] of the Pooling and Servicing Agreement, on any Payment Date, if the
then outstanding
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Pool Balance is [___%] or less of the Original Pool Balance, for a purchase
price equal to the Redemption Price; provided, however, that the Issuer has
available funds sufficient to pay the Redemption Price. The Servicer or the
Issuer shall furnish the Rating Agencies notice of such redemption. If the Notes
are to be redeemed pursuant to this Section 10.01(a), the Servicer or the Issuer
shall furnish notice of such election to the Indenture Trustee not later than
[25] days prior to the Redemption Date and the Issuer shall deposit with the
Indenture Trustee in the Note Distribution Account the Redemption Price of the
Notes to be redeemed whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.2 to
each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to Section
9.2 of the Trust Agreement, all amounts on deposit in the Note Distribution
Account shall be paid to the Noteholders up to the Outstanding Amount of the
Notes and all accrued and unpaid interest thereon. If amounts are to be paid to
Noteholders pursuant to this Section 10.1(b), the Servicer or the Issuer shall,
to the extent practicable, furnish notice of such event to the Indenture Trustee
not later than [25] days prior to the Redemption Date whereupon all such amounts
shall be payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption under Section 10.1(a) shall be given by the
Indenture Trustee by first-class mail, postage prepaid, mailed not less than
[five] days prior to the applicable Redemption Date to each Holder of Notes, as
of the close of business on the Record Date preceding the applicable Redemption
Date, at such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be surrendered for payment of
the Redemption Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.2); and
(iv) CUSIP number.
Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
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(b) Prior notice of redemption under Section 10.1(b) is not required to be
given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date: The Notes or portions
thereof to be redeemed shall, following notice of redemption as required by
Section 10.02 (in the case of redemption pursuant to Section 10.1(a)), on the
Redemption Date become due and payable at the Redemption Price and (unless the
Issuer shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period after the date to which accrued
interest is calculated for purposes of calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee (i) an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such
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examination or investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.1(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officers'
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within [90] days of such deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officers' Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is [___%] or more of the Outstanding Amount of the Notes, but such
a certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Issuer as set forth in the related Officers'
Certificate is less than $________ or less than [one] percent of the Outstanding
Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Defaulted Receivables, whenever any property or securities are to
be released from the lien of this Indenture, the Issuer shall also furnish to
the Indenture Trustee an Officers' Certificate certifying or stating the opinion
of each person signing such certificate as to the fair value (within [90] days
of such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not impair
the security under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officers' Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to
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the Indenture Trustee an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property other than
Purchased Receivables and Defaulted Receivables, or securities released from the
lien of this Indenture since the commencement of the then current calendar year,
as set forth in the certificates required by clause (iii) above and this clause
(iv), equals [___%] or more of the Outstanding Amount of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officers'
Certificate is less than $________ or less than [one] percent of the then
Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose of
Receivables as and to the extent permitted or required by the Basic Documents
and (B) make cash payments out of the Trust Accounts as and to the extent
permitted or required by the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Servicer, the
Depositor or the Issuer, stating that the information with respect to such
factual matters is in the possession of the Servicer, the Depositor or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the grating of such application, or
as evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the grating of such application or at the
effective date of such certificate or report (as the case may be), of the facts
and opinions stated in such document shall in such case be conditions precedent
to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are deliver to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing of such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any manner that the Indenture Trustee deems
sufficient.
(c) The ownership of Notes shall be provided by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization,
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direction, notice, consent, waiver or Act of Noteholders or other documents
provided or permitted by this Indenture to be made upon, given or furnished to
or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Indenture Trustee and received at its Corporate
Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to the Issuer addressed to: PSSFC Auto
Receivables Trust, 199_-_, [Owner Trustee], Attention: ________________, or
at any other address previously furnished in writing to the Indenture
Trustee by Issuer. The Issuer shall promptly transmit any notice received
by it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested to (i) in the case of
[Moody's,] at the following address: [Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007], (ii) in the
case of [Standard & Poor's,] at the following address: [Standard & Poor's
Corporation, 26 Broadway (20th Floor), New York, New York 10004, Attention of
Asset Backed Surveillance Department,] (iii) in the case of [Fitch,] at the
following address: [Fitch Investors Service, Inc., One State Street Plaza, New
York, New York 10004, Attention: Structured Finance Surveillance] [and (iv) in
the case of Duff & Phelps, at the following address: Duff & Phelps Credit Rating
Co., 55 east Monroe Street (35th Floor), Chicago, Illinois 60603, Attention:
________]; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture provides
for notice to Noteholders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Noteholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
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Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, to the extent
satisfactory to the Indenture Trustee, the Issuer may enter into any agreement
with any Holder of a Note providing for a method of payment, or notice by the
Indenture Trustee or any Paying Agent to such Holder, that is different from the
methods provided for in this Indenture for such payments or notices. The Issuer
will furnish to the Indenture Trustee a copy of each such agreement and the
Indenture Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflict with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer
69
<PAGE>
shall bind its successors and assigns, whether so expressed or not.
All agreements of the Indenture Trustee in this Indenture shall bind its
successors, co-trustees and agents of the Indenture Trustee.
SECTION 11.10 Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF [NEW YORK.]
SECTION 11.14 Counterparts. This Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing
70
<PAGE>
delivered in connection herewith or therewith, against (i) the Indenture Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Depositor or the Trust, or
join in any institution against the Depositor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
issuer's normal business hours, to examine all the books of account, records,
reports, and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and independent certified public accountants, and at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
71
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
[ADVANTA AUTO RECEIVABLES
TRUST 199_ -__],
By:___________________, not in
its individual capacity but
solely as Owner Trustee,
By: ____________________
Name:
Title
_____________________, not in
its individual capacity but
solely as Indenture Trustee,
By: _________________________
Name:
Title:
72
<PAGE>
STATE OF ________ )
) ss.:
COUNTY OF ________ )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared _______________, known to me
to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said [ADVANTA
AUTO RECEIVABLES Trust 19_-_], a Nevada business trust, and that he executed the
same as the act of the said business trust for the purpose and consideration
therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of ________, 199_.
_________________________
Notary Public
My commission expires:
__________________________
<PAGE>
STATE OF ________ )
) ss.:
COUNTY OF ________ )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared _______________, known to me
to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said bank and
that he executed the same as the corporation for the purposes and consideration
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of ________,
199_.
_________________________
Notary Public
My commission expires:
__________________________
<PAGE>
EXHIBIT A
Schedule of Receivables
-----------------------
[To be delivered to the Trust at Closing]
A-1
<PAGE>
EXHIBIT B
[Form of Pooling and Servicing Agreement]
-----------------------------------------
B-1
<PAGE>
EXHIBIT C
[Form of Depository Agreement]
C-1
<PAGE>
EXHIBIT D
REGISTERED $_______________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.
[Unless this Note is presented by an authorized representative of The
Depository Trust company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any note issued is
registered in the name of Ceede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC) - ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IN WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FLOATING RATE] AUTO RECEIVABLES BACKED NOTES,
[CLASS A-1]
[Advanta Auto Receivables Trust 199_, - a business trust organized and
existing under the laws of the State of Nevada (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [_________________], or
registered assigns, the principal sum of [_______________] DOLLARS payable on
each Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE]
and the denominator of which is [$________________________] by (ii) the
aggregate amount, if any, payable from the Note Distribution Account in respect
of principal on the [Class A-1] Notes pursuant to Section 8.2(c) of the
Indenture; provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of ____________, 199_ and the
Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture. No
payments of principal of the [Class A-2] Notes shall be made until the principal
of the [Class A-1] Notes has been paid in its entirety. The Issuer will pay
interest on this Note at the [Class A-1] Note Interest Rate on each Payment Date
until principal of this Note
D-1
<PAGE>
is paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Payment Date after giving effect to all payments of
principal made on such preceding Payment Date (or in the case of the first
Payment Date, on the initial principal amount of this Note). Interest on this
Note will accrue for each Payment Date from and including the most recent
Payment Date on which interest has been paid to but excluding such Payment Date
or, if no interest has yet been paid, from ________, 199_. Interest will be
computed on the basis of a 360-day year for the actual number of days in the
period for which such interest is payable. Such principal of and interest on
this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of Payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth o the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: _______________ [ADVANTA AUTO RECEIVABLES
TRUST 199_-_],
By: [Owner Trustee] not in its
individual capacity but solely
as Owner Trustee,
By:___________________________
Name:
Title
D-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
_____________________, not in
its individual capacity but
solely as Indenture Trustee,
By:__________________________
Authorized Signatory
D-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of the [Class A-1] Notes of a duly authorized issue of
Notes of the Issuer, designated as its [Floating Rate] Auto Receivables Backed
Notes (herein called the "Notes"), all issued under an Indenture dated as of
_______________, 199_ (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and ____________________, as
indenture trustee (the "Indenture Trustee", which term includes any successor
indenture trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indentures. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in an amount
described on the face hereof. "Payment Date" means the __th day of each
________, ________, ________ and ________ or, if any such date is not a Business
Day, the next succeeding Business Day, commencing ________, 199_.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of ________, 199_ and the Redemption Date, if
any, pursuant to Section 10.1(a) of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing and the Indenture Trustee or the Holders of the Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in Section
5.2 of the Indenture. All principal payments on the Notes of a Class shall be
made pro rata to the Noteholders of such Class entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that with respect to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transferring immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereof at the address of such Person as it
D-4
<PAGE>
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchanged hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date preceding
such Payment Date by notice mailed within [five] days of such Payment Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in ______________________.
The Issuer shall pay interest on overdue installments of interest at the
[Class A-1] Note Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in whole, but not
in part, at the option of the Servicer, on any Payment Date on or after the date
on which the Pool Balance is less than or equal to ten percent of the Initial
Pool Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly authorized in writing, with such signature guaranteed by
a commercial bank or trust company located, or having a correspondent located,
in The City of New York or the city in which the Corporate Trust Office is
located, or a member firm of a national securities exchange, and such other
documents as the Indenture Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the
D-5
<PAGE>
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director or employee of the
Indenture Trustee or the Owner Trustee in its individual capacity, any holder of
a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee
or of any successor or assign of the Indenture Trustee or the Owner Trustee in
its individual capacity, except as any such Person my have expressly agreed and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the indenture that such Noteholder will not at any
time institute against the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
Federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of this
Note (or any one or more Predecessor Notes) shall be conclusive and binding upon
such Holder and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. the
Indenture also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the Note
issued thereunder.
D-6
<PAGE>
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
The Note and the Indenture shall be construed in accordance with the laws
of the State of [New York], without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the time, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither [Owner Trustee] in its individual
capacity, [Indenture Trustee], in its individual capacity, any owner of a
beneficial in the Issuer, nor any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on, or performance of, or omission to perform, any
of the covenants, obligations or indemnifications contained in this Note or the
Indenture, it being expressly understood that said covenants, obligations and
indemnifications have been made by the Owner Trustee for the sole purposes of
binding the interests of the Owner Trustee in the assets of the Issuer. The
Holder of this Note by the acceptance hereof agrees that except as expressly
provided in the Basic Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
D-7
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___________________________________________________________________________
________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: ______________ ________________________NOTE: The
signature to this assignment must correspond
with the name of the registered owner as it
appears on the face of the within Note in
every particular, without alteration,
enlargement or any change whatsoever.
Signature Guaranteed:
__________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Indenture Trustee which
requirements will include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Indenture Trustee in
addition to, or in substitution for, STAMP,
all in accordance with the Securities Act of
1934, as amended.
___________________
D-8
<PAGE>
EXHIBIT E
REGISTERED $_________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.
[Unless this note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC) - ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FLOATING RATE] AUTO RECEIVABLES BACKED NOTES,
[Class A-2]
[ADVANTA Auto Receivables Trust 199_, - a business trust organized and
existing under the laws of the State of Nevada (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [___________________],
or registered assigns, the principal sum of [____________] DOLLARS payable on
each Payment Day in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE]
and the denominator of which is [$_____________] by (ii) the aggregate amount,
if any, payable from the Note Distribution Account in respect of principal on
the [Class A-2] Notes pursuant to Section 8.02(c) of the Indenture; provided,
however, that the entire unpaid principal amount of this Note shall be due and
payable on the earlier of ___________, 199_ and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. No payments of principal of the
[Class A-2] Notes shall be made until the principal of the [Class A-1] Notes has
been paid in its entirety. The Issuer will pay interest on this Note at the
[Class A-2] Note Interest Rate on each Payment Date until the principal of this
Note is paid or made available
E-1
<PAGE>
for payment, on the principal amount of this Note outstanding on the preceding
Payment Date after giving effect to all payments of principal made on such
preceding Payment Date (or in the case of the first Payment Date, on the initial
principal amount of this Note). Interest on this Note will accrue for each
Payment Date from and including the most recent Payment Date on which interest
has been paid to but excluding such Payment Date or, if no interest has yet been
paid, from ________, 199_. Interest will be computed on the basis of a 360-day
year for the actual number of days in the period for which such interest is
payable. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereof has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ADVANTA AUTO RECEIVABLES
TRUST 199_-_,]
By: [OWNER TRUSTEE],
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement,
By:___________________________
Name:
Title:
E-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
By:______________________________,
not in its individual capacity
but solely as Trustee,
By:___________________________
Authorized Signatory
E-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of the [Class A-2] Notes of a duly authorized issue of
Notes of the Issuer, designated as its [Floating Rate] Auto Receivables Backed
Notes (herein called the "Notes"), all issued under an Indenture dated as of
_____________, 199_ (such indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and __________________, as indenture
trustee (the "Indenture Trustee", which term includes any successor indenture
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in an amount
described on the face hereof. "Payment Date" means the __th day of each ______,
______, ______ and ______ or, if any such date is not a Business Day, the next
succeeding Business Day, commencing _____________, 1993.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of _______, 199_ and the Redemption Date, if
any, pursuant to Section 10.01(a) of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing and the Indenture Trustee or the Holders of the Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. All principal payments on the Notes of a Class shall be
made pro rata to the Noteholders of such Class entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that with respect to Note registered on the Record
E-4
<PAGE>
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date preceding
such Payment Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in ____________________.
The Issuer shall pay interest on overdue installments of interest at the
[Class A-2] Note Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in while, but not
in part, at the option of the Servicer, or any Payment Date on or after the date
on which the Pool Balance is less than or equal to ten percent of the Initial
Pool Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in The City of New
York or the city in which the Corporate Trust Office is located, or a member
firm of a national securities exchange, and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
E-5
<PAGE>
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or the Owner Trustee or its individual capacity, except as any
such Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the indenture that such Noteholder will not at any
time institute against the Depositor, or join in any institution against the
Depositor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the
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<PAGE>
Holders of the Notes under the Indenture at any time by the Issuer with the
consent of the Holders of Notes representing a majority of the Outstanding
amount of all Notes at the time Outstanding. The Indenture also contains
provisions permitting the Holders of Notes representing specified percentages of
the Outstanding Amount of the Notes, on behalf of the Holders of Notes
representing specified percentages of the Outstanding Amount of the Notes, on
behalf of the Holders of all the Notes, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of [New York,] without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and i the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither [Owner Trustee] in its individual
capacity, [Indenture Trustee], in its individual capacity, any owner of a
beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
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<PAGE>
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for the
sole purposes of binding the interests of the Owner Trustee in the assets of the
Issuer. The Holder of this Note by the acceptance hereof agrees that except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
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<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee
___________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___________________________________________________________________________
___________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: _______________ ________________________NOTE:
The signature to this assignment must
correspond with the name of the registered
owner as it appears on the face of the
within Note in every particular, without
alteration, enlargement or any change
whatsoever.
Signature Guaranteed:
________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Indenture Trustee which
requirements will include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Indenture Trustee in
addition to, or in substitution for, STAMP,
all in accordance with the Securities
Exchange Act of 1934, as amended.
________________________
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<PAGE>
EXHIBIT F
[Form of Transferee Certificate]
F-1
<PAGE>
================================================================================
ADVANTA AUTO FINANCE CORPORATION
SPONSOR
AND
------------------------------------
INDENTURE TRUSTEE
-------------------------
INDENTURE
Dated as of _____________, 199__
-------------------------
$___________ _____% AUTO RECEIVABLES-BACKED NOTES, [CLASS A]
$___________ _____% AUTO RECEIVABLES-BACKED NOTES, [CLASS B]
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION............................. 3
SECTION 1.01. General Definitions........................ 3
SECTION 1.02. Compliance Certificates and
Opinions................................. 21
SECTION 1.03. Form of Documents Delivered to
Indenture Trustee........................ 22
SECTION 1.04. Acts of Noteholders, etc................... 23
SECTION 1.05. Notices, etc., to Trustee,
Servicer and Issuer...................... 24
SECTION 1.06. Notice to Noteholders; Waiver.............. 25
SECTION 1.07. Effect of Headings and Table of
Contents................................. 26
SECTION 1.08. Successors and Assigns..................... 26
SECTION 1.09. Severability Clause........................ 26
SECTION 1.10. Benefits of Indenture...................... 26
SECTION 1.11. Governing Law.............................. 26
SECTION 1.12. Legal Holidays............................. 26
SECTION 1.13. Execution in Counterparts.................. 27
SECTION 1.14. Inspection................................. 27
SECTION 1.15. Survival of Representations and
Warranties............................... 27
ARTICLE II THE NOTES.......................................... 28
SECTION 2.01. General Provisions......................... 28
SECTION 2.02. Execution, Authentication,
Delivery, and Dating..................... 30
SECTION 2.03. Registration, Transfer and
Exchange................................. 30
SECTION 2.04. Mutilated, Destroyed, Lost and
Stolen Notes............................. 32
SECTION 2.05. Delivery of [Class C] Notes................ 33
SECTION 2.06. Payment of Interest and Principal;
Rights Preserved......................... 34
SECTION 2.07. Persons Deemed Owners...................... 35
SECTION 2.08. Cancellation............................... 35
ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS................. 35
SECTION 3.01. Accounts; Investments by Indenture
Trustee.................................. 35
SECTION 3.02. Collection of Moneys; Lockbox
Facility; Lockbox Account................ 39
SECTION 3.03. Collection of Moneys....................... 39
SECTION 3.04. Collection Account......................... 39
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Page
----
SECTION 3.05. Reserve Account............................ 43
SECTION 3.06. Pre-Funding Account........................ 44
SECTION 3.07. Capitalized Interest Account............... 44
SECTION 3.08. Reserved................................... 45
SECTION 3.09. Reports by Indenture Trustee;
Notices of Certain Payments.............. 45
SECTION 3.10. Indenture Trustee May Rely on
Certain Information from
Originator and Servicer.................. 46
ARTICLE IV RELEASE OF CONTRACTS AND VEHICLES.................. 46
SECTION 4.01. Release of Contracts and Vehicles
Upon Final Contract Payment.............. 46
SECTION 4.02. Release of Contracts and Vehicles
Following Substitution or
Repurchase............................... 47
SECTION 4.03. Execution of Documents..................... 47
ARTICLE V SERVICER EVENTS OF DEFAULT; SUBSTITUTE
SERVICER........................................... 47
SECTION 5.01. Servicer Events of Default................. 47
SECTION 5.02. Substitute Servicer........................ 47
SECTION 5.03. Notification to Noteholders................ 48
ARTICLE VI EVENTS OF DEFAULT; REMEDIES........................ 48
SECTION 6.01. Events of Default.......................... 48
SECTION 6.02. Acceleration of Maturity;
Rescission and Annulment................. 50
SECTION 6.03. Remedies................................... 51
SECTION 6.04. Indenture Trustee May File Proofs
of Claim................................. 51
SECTION 6.05. Indenture Trustee May Enforce
Claims Without Possession of
Notes.................................... 52
SECTION 6.06. Application of Money Collected............. 53
SECTION 6.07. Limitation on Suits........................ 54
SECTION 6.08. Unconditional Right of Noteholders
to Receive Payment....................... 55
SECTION 6.09. Restoration of Rights and
Remedies................................. 55
SECTION 6.10. Rights and Remedies Cumulative............. 55
SECTION 6.11. Delay or Omission Not Waiver............... 56
SECTION 6.12. Control by Noteholders..................... 56
SECTION 6.13. Waiver of Events of Default................ 57
SECTION 6.14. Waiver of Stay or Extension Laws........... 57
SECTION 6.15. Sale of Trust Estate....................... 57
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Page
----
ARTICLE VII THE INDENTURE TRUSTEE.............................. 59
SECTION 7.01. Certain Duties and
Responsibilities......................... 59
SECTION 7.02. Notice of Defaults or Events of
Default.................................. 60
SECTION 7.03. Certain Rights of Indenture
Trustee.................................. 61
SECTION 7.04. Not Responsible for Recitals or
Issuance of Notes........................ 62
SECTION 7.05. Money Held in Trust........................ 62
SECTION 7.06. Compensation, Reimbursement, etc........... 62
SECTION 7.07. Corporate Indenture Trustee
Required; Eligibility.................... 63
SECTION 7.08. Resignation and Removal;
Appointment of Successor................. 63
SECTION 7.09. Acceptance of Appointment by
Successor................................ 64
SECTION 7.10. Merger, Conversion, Consolidation
or Succession to Business................ 65
SECTION 7.11. Co-trustees and Separate Indenture
Trustees................................. 65
SECTION 7.12. Indenture Trustee to Hold
Contracts................................ 67
SECTION 7.13. Request for Opinion of Counsel............. 67
SECTION 7.14. Financing Statements....................... 67
SECTION 7.15. Power of Attorney.......................... 67
ARTICLE VIII COVENANTS.......................................... 68
SECTION 8.01. Payment of Principal and
Interest................................. 68
SECTION 8.02. Maintenance of Office or Agency;
Chief Executive Office................... 68
SECTION 8.03. Money for Payments to Noteholders
to be Held in Trust...................... 68
SECTION 8.04. Corporate Existence; Merger;
Consolidation, etc....................... 69
SECTION 8.05. Protection of Trust Estate;
Further Assurances....................... 70
SECTION 8.06. Reserved................................... 71
SECTION 8.07. Performance of Obligations;
Receivables Acquisition
Agreement................................ 71
SECTION 8.08. Negative Covenants......................... 72
SECTION 8.09. Information as to the Issuer............... 73
SECTION 8.10. Taxes...................................... 74
SECTION 8.11. Indemnification............................ 75
SECTION 8.12. Certificates of Title...................... 75
iii
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Page
----
ARTICLE IX AMENDMENTS AND SUPPLEMENTAL INDENTURES............. 76
SECTION 9.01. Amendments and Supplemental
Indentures............................... 76
SECTION 9.02. Execution of Amendments and
Supplemental Indentures.................. 76
SECTION 9.03. Effect of Amendments and
Supplemental Indentures.................. 77
SECTION 9.04. Reference in Notes to Amendments
and Supplemental Indentures.............. 77
ARTICLE X REDEMPTION OF NOTES................................ 77
SECTION 10.01. Optional Redemption; Election to
Redeem................................... 77
SECTION 10.02. Notice to Indenture Trustee................ 78
SECTION 10.03. Notice of Redemption by the
Issuer................................... 78
SECTION 10.04. Deposit of the Redemption Price............ 78
SECTION 10.05. Notes Payable on Redemption Date........... 79
ARTICLE XI SATISFACTION AND DISCHARGE......................... 79
SECTION 11.01. Satisfaction and Discharge of
Indenture................................ 79
SECTION 11.02. Application of Trust Money................. 80
SCHEDULE 1 - Contract Schedule
SCHEDULE 2 - Amortization Schedule
EXHIBIT A - Form of [Class A] Notes
EXHIBIT B - Form of [Class B] Notes
EXHIBIT C - Form of Class C Notes
iv
<PAGE>
INDENTURE
This INDENTURE dated as of _____________, 199__, is between ADVANTA AUTO
FINANCE CORPORATION, a Nevada corporation (herein called the "Issuer"), and
___________________________, a national banking association, as trustee (herein
called the "Indenture Trustee").
RECITALS OF THE ISSUER
The Issuer has duly authorized the issue of $_____________ in aggregate
principal amount of its _____% Auto Receivables-Backed Notes, [Class A] (the
"[Class A] Notes") and $_____________ _____% Auto Receivables-Backed Notes,
[Class B] (the "[Class B] Notes" and together with the [Class A] Notes, the
"Offered Notes") of substantially the tenor hereinafter set forth, and to
provide therefor the Issuer has duly authorized the execution and delivery of
this Indenture.
The Issuer may, from time to time, subject to certain conditions set forth
herein, enter into a Supplement directing the issuance of a third class of Notes
(the "[Class C] Notes" and together with the Offered Notes, the "Notes") which
will be subordinate to the [Class A] Notes and to the [Class B] Notes.
All things necessary to make the Notes, when executed by the Issuer and
authenticated and delivered hereunder, the valid obligations of the Issuer, and
to make this Indenture a valid agreement of the Issuer, in accordance with its
terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the holders thereof, it is mutually covenanted and agreed, for the benefit of
all Noteholders, as follows:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee, for the benefit and
security of the Noteholders, all of the Issuer's right, title and interest in
and to (a) the Initial Contracts and all Contract Payments, [Repurchase
Amounts,] Prepayment Amounts and other amounts now due or hereafter becoming due
with respect thereto (other than any prepayments of rent required pursuant to
the terms of any Initial Contract at or before the commencement of the Contract
and any payments due before the Cut-Off Date for such Initial Contract), (b) any
and all Additional Contracts or Substitute Contracts and
<PAGE>
all Contract Payments, [Repurchase Amounts,] Prepayment Amounts and other
amounts now due or hereafter becoming due with respect thereto (other than any
prepayments of rent required pursuant to the terms of any Additional Contract or
Substitute Contract at or before the commencement of any such Additional
Contract or Substitute Contract and any payments due before the related Cut-Off
Date for such Additional Contract or Substitute Contract), (c) all rights of the
Issuer to or under any guarantees of or collateral for the Obligor's obligations
under any Contract, [(d) all Vehicles at any time subject to any Contract,] (e)
all moneys from time to time held by the Indenture Trustee pursuant to Section
3.01 hereof pending deposit in one of the accounts referred to therein, (f) all
moneys from time to time on deposit in the Collection Account, including all
investments and income from the investment of such moneys, (g) all moneys from
time to time on deposit in the Reserve Account, including all investments and
income from the investment of such moneys, (h) all moneys from time to time on
deposit in the Pre-Funding Account, including all investments and income from
the investment of such moneys, (i) all moneys from time to time on deposit in
the Capitalized Interest Account, including all investments and income from the
investment of such moneys, (j) all rights of the Issuer under the Receivables
Acquisition Agreement, (k) all rights of the Issuer under any program agreement,
purchase agreement, assignment agreement or other document pursuant to which the
Originator acquired an interest in any Contract and the Vehicles subject
thereto, and (l) all proceeds of any of the foregoing. Such Grant is made in
trust to secure (i) the payment of all amounts due on the Notes in accordance
with their terms, equally and ratably without prejudice, priority, or
distinction between any Note of the same class and any other Note of the same
class by reason of differences in time of issuance or otherwise, except as
otherwise may be provided in this Indenture or any Supplement, (ii) the payment
of all other sums payable under this Indenture with respect to the Notes and
(iii) compliance with the provisions of this Indenture and any Supplement with
respect to the Notes.
The Indenture Trustee acknowledges such Grant, accepts the trusts hereunder
in accordance with the provisions hereof, and agrees to perform the duties
herein required to the best of its ability and to the end that the interests of
the Noteholders may be adequately and effectively protected as hereinafter
provided.
2
<PAGE>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. General Definitions.
Except as otherwise specified or as the context may otherwise require, the
following terms have the meanings set forth below for all purposes of this
Indenture and any Supplement, and the definitions of such terms are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
Accrual Date: ____________, 199__
Act: with respect to any Noteholder, as defined in Section 1.04.
Additional Contract: each separate installment sale contract and each
contract schedule acquired by the Issuer from the Originator out of funds on
deposit in the Pre-Funding Account pursuant to the related Additional Contract
Transfer Agreement.
Additional Contract Transfer Agreement: as provided in Section ____ of the
Receivables Acquisition Agreement.
Additional Contract Transfer Date: the date specified in each Additional
Contract Transfer Agreement.
Affiliate: of any specified Person, any other Person (i) which directly or
indirectly controls, or whose directors or officers directly or indirectly
control, or is controlled by, or is under common control with, such specified
Person, (ii) which beneficially owns or holds, or whose directors or officers
beneficially own or hold, 25% or more of any class of the Voting Stock (or, in
the case of an entity that is not a corporation, 25% of the equity interest) of
such specified Person, or (iii) 25% or more of the Voting Stock (or, in the case
of an entity that is not a corporation, 25% of the equity interest) of which is
owned or held by such specified Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
Aggregate Implicit Contract Balance: means, with respect to any Calculation
Date, the sum of the Implicit Contract Balances of all Contracts.
3
<PAGE>
Authorized Officer: with respect to any matter, any officer of or other
Person representing the Issuer, the Originator, the Servicer, the Indenture
Trustee or a Noteholder, as the case may be, who is authorized to act for that
party.
Available Funds: means, with respect to each Payment Date, the collections
from the immediately preceding Collection Period on deposit in the Collection
Account.
Business Day: any day that is not a Saturday, Sunday or other day on which
commercial banking institutions in the city in which the Corporate Trust Office
is located are authorized or obligated by law or executive order to remain
closed.
Calculation Date: the first day of any calendar month.
Capitalized Interest Account: the account by that name established and
maintained by the Indenture Trustee pursuant to Section 3.01.
Capitalized Interest Requirement: means, with respect to each Payment Date,
the excess, if any, of (x) the interest due on the Notes on such Payment Date
over (y) the sum of (i) one-month's interest on the Implicit Contract Balance of
all Contracts as of the close of business on the last day of the immediately
preceding Collection Period, calculated at the Weighted Average Note Rate and
(ii) any Pre-Funding Earnings to be transferred to the Collection Account on
such Payment Date pursuant to Section 3.06(c) hereof.
Capital Stock: as defined in Section ____ of the Receivables Acquisition
Agreement.
[Class A] Distribution Account: the account or accounts by that name
established and maintained by the Indenture Trustee pursuant to Section 3.01.
[Class A] Monthly Interest: means, for the initial Payment Date,
one-twelfth of the product of the [Class A] Note Rate and the initial [Class A]
Note Balance, and for any subsequent Payment Date, one-twelfth of the product of
(a) the [Class A] Note Rate and (b) the sum of (i) the Outstanding [Class A]
Note Balance as of the immediately preceding Payment Date (after giving effect
to all payments of [Class A] Monthly Principal and [Class A] Overdue Principal
made on such immediately preceding Payment Date) and (ii) any [Class A] Overdue
Interest.
[Class A] Monthly Principal: with respect to all of the Contracts for any
Payment Date, the product of (x) the sum
4
<PAGE>
of (i) the Contract Payments due during the related Collection Period minus the
aggregate of the Monthly Contract Yield for all Contracts, (ii) for each
Contract that is a Defaulted Contract, the Implicit Contract Balance and (iii)
for each Contract that is the subject of a prepayment (provided that such
Prepayment Amount has actually been deposited in the Collection Account), an
amount equal to the Implicit Contract Balance immediately prior to prepayment
and (y) the [Class A] Percentage. To the extent that an amount is included in
any of clauses (i) through (iii) above, such amount shall not be included in any
other such clause for purposes of calculating the [Class A] Monthly Principal.
[Class A] Noteholder: at any time, any Person in whose name a [Class A]
Note is registered in the Note Register.
[Class A] Note Balance: means, as of the Closing Date, $_____________ and
thereafter, as of each Payment Date, an amount equal to the initial [Class A]
Note Balance reduced by all payments on the [Class A] Notes pursuant to Section
3.04(b)(vi) hereof.
[Class A] Note Rate: the rate at which interest accrues on the [Class A]
Notes, which rate shall be ____% per annum.
[Class A] Notes: any [Class A] Notes described in Article II of, and
authorized by, and authenticated and delivered under, this Indenture.
[Class A] Overdue Interest: with respect to any Payment Date, the excess,
if any, of (a) the aggregate amount of [Class A] Monthly Interest due on all
prior Payment Dates over (b) the aggregate amount of [Class A] Monthly Interest
(from whatever source) actually paid to [Class A] Noteholders on all prior
Payment Dates.
[Class A] Overdue Principal: with respect to any Payment Date, the excess,
if any, of (a) the aggregate amount of [Class A] Monthly Principal due on all
prior Payment Dates over (b) the aggregate amount of [Class A] Monthly Principal
(from whatever source) actually paid to [Class A] Noteholders on all prior
Payment Dates.
[Class A] Percentage: _____%.
[Class B] Distribution Account: the account or accounts by that name
established and maintained by the Indenture Trustee pursuant to Section 3.01.
[Class B] Monthly Interest: means, for the initial Payment Date,
one-twelfth of the product of the [Class B] Note
5
<PAGE>
Rate and the initial [Class B] Note Balance, and for any subsequent Payment
Date, one-twelfth of the product of (a) the [Class B] Note Rate and (b) the sum
of (i) the Outstanding [Class B] Note Balance as of the immediately preceding
Payment Date (after giving effect to all payments of [Class B] Monthly Principal
and [Class B] Overdue Principal made on such immediately preceding Payment Date)
and (ii) any [Class B] Overdue Interest.
[Class B] Monthly Principal: with respect to all of the Contracts for any
Payment Date, the product of (x) the sum of (i) the Contract Payments due during
the related Collection Period minus the aggregate of the Monthly Contract Yield
for all Contracts, (ii) for each Contract that is a Defaulted Contract, the
Implicit Contract Balance and (iii) for each Contract that is the subject of a
prepayment (provided that such Prepayment Amount has actually been deposited in
the Collection Account), an amount equal to the Implicit Contract Balance
immediately prior to prepayment and (y) the [Class B] Percentage. To the extent
that an amount is included in any of clauses (i) through (iii) above, such
amount shall not be included in any other such clause for purposes of
calculating the [Class B] Monthly Principal.
[Class B] Noteholder: at any time, any Person in whose name a [Class B]
Note is registered in the Note Register.
[Class B] Note Balance: means, as of the Closing Date, $_____________ and
thereafter, as of each Payment Date, an amount equal to the initial [Class B]
Note Balance reduced by all payments on the [Class B] Notes pursuant to Section
3.04(b)(vii) hereof.
[Class B] Note Rate: the rate at which interest accrues on the
[Class B] Notes, which rate shall be _____% per annum.
[Class B] Notes: any [Class B] Notes described in Article II of, and
authorized by, and authenticated and delivered under, this Indenture.
[Class B] Overdue Interest: with respect to any Payment Date, the excess,
if any, of (a) the aggregate amount of [Class B] Monthly Interest due on all
prior Payment Dates over (b) the aggregate amount of [Class B] Monthly Interest
(from whatever source) actually paid to [Class B] Noteholders on all prior
Payment Dates.
[Class B] Overdue Principal: with respect to any Payment Date, the excess,
if any, of (a) the aggregate amount of [Class B] Monthly Principal due on all
prior Payment Dates over (b) the aggregate amount of [Class B] Monthly Principal
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(from whatever source) actually paid to [Class B] Noteholders on all prior
Payment Dates.
[Class B] Percentage: _____%.
[Class C] Distribution Account: the account or accounts by that name
established and maintained by the Indenture Trustee pursuant to Section 3.01.
[Class C] Monthly Interest: means, for the initial Payment Date of the
[Class C] Notes, if any, one-twelfth of the product of the [Class C] Note Rate
and the Initial [Class C] Note Balance, and for any subsequent Payment Date,
one-twelfth of the product of (a) the [Class C] Note Rate and (b) the sum of (i)
the Outstanding [Class C] Note Balance as of the immediately preceding Payment
Date (after giving effect to all payments of [Class C] Monthly Principal and
[Class C] Overdue Principal made on such immediately preceding Payment Date) and
(ii) any [Class C] Overdue Interest.
[Class C] Monthly Principal: with respect to all of the Contracts for any
Payment Date, the product of (x) the sum of (i) the Contract Payments due during
the related Collection Period minus the aggregate of the Monthly Contract Yield
for all Contracts, (ii) for each Contract that is a Defaulted Contract, the
Implicit Contract Balance and (iii) for each Contract that is the subject of a
prepayment (provided that such Prepayment Amount has actually been deposited in
the Collection Account), an amount equal to the Implicit Contract Balance
immediately prior to prepayment and (y) the [Class C] Percentage. To the extent
that an amount is included in any of clauses (i) through (iii) above, such
amount shall not be included in any other such clause for purposes of
calculating the [Class C] Monthly Principal.
[Class C] Noteholder: at any time, any Person in whose name a [Class C]
Note is registered in the Note Register.
[Class C] Note Balance: means an amount equal to the Initial [Class C] Note
Balance reduced by all payments on the [Class C] Notes pursuant to Section
3.04(b)(viii) hereof.
[Class C] Note Rate: the rate at which interest accrues on the [Class C]
Notes, which rate shall be established on the date of original issuance of the
[Class C] Notes in the related Supplement.
[Class C] Notes: any [Class C] Notes described in Article II of, and
authorized by, and authenticated and delivered under, this Indenture and the
related Supplement.
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[Class C] Overdue Interest: with respect to any Payment Date, the excess,
if any, of (a) the aggregate amount of [Class C] Monthly Interest due on all
prior Payment Dates over (b) the aggregate amount of [Class C] Monthly Interest
(from whatever source) actually paid to [Class C] Noteholders on all prior
Payment Dates.
[Class C] Overdue Principal: with respect to any Payment Date, the excess,
if any, of (a) the aggregate amount of [Class C] Monthly Principal due on all
prior Payment Dates over (b) the aggregate amount of [Class C] Monthly Principal
(from whatever source) actually paid to [Class C] Noteholders on all prior
Payment Dates.
[Class C] Percentage: a specified percentage of the Initial Aggregate
Balance, as determined on the date of issuance of the [Class C] Notes, not to
exceed _____%.
Closing Date: ______________, 199__.
Collection Account: the account or accounts by that name established and
maintained by the Indenture Trustee pursuant to Section 3.01.
Collection Period: with respect to a Payment Date, the period from the
first day of the calendar month immediately preceding the month in which such
Payment Date occurs through the last day of such calendar month.
Contract: at any time, each Initial Contract, Substitute Contract and
Additional Contract subject to the lien of this Indenture; provided, that, for
purposes of calculating the [Class A] Monthly Principal, the [Class B] Monthly
Principal or the [Class C] Monthly Principal with respect to any Payment Date,
(i) any Contract released from the lien of this Indenture pursuant to Sections
4.01 or 4.02 hereof following the Indenture Trustee's receipt of a Default
Payment shall, notwithstanding such release, be deemed to be a Contract
hereunder to and including the Payment Date next following the date on which
such Default Payment was received and (ii) any other Contract released from the
lien of this Indenture following the Indenture Trustee's receipt of the final
Contract Payment, or a Prepayment Amount shall, notwithstanding such release, be
deemed to be a Contract to and including the Payment Date next following the
Contract Payment Period during which such final Contract Payment was received.
Contract Payment: each periodic installment payable by a Obligor under a
Contract (excluding any Excess Contract Receivables). Prepayment Amounts,
prepayments required pursuant to the terms of a Contract at or before the
commencement of the Contract, payments becoming due before the
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Cut-Off Date and supplemental or additional payments required by the terms of a
Contract with respect to taxes, insurance, maintenance, indemnities, or other
specific charges shall not be Contract Payments hereunder.
Contract Payment Period: with respect to any Payment Date and the
Determination Date with respect thereto, the calendar month prior to the month
in which such Payment Date and such Determination Date occur.
Corporate Trust Office: the principal corporate trust office of the
Indenture Trustee located at ________________________________, or at such other
address as the Trustee may designate from time to time by notice to the
Noteholders and the Issuer.
Cut-Off Date: as defined in Section _____ of the Note Agreement.
Default: any occurrence that is, or with notice or the lapse of time or
both would become, an Indenture Event of Default.
Defaulted Contract: any Contract with respect to which either (i) four
Contract Payments are due and unpaid as of any Calculation Date or (ii) the
Servicer has declined to advance any delinquent Contract Payment in accordance
with Section _____ of the Receivables Acquisition Agreement on the grounds that
such advance would be a Nonrecoverable Advance or (iii) such Contract has been
rejected by or on behalf of the Obligor in a bankruptcy proceeding.
Default Payment: any payment made with respect to a Defaulted Contract (i)
by the Obligor under or with respect to such Contract (or by the application of
any security deposit or other monies owed or belonging to such Obligor) as
actual, liquidated or punitive damages resulting from the breach of such
Contract, (ii) by a transfer to the Collection Account pursuant to Section 3.04,
or (iii) by the Servicer or the Indenture Trustee from the proceeds of any
disposition of the Vehicle subject to such Contract. Contract Payments for any
Contract Payment Period prior to a Contract becoming a Defaulted Contract are
not Default Payments.
Default Pay-Through Amount: with respect to any Contract with respect to
which a Default Payment is made or due, an amount equal to the Implicit Contract
Balance of such Contract as of the Payment Date immediately following the first
Determination Date on which such Contract was a Defaulted Contract.
Delinquency Condition: the condition which exists on and as of any Payment
Date or on and as of the related
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Determination Date if (x) the aggregate of the Contract Payments due during the
related Contract Payment Period under all Contracts with respect to which any
Contract Payment or portion thereof was overdue as of each of the two
immediately preceding Payment Dates (after excluding any such Contract Payment
which was paid in full prior to the related Determination Date) exceeds (y) ____
percent of the aggregate of the Contract Payments due during the related
Contract Payment Period under all Contracts. If a Delinquency Condition exists
on any Payment Date, such Delinquency Condition shall be deemed to continue to
and include the day immediately preceding the next Payment Date.
Delinquency Payment: any payment made with respect to a Delinquent Contract
in an amount equal to all or part of any specific Contract Payment due with
respect to such Contract (i) by the Servicer pursuant to Section ____ of the
Receivables Acquisition Agreement or (ii) by a transfer to the Collection
Account pursuant to Section 3.04.
Delinquent Contract: as of any Determination Date, any Contract (other than
a Contract which became a Defaulted Contract prior to such Determination Date)
with respect to which the Obligor has not paid all Contract Payments then due.
Determination Date: with respect to any Payment Date, the [fifth] Business
Day immediately preceding such Payment Date.
Discount Rate: _____% per annum, which rate represents the Weighted Average
Note Rate plus the Servicing Fee Rate on an annualized basis.
Eligible Account: any one or more of the following accounts:
(i) an account maintained with a depository institution or trust
company whose long-term unsecured debt obligations are rated at least A by
the Rating Agency at the time of any deposit therein (or, if such
obligations are, at the time of such deposit, not rated by the Rating
Agency, its equivalent rating from one other nationally recognized rating
agency); or
(ii) a trust account or accounts maintained with a federal or state
chartered depository institution or trust company subject to regulations
regarding collateralized fiduciary funds on deposit substantially similar
to 12 C.F.R. Section 9.10(b).
Eligible Investments: any one or more of the following obligations or
securities:
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(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, or any agency or instrumentality of the United
States of America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any commercial
bank, depository institution or trust company (including the Indenture
Trustee acting in its commercial capacity) incorporated under the laws of
the United States of America or any state thereof provided, that (x) such
commercial bank, depository institution or trust company shall have a
combined capital and surplus of at least $500,000,000 and be subject to
supervision and examination by federal and/or state banking authorities and
(y) at the time of such investment or contractual commitment providing for
such investment such commercial bank, depository institution or trust
company has a long-term unsecured debt rating of at least AA issued by the
Rating Agency (or, if such obligations are, at the time of such deposit,
not rated by the Rating Agency, its equivalent rating from one other
nationally recognized agency) (or, in the case of a commercial bank or
depository institution which is the principal subsidiary of a holding
company, such holding company has a short-term credit rating of at least
Duff-1 issued by the Rating Agency (or, if such obligations are, at the
time of such deposit, not rated by the Rating Agency, its equivalent rating
from one other nationally recognized rating agency) and (B) any other
demand or time deposit or certificate of deposit which is fully insured by
the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to and collateralized by (A)
any security described in clause (i) above or (B) any other security issued
or guaranteed by an agency or instrumentality of the United States of
America, in each case entered into with a depository institution or trust
company (acting as principal) of the type described in clause (ii) above,
provided that the Indenture Trustee has taken delivery of such security;
(iv) commercial paper (including both non-interest bearing discount
obligations and interest-bearing obligations) payable on demand or on a
specified date not more than 270 days after the date of issuance thereof
having a short-term credit rating of at least Duff-1 from the Rating Agency
(or, if such obligations are, at the time of such deposit, not rated by the
Rating Agency, its equivalent rating from one other nationally recognized
rating agency) at the time of such investment; and
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(v) shares with a constant net asset value in a mutual fund investing
solely in short-term securities of the United States government and having
the highest short-term credit rating of at least Duff-1 from the Rating
Agency (or, if such obligations are, at the time of such deposit, not rated
by the Rating Agency, its equivalent rating from one other nationally
recognized rating agency) which shares are freely transferable by the
holder on a daily basis.
Excess Collections: as of each Payment Date, the amount on deposit in the
Collection Account after payments to the Servicer, [Class A] Noteholders and
[Class B] Noteholders.
Excess Contract Receivables: with respect to any Excess Receivables
Contract and any Payment Date, the excess, if any, of (x) the Contract Payment
with respect to such Contract over (y) the amount which would have been received
with respect to such Contract during the Contract Payment Period with respect to
such Payment Date if the Implicit Contract Balance of such Contract or its
Predecessor Contract, in the case of a Substitute Contract, on the Closing Date
had equalled _____% of the Initial Aggregate Balance, which amount with respect
to each Initial Contract is set forth on Schedule 1 hereto.
Excess Receivables Contract: any Initial Contract which at the Closing Date
has an Implicit Contract Balance in excess of _____% of the Initial Aggregate
Balance, any Additional Contract which at the related Additional Contract
Transfer Date has an Implicit Contract Balance in excess of _____% of the
Initial Aggregate Balance and any Substitute Contract substituted pursuant to
Section ____ of the Receivables Acquisition Agreement for a Predecessor Contract
which is an Excess Receivables Contract.
Final Additional Closing Date: three months following the end of the month
which includes the Closing Date.
Financing Statement: as defined in Section ____ of the Note Agreement.
Grant: grant, bargain, sell, convey, assign, transfer, mortgage, pledge,
create and grant a security interest in and right of set-off against, deposit,
set over and confirm. The Grant of the Trust Estate effected by this Indenture
shall include all rights, powers, and options (but none of the obligations) of
the Issuer with respect thereto, including, without limitation, the immediate
and continuing right to claim for, collect, receive, and give receipts for
Contract Payments in respect of the Contracts and all other moneys payable
thereunder, to give and receive notices and
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other communications, to make waivers, amendments or other agreements, to
exercise all rights and options, to bring judicial proceedings in the name of
the Issuer or otherwise, to terminate a contract pursuant to the terms thereof,
and generally to do and receive anything that the Issuer is or may be entitled
to do or receive thereunder or with respect thereto.
Implicit Contract Balance: means, with respect to a Contract, the present
value of all Contract Payments that become due thereon on or after the
immediately preceding Calculation Date, discounted monthly at the product of (i)
one-twelfth and (ii) the Discount Rate.
Indenture or this Indenture: this instrument as originally executed and as
from time to time supplemented or amended pursuant to the applicable provisions
hereof.
Indenture Event of Default: as defined in Section 6.01.
Indenture Trustee: The Person named as the "Indenture Trustee" in the first
paragraph of this instrument until a successor Person shall have become the
Indenture Trustee pursuant to the applicable provisions of this Indenture, and
thereafter "Indenture Trustee" shall mean such successor; provided, that the
provisions of Section 7.06 and Section 8.11, as applicable to any Person at any
time serving as Indenture Trustee hereunder, shall survive (with respect to any
period prior to the date of such termination) the termination of such Person's
status as Indenture Trustee hereunder and the succession of any other Person to
such status.
Initial Aggregate Balance: an amount equal to $_____________, calculated as
the sum of the Initial Aggregate Implicit Contract Balance and the Original
Pre-Funded Amount.
Initial Aggregate Implicit Contract Balance: an amount equal to
$_______________.
Initial [Class C] Note Balance: an amount equal to the product of (x)
$_____________ minus all principal theretofore paid by the Trustee to the [Class
A] Noteholders, the [Class B] Noteholders or the Issuer and (y) the [Class C]
Percentage.
Initial Contract: each separate installment sale contract and each contract
schedule described in Schedule 1 hereto, as the same may be amended or modified
from time to time in accordance with the provisions hereof and thereof.
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Initial Deposit: the initial amount, equal to _____% of the Initial
Aggregate Balance, to be deposited by the Trustee in the Reserve Account.
Insurance Policy: any insurance policy required to be maintained by the
Obligor pursuant to the related Contract that covers physical damage to the
Vehicle or any liability arising out of the use of such Vehicle.
Insurance Proceeds: any proceeds of an Insurance Policy not applied to
repair or replacement of a Vehicle.
Issuer Order or Issuer Request: a written order or request delivered to the
Indenture Trustee and signed in the name of the Issuer by an Authorized Officer.
Lockbox Account: as defined in Section 3.02(a).
Lockbox Facility: as defined in Section 3.02(a).
Maturity Date: with respect to any installment of principal of or interest
on any Note, the date on which such installment is due and payable as therein or
herein provided, whether at the Stated Maturity Date, by declaration of
acceleration, or otherwise.
Maximum Reserve Amount: means, with respect to any Payment Date, an amount
equal to the lesser of (i) _____% of the Initial Aggregate Balance or (ii) the
sum of (x) the Outstanding [Class A] Note Balance and (y) the Outstanding [Class
B] Note Balance less (z) the Outstanding [Class C] Note Balance.
Monthly Contract Yield: with respect to each Contract, on any Payment Date,
one-twelfth of the product of the Discount Rate and the Aggregate Implicit
Contract Balance on the immediately preceding Payment Date (or the Cut-Off Date
in the case of the initial Payment Date).
Monthly Servicer Report: the report attached as Exhibit ___ to the
Receivables Acquisition Agreement.
Nonrecoverable Advance: as defined in Section ____ of the Receivables
Acquisition Agreement.
Note Agreement: the agreement dated as of the date hereof between the
Issuer and the initial purchasers of the Offered Notes with respect to the
purchase and sale of the Offered Notes as the same may be modified or amended
from time to time in accordance with its terms.
Noteholder: at any time, any Person in whose name a Note is registered in
the Note Register.
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Note Rate: the [Class A] Note Rate, the [Class B] Note Rate or the [Class
C] Note Rate, as applicable.
Note Register: as defined in Section 2.03.
Notes: any notes described in Article II of, and authorized by, and
authenticated and delivered under, this Indenture or any Supplement.
Obligor: the obligor under any Contract including the guarantor.
Offered Notes: the [Class A] Notes and the [Class B] Notes.
[Officers' Certificate: a certificate delivered to the Indenture Trustee
and signed by the Chairman, the President, or a Vice President of the Issuer,
and by another Vice President, the Treasurer, an Assistant Treasurer, the
Secretary, or an Assistant Secretary of the Issuer who is not the same Person as
the other officer signing such certificate.]
Opinion of Counsel: a written opinion, which shall be satisfactory in form
and substance to the Indenture Trustee, of counsel who may, except as otherwise
expressly provided in this Indenture, be inside or outside counsel for the
Issuer and who shall be satisfactory to the Indenture Trustee.
Optional Redemption: prepayment of the Offered Notes, in their entirety, by
the Issuer, without premium, on any Payment Date when the Outstanding [Class A]
Note Balance is less than or equal to _____% of the initial [Class A] Note
Balance and the Outstanding [Class B] Note Balance is less than or equal to
_____% of the initial [Class B] Note Balance (after giving effect to payments of
principal on such Payment Date).
Original Capitalized Interest Amount: means the amount deposited in the
Capitalized Interest Account on the Closing Date pursuant to Section 3.07(a) of
this Indenture.
Original Pre-Funded Amount: means the amount deposited in the Pre-Funding
Account on the Closing Date pursuant to Section 3.06(a) of this Indenture.
Originator: _______________, a _____________ organized and existing under
the laws of the State of ___________________, and its successors.
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Outstanding: with respect to the Notes, as of any date of determination,
all Notes theretofore authenticated and delivered under this Indenture or any
Supplement except:
(i) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes or portions thereof for whose payment money in the
necessary amount has been theretofore irrevocably deposited with the
Indenture Trustee in trust for the holders such Notes; and
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture or any
Supplement unless proof satisfactory to the Indenture Trustee is presented
that any such Notes are held by a Person in whose hands the Note is a valid
obligation;
provided, however, that in determining whether the holders of Notes evidencing
the requisite percentage of Voting Rights have given any request, demand,
authorization, direction, notice, consent, or waiver hereunder, (i) Notes owned
by the Issuer or any Affiliate of the Issuer shall be disregarded and deemed not
to be Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Notes that a Responsible Officer of
the Indenture Trustee actually knows to be so owned shall be so disregarded and
(ii) Notes owned by the Indenture Trustee or any Affiliate of the Indenture
Trustee shall be disregarded and deemed not to be Outstanding for purposes of
determining whether the requisite holders of the Notes have voted in favor of
any action or matter to be approved by them in accordance with Section 7.08
hereof.
Overfunded Interest Amount: means, with respect to each Payment Date, the
excess of (A) the amount on deposit in the Capitalized Interest Account (after
giving effect to any withdrawals on such Payment Date from the Capitalized
Interest Account pursuant to Section 3.07(b) of this Indenture) over (B) the
product of (i) one twelfth, (ii) the Weighted Average Note Rate, (iii) the
number of months remaining in the maximum Funding Period and (iv) the excess of
(x) the amount on deposit in the Pre-Funding Account as of the immediately
preceding Payment Date (excluding Pre-Funding Earnings) (or, in the case of the
initial Payment Date, the Original Pre-Funded Amount) over (y) the amount on
deposit in the Pre-Funding Account on such Payment Date (excluding Pre-Funding
Earnings).
Payment Date: the [twentieth] day of each month (or if such date is not a
Business Day, the next succeeding
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Business Day), commencing ____________, 199__, and ending with the Stated
Maturity Date.
Person: any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
Predecessor Contract: with respect to any Substitute Contract acquired by
the Issuer by substitution pursuant to Section ____ of the Receivables
Acquisition Agreement, the Contract or Contracts for which such Substitute
Contract or any intervening Substitute Contract has been substituted.
Predecessor Notes: with respect to any particular Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition, any Note authenticated
and delivered under Section 2.04 in lieu of a lost, destroyed or stolen Note (or
a mutilated Note surrendered to the Indenture Trustee) shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note (or a mutilated
Note surrendered to the Indenture Trustee).
Pre-Funded Amount: with respect to any Determination Date, the amount on
deposit in the Pre-Funding Account.
Pre-Funding Account: the account or accounts by that name established and
maintained by the Indenture Trustee pursuant to Section 3.01.
Pre-Funding Earnings: the actual investment earnings earned on the
Pre-Funding Account during each Collection Period.
Prepayment Amount: means, with respect to any Contract, the sum of (1) the
Implicit Contract Balance as of the first day of the Collection Period preceding
such prepayment, together with one month of interest thereon at the Discount
Rate, (2) any unreimbursed Servicer Advances with respect to such Contract and
(3) any Contract Payments due and outstanding under such Contract that are not
the subject of a Servicer Advance.
Prepayment Premium: means the greater of (i) zero and (ii) the excess of
(A) the product of (1) the present value of the remaining payments on the
Outstanding [Class A] Notes, the Outstanding [Class B] Notes or the Outstanding
[Class C] Notes, as applicable, discounted on a monthly basis (assuming a
calendar year consisting of twelve 30-day months)
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at a discount rate equal to the sum of (x) the rate on U.S. Treasury securities
with a remaining maturity equal to the weighted average life of the prepaid
principal plus (y) _____%, and (2) a fraction, the numerator of which is the
prepaid principal and the denominator of which is the Outstanding [Class A] Note
Balance, the Outstanding [Class B] Note Balance or the Outstanding [Class C]
Note Balance, as applicable, over (B) the prepaid principal. A Prepayment
Premium shall be payable only pursuant to Section 2.01(c) and (d) hereof.
Purchaser: an initial purchaser of Offered Notes under the Note Agreement.
Rating Agency: _________________ and any successor thereto.
Receivables Acquisition Agreement: the Receivables Acquisition Agreement
dated as of the date hereof between the Issuer and the Originator, as the same
may be amended or modified from time to time in accordance with the provisions
hereof and thereof.
Record Date: with respect to any Payment Date, the last Business Day of the
month immediately preceding such Payment Date.
Redemption Date: with respect to any redemption of Offered Notes, a date
fixed pursuant to Section 10.01.
Redemption Price: with respect to any Offered Note, and as of any
redemption date fixed by the Indenture Trustee, the Outstanding [Class A] Note
Balance or the Outstanding [Class B] Note Balance, as applicable, of such
Offered Note, together with interest accrued thereon to such redemption date at
the [Class A] Note Rate or the [Class B] Note Rate, as applicable (exclusive of
installments of interest and principal maturing on or prior to such date,
payment of which shall have been made to the holder of such Note on the
applicable Record Date or as otherwise provided herein).
Redemption Record Date: with respect to any redemption of Offered Notes, a
date fixed pursuant to Section 10.01.
[Repurchase Amount: an amount equal to the sum of (1) the Implicit Contract
Balance as of the first day of the Collection Period preceding such repurchase,
together with one month of interest thereon at the Discount Rate, (2) any
unreimbursed Servicer Advances with respect to such Contract and (3) any
Contract Payments due and outstanding under such Contract that are not the
subject of a Servicer Advance.]
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Required Deposit Date: as defined in Section 3.02(b).
Required Payments: the payments required pursuant to clauses (i), (ii) and
(iii) of Section 3.04(b) hereof.
Reserve Account: the account or accounts by that name established and
maintained by the Indenture Trustee pursuant to Section 3.01.
Reserve Account Payment: as of any Payment Date, an amount equal to the
excess, if any, of Required Payments over the amount on deposit in the
Collection Account.
Responsible Officer: with respect to the Indenture Trustee, any officer
regularly engaged in the administration or supervision of corporate trust
accounts and also, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
Restricting Event: as of any Payment Date or as of the related
Determination Date, the occurrence and continuance of a Delinquency Condition on
(i) such Payment Date, (ii) such related Determination Date or (iii) any of the
five previous Payment Dates.
Servicer: the Originator and any Successor Servicer appointed pursuant to
the terms hereof and of the Receivables Acquisition Agreement.
Servicer Advance: as defined in Section ____ of the Receivables Acquisition
Agreement.
Servicer Event of Default: as defined in Section ____ of the Receivables
Acquisition Agreement.
Servicer Order: a written order or request delivered to the Indenture
Trustee and signed in the name of the Servicer by an Authorized Officer.
Servicing Fee: an amount equal to the sum of (a) the product of (i)
one-twelfth, (ii) the Servicing Fee Rate and (iii) the Aggregate Implicit
Contract Balance as of the beginning of the previous Collection Period, (b) late
payment fees and certain other fees paid by the Obligors during the previous
Collection Period and (c) any investment earnings on amounts held in the
Collection Account.
Servicing Fee Rate: _____%.
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Sponsor: Advanta Auto Finance Corporation, a corporation organized and
existing under the laws of the State of Nevada, and its successors.
Stated Maturity Date: the date on which the entire unpaid principal amount
of the Notes is due and payable, which date is ________ __, 199__.
Substitute Contract: each separate installment sale contract and each
contract schedule substituted for another Contract pursuant to the provisions of
Section ____ of the Receivables Acquisition Agreement, as the same may be
amended or modified from time to time in accordance with the provisions hereof
and thereof.
Successor Servicer: the Indenture Trustee or any successor to the Servicer
pursuant to the Receivables Acquisition Agreement.
Supplement: with respect to the [Class C] Notes, if any are issued, a
supplement to this Indenture complying with the terms of Section 2.05 hereof.
Transaction Payment Amount: for each Required Deposit Date, the amount of
all Contract Payments, Excess Contract Receivables, Delinquency Payments,
Default Payments, Prepayment Amounts and other payments on or in respect to a
Contract received by the Trustee in the Lockbox Facility or otherwise and
deposited in the Lockbox Account pursuant to Section 3.02(a) hereof and reported
by the Servicer for such Required Deposit Date in accordance with Section ____
of the Receivables Acquisition Agreement.
Trust Estate: all Contracts, Vehicles, money, instruments, accounts and
other property subject to or intended to be subject to the lien of this
Indenture including all proceeds thereof.
Uniform Commercial Code or UCC: with respect to a particular jurisdiction,
the Uniform Commercial Code, as in effect from time to time in such
jurisdiction, or any successor statute thereto.
Vehicles: each item of property, together with any replacement parts,
additions, and repairs thereto, any replacements thereof, any accessories
incorporated therein and/or affixed thereto, subject to a Contract or, following
expiration or termination of the Contract to which the same was previously
subject, remaining subject to the lien of this Indenture in accordance with the
provisions hereof.
Voting Rights: means, for so long as any [Class A] Notes remain
Outstanding, 100% of the Voting Rights shall be
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exercised by the [Class A] Noteholders, with each [Class A] Noteholder having
its proportionate percentage interest in all Voting Rights. When no [Class A]
Note is Outstanding, 100% of the Voting Rights shall be exercised by the [Class
B] Noteholders, with each [Class B] Noteholder having its proportionate
percentage interest in all Voting Rights. When no [Class A] Notes and [Class B]
Notes are Outstanding, 100% of the Voting Rights shall be exercised by the
[Class C] Noteholders, if any, with each [Class C] Noteholder having its
proportionate percentage interest in all Voting Rights.
Voting Stock: capital stock of any class of a corporation having power to
vote for the election of the members of the board of directors of such
corporation, or persons performing similar functions (whether or not at the time
stock of any class shall have or might have special voting powers or rights by
reason of the happening of any contingency).
Weighted Average Note Rate: the weighted average of the [Class A] Note
Rate, the [Class B] Note Rate and the [Class C] Note Rate, calculated as of the
Closing Date. For purposes of calculating the Weighted Average Note Rate, the
[Class C] Note Rate shall be equal to the [Class B] Note Rate and the balance
applicable thereto shall equal _____% of the Initial Aggregate Balance.
SECTION 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Issuer to the Indenture Trustee to
take any action under any provision of this Indenture or any Supplement, other
than any request that (i) the Indenture Trustee authenticate the Notes specified
in such request, (ii) the Indenture Trustee invest moneys in the Collection
Account, the Reserve Account, the Pre-Funding Account or the Capitalized
Interest Account pursuant to the written directions specified in such request,
or (iii) the Indenture Trustee pay moneys due and payable to the Issuer
hereunder to the Issuer's assignee specified in such request, the Indenture
Trustee may require the Issuer to furnish to the Indenture Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture or any Supplement relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that in the
case of any such requested action as to which other evidence of satisfaction of
the conditions precedent thereto is specifically required by any provision of
this Indenture or any Supplement, no additional certificate or opinion need be
furnished.
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SECTION 1.03. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any Officer's Certificate or opinion and any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer or Authorized Officers of the
Issuer as to such factual matters unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion, which shall include the Noteholders as addressees thereof,
and shall include a statement to the effect that such counsel believes that such
counsel, the Indenture Trustee and the Noteholders may reasonably rely upon the
opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Supplement, they may, but need not, be
consolidated and form one instrument.
Wherever in this Indenture or any Supplement, in connection with any
application or certificate or report to the Indenture Trustee, it is provided
that the Issuer shall deliver any document as a condition of the granting of
such application, or as evidence of compliance with any term hereof, it is
intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Section 7.01(a)(ii).
Whenever in this Indenture or any Supplement it is provided that the
absence of the occurrence and continuation
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of a Default or an Indenture Event of Default or a Servicer Event of Default is
a condition precedent to the taking of any action by the Indenture Trustee at
the request or direction of the Issuer, then, notwithstanding that the
satisfaction of such condition is a condition precedent to the Issuer's right to
make such request or direction, the Indenture Trustee shall be protected in
acting in accordance with such request or direction if it does not have
knowledge of the occurrence and continuation of such Default or Indenture Event
of Default or Servicer Event of Default. For all purposes of this Indenture and
any Supplement, the Indenture Trustee shall not be deemed to have knowledge of
any Default or Indenture Event of Default (other than an Indenture Event of
Default of the kind described in clause (i) of Section 6.01) or Servicer Event
of Default unless a Responsible Officer of the Indenture Trustee shall have
actual knowledge thereof or shall have been notified in writing thereof by the
Issuer, the Servicer or any Noteholder.
SECTION 1.04. Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture or any Supplement to be given or
taken by Noteholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, with a copy (or if expressly required an
original) to the Issuer and the Servicer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture or any Supplement and
(subject to Section 7.01) conclusive in favor of the Indenture Trustee and the
Issuer, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person
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executing the same, may also be proved in any other manner which the Indenture
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the holder of any Note shall bind every future holder of the
same Note and the holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Indenture Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such Note.
(d) By accepting the Notes issued pursuant to this Indenture and any
Supplement, each Noteholder irrevocably appoints the Indenture Trustee hereunder
as the special attorney-in-fact for such Noteholder vested with full power on
behalf of such Noteholder to effect and enforce the rights of such Noteholder
pursuant hereto and the provisions hereof for the benefit of such Noteholder.
SECTION 1.05. Notices, etc., to Trustee, Servicer and Issuer.
Any request, demand, authorization, direction, notice, consent, waiver, Act
of Noteholders, or other document provided or permitted by this Indenture or any
Supplement to be made upon, given or furnished to, or filed with, the Indenture
Trustee, the Issuer or the Servicer shall be sufficient for every purpose
hereunder if in writing and telexed, telecopied (with a copy of the telexed or
telecopied material sent to the recipient by overnight courier on the day of the
telex or telecopy), mailed, first-class postage prepaid, or hand delivered.
Unless otherwise specifically provided herein, no such request, demand,
authorization, direction, notice, consent, waiver, Act of Noteholders or other
document shall be effective until received and any provision hereof requiring
the making, giving, furnishing, or filing of the same on any date shall be
interpreted as requiring the same to be sent or delivered in such fashion that
it will be received on such date. Any such request, demand, authorization,
direction, notice, consent, waiver, Act of Noteholders, or other document shall
be sent or delivered to the following addresses:
(i) if to the Indenture Trustee, at the [Corporate Trust Office],
Attention: ________________ (Number for telecopy: ______________;
(ii) if to the Issuer, at [130 John Street, New York, New York 10038
(Number for telecopy: (212) ________)], or at any other address previously
furnished in writing to the Indenture Trustee and the Servicer by the Issuer;
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(iii) if to the Originator, at ________ ________________________ (Number
for telecopy: (___) ________), or at any other address previously furnished in
writing to the Indenture Trustee, the Issuer and the Servicer by the Originator;
or
(iv) if to the Servicer, at ___________
___________________________________________________ (Number for telecopy:
_______________, or at any other address previously furnished in writing to the
Indenture Trustee, the Issuer and the Originator by the Servicer.
The Indenture Trustee will send to each Noteholder a copy of any notice it
receives hereunder by the Business Day following the receipt thereof by the
Indenture Trustee.
SECTION 1.06. Notice to Noteholders; Waiver.
(a) Where this Indenture or any Supplement provides for notice to
Noteholders of any event, or the mailing of any report to Noteholders, such
notice or report shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, certified mail return-receipt requested, or
sent by private courier or confirmed telecopy (with a copy of the telecopied
material sent to the recipient by overnight courier on the day of the telecopy)
to each Noteholder affected by such event or to whom such report is required to
be mailed, at his address as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice or the mailing of such report. In any case where a notice or
report to Noteholders is mailed, neither the failure to mail such notice or
report, nor any defect in any notice or report so mailed, to any particular
Noteholder shall affect the sufficiency of such notice or report with respect to
other Noteholders. Where this Indenture or any Supplement provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Noteholders shall be filed
with the Indenture Trustee, but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such waiver.
(b) In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to mail or send notice to
Noteholders, in accordance with Section 1.06(a), of any event or any report to
Noteholders when such notice or report is required to be delivered pursuant to
any provision of this Indenture or any Supplement, then such notification or
delivery as shall be made with the approval of the Indenture Trustee shall
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constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.08. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer or the
Indenture Trustee shall bind its respective successors and permitted assigns,
whether so expressed or not.
SECTION 1.09. Severability Clause.
In case any provision in this Indenture, any Supplement or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.10. Benefits of Indenture.
Nothing in this Indenture, any Supplement or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any separate trustee or co-trustee appointed under Section
7.11 hereof and the holders of Notes, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.11. Governing Law.
This Indenture, any Supplement and the Notes shall be governed by, and
construed in accordance with, the laws of the State of [New York], without
regard to conflict of laws principles; provided that any provision of this
Indenture which relates to, or provides for, the rights, duties and obligations
of the Indenture Trustee shall be governed by, and construed in accordance with,
the laws of the State of _____________. This Indenture is not subject to the
Trust Indenture Act of 1939 and shall not be governed thereby or construed in
accordance therewith.
SECTION 1.12. Legal Holidays.
In any case where any Payment Date or the Stated Maturity Date or any other
date on which principal of or interest on any Note is proposed to be paid shall
not be a Business Day, then (notwithstanding any other provision of
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this Indenture or of the Notes) such payment shall be made on the immediately
succeeding Business Day.
SECTION 1.13. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 1.14. Inspection.
The Issuer agrees that it will permit the representatives of the Indenture
Trustee or any Noteholder, during the Issuer's normal business hours, to examine
all of the books of account, records, reports and other papers of the Issuer, to
make copies thereof and extracts therefrom, to cause such books to be audited by
independent accountants selected by the Issuer and reasonably acceptable to the
Indenture Trustee or such Noteholder, as the case may be, and to discuss its
affairs, finances and accounts with its officers, employees and independent
accountants (and by this provision the Issuer hereby authorizes its accountants
to discuss with such representatives such affairs, finances and accounts), all
at such times and as often as may be reasonably requested for the purpose of
reviewing or evaluating the financial condition or affairs of the Issuer or the
performance of and compliance with the covenants and undertakings of the Issuer
in this Indenture, the Note Agreement, the Receivables Acquisition Agreement, or
any of the other documents referred to herein or therein. Any expense incident
to the exercise by the Indenture Trustee or any Noteholder during the
continuance of any Default or Indenture Event of Default of any right under this
Section 1.14 shall be borne by the Issuer, but any expense due to the exercise
of a right by any such Person prior to the occurrence of a Default or Indenture
Event of Default shall be borne by such Person.
SECTION 1.15. Survival of Representations and Warranties.
The representations, warranties and certifications of the Issuer made in
this Indenture or in any certificate or other writing delivered by the Issuer
pursuant hereto shall survive the authentication and delivery of the Notes
hereunder, but unless explicitly provided to the contrary, they are made only as
of the Closing Date.
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ARTICLE II
THE NOTES
SECTION 2.01. General Provisions.
(a) The Notes issuable hereunder shall be issued as registered Notes in no
more than [three classes] as from time to time shall be authorized by the Issuer
on or before __________, 199__. The Notes of all classes shall be known and
entitled generally as the "Advanta Auto Finance Corporation Auto
Receivables-Backed Notes." The Notes of each class shall have further particular
designation as the Issuer may adopt for each class, and each Note issued
hereunder shall bear upon the face thereof the designation so adopted for the
class to which it belongs. The Indenture Trustee is hereby authorized and
directed to authenticate and deliver Notes to be issued hereunder in two classes
entitled "_____% Auto Receivables-Backed Notes, [Class A]" and "_____% Auto
Receivables-Backed Notes, [Class B]", respectively. The Issuer may, from time to
time, subject to certain conditions precedent set forth in this Article II,
direct the issuance of the [third class] of Notes which will be subordinate to
the [Class A] Notes and to the [Class B] Notes by entering into a Supplement.
The form of each class of Notes and of the Indenture Trustee's certificate of
authentication shall be in substantially the forms set forth in Exhibits A, B
and C hereto, with such appropriate insertions, omissions, substitutions, and
other variations as are required or permitted by this Indenture. The aggregate
principal amount of Notes which may be authenticated and delivered under this
Indenture is limited to $_____________ (of which the aggregate principal amount
of the [Class A] Notes and the [Class B] Notes is $_____________) except for
Notes authenticated and delivered upon registration of, transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Section 2.03, 2.04, or
9.04. The [Class A] Notes shall be issuable only in registered form and only in
denominations of at least $_____________, provided that the foregoing shall not
restrict or prevent the transfer or issuance in accordance with Sections 2.03 or
2.04 of any [Class A] Note having a remaining outstanding principal amount of
less than $_____________. The [Class B] Notes shall be issuable only in
registered form and only in denominations of at least $_____________, provided
that the foregoing shall not restrict or prevent the transfer or issuance in
accordance with Sections 2.03 or 2.04 of any [Class B] Note having a remaining
outstanding principal amount of less than $_____________. [Class C] Notes, if
any, shall be issued in the minimum denominations indicated in the related
Supplement.
(b) The aggregate amount of principal due and payable on each class of
Notes on each Payment Date shall be
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equal to the [Class A] Monthly Principal, the [Class B] Monthly Principal or the
[Class C] Monthly Principal, as applicable, with respect to such Payment Date.
Except (i) for Optional Redemption pursuant to Section 10.01, (ii) Prepayment
Amounts, (iii) Repurchase Amounts, (iv) prepayments from funds remaining in the
Pre-Funding Account, or (v) as otherwise provided in Section 6.02, no part of
the principal of any Note shall be paid prior to the Payment Date on which such
principal is due in accordance with the preceding provisions of this Section
2.01(b).
(c) If the [Class A] Monthly Principal, the [Class B] Monthly Principal or
the [Class C] Monthly Principal, as applicable, to be paid on the Notes on any
Payment Date includes any amount pursuant to clause (iii) of the definition of
the [Class A] Monthly Principal, the [Class B] Monthly Principal or the [Class
C] Monthly Principal, as applicable (other than any prepayment in connection
with casualty to Vehicles or a Defaulted Contract), there shall also be paid to
the Noteholders on such Payment Date a premium equal to the Prepayment Premium
with respect to such amount to be paid pursuant to such clause (iii).
(d) Any amounts on deposit in the Pre-Funding Account after the Final
Additional Closing Date will be applied as a prepayment of the Notes to the
Noteholders on the next succeeding Payment Date in accordance with their
respective Class Percentages. If such prepayment is of an amount greater than
$_____________, a Prepayment Premium shall also be paid to the [Class A]
Noteholders and [Class B] Noteholders.
(e) Interest on the unpaid principal amount of each Outstanding Note shall
be payable on each Payment Date at the [Class A] Note Rate, the [Class B] Note
Rate or the [Class C] Note Rate, as applicable, for the period from the Accrual
Date, in the case of the [Class A] Notes and the [Class B] Notes, and from and
including the closing date thereof in the case of [Class C] Notes or, in either
case, such later date to which interest has been paid or duly provided for, to
such Payment Date. Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
(f) All payments made with respect to any Note shall be made in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts and shall be applied first to the
interest then due and payable on such Notes, then to Prepayment Premium, if any,
and finally the principal thereof.
(g) All Notes of the same class issued under this Indenture or any
Supplement shall be in all respects equally and ratably entitled to the benefits
hereof and thereof
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without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Indenture or any Supplement. Payments of principal, the
Prepayment Premium, if any, and interest on Notes of the same class shall be
made pro rata among all Outstanding Notes of such class, without preference or
priority of any kind.
SECTION 2.02. Execution, Authentication, Delivery, and Dating.
(a) The Notes shall be manually executed on behalf of the Issuer by an
Authorized Officer.
(b) Any Note bearing the signature of an individual who was at the time of
execution thereof a proper officer of the Issuer shall bind the Issuer,
notwithstanding that such individual ceases to hold such office prior to the
authentication and delivery of such Note or did not hold such office at the date
of such Note.
(c) No Note shall be entitled to any benefit under this Indenture or any
Supplement or be valid or obligatory for any purpose unless there appears on
such Note a certificate of authentication substantially in the form provided for
herein, executed by the Indenture Trustee by manual signature, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder. Each Note
shall be dated the date of its authentication.
(d) The Notes may from time to time be executed by the Issuer and delivered
to the Indenture Trustee for authentication together with an Issuer Request to
the Indenture Trustee directing the authentication and delivery of such Notes
and thereupon the same shall be authenticated and delivered by the Indenture
Trustee in accordance with such Issuer Request.
SECTION 2.03. Registration, Transfer and Exchange.
(a) The Issuer shall cause to be kept at the Corporate Trust Office a
register (the "Note Register") in which, subject to such reasonable regulations
as the Indenture Trustee may prescribe, the Issuer shall provide for the
registration of Notes and of transfers of Notes. The Indenture Trustee is hereby
appointed "Note Registrar" for the purpose of registering Notes and transfers of
Notes as herein provided.
(b) Upon surrender for registration of transfer of any Note at the office
of the Issuer designated pursuant to Section 8.02 for such purpose, the Issuer
shall execute and
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the Indenture Trustee upon request shall authenticate and deliver, in the name
of the designated transferee or transferees, one or more new Notes of the same
class, of any authorized denominations and of a like aggregate original
principal amount. The Indenture Trustee shall make a notation on any such new
Note of the amount of principal, if any, that has been paid on such Note and
shall make the appropriate entries in the Note Register.
(c) All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture and any Supplement, as the
Notes surrendered upon such registration of transfer or exchange.
(d) Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Issuer or the Indenture Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Indenture Trustee duly executed, by the
holder thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Issuer or the Indenture Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 9.04 not involving any transfer.
(f) Each prospective initial Noteholder acquiring a Note, each prospective
transferee acquiring a Note and each prospective owner of a beneficial interest
in Notes acquiring such beneficial interest (the prospective initial Noteholder,
the prospective transferee and the prospective beneficial owner, each, a
"Prospective Owner"), shall either (i) represent and warrant, in writing, to the
Issuer, the Trustee, the Servicer and any Successor Servicer that the
Prospective Owner is not an "employee benefit plan" within the meaning of
Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of
the Code (any such plan or employee benefit plan, a "Plan") and the Prospective
Owner is not directly or indirectly acquiring the Note on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with assets of a
Plan, or (ii) furnish to the Issuer, the Indenture Trustee, the Servicer and any
Successor Servicer an opinion of counsel acceptable to the Issuer, the Indenture
Trustee, the Servicer and any Successor Servicer that (a) the proposed
acquisition or transfer will not cause any of the assets of the Issuer to be
deemed to be assets of a Plan, or (b) the proposed acquisition or transfer will
not cause the
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Issuer, the Indenture Trustee, the Servicer or any Successor Servicer to be a
fiduciary of a Plan within the meaning of Section 3(21) of ERISA and will not
give rise to a transaction described in Section 406 of ERISA or Section
4975(e)(1) of the Code for which a statutory or administrative exemption is
unavailable.
SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Indenture Trustee, the
Issuer shall execute and the Indenture Trustee shall authenticate and deliver in
exchange therefor a replacement Note of the same class, of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
(b) If there shall be delivered to the Issuer and the Indenture Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note
(provided, that any Noteholder's affidavit shall be sufficient evidence for
these purposes) and (ii) such security or indemnity as may be required by them
to save each of them and any agent of either of them harmless (provided, that
any institutional Noteholder's own unsecured agreement of indemnity shall be
sufficient for these purposes), then, in the absence of actual notice to the
Issuer or the Indenture Trustee that such Note has been acquired by a bona fide
purchaser, the Issuer shall execute and upon its request the Indenture Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Note, a replacement Note of the same class, of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
(c) In case the final installment of principal on any such mutilated,
destroyed, lost or stolen Note has become or will at the next Payment Date
become due and payable, the Issuer in its discretion may, instead of issuing a
replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this Section, the
Issuer or the Indenture Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed as a result of
the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture and any
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Supplement equally and proportionately with any and all other Notes of the same
class, duly issued hereunder.
(f) The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.05. Delivery of [Class C] Notes.
(a) Upon delivery to the Indenture Trustee of an Officers' Certificate of
the Issuer (a) requesting the authentication of the [Class C] Notes and (b)
stating the date upon which such [Class C] Notes are to be issued (such date,
the "Issuance Date" and such notice, the "Issuance Notice") and certifying the
satisfaction of the conditions stated in this Section and Section 2.01, the
Indenture Trustee shall, subject to Section 2.05(b), authenticate pursuant to
Section 2.02 and deliver to or upon the order of the Issuer on such Issuance
Date such [Class C] Notes. Any such [Class C] Note shall be substantially in the
form of Exhibit C hereto and shall bear, upon its face, the designation for such
class to which it belongs so selected by the Issuer and set forth in the related
Supplement. All [Class C] Notes shall be identical in all respects except for
the denominations thereof and shall be equally and ratably entitled among
themselves to the benefits of this Agreement and any Supplement thereof without
preference, priority or distinction on account of the actual title or times of
authentication and delivery, all in accordance with the terms and provisions of
this Agreement and such Supplement. Notwithstanding anything contained in any
Supplement, no [Class C] Notes issued pursuant to the provisions of this Section
shall adversely affect the method of allocating Available Funds to [Class A]
Notes or [Class B] Notes for any period over which such [Class C] Notes shall be
outstanding.
(b) On the Issuance Date, the Indenture Trustee shall authenticate and
deliver any such [Class C] Notes upon delivery to it of the following: (i) a
Supplement substantially in the form of ____________ and in form reasonably
satisfactory to the Indenture Trustee executed by the Issuer and the Indenture
Trustee and specifying the items provided in Section 2.05(c) and any other terms
(the "Principal Terms"), (ii) an Opinion of Counsel delivered by outside counsel
to the Issuer reasonably acceptable to the Indenture Trustee, to the effect that
(A) the newly issued [Class C] Notes would be treated as debt for Federal income
tax purposes under existing law, (B) immediately following the issuance of the
[Class C] Notes, the Outstanding [Class A] Notes and the Outstanding [Class B]
Notes will continue to be treated as debt for Federal income tax purposes under
existing law and (C) such issuance of the [Class C] Notes will not have
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a material adverse tax effect on any Outstanding [Class A] Notes or Outstanding
[Class B] Notes, (iii) written confirmation from the Rating Agency that the
issuance of such [Class C] Notes will not result in the Rating Agency's reducing
or withdrawing its rating on the Outstanding [Class A] Notes or Outstanding
[Class B] Notes, (iv) such other closing documents, certificates and opinions of
counsel as may be required by the applicable Supplement. Notwithstanding the
foregoing, the Indenture Trustee shall not authenticate and deliver any [Class
C] Notes hereunder unless it also received on or prior to the Issuance Date, an
Officers' Certificate of the Issuer stating: (A) the [Class C] Percentage, which
percentage shall not exceed _____%, (B) the Initial [Class C] Note Balance, and
(C) the [Class C] Note Rate.
(c) Any Supplement relating to [Class C] Notes shall define or make
provision with respect to the [Class C] Notes to be issued pursuant thereto
including, but not limited to, the following Principal Terms: (i) the name or
designation of the [Class C] Notes, (ii) the Initial [Class C] Note Balance
thereof, (iii) the [Class C] Note Rate (or the formula for the determination
thereof, which may provide that such rate is a floating rate), (iv) the [Class
C] Percentage, (v) the Stated Maturity Date and (vi) the Redemption Price, if
any.
SECTION 2.06. Payment of Interest and Principal; Rights Preserved.
(a) Any installment of interest or principal and Prepayment Premium, if
any, payable on any Note that is paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note was
registered at the close of business on the Record Date for such Payment Date by
wire transfer of federal funds to the account and number specified in the Note
Register on such Record Date for such Person (which shall be, as to each
original purchaser of the Notes, the account and number specified on Exhibit A
to the Note Agreement until such time as such purchaser notifies the Indenture
Trustee in writing of a change therein) or, if no such account or number is so
specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date.
(b) All reductions in the principal amount of a Note effected by payments
of installments of principal made on any Payment Date shall be binding upon all
holders of such Note and of any Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, whether or not such payment
is noted on such Note. All payments on the Notes shall be paid without any
requirement of presentment but each holder of any Note shall be deemed to agree,
by its
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acceptance of the same, to surrender such Note at the Corporate Trust Office
within ten Business Days following payment of the final installment of principal
of such Note.
SECTION 2.07. Persons Deemed Owners. Prior to due presentment of a Note for
registration or transfer, the Issuer, the Indenture Trustee, and any agent of
the Issuer or the Indenture Trustee may treat the Noteholder as the owner of
such Note for the purpose of receiving payment of principal of and interest on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and neither the Issuer, the Indenture Trustee, nor any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.08. Cancellation. All Notes surrendered for registration of
transfer or exchange or following final payment shall, if surrendered to any
Person other than the Trustee, be delivered to the Indenture Trustee and shall
be promptly cancelled by it. The Issuer may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly cancelled by the Indenture Trustee. No
Notes shall be authenticated in lieu of or in exchange for any Notes cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled Notes held by the Indenture Trustee may be disposed of in the
normal course of its business or as directed by an Issuer Order.
ARTICLE III
ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION
AND APPLICATION OF MONEYS; REPORTS
SECTION 3.01. Accounts; Investments by Indenture Trustee.
(a) On or before the Closing Date, the Indenture Trustee shall establish in
the name of the Indenture Trustee for the benefit of the Noteholders and the
Issuer to the extent of their interests therein as provided in this Indenture
and in the Receivables Acquisition Agreement, the following accounts, which
accounts shall be trust accounts maintained at the Corporate Trust Office:
(i) Collection Account;
(ii) [Class A] Distribution Account;
(iii) [Class B] Distribution Account;
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(iv) [Class C] Distribution Account;
(v) Reserve Account;
(vi) Pre-Funding Account;
(vii) Capitalized Interest Account; and
(viii) Lockbox Account.
Each of such accounts shall be established and maintained as an Eligible
Account. Subject to the further provisions of this Section 3.01(a), the
Indenture Trustee shall, upon receipt or upon transfer from another account, as
the case may be, deposit into such accounts all amounts received by it which are
required to be deposited therein in accordance with the provisions of this
Indenture. All such amounts and all investments made with such amounts,
including all income and other gain from such investments, shall be held by the
Indenture Trustee in such accounts as part of the Trust Estate as herein
provided, subject to withdrawal by the Indenture Trustee in accordance with, and
for the purposes specified in the provisions of, this Indenture.
(b) Subject to Section 3.02, the Indenture Trustee shall hold in trust but
shall not be required to deposit in any account specified in Section 3.01(a) any
payment received by it until such time as the Indenture Trustee shall have
identified to its reasonable satisfaction the nature of such payment and, on the
basis thereof, the proper account or accounts into which such payment is to be
deposited. In determining into which of the accounts, if any, referred to above
any amount received by the Indenture Trustee is to be deposited, the Indenture
Trustee may conclusively rely (in the absence of bad faith on the part of the
Indenture Trustee) on the written instructions of the Servicer. Subject to
Section 3.02, unless otherwise advised in writing by the Obligor making the
payment or by the Servicer, the Indenture Trustee shall assume that any amount
remitted to it by such Obligor is to be deposited into the Collection Account
pursuant to Section 3.03. The Indenture Trustee may establish from time to time
such deadline or deadlines as it shall determine are reasonable or necessary in
the administration of the Trust Estate after which all amounts received or
collected by the Indenture Trustee on any day shall not be deemed to have been
received or collected until the next succeeding Business Day.
(c) The Indenture Trustee shall have no right of set-off with respect to
the Lockbox Account, the Collection Account, the [Class A] Distribution Account,
the [Class B] Distribution Account, the [Class C] Distribution Account, the
Reserve Account, the Pre-Funding Account, the Capitalized
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Interest Account or any investment therein, whether or not commingled.
(d) So long as no Default or Indenture Event of Default shall have occurred
and be continuing, the amounts in the Collection Account, the Reserve Account,
the Pre-Funding Account and the Capitalized Interest Account shall be invested
and reinvested by the Indenture Trustee pursuant to an Issuer's Order or
Servicer Order in one or more Eligible Investments. Subject to the restrictions
on the maturity of investments set forth in Section 3.01(f), each such Issuer
Order or Servicer Order may authorize the Indenture Trustee to make the specific
Eligible Investments set forth therein, to make Eligible Investments from time
to time consistent with the general instructions set forth therein, or to make
specific Eligible Investments pursuant to instructions received in writing or by
telegraph or facsimile transmission from the employees or agents of the Issuer
or the Servicer, as the case may be, identified therein, in each case in such
amounts as such Issuer Order or Servicer Order shall specify. The Issuer agrees
to report as income for financial reporting and tax purposes (to the extent
reportable) all investment earnings on amounts in the Collection Account, the
Reserve Account, the Pre-Funding Account, and the Capitalized Interest Account.
(e) In the event that either (i) the Issuer or the Servicer, as applicable,
shall have failed to give investment directions to the Indenture Trustee by
[12:00 P.M. New York time] on any Business Day on which there may be uninvested
cash or (ii) a Default or Indenture Event of Default shall have occurred and be
continuing, then the Indenture Trustee shall promptly notify each Noteholder of
such fact and indicate that the Indenture Trustee is prepared to invest such
funds in one or more Eligible Investments in accordance with the instructions of
the holders of Notes evidencing more than [50%] of Voting Rights. In the absence
of such instructions, the Indenture Trustee shall invest and reinvest the funds
then in the Collection Account, the Reserve Account, the Pre-Funding Account,
or the Capitalized Interest Account, as the case may be, to the fullest extent
practicable in one or more Eligible Investments. All investments made by the
Indenture Trustee shall mature no later than the maturity date therefor
permitted by Section 3.01(f).
(f) No investment of any amount held in the Collection Account, the Reserve
Account, the Pre-Funding Account, or the Capitalized Interest Account shall
mature later than the Business Day immediately preceding the Payment Date which
is scheduled to occur immediately following the date of investment. All income
or other gains from the investment of moneys deposited in the Collection
Account, the Reserve Account, the Pre-Funding Account, or the Capitalized
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Interest Account shall be deposited by the Indenture Trustee in such account
immediately upon receipt. Any net loss of principal (determined on a month by
month basis) resulting from such investment of amounts in the Collection
Account, the Reserve Account, the Pre-Funding Account, or the Capitalized
Interest Account shall be charged to the Issuer, and upon notice thereof by the
Indenture Trustee, the Issuer shall reimburse such account for such loss within
[three] Business Days.
(g) Any investment of any funds in the Collection Account, the Reserve
Account, the Pre-Funding Account, or the Capitalized Interest Account, and any
sale of any investment held in such accounts, shall be made under the following
terms and conditions:
(i) each such investment shall be made in the name of the Indenture
Trustee (in its capacity as such) or in the name of a nominee of the
Indenture Trustee;
(ii) the investment earnings of any investment shall be credited to
the account for which such investment was made;
(iii) any certificate or other instrument evidencing such investment
shall be delivered directly to the Indenture Trustee or its agent and the
Indenture Trustee shall have sole possession of such instrument, and all
income on such investment; and
(iv) the proceeds of any sale of an investment shall be remitted by
the purchaser thereof directly to the Indenture Trustee for deposit in the
account in which such investment was held.
(h) If any amounts are needed for disbursement from the Collection Account,
the Reserve Account, the Pre-Funding Account, or the Capitalized Interest
Account, and sufficient uninvested funds are not collected and available therein
to make such disbursement, in the absence of an Issuer Order or Servicer Order
for the liquidation of investments held therein in an amount sufficient to
provide the required funds, the Indenture Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
account selected by it in its absolute discretion and shall not be liable for
any loss resulting therefrom.
(i) The Indenture Trustee shall not in any way be held liable by reason of
any insufficiency in the Collection Account, the Reserve Account, the
Pre-Funding Account, or the Capitalized Interest Account, resulting from losses
on investments made in accordance with the provisions of this Section 3.01 (but
the institution serving as Indenture Trustee
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shall at all times remain liable for its own debt obligations, if any,
constituting part of such investments). The Indenture Trustee shall not be
liable for any investment made by it in accordance with this Section 3.01 on the
grounds that it could have made a more favorable investment.
SECTION 3.02. Collection of Moneys; Lockbox Facility; Lockbox Account.
(a) On or before the Closing Date, the Indenture Trustee shall establish,
in the name of the Indenture Trustee, a post office box (the "Lockbox Facility")
for the receipt directly from Obligors of all Contract Payments, Excess Contract
Receivables and Prepayment Amounts on or in respect of each Contract. No Person
other than the Indenture Trustee shall be permitted to have access to such
Lockbox Facility. On each Business Day, the Indenture Trustee shall cause all
items received in the Lockbox Facility since the preceding Business Day to be
deposited into an account maintained with the Indenture Trustee in the name of
(and under the sole control of) the Indenture Trustee (the "Lockbox Account").
All Contract Payments, [Repurchase Amounts,] Prepayment Amounts and other
payments relating to a Contract received in the Lockbox Facility and so
deposited in the Lockbox Account shall constitute part of the Trust Estate.
(b) The Indenture Trustee shall, on each Business Day on which the
Indenture Trustee receives a report from the Servicer pursuant to Section _____
of the Receivables Acquisition Agreement (each such day, a "Required Deposit
Date"), in accordance with the information provided therein, withdraw from the
Lockbox Account and deposit in the Collection Account the Transaction Payment
Amount.
SECTION 3.03. Collection of Moneys. If at any time the Issuer shall receive
any payment on or in respect of any Contract or Vehicle, it shall hold such
payment in trust for the benefit of the Indenture Trustee and the holders of the
Notes, shall segregate such payment from the other property of the Issuer, and
shall, within one day of receipt, deliver such payment in the form received
(with any necessary endorsement) by it to the Indenture Trustee.
SECTION 3.04. Collection Account.
(a) The Indenture Trustee shall deposit the following into the Collection
Account:
(i) each Contract Payment received by the Indenture Trustee in the
Lockbox Facility or otherwise received by the Indenture Trustee, including
all Contract Payments deposited with the Indenture Trustee by the
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Originator on the Closing Date pursuant to Section ________ of the Note
Agreement;
(ii) the amount of each Delinquency Payment or portion thereof
received by the Indenture Trustee (whether from the Servicer as a Servicer
Advance pursuant to Section ____ of the Receivables Acquisition Agreement,
from transfers from the Reserve Account, or from a combination thereof);
(iii) the amount of each Default Payment or portion thereof received
by the Indenture Trustee (whether from transfers from the Reserve Account
or otherwise); and the proceeds of any repurchase of Contracts and Vehicles
pursuant to Section ________ of the Receivables Acquisition Agreement;
(iv) each Prepayment Amount received in the Lockbox Facility or
otherwise received by the Indenture Trustee;
[(v) each Repurchase Amount received in the Lockbox Facility or
otherwise received by the Indenture Trustee;]
(vi) each Excess Contract Receivable received in the Lockbox Facility
or otherwise received by the Indenture Trustee;
(vii) any Insurance Proceeds received in the Lockbox Facility or
otherwise received by the Indenture Trustee;
(viii) the Pre-Funding Earnings, if any, on each Payment Date; and
(ix) the Capitalized Interest Requirement, if any, on each Payment
Date from amounts on deposit in the Capitalized Interest Account.
(b) Unless the Notes have been declared due and payable pursuant to Section
6.02 and moneys collected by the Indenture Trustee are being applied in
accordance with Section 6.06, the Indenture Trustee shall on each Payment Date
withdraw and pay or cause to be paid all Available Funds and any Reserve Account
Payment deposited in the Collection Account (including any investment income
with respect to monies on deposit in the Collection Account) the amounts
required, for application in the following order of priority:
(i) to the Servicer, the Servicing Fee due to the Servicer on such
Payment Date and any unreimbursed
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Nonrecoverable Advances or Servicer Advances, with respect to Defaulted
Contracts;
(ii) to the [Class A] Distribution Account, in the following order of
priority, the sum of:
(a) the [Class A] Overdue Interest, if any;
(b) the [Class A] Monthly interest;
(c) the Prepayment Premium due to [Class A] Noteholders on such
Payment Date, if any;
(d) if such Payment Date follows the Final Additional Closing
Date, the product of (x) the amount, if any, remaining in
the Pre-Funding Account on such Payment Date and (y) the
[Class A] Percentage;
(e) the [Class A] Overdue Principal, if any; and
(f) the [Class A] Monthly Principal.
(iii) to the [Class B] Distribution Account, in the following order of
priority, the sum of:
(a) the [Class B] Overdue Interest, if any;
(b) the [Class B] Monthly Interest;
(c) the Prepayment Premium due to [Class B] Noteholders on such
Payment Date, if any;
(d) if such Payment Date follows the Final Additional Closing
Date, the product of (x) the amount, if any, remaining in
the Pre-Funding Account on such Payment Date and (y) the
[Class B] Percentage;
(e) the [Class B] Overdue Principal, if any; and
(f) the [Class B] Monthly Principal.
(iv) to the Reserve Account, an amount equal to the excess, if any, of
the Maximum Reserve Amount for the next succeeding Payment Date over the
amount on deposit in the Reserve Account (after giving effect to any
withdrawals from the Reserve Account on such Payment Date);
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(v) to the [Class C] Distribution Account, in the following order of
priority, the sum of:
(a) the [Class C] Overdue Interest, if any;
(b) the [Class C] Monthly Interest;
(c) the Prepayment Premium due to [Class C] Noteholders on such
Payment Date, if any;
(d) if such Payment Date follows the Final Additional Closing
Date, the product of (x) the amount, if any, remaining in
the Pre-Funding Account on such Payment Date and (y) the
[Class C] Percentage;
(e) the [Class C] Overdue Principal, if any; and
(f) the [Class C] Monthly Principal;
provided, however, that if a Restricting Event shall have occurred and be
continuing on such Payment Date, any such amounts otherwise payable under
this clause (v) shall be deposited in the Reserve Account;
(vi) to the [Class A Noteholders], pro rata, the amount then on
deposit in the [Class A] Distribution Account;
(vii) to the [Class B Noteholders], pro rata, the amount then on
deposit in the [Class B] Distribution Account;
(viii) to the [Class C Noteholders], pro rata, the amount then on
deposit in the [Class C] Distribution Account; and
(ix) all remaining amounts in the Collection Account shall be paid to
the Issuer; provided, however, that if a Restricting Event shall have
occurred and be continuing on such Payment Date, any such amounts otherwise
payable under this clause (ix) shall be deposited in the Reserve Account.
If at any time any amount or portion thereof previously distributed pursuant to
this Section 3.04(b) shall have been recovered, or shall be subject to recovery,
in any proceeding with respect to the Issuer or otherwise, then for purposes of
determining future distributions pursuant to this Section 3.04(b) such amount or
portion thereof shall be deemed not to have been previously so distributed. The
Indenture Trustee shall make no disbursal pursuant to any clause of this Section
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3.04 on any Payment Date if funds are not available after all prior payments are
made on such Payment Date.
SECTION 3.05. Reserve Account.
(a) On the Closing Date, the Issuer shall direct the Indenture Trustee to
deposit in the Reserve Account an amount equal to ________% of the Initial
Aggregate Balance from proceeds of the sale of the Offered Notes. On each
Payment Date, the Excess Collections shall be deposited in the Reserve Account
to the extent necessary, if any, to bring the balance in the Reserve Account to
the Maximum Reserve Amount.
(b) If by [12:00 noon, New York time], on the Business Day preceding any
Payment Date, Available Funds are insufficient to permit, on such Payment Date,
the distribution of all Required Payments under this Indenture, then the
Indenture Trustee shall transfer, not later than the end of such Business Day,
from the Reserve Account to the Collection Account such amount as shall be
necessary to make all Required Payments on such Payment Date.
(c) If at the time of any required transfer from the Reserve Account to the
Collection Account pursuant to Section 3.05(b) or any addition or substitution
of one or more Additional Contracts or Substitute Contracts pursuant to Section
________ of the Receivables Acquisition Agreement, the Indenture Trustee has
been advised in writing by the Servicer that the Servicer has made one or more
Servicer Advances pursuant to Section ________ of the Receivables Acquisition
Agreement with respect to any Contract which has become a Defaulted Contract for
which the Servicer has not otherwise been reimbursed, before transferring any
funds from the Reserve Account to the Collection Account, the Indenture Trustee
shall first transfer from the amounts available in the Reserve Account to the
Servicer the amount of such advance or advances.
(d) On each Payment Date, funds on deposit in the Reserve Account (after
withdrawal of any Reserve Account Payment) in excess of the Maximum Reserve
Amount will be distributed to the [Class C] Distribution Account to the extent
of [Class C] Overdue Interest and [Class C] Overdue Principal and any remainder
shall be distributed to the Issuer in accordance with this Indenture; provided,
however, that if a Restricting Event exists on such Payment Date, all funds on
deposit in the Reserve Account (after withdrawal of any Reserve Account Payment)
shall remain in the Reserve Account, subject to use as otherwise provided in
this Section. If the amount on deposit in the Reserve Account is insufficient to
pay the Required Payments, no other assets will be available on the related
Payment Date for the payment of the deficiency. Upon discharge of this
Indenture, after all obligations to the
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Noteholders have been fully and irrevocably satisfied, any balance remaining in
the Reserve Account shall be paid to the Issuer.
SECTION 3.06. Pre-Funding Account.
(a) On the Closing Date, the Indenture Trustee shall deposit, on behalf of
the Noteholders, in the Pre-Funding Account the Original Pre-Funded Amount in
an amount equal to $_________ from the proceeds of the sale of the Offered
Notes.
(b) On any Additional Contract Transfer Date, the Issuer shall instruct the
Indenture Trustee to withdraw from the Pre-Funding Account an amount equal to
___% of the Implicit Contract Balance of the Additional Contracts sold to the
Issuer on such Additional Contract Transfer Date and pay such amount to the
Originator upon an Issuer Order detailing satisfaction of the conditions set
forth in Section ________ of the Receivables Acquisition Agreement with respect
to such transfer.
(c) On each Payment Date through and including the Payment Date immediately
following the Final Additional Closing Date (or, if the Final Additional Closing
Date is also a Payment Date, then on the Final Additional Closing Date), the
Indenture Trustee shall transfer from the Pre-Funding Account to the Collection
Account the Pre-Funding Earnings, if any, applicable to each such Payment Date.
(d) If the Pre-Funding Account has not been reduced to zero on the Final
Additional Closing Date, the Indenture Trustee, upon a Servicer Order, shall
withdraw from the Pre-Funding Account on such Final Additional Closing Date the
remaining Pre-Funded Amount on deposit in the Pre-Funding Account and shall
distribute such amounts on such Final Additional Closing Date to the
Noteholders, in accordance with their respective Class Percentages, as a
prepayment on the Notes. To the extent that such prepayment is of an amount
greater than $___________, a Prepayment Premium shall also be paid to the [Class
A Noteholders] and [Class B Noteholders] pursuant to Section 2.01(d) of this
Indenture.
SECTION 3.07. Capitalized Interest Account.
(a) On the Closing Date, the Indenture Trustee shall deposit in the
Capitalized Interest Account the Original Capitalized Interest Amount in an
amount equal to $_________ from the proceeds of the sale of the Offered Notes.
(b) On each Payment Date through and including the Payment Date immediately
following the Final Additional Closing Date (or, if the Final Additional Closing
Date is also
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a Payment Date, then on the Final Additional Closing Date), the Indenture
Trustee shall transfer from the Capitalized Interest Account to the Collection
Account the Capitalized Interest Requirement for such Payment Date.
(c) On each Payment Date prior to the Final Additional Closing Date, the
Indenture Trustee, upon an Issuer Order, shall withdraw from the Capitalized
Interest Account and pay on such Payment Date to the Issuer the Overfunded
Interest Amount for such Payment Date.
(d) On the Payment Date following the Final Additional Closing Date (or, if
the Final Additional Closing Date is also a Payment Date, then on the Final
Additional Closing Date), any amounts remaining in the Capitalized Interest
Account, after taking into account the transfers on such Payment Date described
in clause (c) above, shall be paid to the Issuer on such Payment Date and the
Capitalized Interest Account shall be closed.
SECTION 3.08. Reserved.
SECTION 3.09. Reports by Indenture Trustee; Notices of Certain Payments.
(a) The Indenture Trustee shall on each Business Day report to the
Originator and the Servicer the name of each Obligor from which any payment has
been received by the Indenture Trustee (in the Lockbox Facility or otherwise)
since the preceding report of the Indenture Trustee pursuant to this Section
3.09(a), the amount of such payment, and (if such payment was accompanied by
information identifying the Contract or Contracts to which it relates), the
Contract or Contracts to which such payment relate.
(b) Concurrently with each payment to the Noteholders, the Indenture
Trustee shall mail to the Issuer, the Originator, the Servicer and each
Noteholder the following information:
(i) the Monthly Servicer Report furnished by the Servicer to the
Indenture Trustee following such Payment Date pursuant to Section ________
of the Receivables Acquisition Agreement (or if such report has not been
received, a written statement to such effect); and
(ii) the amount on deposit as of such Payment Date in the Collection
Account, the Reserve Account, the Pre-Funding Account and the Capitalized
Interest Account, in each case after giving effect to all of the
withdrawals and applications or transfers required on such Payment Date
pursuant to Article III.
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(c) The Indenture Trustee shall within [five] Business Days after the
request of the Issuer or the Servicer, deliver to the Issuer and the Servicer a
written report setting forth the amounts on deposit in the Collection Account,
the Reserve Account, Pre-Funding Account and the Capitalized Interest Account,
and identifying the investments included therein.
SECTION 3.10. Indenture Trustee May Rely on Certain Information from
Originator and Servicer.
Pursuant to Sections ________, ________ and ________ through ________ of
the Receivables Acquisition Agreement, the Originator and the Servicer are
required to furnish to the Indenture Trustee from time to time certain
information and make various calculations which are relevant to the performance
of the Indenture Trustee's duties in this Article Three and in Article Four of
this Indenture. The Indenture Trustee shall be entitled to rely in good faith on
any such information and calculations in the performance of its duties
hereunder, (i) unless and until a Responsible Officer of the Indenture Trustee
has actual knowledge, or is advised by any Noteholder (either in writing or
orally with prompt written or telecopied confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; provided that the Indenture Trustee shall verify, using
all available information, the [Class A] Monthly Principal, the [Class B]
Monthly Principal, the [Class C] Monthly Principal, the [Class A] Monthly
Interest, the [Class B] Monthly Interest, the [Class C] Monthly Interest and the
Prepayment Premium, if any, to be paid on each Payment Date.
ARTICLE IV
RELEASE OF CONTRACTS AND VEHICLES
SECTION 4.01. Release of Contracts and Vehicles Upon Final Contract
Payment. In the event that the Indenture Trustee shall have received written
certification from an Authorized Officer of the Servicer that the Indenture
Trustee has received from amounts paid by the Obligor or from the proceeds of
the Vehicle subject to any Contract (i) the final Contract Payment due and
payable under any Contract, or (ii) a Prepayment Amount in respect of any
Contract and, following such final Contract Payment or Prepayment Amount, no
further payments on or in respect of such Contract are or will be due and
payable, or (iii) the full amount of any Contract Default Pay-Through Amount
with respect to any Contract, such Contract and the Vehicle subject thereto
shall be released from the lien of this Indenture.
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SECTION 4.02. Release of Contracts and Vehicles Following Substitution or
Repurchase.
In the event that (i) the Originator shall have substituted a Substitute
Contract and the Vehicle subject thereto for a Predecessor Contract and the
Vehicle subject thereto in accordance with Section ________ of the Receivables
Acquisition Agreement, or (ii) the Originator shall have repurchased a Contract
and the related Vehicle in accordance with Section ________ of the Receivables
Acquisition Agreement, the Predecessor Contract, or the repurchased Contract,
and the Vehicle subject thereto shall be released from the lien of this
Indenture when the Indenture Trustee shall have received written certification
from an Authorized Officer of the Servicer that there are no unreimbursed
amounts drawn on the Reserve Account with respect to such Contract. If there are
such unreimbursed amounts any proceeds received with respect to such Predecessor
Contract and the related Vehicle shall be applied hereunder only to the extent
necessary to reimburse the Reserve Account for such amounts drawn thereon and
the balance of such proceeds, if any, shall be paid to, or as directed by, the
Originator.
SECTION 4.03. Execution of Documents.
The Indenture Trustee shall promptly execute and deliver such documents
(which shall be furnished to the Indenture Trustee by the Issuer) and take such
other actions as the Issuer, by Issuer Request, may reasonably request to fully
effectuate the release from this Indenture of any Contract and Vehicle required
to be so released pursuant to Sections 4.01 and 4.02.
ARTICLE V
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.01. Servicer Events of Default.
If a Servicer Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, upon the request of the holders of Notes evidencing
more than [50%] of Voting Rights, give notice in writing to the Servicer of its
termination as Servicer and shall act as substitute Servicer in accordance with
Section ________ of the Receivables Acquisition Agreement.
SECTION 5.02. Substitute Servicer.
Notwithstanding the provisions of Section 5.01, the Indenture Trustee may,
if it shall be unwilling to continue to act as the Successor Servicer in
accordance with Section 5.01
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or if it is unable to continue to so act, appoint a Successor Servicer in
accordance with the provisions of Section ________ of the Receivables
Acquisition Agreement.
SECTION 5.03. Notification to Noteholders.
Upon any termination of the Servicer or appointment of a Successor
Servicer, the Indenture Trustee shall give prompt notice of such termination or
appointment to each Noteholder in the manner provided herein.
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
SECTION 6.01. Events of Default.
"Indenture Event of Default," wherever used herein, means any one of the
following (whatever the reason for such Indenture Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) default in the payment of any principal of or interest and
premium, if any, upon any Outstanding Note when it becomes due and payable;
(ii) default in the performance, or breach, of any covenant set forth
in Section 8.07(b), 8.07(e) and Section 8.08;
(iii) default in the performance, or breach, of any covenant of the
Issuer in this Indenture (other than a covenant default the performance of
which or breach of which is elsewhere in this Section 6.01 specifically
dealt with), the Note Agreement or the Receivables Acquisition Agreement
and continuance of such default or breach for a period of [30] days after
the earliest of (A) any officer of the Issuer first acquiring knowledge
thereof, (B) the Indenture Trustee's giving written notice thereof to the
Issuer or (C) the holder of any Note giving written notice thereof to the
Issuer;
(iv) if any representation or warranty of the Issuer or the Originator
made in this Indenture, the Note Agreement or the Receivables Acquisition
Agreement or any other writing provided to the Noteholders in connection
with the foregoing documents shall prove to be incorrect in any material
respect as of the time when the same shall have been made; provided,
however, that the breach
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of any representation or warranty made by the Originator in Section
________ or ________ of the Receivables Acquisition Agreement with respect
to any of the Contracts or the Vehicle subject thereto shall not constitute
an Indenture Event of Default if the Originator substitutes one or more
Substitute Contracts and the Vehicle subject thereto for such Contract and
Vehicle in accordance with Section ________ of the Receivables Acquisition
Agreement or repurchases a Contract and the related Vehicle in accordance
with Section ________ of the Receivables Acquisition Agreement;
(v) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Issuer in an involuntary case
or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (B) a decree or order adjudging the
Issuer a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in
respect of the Issuer under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or other similar official of the Issuer or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days;
(vi) the commencement by the Issuer of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Issuer in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or
similar official of the Issuer or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
Issuer's failure to pay its debts generally as they become due, or the
taking of corporate action by the Issuer in furtherance of any such action;
or
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(vii) the rendering against the Issuer of a final judgment, decree or
order for the payment of money in excess of [$10,000] and the continuance
of such judgment, decree or order unsatisfied for any period of [60]
consecutive days without a stay of execution.
SECTION 6.02. Acceleration of Maturity; Rescission and Annulment.
(a) If an Indenture Event of Default of the kind specified in clauses (v)
or (vi) of Section 6.01 occurs, the unpaid principal amount of the Notes shall
automatically become due and payable at par together with all accrued and unpaid
interest thereon, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Issuer. If an Indenture Event of Default
(other than an Indenture Event of Default of the kind described in clauses (v)
or (vi) of Section 6.01) occurs and is continuing, then and in every such case
the Indenture Trustee or the holders of Notes evidencing not less than [66-2/3%]
of Voting Rights may declare the unpaid principal amount of all the Notes to be
due and payable immediately, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by the Noteholders), and upon any such declaration
such principal amount shall become immediately due and payable together with all
accrued and unpaid interest thereon, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Issuer.
(b) At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Indenture Trustee as hereinafter in this Article provided, the holders of
Notes evidencing not less than [33-1/3%] of Voting Rights, by written notice to
the Issuer and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(A) all principal of and premium, if any, of any Notes which have
become due otherwise than by such declaration of acceleration and
interest thereon from the date when the same first became due at the
applicable Note Rate plus _____ basis points,
(B) all interest which has became due with respect to the Notes
and, to the extent that payment of such interest is lawful, interest
upon overdue interest from the date when the same first became due at
a rate per annum equal to the applicable Note Rate plus _____ basis
points, and
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(C) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements, and advances
of the Indenture Trustee, its agents and counsel; and
(ii) all Indenture Events of Default, other than the non-payment of
the aggregate principal amount of the Notes which has become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section 6.13.
No such rescission shall affect any subsequent Indenture Event of Default or
impair any right consequent thereon.
SECTION 6.03. Remedies.
(a) If an Indenture Event of Default occurs and is continuing of which a
Responsible Officer has actual knowledge, the Indenture Trustee shall give
notice to each Noteholder as set forth in Section 7.02 and shall solicit the
Noteholders for advice. The Indenture Trustee shall then take such action, if
any, as may be directed by the holders of Notes evidencing not less than
[66-2/3%] of Voting Rights.
(b) Following any acceleration of the Notes, the Indenture Trustee shall
have all of the rights, powers and remedies with respect to the Trust Estate as
are available to secured parties under the Uniform Commercial Code or other
applicable law. Such rights, powers and remedies may be exercised by the
Indenture Trustee in its own name as trustee of an express trust.
SECTION 6.04. Indenture Trustee May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition, or other
judicial proceeding relative to the Issuer, the Originator, the Servicer or any
other obligor upon the Notes or the other obligations secured hereby or relating
to the property of the Issuer, the Originator, the Servicer or of such other
obligor or their creditors, the Indenture Trustee (irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand on the Issuer, the Originator or the Servicer for the
payment of overdue principal or overdue interest or any such other obligation)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:
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(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and any other obligation
secured hereby and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel) and of the Noteholders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Indenture Trustee and, in the event
that the Indenture Trustee shall consent to the making of such payments directly
to the Noteholders to pay to the Indenture Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel, and any other amounts due the Indenture Trustee
under Section 7.06.
(b) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Noteholder in any such
proceeding.
SECTION 6.05. Indenture Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Indenture Trustee without the possession of any
of the Notes or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Indenture Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and counsel, be
for the ratable benefit of the holders of the Notes in respect of which such
judgment has been recovered.
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SECTION 6.06. Application of Money Collected.
Any money collected by the Indenture Trustee pursuant to this Article, and
any moneys that may then be held or thereafter received by the Indenture
Trustee, shall be applied in the following order, at the date or dates fixed by
the Indenture Trustee and, in case of the distribution of the entire amount due
on account of principal or interest, upon presentation of the Notes and
surrender thereof:
first, to the payment of all costs and expenses of collection incurred
by the Indenture Trustee (including the reasonable fees and expenses of any
counsel to the Indenture Trustee) and all other amounts due the Indenture
Trustee under Section 7.06 and, after such costs and expenses incurred by
the Indenture Trustee have been paid, then to the payment of any such costs
and expenses incurred by the Noteholders;
second, to the payment of all unreimbursed Servicer Advances and
Servicing Fees then due to such Person;
third, to the payment of all accrued and unpaid interest on the
Outstanding [Class A] Note Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the date such
installment was due to the date of payment thereof at the rate per annum
equal to the [Class A] Note Rate plus ________ basis points, all such
amounts to be paid ratably among the [Class A] Notes, without preference or
priority of any kind;
fourth, to the payment of the Outstanding [Class A] Note Balance and
any other amounts due to the [Class A] Noteholders ratably, without
preference or priority of any kind;
fifth, to the payment of all accrued and unpaid interest on the
Outstanding [Class B] Note Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the date such
installment was due to the date of payment thereof at the rate per annum
equal to the [Class B] Note Rate plus ________ basis points, all such
amounts to be paid ratably among the [Class B] Notes, without preference or
priority of any kind;
sixth, to the payment of the Outstanding [Class B] Note Balance and
any other amounts due to the [Class B] Noteholders ratably, without
preference or priority of any kind;
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seventh, to the payment of all accrued and unpaid interest on the
Outstanding [Class C] Note Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the date such
installment was due to the date of payment thereof at the rate per annum
equal to the [Class C] Note Rate plus ________ basis points, all such
amounts to be paid ratably among the [Class C] Notes, without preference or
priority of any kind;
eighth, to the payment of the Outstanding [Class C] Note Balance and
any other amounts due to the [Class C] Noteholders ratably, without
preference or priority of any kind; and
ninth, to the payment of the remainder, if any, to or at the order of
the Issuer.
SECTION 6.07. Limitation on Suits.
The holder of any Note shall not have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Noteholder has previously given written notice to the
Indenture Trustee of a continuing Indenture Event of Default;
(ii) the holders of Notes evidencing not less than ________% of Voting
Rights shall have made written request to the Indenture Trustee to
institute proceedings in respect of such Indenture Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the Indenture
Trustee adequate indemnity (which the Indenture Trustee agrees, in the case
of each of the original purchasers of the Notes, need only be the written
promise of such Person) against the costs, expenses and liabilities to be
incurred in compliance with such request;
(iv) the Indenture Trustee for [60] days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(v) so long as any of the Notes remain Outstanding, no direction
inconsistent with such written request has been given to the Indenture
Trustee during such [60-day] period by the holders of Notes evidencing more
than [50%] of Voting Rights;
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it being understood and intended that no one or more Noteholder shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb, or prejudice the rights of any other
Noteholder, or to obtain or to seek to obtain priority or preference over any
other Noteholder or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Noteholders.
SECTION 6.08. Unconditional Right of Noteholders to Receive Payment.
Notwithstanding any other provision in this Indenture, other than the
provisions hereof establishing priorities of payment or limiting the right to
recover amounts due on the Notes to recoveries from the property of the Trust
Estate, the holder of any Note shall have the absolute and unconditional right
to receive payment of the principal of and interest on such Note on the Payment
Dates for such payments, including the Stated Maturity Date, and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Noteholder.
SECTION 6.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Indenture Trustee or to such Noteholder, then and in every such case,
subject to any determination in such proceeding, the Issuer, the Indenture
Trustee and the Noteholders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Indenture Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost, or stolen Notes in the last paragraph of Section
2.04, no right or remedy herein conferred upon or reserved to the Indenture
Trustee or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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SECTION 6.11. Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee or of any holder of any Note
to exercise any right or remedy accruing upon any Indenture Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Indenture Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Indenture Trustee or to the Noteholders
may be exercised from time to time, and as often as may be deemed expedient, by
the Indenture Trustee or by the Noteholders, as the case may be.
SECTION 6.12. Control by Noteholders.
Except as provided in Sections 4.01 and 5.01, until such time as the
conditions specified in Sections 11.01(a)(i) and (ii) have been satisfied in
full, the holders of Notes evidencing not less than [________%] of Voting Rights
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee or exercising any
trust or power conferred on the Indenture Trustee. Notwithstanding the
foregoing:
(i) no such direction shall be in conflict with any rule of law or
with this Indenture;
(ii) any direction to the Indenture Trustee by the Noteholders to
undertake a private sale of the Trust Estate shall be by the holders of
Notes evidencing ________% of the Voting Rights, unless the condition set
forth in Section 6.15(b)(ii) is met;
(iii) the Indenture Trustee shall not be required to follow any such
direction which the Indenture Trustee reasonably believes may be
prejudicial to any Noteholder not joining in such direction or which the
Indenture Trustee reasonably believes might result in any personal
liability on the part of the Indenture Trustee for which the Indenture
Trustee is not adequately indemnified;
(iv) the Indenture Trustee shall not undertake a private sale of the
Trust Estate unless the conditions set forth in Section 6.15(b) are met;
and
(v) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with any such direction;
provided, that the Indenture Trustee shall give notice of any such action
to each Noteholder.
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SECTION 6.13. Waiver of Events of Default.
(a) The holders of Notes evidencing not less than [66-2/3%] of Voting
Rights may, by one or more instruments in writing, waive any Indenture Event of
Default hereunder and its consequences, except a continuing Indenture Event of
Default:
(i) in respect of the payment of the principal of or premium or
interest on any Outstanding Note (which may only be waived by the holder of
such Note), or
(ii) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the holder of
each Outstanding Note affected (which only may be waived by the holders of
all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be furnished by
the Issuer to the Indenture Trustee. Upon any such waiver, such Indenture Event
of Default shall cease to exist and shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Indenture Event of Default or impair any right consequent
thereon.
SECTION 6.14. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 6.15. Sale of Trust Estate.
(a) The power to effect any sale of any portion of the Trust Estate
pursuant to Section 6.03 shall not be exhausted by any one or more sales as to
any portion of the Trust Estate remaining unsold, but shall continue unimpaired
until the entire Trust Estate shall have been sold or all amounts payable on the
Notes shall have been paid. The Indenture Trustee may from time to time postpone
any public sale by public announcement made at the time and place of such sale.
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(b) To the extent permitted by applicable law, the Indenture Trustee shall
not in any private sale sell to a third party the Trust Estate, or any portion
thereof unless either (i) the holders of Notes evidencing 100% of the Voting
Rights consent to or direct the Indenture Trustee to make such sale; or (ii) the
proceeds of such sale would be not less than the sum of all amounts due to the
Indenture Trustee hereunder and the entire unpaid principal amount of the Notes
and the Prepayment Premium, if any, and interest due or to become due thereon in
accordance with Section 6.06 on the Payment Date next succeeding the date of
such sale.
The Indenture Trustee may not purchase all or any portion of the Trust
Estate at a private sale.
(c) In connection with a sale of all or any portion of the Trust Estate:
(i) any one or more Noteholders may bid for and purchase the property
offered for sale, and upon compliance with the terms of sale may hold,
retain, and possess and dispose of such property, without further
accountability, and any Noteholder may, in paying the purchase money
therefor, deliver in lieu of cash any Outstanding Notes or claims for
interest thereon for credit in the amount that shall, upon distribution of
the net proceeds of such sale, be payable thereon, and such Notes, in case
the amounts so payable thereon shall be less than the amount due thereon,
shall be returned to the Noteholders after being appropriately stamped to
show such partial payment;
(ii) the Indenture Trustee may not bid for and acquire the property
offered for sale in connection with any public sale thereof;
(iii) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Trust Estate in connection with a sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a sale thereof, and to
take all action necessary to effect such sale; and
(v) no purchaser or transferee at such a sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any moneys.
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(d) The method, manner, time, place and terms of any sale of all or any
portion of the Trust Estate shall be commercially reasonable.
(e) The provisions of this Section 6.15 shall not be construed to restrict
the ability of the Indenture Trustee to exercise any rights and powers against
the Issuer or the Trust Estate that are vested in the Indenture Trustee by this
Indenture, including, without limitation, the power of the Indenture Trustee to
proceed against the collateral subject to the lien of this Indenture and to
institute judicial proceedings for the collection of any deficiency remaining
thereafter.
ARTICLE VII
THE INDENTURE TRUSTEE
SECTION 7.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Indenture Event of Default known to
the Indenture Trustee,
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Indenture Event of Default has occurred and is continuing to
the actual knowledge of a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for
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its own negligent action, its own negligent failure to act, or its own wilful
misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Noteholders in accordance with Section 6.12 relating
to the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power
conferred upon the Indenture Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee (solely in its role as Indenture Trustee and
not in its role as substitute Servicer) shall be subject to the provisions of
this Section.
SECTION 7.02. Notice of Defaults or Events of Default.
Within two Business Days after a Responsible Officer obtains knowledge of
the occurrence of any Default or Indenture Event of Default hereunder or
Servicer Event of Default under the Receivables Acquisition Agreement, the
Indenture Trustee shall transmit by facsimile (if a facsimile number is
reasonably obtainable by the Indenture Trustee), with a copy by registered mail,
to all Noteholders, as their names, addresses and facsimile numbers appear in
the Note Register, the Issuer, the Servicer and the Originator notice of such
Default, Indenture Event of Default or Servicer Event of Default hereunder known
to the Indenture Trustee, unless such Default, Indenture Event of Default or
Servicer Event of Default shall have been cured or waived.
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SECTION 7.03. Certain Rights of Indenture Trustee.
Subject to the provisions of Section 7.01:
(i) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
note, debenture, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order and any action
of the Issuer may be sufficiently evidenced by an Issuer Order;
(iii) whenever in the administration of this Indenture the Indenture
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Indenture
Trustee (unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an Officers' Certificate;
(iv) the Indenture Trustee may consult with counsel as to legal
matters and the written advice of any such counsel selected and supervised
by the Indenture Trustee with due care shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(v) the Indenture Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(vi) the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, note, debenture, other evidence of indebtedness,
or other paper or document, but the Indenture Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Indenture Trustee shall determine to make
such further inquiry or investigation, it shall be
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entitled to examine the books, records and premises of the Issuer,
personally or by agent or attorney; and
(vii) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Indenture Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
and supervised with due care by it hereunder.
SECTION 7.04. Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the Indenture
Trustee's certificates of authentication, shall be taken as the statements of
the Issuer, and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Notes. The Indenture Trustee shall
not be accountable for the use or application by the Issuer of the proceeds of
the Notes.
SECTION 7.05. Money Held in Trust.
Money and investments held by the Indenture Trustee shall be held in trust
in one or more trust accounts as required hereunder.
SECTION 7.06. Compensation, Reimbursement, etc.
The Issuer agrees:
(i) to pay to the Indenture Trustee from time to time such
compensation for all services rendered by it hereunder as the Issuer and
the Indenture Trustee have agreed in writing prior to the Closing Date
(which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust), such payment to be
made independent of the other payment obligations of the Issuer hereunder;
and
(ii) except as otherwise expressly provided herein, to reimburse the
Indenture Trustee upon its request for all reasonable expenses,
disbursements, and advances incurred or made by the Indenture Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement, or advance as may be attributable to
its negligence or bad faith.
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SECTION 7.07. Corporate Indenture Trustee Required; Eligibility.
There shall at all times be an Indenture Trustee hereunder which (i) shall
be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers; (ii) shall have a combined
capital and surplus of at least [$250,000,000] or be a wholly owned subsidiary
of a bank holding company having such a capital and surplus; (iii) shall be
subject to supervision or examination by federal or state authority; (iv) at the
time of appointment, shall have commercial paper or other short-term debt
obligations (or, if the Indenture Trustee does not have outstanding commercial
paper or other short-term obligations and is a subsidiary of a holding company,
which holding company shall have commercial paper or other short term
obligations) having either of the two highest short-term credit ratings
available from the Rating Agency (or if the Rating Agency does not rate such
obligations, its equivalent from one other nationally recognized rating agency);
and (v) shall not be affiliated (as such term is defined in Rule 405 under the
Securities Act of 1933, as amended) with the Issuer or with any Person involved
in the organization or operation of the Issuer. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 7.08. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Indenture Trustee and no appointment
of a successor Indenture Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Indenture Trustee under
Section 7.09.
(b) The Indenture Trustee may resign for cause at any time by giving
written notice thereof to the Issuer and by mailing notice of resignation by
first-class mail, postage prepaid, to the Noteholders at their addresses
appearing on the Note Register.
(c) The Indenture Trustee may be removed at any time by Act of the holders
of Notes evidencing more than [50%]
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of Voting Rights, delivered to the Indenture Trustee and the Issuer.
(d) If the Indenture Trustee shall resign, be removed, or become incapable
of acting, or if a vacancy shall occur in the office of Indenture Trustee for
any cause, the Issuer, with the consent of the holders of Notes evidencing not
less than [66-2/3%] of Voting Rights, by an act of the Issuer, shall promptly
appoint a successor Indenture Trustee.
(e) If no successor Indenture Trustee shall have been so appointed by the
Issuer as hereinbefore provided and accepted appointment in the manner
hereinafter provided within 30 days after any such resignation or removal,
existence of incapability, or occurrence of such vacancy, the Indenture Trustee
or any Noteholder may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
(f) The Issuer shall give notice of each resignation and each removal of
the Indenture Trustee and each appointment of a successor Indenture Trustee by
mailing written notice of such event by first-class mail, postage prepaid, to
all Noteholders, as their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Indenture Trustee and the address
of its Corporate Trust Office.
SECTION 7.09. Acceptance of Appointment by Successor.
(a) Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and to the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee; but, on request of the Issuer or the successor Indenture Trustee, such
retiring Indenture Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Indenture Trustee all the
rights, powers and trusts of the retiring Indenture Trustee and shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder. Upon request of any
such successor Indenture Trustee, the Issuer shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Indenture Trustee all such rights, powers and trusts.
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(b) No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article.
SECTION 7.10. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Indenture Trustee may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Indenture Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of the Indenture Trustee, shall be the successor of the Indenture Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Indenture Trustee then in office, any
successor by merger, conversion, or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
itself authenticated such Notes.
SECTION 7.11. Co-trustees and Separate Indenture Trustees.
(a) At any time or times, for the purpose of meeting the legal requirements
of any jurisdiction in which any of the Trust Estate may at the time be located,
the Issuer and the Indenture Trustee shall have power to appoint, and, upon the
written request of the Indenture Trustee, the holders of Notes evidencing more
than [50%] of Voting Rights, the Issuer shall for such purpose join with the
Indenture Trustee in the execution, delivery, and performance of all instruments
and agreements necessary or proper to appoint one or more Persons approved by
the Indenture Trustee either to act as co-trustee, jointly with the Indenture
Trustee, of all or any part of such Trust Estate, or to act as separate trustee
of any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If the Issuer does not join in
such appointment within [15] days after the receipt by it of a request so to do,
or in case an Indenture Event of Default has occurred and is continuing, the
Indenture Trustee alone shall have power to make such appointment.
(b) Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate
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trustee such property, title, right, or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the Issuer.
(c) Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(i) The Notes shall be authenticated and delivered and all rights,
powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Indenture Trustee hereunder, shall be
exercised solely by the Indenture Trustee.
(ii) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Indenture Trustee in respect of any property covered by
such appointment shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee or by the Indenture Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the
extent that, under any law of any jurisdiction in which any particular act
is to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties
and obligations shall be exercised and performed by such co-trustee or
separate trustee.
(iii) The Indenture Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Issuer evidenced by an Issuer
Order, may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case an Indenture Event of
Default has occurred and is continuing, the Indenture Trustee shall have
power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Issuer. Upon the written
request of the Indenture Trustee, the Issuer shall join with the Trustee in
the execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A successor
to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section.
(iv) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Indenture Trustee or any
other such trustee hereunder and the Indenture Trustee shall not be
personally liable by reason of any act or omission of any co-trustee or
other such separate trustee hereunder
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selected and supervised by the Indenture Trustee with due care or appointed
in accordance with directions to the Indenture Trustee pursuant to Section
6.12.
(v) Any Act of Noteholders delivered to the Indenture Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 7.12. Indenture Trustee to Hold Contracts.
The Indenture Trustee shall hold the sole original, manually executed
counterpart of each Contract that constitutes chattel paper, together with any
documents relating thereto that may from time to time be delivered to the
Indenture Trustee, until such time as such Contract is released from the lien of
this Indenture pursuant to the provisions hereof.
SECTION 7.13. Request for Opinion of Counsel.
By its execution of this Indenture, the Indenture Trustee specifically
requests [counsel], the Indenture Trustee's special counsel in connection with
the transactions contemplated hereby, to prepare and deliver to each initial
purchaser of the Offered Notes the closing opinion contemplated by Section ____
of the Note Agreement.
SECTION 7.14. Financing Statements.
The Indenture Trustee shall execute such Financing Statements and
continuation statements as shall be necessary and shall furnish the Servicer
with any powers of attorney or other documents necessary or appropriate to
enable the Servicer to fulfill its obligations under Section ______ of the
Receivables Acquisition Agreement and to carry out its servicing and
administration duties under the Receivables Acquisition Agreement.
SECTION 7.15. Power of Attorney.
The Issuer hereby grants to the Indenture Trustee the power as its
attorney-in-fact to file Financing Statements in the appropriate offices
evidencing the conveyance of the Contracts and related Vehicles, and proceeds
thereof, to the Indenture Trustee for the benefit of the Noteholders, and to do
any and all other acts as may be necessary or appropriate to effect the
transaction contemplated herein and in the Receivables Acquisition Agreement and
the Note Agreement. The Issuer will execute any document or instrument deemed
necessary by the Indenture Trustee to effect or to evidence this power of
attorney. All costs associated with such filing or instructions shall be paid by
the Issuer.
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ARTICLE VIII
COVENANTS
SECTION 8.01. Payment of Principal and Interest.
The Issuer will duly and punctually pay the principal of and interest and
premium, if any, on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 8.02. Maintenance of Office or Agency; Chief Executive Office.
(a) The Issuer will maintain in the State of _________________ an office or
agency where notices and demands to or upon the Issuer in respect of the Notes
and this Indenture may be served.
(b) The chief executive office of the Issuer, and the office at which the
Issuer maintains its records with respect to the Contracts, the Vehicles, and
the transactions contemplated hereby, is located in [New York, New York]. The
Issuer will not change the location of such office without giving the Indenture
Trustee and each Noteholder at least 60 days' prior written notice thereof.
SECTION 8.03. Money for Payments to Noteholders to be Held in Trust.
(a) All payments of amounts due and payable with respect to any Notes that
are to be made from amounts withdrawn from the Collection Account, the Reserve
Account, the Pre-Funding Account or the Capitalized Interest Account pursuant to
Section 3.04(b) or Section 6.06 shall be made on behalf of the Issuer by the
Indenture Trustee, and no amounts so withdrawn from the Collection Account, the
Reserve Account, the Pre-Funding Account or the Capitalized Interest Account for
payments of Notes shall be paid over to the Issuer under any circumstances
except as provided in this Section 8.03 or in Sections 3.04, 3.05, 3.06, 3.07 or
6.06.
(b) In making payments hereunder, the Indenture Trustee will:
(i) allocate all sums received for payment to the Noteholders on each
Payment Date among such Noteholders in accordance with Section 3.04(b)
hereof;
(ii) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as
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herein provided and pay such sums to such Persons as herein provided; and
(iii) comply with all requirements of the Internal Revenue Code of
1986, as amended (or any successor statutes), and all regulations
thereunder, with respect to the withholding from any payments made by it on
any Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(c) Except as required by applicable law, any money held by the Indenture
Trustee in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for three years after such amount has become due and payable
to the Noteholder shall be discharged from such trust and, subject to applicable
escheat laws, paid to the Issuer upon request; and such Noteholder shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof, and all liability of the Indenture Trustee with respect to such
trust money shall thereupon cease.
SECTION 8.04. Corporate Existence; Merger; Consolidation, etc.
(a) The Issuer will keep in full effect its existence, rights, and
franchises as a corporation under the laws of the State of [Nevada], and will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes, or any of
the Contracts.
(b) The Issuer shall at all times observe and comply in all material
respects with (i) all laws, regulations and court orders applicable to it, (ii)
all requirements of law in the declaration and payment of dividends on its
Capital Stock, and (iii) all requisite and appropriate corporate and other
formalities (including, without limitation, annual and all other appropriate
meetings of the Issuer's board of directors and, if required by law, its charter
or otherwise, meetings and votes of shareholders to authorize corporate action)
in the management of its business and affairs and the conduct of the
transactions contemplated hereby and by the Note Agreement and the Receivables
Acquisition Agreement.
(c) The Issuer shall not issue or register the transfer of any of its
Capital Stock to any Person other than the Originator.
(d) The Issuer shall not (i) consolidate or merge with or into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any
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other Person except under or in compliance with this Indenture or (ii) commingle
any of its funds or other assets with those of any other Person.
(e) The Issuer will, at all times, (i) maintain (A) corporate and financial
books and records separate from those of any other Person and (B) minutes of the
meetings and other proceedings of its shareholders and board of directors; (ii)
continuously maintain the resolutions, agreements and other instruments
underlying the transactions contemplated hereby and by the Note Agreement and
the Receivables Acquisition Agreement as official records of the Issuer; (iii)
act solely in its corporate name and through its duly authorized officers or
agents to maintain an arm's-length relationship with the Originator and its
Affiliates; (iv) pay all of its operating expenses and liabilities from its own
funds; (v) maintain an office separate from that of the Originator on the
premises currently rented by the Originator; and (vi) transact the majority of
its business with entities that are not Affiliates of the Originator.
(f) The Issuer shall conduct its business solely in its own name so as to
not mislead others as to the identity of the corporation with which those others
are concerned, and particularly will avoid the appearance of conducting business
on behalf of the Originator or any of its Affiliates or that the assets of the
Issuer are available to pay the creditors of the Originator or any of its
Affiliates. Without limiting the generality of the foregoing, all oral and
written communications, including without limitation, letters, invoices,
purchase orders, contracts, statements and loan applications, will be made
solely in the name of the Issuer.
(g) The Issuer will be operated so as not to be substantively consolidated
with the Originator.
SECTION 8.05. Protection of Trust Estate; Further Assurances.
The Issuer will from time to time execute and deliver all such supplements
and amendments hereto and all such Financing Statements, continuation
statements, instruments of further assurance, and other instruments, and will
take such other action as may be necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien of this Indenture or carry out more
effectively the purposes hereof;
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(iii) publish notice of, or protect the validity of, any Grant made or
to be made by this Indenture and perfect the security interest contemplated
hereby in favor of the Indenture Trustee in the Trust Estate; provided,
that the Issuer shall not be required to file Financing Statements with
respect to the Vehicles in addition to those contemplated by Section _____
of the Note Agreement and Section _____ of the Receivables Acquisition
Agreement;
(iv) enforce or cause the Servicer to enforce any of the Contracts; or
(v) preserve and defend title to any Contract (including the right to
receive all payments due or to become due thereunder), Vehicles, or other
property included in the Trust Estate and preserve and defend the rights of
the Indenture Trustee and the Noteholders in such Contract (including the
right to receive all payments due or to become due thereunder), Vehicles
and other property against the claims of all persons and parties.
The Issuer, upon the Issuer's failure to do so, hereby designates the Indenture
Trustee its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 8.05; provided,
however, that such designation shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance of the Issuer with the foregoing
covenants, and provided, further, that the duty of the Indenture Trustee to
execute any instrument required pursuant to this Section 8.05 shall arise only
if a Responsible Officer of the Indenture Trustee has actual knowledge of any
failure of the Issuer to comply with the provisions of this Section 8.05.
SECTION 8.06. Reserved.
SECTION 8.07. Performance of Obligations; Receivables Acquisition
Agreement.
(a) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, any Supplement, the Notes, the Note
Agreement and the Receivables Acquisition Agreement.
(b) The Issuer will not take any action or permit any action to be taken by
others which would release any Person from any of such Person's covenants or
obligations under any Contract or any other instrument included in the Trust
Estate other than any such release occasioned by the early termination of a
Contract after receipt of the
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Prepayment Amount, or which would result in the amendment, hypothecation,
subordination, termination, or discharge of, or impair the validity or
effectiveness of, any Contract or such other instrument, except as expressly
provided in this Indenture or the Receivables Acquisition Agreement.
(c) The Issuer will clearly mark its books and records to reflect each
assignment and transfer of a Contract and the Vehicle subject thereto from the
Originator.
(d) The Issuer will reply to all inquiries by third parties with respect to
the transactions contemplated by the Receivables Acquisition Agreement by
indicating that the Originator has assigned and transferred to it the Contracts
and the Originator's right, title and interest in and to the related Vehicles.
(e) If any Authorized Officer shall have knowledge of the occurrence of a
default under the Receivables Acquisition Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Noteholders thereof, and shall specify in
such notice the action, if any, the Issuer is taking in respect of such default.
Unless consented to by the Indenture Trustee, the Issuer may not waive any
default under or amend the Receivables Acquisition Agreement.
SECTION 8.08. Negative Covenants.
The Issuer will not:
(i) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate except as expressly permitted by this Indenture or any
Supplement;
(ii) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Notes by reason of the payment of any taxes
levied or assessed upon any portion of the Trust Estate;
(iii) engage in any business or activity other than in connection
with, or relating to the ownership of, the Contracts and the Vehicles, the
issuance of the Notes, and the specific transactions contemplated hereby;
(iv) become liable for, issue, incur, assume, or allow to remain
outstanding any indebtedness, or guaranty any indebtedness of any Person,
other than the Notes, except as contemplated by this Indenture, any
Supplement, the Receivables Acquisition Agreement and the Note Agreement;
(v) seek dissolution or liquidation in whole or in part or
reorganization of its business or affairs;
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(vi) (A) permit the validity or effectiveness of this Indenture or any
Grant hereby to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit
any Person to be released from any covenants or obligations under this
Indenture, except as may be expressly permitted hereby, (B) permit any
lien, charge, security interest, mortgage or other encumbrance to be
created on or to extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds thereof
other than the lien of this Indenture and the rights of Obligors, or (C)
permit the lien of this Indenture not to constitute a valid first priority
security interest in the Trust Estate; or
(vii) conduct its business or engage in any activity in violation of
the provisions contained in its Articles of Incorporation.
SECTION 8.09. Information as to the Issuer.
The Issuer shall deliver to the Indenture Trustee and each institutional
holder of Outstanding Notes (and, upon the request of any Noteholder, to any
prospective transferee of any Notes):
(a) Annual Statements - within [90] days after the end of each fiscal
year of the Issuer, three copies of:
(i) a balance sheet of the Issuer, at the end of that year, and
(ii) statements of income, retained earnings and cash flows of
the Issuer for that year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by an opinion of a
firm of independent certified public accountants of recognized national
standing stating that such financial statements present fairly the
financial condition of the Issuer and have been prepared in accordance with
generally accepted accounting principles consistently applied (except for
changes in application in which such accountants concur and footnote), and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records
and such other auditing procedures as were considered necessary in the
circumstances;
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(b) Officers' Certificate - with each set of financial statements
delivered pursuant to Section 8.09(a), the Issuer will deliver a
certificate from an Authorized Officer stating that such Authorized Officer
has reviewed the relevant terms of this Indenture, any Supplement, the Note
Agreement and the Receivables Acquisition Agreement (including, without
limitation, Section 8.04 hereof) and has made, or caused to be made, under
such officer's supervision, a review of the transactions and conditions of
the Issuer during the period covered by the income statements then being
furnished and that the review has not disclosed the existence of any
Indenture Event of Default or, if an Indenture Event of Default exists,
describing its nature;
(c) Notice of Indenture Event of Default - immediately upon becoming
aware of the existence of any condition or event which constitutes a
Default or an Indenture Event of Default, a written notice describing its
nature and period of existence and what action the Issuer is taking or
proposes to take with respect thereto;
(d) Report on Proceedings - promptly upon the Issuer's becoming aware
of:
(i) any proposed or pending investigation of it by any
governmental authority or agency, or
(ii) any pending or proposed court or administrative proceeding
which involves or may involve the possibility, individually or in the
aggregate, of materially and adversely affecting the properties,
business, prospects, profits or condition (financial or otherwise) of
the Issuer, a written notice specifying the nature of such
investigation or proceeding and what action the Issuer is taking or
proposes to take with respect thereto and evaluating its merits; and
(e) Requested Information - with reasonable promptness, any other data
and information which may be reasonably requested from time to time.
SECTION 8.10. Taxes.
The Issuer shall pay all taxes when due and payable or levied against its
assets, properties or income, including any property that is part of the Trust
Estate, except to the extent the Issuer is contesting the same in good faith and
has set aside adequate reserves in accordance with generally accepted accounting
principles for the payment thereof. The
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Issuer shall be included as a consolidated entity in the federal tax returns
filed by the Originator.
SECTION 8.11. Indemnification.
The Issuer agrees to indemnify and hold harmless the Indenture Trustee and
each Noteholder (each an "Indemnified Party") against any and all liabilities,
losses, damages, penalties, costs and expenses (including costs of defense and
legal fees and expenses) which may be incurred or suffered by such Indemnified
Party without negligence or willful misconduct on its part as a result of
claims, actions, suits or judgments asserted or imposed against it and arising
out of the transactions contemplated hereby or by the Note Agreement or the
Receivables Acquisition Agreement, including, without limitation, any claims
resulting from any use, operation, maintenance, repair, storage or
transportation of any Vehicle, whether or not in the Issuer's possession or
under its control, and any tort claims and any fines or penalties arising from
any violation of the laws or regulations of the United States or any state or
local government or governmental authority; provided that, all amounts payable
pursuant to this Section 8.11 shall be fully subordinated to amounts payable
under the Notes, shall be without recourse to the Issuer except to the extent
that all amounts otherwise due and payable under the terms of this Indenture
have been fully paid and shall not, to the extent that such amounts are unpaid,
constitute a claim against the Issuer except to the extent that all amounts
otherwise due and payable under the terms of this Indenture have been fully
paid. The provisions of this Section 8.11 shall survive the termination of this
Indenture.
SECTION 8.12. Certificates of Title.
For any Vehicle for which a certificate of title is pending or for which
the Issuer has requested, but has not yet received, an application to change its
certificate of title, the Issuer shall apply to have the Indenture Trustee named
as a lienholder on such Vehicle immediately upon receiving such certificate of
title or application, respectively. The Issuer shall furnish to the Indenture
Trustee copies of all applications for changes to certificates of title prepared
by it and all changed certificates of title received by it.
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ARTICLE IX
AMENDMENTS AND SUPPLEMENTAL INDENTURES
SECTION 9.01. Amendments and Supplemental Indentures.
With the consent of the holders of Notes evidencing not less than [66-2/3%]
of Voting Rights, by Act of said Noteholders delivered to the Issuer and the
Indenture Trustee, and with the consent of the Issuer, by an Issuer Order, and
the Indenture Trustee may enter into an amendment to this Indenture or an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Noteholders under
this Indenture. Without the consent of Noteholders, amendments may be made by
the Issuer and the Indenture Trustee to cure any ambiguity, to correct or
supplement any provision that is inconsistent with another provision or to add
or amend any provision with respect to matters or questions arising under this
Indenture; provided, however, that no amendment to this Indenture or any
supplemental indenture may modify the amount of, or the timing of payment of,
any amount due any Noteholder without the consent of such Noteholder, or any
other rights of the holders of a class of Notes, without the consent of
[66-2/3%] of the Outstanding Note Balance of the Notes of such class; and
provided, further, that no supplemental indenture may (i) modify any provision
of this Indenture requiring the consent of all Noteholders or (ii) release any
of the Trust Estate from the lien hereof or modify Sections 2.05 or 6.06 hereof
without the consent of all Noteholders.
SECTION 9.02. Execution of Amendments and Supplemental Indentures.
In executing any amendment to this Indenture or any supplemental indenture
pursuant to Section 9.01 of this Indenture, the Indenture Trustee shall be
entitled to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such amendment
to this Indenture or any supplemental indenture is authorized or permitted by
this Indenture. The Indenture Trustee may, but shall not be obligated to, enter
into any supplemental indenture which affects the Indenture Trustee's own
rights, duties, protections, or immunities under this Indenture or otherwise.
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SECTION 9.03. Effect of Amendments and Supplemental Indentures.
Upon the execution of any amendment to this Indenture or any supplemental
indenture under this Article, this Indenture shall be modified in accordance
therewith, and such amendment or supplemental indenture shall form a part of
this Indenture for all purposes, and every Noteholder of Notes theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.04. Reference in Notes to Amendments and Supplemental Indentures.
Notes authenticated and delivered after the execution of any amendment to
this Indenture or any supplemental indenture pursuant to this Article may, and
shall if required by the Indenture Trustee, bear a notation in form approved by
the Indenture Trustee as to any matter provided for in such amendment or
supplemental indenture. If the Issuer shall so determine, new Notes so modified
as to conform, in the opinion of the Indenture Trustee and the Issuer, to any
such amendment or supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Optional Redemption; Election to Redeem.
The Notes may be redeemed by the Issuer, in whole but not in part, as to
the then Outstanding Offered Notes, on any Payment Date when (i) the Outstanding
[Class A] Note Balance is less than or equal to ___% of the initial [Class A]
Note Balance and (ii) the Outstanding [Class B] Note Balance is less than or
equal to ___% of the initial [Class B] Note Balance, at the Redemption Price.
The Issuer, by an Authorized Officer, shall set the Redemption Date and the
Redemption Record Date and give notice thereof to the Indenture Trustee pursuant
to Section 10.02.
Installments of interest and principal due on or prior to a Redemption Date
shall continue to be payable to the Holders of Offered Notes called for
redemption as of the relevant Record Dates according to their terms and the
provisions of Section 2.06. The election of the Issuer to redeem any Offered
Notes pursuant to this Section shall be
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evidenced in writing by an Authorized Officer directing the Indenture Trustee to
make the payment of the Redemption Price on all of the Offered Notes to be
redeemed from monies deposited with the Indenture Trustee pursuant to Section
10.04.
SECTION 10.02. Notice to Indenture Trustee.
In the case of any redemption pursuant to Section 10.01, the Issuer shall,
at least [15] days prior to the Redemption Date (unless a shorter notice shall
be satisfactory to the Indenture Trustee), notify the Indenture Trustee of such
Redemption Date.
SECTION 10.03. Notice of Redemption by the Issuer.
Notice of redemption pursuant to Section 10.01 shall be given by first
class mail, postage prepaid, mailed not less than [15] days prior to the
applicable Redemption Date, to each Noteholder, at his address in the Note
Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price; and
(3) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Note, and that interest thereon shall cease to
accrue on such date.
Notice of redemption of Offered Notes shall be given by the Issuer, by an
Authorized Officer, or, at the request of such Authorized Officer, by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Noteholder selected for
redemption shall not impair or affect the validity of the redemption of any
other Note.
SECTION 10.04. Deposit of the Redemption Price.
On or before the Business Day next preceding any Redemption Date, the
Issuer shall deposit with the Indenture Trustee an amount of monies sufficient
to pay the Redemption Price of all Offered Notes Outstanding on such Redemption
Date (less any portion of such payment to be made from monies in the Collection
Account).
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SECTION 10.05. Notes Payable on Redemption Date.
Notice of redemption having been given as provided in Section 10.03, the
Note shall, on the applicable Redemption Date, become due and payable at the
Redemption Price and on such Redemption Date (unless the Issuer shall default in
the payment of the Redemption Price) such Notes shall cease to bear interest.
The Noteholders shall be paid the Redemption Price by the Indenture Trustee on
behalf of the Issuer; provided, however, that installments of principal and
interest which are due on or prior to the Redemption Date shall be payable to
the Noteholders registered as such on the relevant Record Dates according to
their terms and the provisions of Section 2.06.
If the Holders of any Offered Note called for redemption shall not be so
paid, the principal and premium, if any, shall, until paid, bear interest from
the Redemption Date at the related Note Rate.
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except as to any
surviving rights herein expressly provided for), and the Indenture Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when:
(i) either:
(A) all Notes theretofore authenticated and delivered (other than
(x) Notes which have been destroyed, lost, or stolen and which have
been replaced or paid as provided in Section 2.04 and (y) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section
8.03(c)) have been irrevocably paid and delivered to the Indenture
Trustee for cancellation; or
(B) the final installments of principal on all such Notes not
theretofore delivered to the Indenture Trustee for cancellation:
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(1) have become due and payable, or
(2) will become due and payable at their Stated Maturity
Date within one year,
and the Issuer has deposited or caused to be deposited with the
Indenture Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Indenture Trustee for cancellation,
for principal and interest to the date of such deposit (in the case of
Notes which have become due and payable) or to the Stated Maturity
Date thereof;
(ii) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer for the benefit of the Noteholders; and
(iii) the Issuer has delivered to the Indenture Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
At such time, the Indenture Trustee shall deliver to the Issuer or, upon Issuer
Order, its assignee, all cash, securities and other property held by it as part
of the Trust Estate other than funds deposited with the Indenture Trustee
pursuant to Section 11.01(a)(i)(B) for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer under Sections 7.06 and 8.11, and, if money shall have
been deposited with the Indenture Trustee pursuant to Section 11.01(a)(i)(B),
the obligations of the Indenture Trustee under Section 11.02 and Section 8.03(c)
shall survive.
SECTION 11.02. Application of Trust Money. Subject to the provisions of
Section 8.03(c), all money deposited with the Indenture Trustee pursuant to
Sections 11.01 and 8.03 shall be held in trust and applied by it, in accordance
with the provisions of the Notes and this Indenture, to the payment to the
Persons entitled thereto of the principal and interest for whose payment such
money has been deposited with the Indenture Trustee.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
witnessed, all as of the day and year first above written.
Attest: ADVANTA AUTO FINANCE CORPORATION
______________________________ By:______________________________________
Name: Name:
Title: Title:
Attest: _________________________________________,
____________________________, as Indenture
Trustee
______________________________ By:______________________________________
Name: Name:
Title: Title:
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EXHIBIT A
TO INDENTURE
[FORM OF [CLASS A] NOTES]
_____% AUTO RECEIVABLES-BACKED NOTE, [CLASS A]
No. [A-__________] $______________
ADVANTA AUTO FINANCE CORPORATION, a Nevada corporation (the "Issuer"), for
value received, hereby promises to pay to ___________________ or registered
assigns, the principal sum of _____________________ Dollars ($____________) in
monthly installments equal to the [Class A] Monthly Principal, if any, on the
[twentieth] day of each month commencing ________, 199_ and ending not later
than _________ __, 199__, when all remaining principal and interest are due and
payable in their entirety (each, a "Payment Date"); to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) on each Payment Date on the
unpaid principal amount of this [Class A Note] from the Accrual Date or such
later date to which interest has been paid or duly provided for, to such Payment
Date, at the rate of _____% per annum; to the extent provided in the Indenture
referred to below, to pay the Prepayment Premium with respect to the [Class A
Notes]; and (to the extent permitted by applicable law) to pay interest on any
overdue installments of interest, premium, if any, and principal at the rate of
_____% per annum. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Indenture.
Payments of principal, premium, if any, and interest on this Note shall be
made on each Payment Date in such coin or currency of the United States of
America as at such time is legal tender for payment of public and private debts
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Record Date for such Payment Date,
which shall be the [fifth] Business Day preceding such Payment Date, by wire
transfer of federal funds to the account and number specified in the Note
Register on such Record Date for such Person or, if no such account or number is
so specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date. Within 10 Business Days following receipt of
the final installment of principal of this Note, the holder hereof shall
surrender this Note at the principal Corporate Trust Office of the Indenture
Trustee.
This Note is one of a duly authorized issue of [Class A Notes] of the
Issuer designated as its ____% Auto Receivables-Backed Notes, [Class A] with
aggregate principal
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amount of $____________ and to be issued under an Indenture dated as of
__________, 199_ (herein called the "Indenture"), between the Issuer and
______________________, as trustee (herein called the "Indenture Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties, and immunities thereunder
of the Issuer, the Indenture Trustee, and the holders of the Notes and of the
terms upon which the Notes are, and are to be, authenticated and delivered. The
Trust Estate secures the Notes equally and ratably without prejudice, priority,
or distinction between any Note of the same class and any other Note of the same
class by reason of difference in time of issuance or otherwise, and also secures
the payment of certain other amounts and certain other obligations as set forth
in the Indenture.
As provided in the Indenture, the aggregate amount of principal due and
payable on the [Class A Notes] on each Payment Date is equal to the [Class A]
Monthly Principal with respect to such Payment Date. All such payments shall be
made pro rata among the Outstanding [Class A Notes], without preference or
priority of any kind.
If an Indenture Event of Default as defined in the Indenture shall occur
and be continuing, the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations set forth
therein and above, the transfer of this Note is registrable in the Note
Register, upon surrender of this Note for registration of transfer at the office
or agency designated by the Issuer pursuant to the Indenture, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Indenture Trustee duly executed by, the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same original aggregate principal amount,
will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Indenture Trustee
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and any agent of the Issuer or the Trustee may treat the Person in whose name
this Note is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Indenture Trustee nor any such
agent shall be affected by notice to the contrary.
By accepting this Note, the holder hereof irrevocably appoints the
Indenture Trustee under the Indenture as the special attorney-in-fact for the
holder vested with full power on behalf of the holder to effect and enforce the
rights of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All terms used in this Note which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, this Note and the Indenture shall be governed
by, and construed in accordance with, the laws of the State of [New York],
except that any provision of the Indenture which relates to, or provides for,
the rights, duties and obligations of the Indenture Trustee shall be governed
by, and construed in accordance with, the laws of the State of ____________.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed in its name by the manual signature of its President or one of its Vice
Presidents.
ADVANTA AUTO FINANCE CORPORATION
By:____________________________________
Name:
Title:
A-3
<PAGE>
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
__________________, as Indenture
Trustee
Dated: ________ __, 19__ By:__________________________________
Authorized Signatory
A-4
<PAGE>
EXHIBIT B
TO INDENTURE
[FORM OF [CLASS B] NOTES]
_____% AUTO RECEIVABLES-BACKED NOTE, [CLASS B]
No. [B-__________] $______________
ADVANTA AUTO FINANCE CORPORATION, a Nevada corporation (the "Issuer"), for
value received, hereby promises to pay to ___________________ or registered
assigns, the principal sum of _____________________ Dollars ($____________) in
monthly installments equal to the [Class B] Monthly Principal, if any, on the
[twentieth] day of each month commencing ________, 199_ and ending not later
than _________ __, 199__, when all remaining principal and interest are due and
payable in their entirety (each, a "Payment Date"); to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) on each Payment Date on the
unpaid principal amount of this [Class B Note] from the Accrual Date or such
later date to which interest has been paid or duly provided for, to such Payment
Date, at the rate of _____% per annum; to the extent provided in the Indenture
referred to below, to pay the Prepayment Premium with respect to the [Class B
Notes]; and (to the extent permitted by applicable law) to pay interest on any
overdue installments of interest, premium, if any, and principal at the rate of
_____% per annum. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Indenture.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS [CLASS B] NOTE ARE
SUBORDINATE TO THE PRIOR PAYMENT IN FULL OF ALL AMOUNTS OF PRINCIPAL AND
INTEREST DUE AND PAYABLE ON THE [CLASS A] NOTES ON EACH PAYMENT DATE.
Payments of principal, premium, if any, and interest on this Note shall be
made on each Payment Date in such coin or currency of the United States of
America as at such time is legal tender for payment of public and private debts
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Record Date for such Payment Date,
which shall be the [fifth] Business Day preceding such Payment Date, by wire
transfer of federal funds to the account and number specified in the Note
Register on such Record Date for such Person or, if no such account or number is
so specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date. Within 10 Business Days following receipt of
the final installment of principal of this Note, the holder
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<PAGE>
hereof shall surrender this Note at the principal Corporate Trust Office of the
Indenture Trustee.
This Note is one of a duly authorized issue of [Class B Notes] of the
Issuer designated as its ____% Auto Receivables-Backed Notes, [Class B] with
aggregate principal amount of $____________ and to be issued under an Indenture
dated as of __________, 199_ (herein called the "Indenture"), between the Issuer
and ______________________, as trustee (herein called the "Indenture Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, and
immunities thereunder of the Issuer, the Indenture Trustee, and the holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trust Estate secures the Notes equally and
ratably without prejudice, priority, or distinction between any Note of the same
class and any other Note of the same class by reason of difference in time of
issuance or otherwise, and also secures the payment of certain other amounts and
certain other obligations as set forth in the Indenture.
As provided in the Indenture, the aggregate amount of principal due and
payable on the [Class B Notes] on each Payment Date is equal to the [Class B]
Monthly Principal with respect to such Payment Date. All such payments shall be
made pro rata among the Outstanding [Class B Notes], without preference or
priority of any kind.
If an Indenture Event of Default as defined in the Indenture shall occur
and be continuing, the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations set forth
therein and above, the transfer of this Note is registrable in the Note
Register, upon surrender of this Note for registration of transfer at the office
or agency designated by the Issuer pursuant to the Indenture, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Indenture Trustee duly executed by, the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same original aggregate principal amount,
will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
B-2
<PAGE>
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
By accepting this Note, the holder hereof irrevocably appoints the
Indenture Trustee under the Indenture as the special attorney-in-fact for the
holder vested with full power on behalf of the holder to effect and enforce the
rights of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All terms used in this Note which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, this Note and the Indenture shall be governed
by, and construed in accordance with, the laws of the State of [New York],
except that any provision of the Indenture which relates to, or provides for,
the rights, duties and obligations of the Indenture Trustee shall be governed
by, and construed in accordance with, the laws of the State of ____________.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed in its name by the manual signature of its President or one of its Vice
Presidents.
ADVANTA AUTO FINANCE CORPORATION
By:____________________________________
Name:
Title:
B-3
<PAGE>
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
__________________, as Indenture
Trustee
Dated: ________ __, 19__ By:____________________________________
Authorized Signatory
B-4
<PAGE>
EXHIBIT C
TO INDENTURE
[FORM OF [CLASS C] NOTES]
_____% AUTO RECEIVABLES-BACKED NOTE, [CLASS C]
No. [C-__________] $______________
ADVANTA AUTO FINANCE CORPORATION, a Nevada corporation (the "Issuer"), for
value received, hereby promises to pay to ___________________ or registered
assigns, the principal sum of _____________________ Dollars ($____________) in
monthly installments equal to the [Class C] Monthly Principal, if any, on the
[twentieth] day of each month commencing ________, 199_ and ending not later
than _________ __, 199__, when all remaining principal and interest are due and
payable in their entirety (each, a "Payment Date"); to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) on each Payment Date on the
unpaid principal amount of this [Class C Note] from the Accrual Date or such
later date to which interest has been paid or duly provided for, to such Payment
Date, at the rate of _____% per annum; to the extent provided in the Indenture
referred to below, to pay the Prepayment Premium with respect to the [Class C
Notes]; and (to the extent permitted by applicable law) to pay interest on any
overdue installments of interest, premium, if any, and principal at the rate of
_____% per annum. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Indenture.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS [CLASS C] NOTE ARE
SUBORDINATE TO THE PRIOR PAYMENT IN FULL OF ALL AMOUNTS OF PRINCIPAL AND
INTEREST DUE AND PAYABLE ON THE [CLASS A] AND THE [CLASS B] NOTES ON EACH
PAYMENT DATE.
Payments of principal, premium, if any, and interest on this Note shall be
made on each Payment Date in such coin or currency of the United States of
America as at such time is legal tender for payment of public and private debts
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Record Date for such Payment Date,
which shall be the [fifth] Business Day preceding such Payment Date, by wire
transfer of federal funds to the account and number specified in the Note
Register on such Record Date for such Person or, if no such account or number is
so specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date. Within 10 Business Days following receipt of
the final installment of principal of this Note, the holder
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<PAGE>
hereof shall surrender this Note at the principal Corporate Trust Office of the
Indenture Trustee.
This Note is one of a duly authorized issue of [Class C Notes] of the
Issuer designated as its ____% Auto Receivables-Backed Notes, [Class C] with
aggregate principal amount of $____________ and to be issued under an Indenture
dated as of __________, 199_ (herein called the "Indenture"), between the Issuer
and ______________________, as trustee (herein called the "Indenture Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, and
immunities thereunder of the Issuer, the Indenture Trustee, and the holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trust Estate secures the Notes equally and
ratably without prejudice, priority, or distinction between any Note of the same
class and any other Note of the same class by reason of difference in time of
issuance or otherwise, and also secures the payment of certain other amounts and
certain other obligations as set forth in the Indenture.
As provided in the Indenture, the aggregate amount of principal due and
payable on the [Class C Notes] on each Payment Date is equal to the [Class C]
Monthly Principal with respect to such Payment Date. All such payments shall be
made pro rata among the Outstanding [Class C Notes], without preference or
priority of any kind.
If an Indenture Event of Default as defined in the Indenture shall occur
and be continuing, the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
As provided in the Indenture and subject to the limitations set forth
therein and above, the transfer of this Note is registrable in the Note
Register, upon surrender of this Note for registration of transfer at the office
or agency designated by the Issuer pursuant to the Indenture, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Indenture Trustee duly executed by, the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same original aggregate principal amount,
will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations as provided in the Indenture and subject to certain limitations
therein set forth. No service charge shall be made for any such registration of
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<PAGE>
transfer or exchange, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Issuer, the
Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
By accepting this Note, the holder hereof irrevocably appoints the
Indenture Trustee under the Indenture as the special attorney-in-fact for the
holder vested with full power on behalf of the holder to effect and enforce the
rights of such holder and the provisions of the Indenture for the benefit of the
holder. The preceding provision in no way shall limit the right of the holder
hereof to demand payment hereunder or bring an action to enforce payment hereof.
All terms used in this Note which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, this Note and the Indenture shall be governed
by, and construed in accordance with, the laws of the State of [New York],
except that any provision of the Indenture which relates to, or provides for,
the rights, duties and obligations of the Indenture Trustee shall be governed
by, and construed in accordance with, the laws of the State of ____________.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed in its name by the manual signature of [the Trustee] [its President or
one of its Vice Presidents].
ADVANTA AUTO FINANCE CORPORATION
By:____________________________________
Name:
Title:
C-3
<PAGE>
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
__________________, as Indenture
Trustee
Dated: ________ __, 19__ By:___________________________________
Authorized Signatory
C-4
<PAGE>
EXHIBIT 4.3
<PAGE>
- --------------------------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
among
ADVANTA AUTO FINANCE CORPORATION
as Sponsor and Servicer
___________________________________,
as [Master Administrator]
___________________________________,
as [Master Servicer]
___________________________________,
as Originator and Servicer
and
___________________________________,
as Trustee
Dated as of _____________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms............................ 2
SECTION 1.02. Provisions of General Application................ 18
SECTION 1.03. Calculation of Quarterly Interest................ 19
ARTICLE II
TRANSFER OF TRUST ASSETS
SECTION 2.01. Conveyance of Transferred Assets................. 19
SECTION 2.02. Acceptance by Trustee and Appointment of
the [Master Servicer] as Custodian............... 19
SECTION 2.03. Additional Purchases............................. 20
SECTION 2.04. Conditions Precedent to All Purchases............ 21
SECTION 2.05. Grant of Security Interest; Tax
Treatment........................................ 22
SECTION 2.06. Further Action Evidencing Assignments............ 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the
Sponsor.......................................... 24
SECTION 3.02. Representations and Warranties as to
Each Auto Loan and the other Transferred
Assets........................................... 26
SECTION 3.03. Repurchases and Purchases........................ 28
ARTICLE IV
SERVICING OF TRUST ASSETS
SECTION 4.01. [Appointment of [Master Servicer]................ 29
SECTION 4.02. Subservicing Agreements Between Servicer
and Subservicer.................................. 31
SECTION 4.03. Representations and Warranties of the
Servicer and the [Master Servicer]............... 32
SECTION 4.04. Duties and Responsibilities of the
Servicer......................................... 33
SECTION 4.05. Fidelity Bond, Errors and Omissions
Insurance........................................ 36
SECTION 4.06. Inspection....................................... 37
SECTION 4.07. Trustee to Cooperate............................. 37
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Page
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SECTION 4.08. Servicing Fee; Servicing Expenses................ 38
SECTION 4.09. [Master Servicer] To Maintain Computer
Link............................................. 38
SECTION 4.10. [Master Servicer] and Servicer Not to
Resign........................................... 39
SECTION 4.11. Change in Business of the [Master
Servicer] or the Servicer........................ 39
SECTION 4.12. Events of Master Servicing Termination........... 40
SECTION 4.13. Appointment of the Successor Master
Servicer......................................... 41
SECTION 4.14. Events of Servicing Termination.................. 42
SECTION 4.15. Appointment of the Successor Servicer............ 44
SECTION 4.16. Effect of Service Transfer....................... 45
SECTION 4.17. Annual Reports; Statements as to
Compliance....................................... 46
SECTION 4.18. Annual Independent Public Accountants'
Servicing Report................................. 47
SECTION 4.19. Servicer Reports................................. 47
[ARTICLE V]
[THE [Master Administrator]]
SECTION 5.01. Appointment of [Master Administrator]............ 49
SECTION 5.02. Subcontracting Agreements Between Master
Administrator and Subcontractor.................. 49
SECTION 5.03. Duties and Responsibilities of the
Master Administrator............................. 50
SECTION 5.04. Representations and Warranties of the
[Master Administrator]........................... 51
SECTION 5.05. Monthly Administrator Fee; Administrator
Expenses......................................... 52
SECTION 5.06. [Master Administrator] Not to Resign............. 52
SECTION 5.07. Events of Administrator Termination.............. 52
SECTION 5.08. Appointment of the Successor Master
Administrator.................................... 54
SECTION 5.09. Annual Reports; Annual Statement as to
Compliance....................................... 55
SECTION 5.10. Other Data....................................... 56
SECTION 5.11. Reports of the [Master Administrator]............ 56
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates................................. 58
SECTION 6.02. Authentication of Certificates................... 60
SECTION 6.03. Registration of Transfer and Exchange of
Certificates..................................... 61
SECTION 6.04 Appointment of Paying Agent...................... 62
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Page
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SECTION 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates..................................... 63
SECTION 6.06. Persons Deemed Owners............................ 63
SECTION 6.07. Access to List of Certificateholders'
Names and Addresses.............................. 64
SECTION 6.08. Acts of Certificateholders....................... 64
SECTION 6.09 Notices to Depository............................ 65
ARTICLE VII
DEPOSITS AND DISTRIBUTIONS
SECTION 7.01. Rights of Certificateholders..................... 65
SECTION 7.02. Establishment and Administration of the
Collection Account............................... 66
SECTION 7.03. Establishment and Administration of the
Cash Reserve Account............................. 67
SECTION 7.04. Distributions.................................... 68
SECTION 7.05. Reports to Certificateholders.................... 71
ARTICLE VIII
REMEDIES
SECTION 8.01. Events of Default................................ 71
SECTION 8.02. Declaration of Principal Amortization
Event............................................ 73
SECTION 8.03. Collection of Indebtedness and Suits for
Enforcement by Trustee........................... 73
SECTION 8.04. Trustee May File Proofs of Claim................. 73
SECTION 8.05. Trustee May Enforce Claims Without
Possession of Investor Certificates.............. 74
SECTION 8.06. Application of Money Collected................... 75
SECTION 8.07. Limitation on Suits.............................. 75
SECTION 8.08. Restoration of Rights and Remedies............... 75
SECTION 8.09. Rights and Remedies Cumulative................... 76
SECTION 8.10. Delay or Omission Not Waiver..................... 76
SECTION 8.11. Control by Certificateholders.................... 76
SECTION 8.12. Waiver of Past Defaults.......................... 76
SECTION 8.13. Undertaking for Costs............................ 77
SECTION 8.14. Waiver of Stay or Extension Laws................. 77
ARTICLE IX
LIMITATION ON LIABILITY; INDEMNITIES
SECTION 9.01. Liabilities of Obligors and Insurers.............. 77
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Page
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SECTION 9.02. Limitation on Liability of the Sponsor,
the [Master Servicer], Servicer and the
[Master Administrator]........................... 78
SECTION 9.03. Indemnities of the [Master Servicer],
the Servicer and the [Master
Administrator]................................... 78
ARTICLE X
THE TRUSTEE
SECTION 10.01. Certain Duties................................... 79
SECTION 10.02. Notice of Defaults............................... 81
SECTION 10.03. Certain Matters Affecting the Trustee............ 81
SECTION 10.04. Trustee Not Liable for Certificates or
Auto Loans....................................... 83
SECTION 10.05. Trustee May Own Certificates..................... 84
SECTION 10.06. The [Master Administrator] to Pay
Trustee's Fees and Expenses...................... 84
SECTION 10.07. Eligibility Requirements for Trustee............. 84
SECTION 10.08. Resignation or Removal of Trustee................ 84
SECTION 10.09. Successor Trustee................................ 85
SECTION 10.10. Merger or Consolidation of Trustee............... 86
SECTION 10.11. Tax Matters...................................... 86
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Agreement; Optional
Repurchase....................................... 86
SECTION 11.02. Beneficiaries.................................... 88
SECTION 11.03. Amendment........................................ 88
SECTION 11.04. Notices.......................................... 89
SECTION 11.05. Notices and Reports to be Delivered to
the Rating Agency................................ 91
SECTION 11.06. Merger and Integration........................... 91
SECTION 11.07. Headings......................................... 91
SECTION 11.08. Certificates Nonassessable and Fully
Paid............................................. 92
SECTION 11.09. Severability of Provisions....................... 92
SECTION 11.10. No Proceedings................................... 92
SECTION 11.11. GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL............................. 92
SECTION 11.12. Counterparts..................................... 93
EXHIBITS
Exhibit A Form of Purchase Agreement
Exhibit B Auto Loan Protection Policy
Exhibit C Blanket Collateral Protection Policy
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Exhibit D Form of Assignment
Exhibit E Form of Release and Assignment
Exhibit F Form of Servicer Report
Exhibit G Form of Master Administrator Report
Exhibit H Form of Investor Certificate
Exhibit I Form of Seller Certificate
Exhibit J Form of Depository Agreement
Exhibit K Form of Issuance Supplement
SCHEDULES
Schedule 1 List of Auto Loans
v
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POOLING AND SERVICING AGREEMENT, dated as of ___________, 199_, among
ADVANTA AUTO FINANCE CORPORATION, a Nevada corporation, its successors and
permitted assigns, as Sponsor and as Servicer (the "Sponsor" and the "Servicer"
respectively), __________________________________, a __________ corporation, its
successors and permitted assigns as [Master Administrator] (the "[Master
Administrator]"), a _________ corporation, its successors and permitted assigns,
as [Master Servicer] (the "[Master Servicer]"), _______________, a ____________
corporation, its successors and permitted assigns, as Originator (the
"Originator") and _________________________, a _______________ corporation, its
successors and permitted assigns, as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Sponsor is a bankruptcy-remote corporation formed for the
purpose of acting as the issuer of certain certificates representing undivided
beneficial interests in trusts, including the trust to be established pursuant
to this Agreement of consumer automobile loans and certain other rights and
properties pertaining to the Advanta Auto Receivables Trust 199_-_] (the
"Trust");
WHEREAS, the Sponsor will acquire from time to time consumer automobile
loans financing the purchase of automobiles and light trucks, which loans create
a lien or security interest in the automobile financed thereunder in favor of
the loan holder (the "Auto Loans");
WHEREAS, the Sponsor intends that the Trust will purchase the Auto Loans
from the Sponsor simultaneously with the acquisition of such Auto Loans by the
Sponsor;
[WHEREAS, the [Master Administrator] has been requested and is willing to
direct the Trustee to make certain distributions of funds in connection with
amounts received as proceeds from the Auto Loans, investment income, and payment
of principal of and interest on, the Certificates and to otherwise perform
certain administrative functions in connection with the transactions
contemplated hereby;]
WHEREAS, in order to effectuate the purposes of this Agreement, the
Sponsor, the [Master Administrator] and the Trustee desire that [a master
servicer and] a servicer be appointed to perform certain servicing and
collection functions in respect of the Auto Loans to be acquired by the Trust
for the benefit of the Certificateholders as their interests appear herein; and
<PAGE>
WHEREAS, Advanta Auto Finance Corporation and ___ have been requested and
[each] is willing to act as [the [Master Servicer] and] the Servicer[,
respectively,] hereunder.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used herein, the following terms
shall have the following meanings:
"Actuarial Loan" means any Auto Loan in which the method of allocating
payments of principal and interest is the Actuarial Method.
"Actuarial Method" means the method of allocating a fixed level monthly
payment on an Auto Loan between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is the product of
one-twelfth of the APR multiplied by the Principal Balance.
"Administrator Transfer" has the meaning specified in Section 5.07.
"Adverse Claim" means any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the security interest created under this
Agreement.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Excess Interest" means, with respect to any Distribution Date,
an amount not less than zero, equal to the total of (a) the aggregate amount of
interest collected on all of the Auto Loans during the immediately preceding Due
Period minus (b) the amount of interest on the Investor Certificates calculated
pursuant to Section 7.04(c)(i)(A) in respect of such Distribution Date minus (c)
the amount of interest on the Originator Certificate calculated pursuant to
Section 7.04(c)(iii) in respect of such Distribution Date minus (d) the Trust
Operating Expenses with respect to the immediately preceding Due Period.
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<PAGE>
"Agreement" means this Pooling and Servicing Agreement, as amended or
supplemented from time to time including all exhibits and schedules hereto and
thereto.
"Applicants" has the meaning specified in Section 6.07.
"APR" means the annual percentage rate of an Auto Loan as determined
according to the related contractual documents with the Obligor thereof.
"Assignment" means collectively, with respect to any Auto Loan, the related
Sale Assignment and Purchase Assignment.
"Authorized Officer" means, with respect to any corporation or partnership,
the Chairman of the Board, the President, any Vice President, the Secretary, the
Treasurer, any Assistant Secretary, any Assistant Treasurer and each other
officer of such corporation or the general partner of such partnership
specifically authorized in resolutions of the Board of Directors of such
corporation to sign agreements, instruments or other documents in connection
with this Agreement on behalf of such corporation or partnership, as the case
may be.
"Auto Loan" means a consumer loan arising from the sale of an Automobile
and conveyed to the Trust by the Sponsor as part of the Trust Assets, and
includes, without limitation, (a) the related Assignment, (b) all security
interests or liens and property subject thereto from time to time purporting to
secure payment by the Obligor thereunder, (c) all guarantees, indemnities and
warranties, insurance policies (but not including the Insurance Policies),
certificates of title or other title documentation and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Auto Loan, (d) all collections and records with respect to the
foregoing, and (e) all proceeds of any of the foregoing.
"Auto Loan Protection Policy" means one of the Insurance Policies a copy of
which is attached hereto as Exhibit B insuring against loss in the amount of the
difference between (a) the unpaid balance of an Auto Loan and accrued or earned
interest thereon (after certain refundable items, repossession expenses and
applicable deductible have been subtracted) and (b) the liquidated value of the
repossessed Automobile.
"Automobiles" means new and used automobiles and light trucks, the purchase
of which the Obligors financed by the Auto Loans.
"Available Cash Reserve Amount" means, on any date of determination, the
amount on deposit in the Cash Reserve Account.
"Available Distribution Amount" means, on any Distribution Date, the amount
of Available Funds remaining after
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<PAGE>
the payment of the Trust Operating Expenses with respect to the immediately
preceding Due Period.
"Available Funds" means for any Monthly Fee Date or Distribution Date, (a)
all amounts representing Payments collected during the immediately preceding
month or Due Period, as the case may be, (b) all Recoveries on Defaulted Auto
Loans received during such month or Due Period, and (c) all amounts retained in
the Collection Account pursuant to Section 7.04(c)(vi) and 7.04(d)(vii) (net of
investment earnings on such amounts).
"Available Purchase Amount" means, on any date of determination, an amount
equal to the sum of (a) $__________ minus (b) the then aggregate Principal
Balance of Auto Loans previously purchased by the Trust.
"Available Subordination Amount" means for any Distribution Date, the sum
of (a) the then applicable Maximum Subordination Amount minus (b) the Cumulative
Subordination Payments.
"Blanket Collateral Protection Policy" means one of the Insurance Policies,
a copy of which is attached hereto as Exhibit C, insuring against loss or
damages to an Automobile.
"Book-Entry Certificates" has the meaning specified in Section 6.01(b).
"Business Day" means any day other than a Saturday or a Sunday, or another
day on which banks in the State of New York generally, or the City of New York,
the State of _______ generally, (or such other cities and states in which the
Corporate Trust Office, the principal administrative offices of the [Master
Administrator], Certificate Registrar and Transfer Agent, and Paying Agent or
the principal offices of the [Master Servicer] or the Servicer are subsequently
located, as specified in writing by such party to the other parties hereto) are
required, or authorized by law, to close.
"Cash Reserve Account" means the account described in Section 7.03(a).
"Certificate Rate" means the rate per annum specified in the Issuance
Supplement as the rate per annum at which interest accrues in respect of the
Investor Certificates and the Originator Certificate.
"Certificates" means on any date the Originator Certificate and the
Investor Certificates issued and outstanding on such date.
4
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"Certificateholder" means the registered holder of an Investor Certificate
or the Originator Certificate, as the case may be.
"Certificateholders' Interest" has the meaning specified in Section
7.01(a).
"Certificate Registrar and Transfer Agent" has the meaning specified in
Section 6.03(a).
"Certificate Register" has the meaning specified in Section 6.03.
"Closing Date" means ___________, 199_.
"Code" means the Internal Revenue Code of 1986.
"Collection Account" means the account described in Section 7.02(a).
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 11.03.
"Credit and Collection Policies" means written policies consistent with the
requirements of the Pooling and Servicing Agreement in effect from time to time
formulated by the [Master Administrator] in consultation with the Servicer and
agreed to by the [Master Servicer] as to the requirements of certain servicing
matters.
"Cumulative Subordination Payments" means, for any Distribution Date, an
amount equal to the sum of (a) all payments made to the Investor
Certificateholders minus (b) amounts attributable to interest on any Shortfall,
calculated at the Certificate Rate, over the term of this Agreement up to and
including such Distribution Date minus (c) the Investor's Share of the Available
Distribution Amount determined for all Distribution Dates up to and including
such Distribution Date.
"Dealer" means each automobile dealer with whom an Originator has entered
into an agreement which provides for, among other things, the origination of the
Auto Loans.
"Debt" means for any Person, (a) indebtedness of such Person for borrowed
money, (b) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) obligations of such Person to pay the deferred
purchase price of property or services, (d) obligations of such Person as lessee
under leases which have been or should be, in accordance with GAAP, recorded as
capital leases, (e) obligations secured by any lien or
5
<PAGE>
other charge upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations, (f)
obligations of such Person under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e) above,
and (g) liabilities in respect of unfunded vested benefits under plans covered
by ERISA. For the purposes hereof, the term "guarantee" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire Debt of any other Person, or to purchase, sell
or lease, as lessee or lessor, property or services, in any such case primarily
for the purpose of enabling another Person to make payment of Debt, or to make
any payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another Person
in connection with Debt of such Person.
"Defaulted Auto Loan" means, for any Due Period, (a) an Auto Loan as to
which a claim has been submitted under the terms of the Insurance Policies to
the extent such Auto Loan is eligible for coverage thereunder, (b) an Auto Loan
determined to be uncollectible in accordance with the Servicer's customary
practices on or prior to the last day of such Due Period or (c) an Auto Loan
repurchased by the Originator or the Sponsor or purchased by the [Master
Servicer] pursuant to Section 3.03.
"Definitive Certificates" has the meaning specified in Section 6.01(b).
"Deposit Date" means the Business Day immediately preceding each related
Distribution Date or Monthly Fee Date.
"Depository" means The Depository Trust Company or a successor appointed by
the [Master Administrator]. Any successor to the Depository shall be an
organization registered as a "clearing agency" pursuant to Section 17A of the
Securities Exchange Act of 1934.
"Depository Agreement" means the agreement among the Sponsor, the Trustee,
the [Master Administrator] and the Depository dated on or before the Issuance
Date, substantially in the form of Exhibit J.
"Depository Participant" means a Person for whom, from time to time, the
Depository effects book-entry transfers and pledges of securities deposited with
the Depository.
"Determination Date" means the 15th day of each month (or the preceding
Business Day, if such day is not a Business Day) on
6
<PAGE>
which the [Master Administrator] will determine, among other things, the
Available Funds.
"Distribution Date" means the 20th day of each month specified as a month
in which a Distribution Date occurs in the Issuance Supplement (or, if such day
is not a Business Day, the next succeeding Business Day).
"Dollar" and "$" means lawful currency of the United States of America.
"Due Period" means with respect to the first Due Period following the
Issuance Date, the period from the Issuance Date to the last day of the calendar
month immediately preceding the first Distribution Date, and thereafter, the
three consecutive calendar months immediately preceding each subsequent
Distribution Date.
"Duff & Phelps" means Duff & Phelps Credit Rating Co., a nationally
recognized statistical rating organization, and any successor thereto.
"Electronic Ledger" means the electronic master record of the Auto Loans
maintained by the Servicer.
"Eligible Account" means a segregated account, which may be an account
maintained with the Trustee, which is either (a) maintained with a depository
institution or trust company whose long term unsecured debt obligations are
rated at least BBB+ by Duff & Phelps (or, if such obligations are not rated by
Duff & Phelps, BBB+ by Standard & Poor's and Baa1 by Moody's, provided, that if
only one such rating agency rates such institution, such single rating shall
suffice), or (b) a segregated trust account or similar account maintained with a
federally or state chartered depository institution subject to regulations
regarding fiduciary funds on deposit substantially similar to 12 C.F.R.
ss.9.10(b).
"Eligible Investments" means any of the following:
(a) obligations of, or guaranteed as to the full and timely payment of
principal and interest by, the United States or obligations of any agency or
instrumentality thereof, when such obligations are backed by the full faith and
credit of the United States;
(b) repurchase agreements on obligations specified in clause (a); provided,
that the short-term debt obligations of the party agreeing to repurchase are
rated no less than Duff-1 by Duff & Phelps or, if not rated by Duff & Phelps, no
less than A-1 by Standard & Poor's and P-1 by Moody's (provided, that if only
one such rating agency rates such party, such single rating shall suffice);
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<PAGE>
(c) federal funds, certificates of deposit, time deposits and bankers'
acceptances (which shall each have an original maturity of not more than 90 days
and, in the case of bankers' acceptances, shall in no event have an original
maturity of more than 365 days) of any United States depository institution or
trust company incorporated under the laws of the United States or any state;
provided, that the short-term obligations of such depository institution or
trust company are rated no less than Duff-1 by Duff & Phelps or, if not rated by
Duff & Phelps, no less than A-1 by Standard & Poor's and P-1 by Moody's
(provided, that if only one such rating agency rates such party, such single
rating shall suffice);
(d) commercial paper (having original maturities of not more than 30 days)
of any corporation incorporated under the laws of the United States or any state
thereof which on the date of acquisition are rated no less than Duff-1 by Duff &
Phelps or, if not rated by Duff & Phelps, no less than A-1 by Standard & Poor's
and P-1 by Moody's (provided, that if only one such rating agency rates such
party, such single rating shall suffice);
(e) securities of money market funds rated AAm or better by Standard &
Poor's and Aa by Moody's (provided, that if only one such rating agency rates
such fund, such single rating shall suffice); and
(f) such other investment grade investments as shall be acceptable to the
Rating Agency.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Event of Administrator Termination" has the meaning specified in Section
5.07.
"Event of Default" has the meaning specified in Section 8.01.
"Event of Master Servicing Termination" has the meaning specified in
Section 4.12.
"Event of Servicing Termination" has the meaning specified in Section 4.14.
"Expected Final Payment Date" means the date specified as such in the
Issuance Supplement.
"Fractional Undivided Interest" means the fractional undivided interest in
the Investor Certificate Principal Balance that is evidenced by an Investor
Certificate and that is set forth on the face of such Investor Certificate;
provided, however, that the Trust shall only issue Investor Certificates
evidencing in the
8
<PAGE>
aggregate Fractional Undivided Interests totalling 100% of the Investor
Certificate Principal Balance.
"GAAP" means generally accepted accounting principles as in effect in the
United States, consistently applied, as of the date of such application.
"Governmental Authority" means the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
"Independent Public Accountant" means any of (a) Arthur Andersen & Co., (b)
Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst & Young (e) KMPG Peat
Marwick and (f) Price Waterhouse (and any successors thereof); provided, that
such firm is independent with respect to the [Master Servicer], the Servicer, or
any Subservicer, as the case may be, within the meaning of the Securities Act of
1933.
"Individual Sold Balance" means (a) with respect to any Actuarial Auto Loan
and any Precomputed Auto Loan, the present value of all Scheduled Payments for
such Auto Loan due on or after the effective date of its transfer to the Trust
(calculated based on the assumption that each such Scheduled Payment is paid on
its due date), discounted monthly at one-twelfth of the related APR and (b) with
respect to any Simple Interest Auto Loan, the principal balance thereof as of
the effective date of its transfer to the Trust.
"Initial Principal Amount" means the initial principal amount of the
Investor Certificates authenticated and delivered on the Issuance Date.
"Insurance Companies" means _________________________.
"Insurance Policies" means the Auto Loan Protection Policy and the Blanket
Collateral Protection Policy issued by _____ at the request of the Sponsor in
the name of the Trust and attached hereto as Exhibits B and C, respectively.
"Insurer" means _________________________.
"Intended Tax Characterization" has the meaning specified in Section
2.05(b).
"Interest-Only Period" means the period commencing on the Issuance Date
until the first day of the Principal Amortization Period.
"Investor Certificate Principal Balance" means, for any Distribution Date,
the Initial Principal Amount reduced by all
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prior payments to the Investor Certificateholders allocable to principal.
"Investor Certificates" means the Certificates issued pursuant hereto.
"Investor Certificateholder" means the holder of record of an Investor
Certificate.
"Investor's Share" means, with respect to any Distribution Date, the
percentage, which shall not be greater than ____%, specified as the "Investor's
Share" in the Issuance Supplement.
"Issuance Date" means the date specified as such in the Issuance Supplement
on which the Investor Certificates will be authenticated and delivered by the
Trustee in accordance with the provisions of Section 6.02(b).
"Issuance Notice" has the meaning specified in Section 6.02(b)(i).
"Issuance Supplement" means a supplement to this Agreement complying with
the terms of Section 6.02(b)(vi) and executed in conjunction with the issuance
of the Investor Certificates.
"List of Auto Loans" means a list containing the Required Information with
respect to each Auto Loan delivered to the Trustee and certified by a duly
authorized officer of the Sponsor which is attached hereto as Schedule 1.
"Loan File" means, with respect to any Auto Loan, the original loan and
security agreement evidencing the Auto Loan and originals or copies of such
other documents and instruments relating to each Auto Loan and the security
interest on the selected Automobile as specified in the Credit and Collection
Policies.
"[Master Administrator] Duties" has the meaning specified in Section
5.01(b).
"[Master Administrator]'s Report" has the meaning specified in Section
5.11.
"Maximum Subordination Amount" means, on any Distribution Date, an amount
equal to the product of (a) the Originator's Share and (b) the aggregate
Principal Balance of the Auto Loans specified in the Issuance Supplement.
"Monthly Administrator Fee" means, with respect to any Monthly Fee Date, a
fee equal to the sum of (a) all late payment penalties paid by Obligors on Auto
Loans not paid to the [Master
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Servicer] pursuant to Section 4.08 during the immediately preceding calendar
month, (b) any prepayment penalties paid by Obligors in connection with any
prepayment of any Auto Loan (such penalties to include the excess of the amount
received from and not rebated to the Obligor in connection with a prepayment in
full of a Precomputed Auto Loan or an Actuarial Loan over the outstanding
Principal Balance plus accrued interest, determined in accordance with the
Actuarial Method) during the immediately preceding calendar month; and (c) all
net investment earnings on Eligible Investments in respect of the Collection
Account and the Cash Reserve Account during the period from the second preceding
Deposit Date to the immediately preceding Deposit Date.
"Monthly Fee Date" means the 20th day of each calendar month (or, if such
day is not a Business Day, the next succeeding Business Day) commencing
__________ 20, 199_.
"Monthly Servicing Fee" means, with respect to any Monthly Fee Date, a fee
equal to (a) the product of (i) ____% and (ii) the aggregate Principal Balance
of the Auto Loans as of the end of the month immediately preceding such Monthly
Fee Date, plus (b) the Reimbursable Servicer Expenses, plus (c) the Servicer
Penalty Payment Amount, plus (d) the Servicer Variable Amount.
"Monthly Subrogation Amount" means, with respect to any Monthly Fee Date,
amounts determined by the [Master Administrator] to be payable to the Insurer in
respect of claims paid under the Insurance Policies in connection with the
Insurer's subrogation rights thereunder during the immediately preceding
calendar month.
"Moody's" means Moody's Investors Service, Inc., a nationally recognized
statistical rating organization, and any successor thereto.
"Obligor" means, with respect to any Auto Loan, the Person primarily
obligated to make payments in respect thereto.
"Officer's Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, Vice Chairman of the Board, the President,
a Vice President, the Treasurer, the Secretary, an Assistant Secretary, or the
manager of such Person.
"Opinion of Counsel" means a written opinion of counsel (who may be counsel
to the Sponsor, the [Master Administrator], the [Master Servicer] or the
Servicer), which opinion is acceptable to the Trustee.
"Originator Certificate" means the Certificate authenticated by the Trustee
pursuant to Section 6.02.
"Originator Certificate Principal Balance" means, on any date of
determination, (a) prior to the Issuance Date, the sum of
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(i) the initial principal amount of the Originator Certificate plus (ii) any
additions to the Originator Certificate Principal Balance pursuant to Section
2.03(a) and (b) on and after the Issuance Date, the sum of (i) the Originator
Certificate Principal Balance determined on the Issuance Date plus (ii) any
additions to the Originator Certificate Principal Balance pursuant to Section
2.03(a) minus (iii) all prior payments to the Originator Certificateholder in
reduction of principal pursuant to Section 7.04(c)(ii) and Section 7.04(d)(iv).
"Originator's Interest" means the residual undivided ownership interest in
the Auto Loans owned by the Sponsor equal to the aggregate Principal Balance of
the Auto Loans less the Investor Certificate Principal Balance.
"Originator's Share" means, with respect to any Distribution Date, the
percentage, which shall not be less than ___%, specified as the "Originator's
Share" in the Issuance Supplement.
"Partial Payment Amount" means any payment of principal on an Auto Loan
which is received in advance of its scheduled due date, but excluding any
prepayment in full by an Obligor or Recoveries on Defaulted Auto Loans.
"Payments" for any Auto Loan for any Due Period means all amounts received
with respect to such Auto Loan during such Due Period on or after the effective
date of the transfer of such Auto Loan to the Trust, including, without
limitation, proceeds from any insurance policy including the Insurance Policies
(other than proceeds applied to the restoration or repair, or in certain
circumstances, replacement, of the related Automobile), but not including
amounts which constitute Recoveries on Defaulted Auto Loans, the Repurchase
Price of any Auto Loan and withdrawals from the Cash Reserve Account.
"Percentage" means the Fractional Undivided Interest owned by a particular
Investor Certificateholder, expressed as the percentage obtained by dividing the
denomination representing the initial principal amount of the related Investor
Certificate by the Initial Principal Amount.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, Governmental Authority or any other entity of
whatever nature.
"Pool Factor" means an eight-digit decimal computed as of any Distribution
Date by dividing the Investor Certificate Principal Balance (after giving effect
to any payments to Investor Certificateholders allocable to principal on such
Distribution Date) by the Initial Principal Amount.
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"Precomputed Auto Loan" means any Auto Loan under which earned interest
(which may be referred to in the Auto Loan as the add-on finance charge) and
principal is determined according to the sum of periodic balances or the sum of
monthly balances or any equivalent method commonly referred to as the "Rule of
78s".
"Principal Amortization Event" means an Event of Default declared as such
pursuant to the requirements of Section 8.02.
"Principal Amortization Period" means the period (a) beginning on the
earlier to occur of (i) the first Distribution Date following the sixth monthly
anniversary of the Issuance Date, and (ii) the Distribution Date immediately
following the occurrence of a Principal Amortization Event and (b) ending on the
Trust Termination Date.
"Principal Balance" of an Auto Loan means, on any date of determination,
(a) with respect to a Simple Interest Auto Loan, the Individual Sold Balance
thereof reduced by that portion of all prior Payments received by the Servicer
with respect to such Auto Loan allocable to principal as reflected on the
records maintained by the Servicer (in accordance with the Credit and Collection
Policies) other than amounts allocable to the Partial Prepayment Amount and (b)
with respect to a Precomputed Auto Loan or an Actuarial Auto Loan, the
Individual Sold Balance minus that portion of all Scheduled Payments received on
or prior to such date allocable to principal using the Actuarial Method other
than amounts allocable to the Partial Prepayment Amount; provided that, for the
purpose of determining principal allocable to the Certificateholders, for every
Due Period following the Due Period with respect to which an Auto Loan is
repurchased or purchased by the [Master Servicer], an Originator or the Sponsor
in accordance with the provisions of Section 3.03 or in which such Auto Loan
becomes a Defaulted Auto Loan or is prepaid in full, the Principal Balance of
such Auto Loan shall be deemed to be zero.
"Purchase" has the meaning specified in Section 2.03(a).
"Purchase Assignment" means a certificate of assignment by the Sponsor to
the Trustee substantially in the form of Exhibit A giving notice of, and
evidencing, the transfer of ownership of the Transferred Assets by the Sponsor
to the Trustee for the benefit of the Certificateholders.
"Purchase Date" means the Closing Date and each day on which a Purchase is
made by the Trust.
"Purchase Notice" has the meaning specified in Section 2.03(b).
"Rating Agency" means any nationally recognized statistical organization
rating the Investor Certificates at the request of the Sponsor; as of the date
hereof, Duff & Phelps.
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"Records" means all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) prepared and
maintained by the Originator, the [Master Servicer], the Servicer or by or on
behalf of the Sponsor with respect to Auto Loans and the related Obligors.
"Record Date" means the last Business Day of the calendar month preceding
the month in which a Distribution Date occurs.
"Recoveries on Defaulted Auto Loans" means, for any Due Period, all amounts
received by the Servicer during such Due Period with respect to Defaulted Auto
Loans from any source including without limitation proceeds of insurance
(including insurance maintained by Obligor and the Insurance Policies), and the
Repurchase Price of Auto Loans repurchased by the Originator or the Sponsor or
purchased by the [Master Servicer] pursuant to Section 3.03.
"Reimbursable Servicer Expenses" means, with respect to any Monthly Fee
Date, all reasonable and customary fees and expenses of third parties incurred
by the [Master Servicer] or the Servicer (including fees and expenses of the
Trustee, to the extent not reimbursable by the [Master Administrator] pursuant
to Section 10.06, and expenses related to financing statements and titles) in
connection with their respective repossession and remarketing activities
hereunder including without limitation fees of attorneys, appraisers, third
party collateral managers and others (who shall have been retained by the
[Master Servicer] or the Servicer, as applicable, in accordance with the
servicing standard set forth in Section 4.01) for the month immediately
preceding such Monthly Fee Date.
"Related Documents" means each Assignment, each Sale Agreement, the
Insurance Policies, the Issuance Supplement and all documents and instruments
required to be delivered thereunder.
"Repurchase Price" means for any Due Period, (a) with respect to any Auto
Loan which the Sponsor is obligated to repurchase, or the [Master Servicer] is
required to purchase in accordance with the provisions of Section 3.03, the sum
of (i) the Principal Balance of such Auto Loan plus (ii) an amount equal to the
amount of interest accrued on such Principal Balance at the related APR from the
last day to which interest has been paid with respect to such Auto Loan through
the last day of the Due Period preceding the Deposit Date on which such Auto
Loan is repurchased and (b) with respect to any Auto Loan an Originator is
required to repurchase in accordance with the provisions of Sections 3.03 and
the related Sale Agreement, the amount specified in such Sale Agreement as the
"Repurchase Price" for such Auto Loan.
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"Required Cash Reserve Amount" means, on any day, the amount specified as
such in the Issuance Supplement but not more than the Available Subordination
Amount.
"Required Information" means, with respect to an Auto Loan (a) the name of
the Obligor, (b) the Individual Sold Balance, (c) the Principal Balance, (d) the
maturity date, (e) the APR and (f) the state of origination.
"Responsible Officer" shall mean any Vice President, any Assistant Vice
President, any Assistant Secretary, any Assistant Treasurer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above-designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Sale Agreement" means any purchase agreement between and among the
Originator and the Sponsor, providing for the sale of the Auto Loans to the
Sponsor.
"Sale Assignment" means, with respect to any Auto Loan, the assignment
conveying such Auto Loan to the Sponsor under all applicable law in the state in
which the related Automobiles are located to permit the assignee or its agents
to exercise all rights granted by the Obligor under such Auto Loan and such
other documents and all rights available under applicable law to the obligee
under such Auto Loan and which, in each case, may, to the extent permitted by
the laws of the state in which the related Automobiles are located, be a blanket
instrument of assignment covering other Auto Loans as well.
"Scheduled Payment" means a payment due on an Auto Loan in accordance with
its terms.
"Service Transfer" has the meaning specified in Section 4.14.
"Servicer Duties" has the meaning specified in Section 4.04(a).
"Servicer Penalty Payment Amount" means, with respect to any Monthly Fee
Date, all penalties or reimbursement charges paid by Obligors on account of
payments returned for insufficient funds by their paying banks and __% of all
late payment penalties paid by Obligors on Auto Loans during the immediately
preceding calendar month.
"Servicer Report" has the meaning specified in Section 4.19.
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"Servicer Variable Amount" means, with respect to any Monthly Fee Date, an
amount not less than zero, equal to the excess of (a) the aggregate interest
accrued on all of the Auto Loans at the actual interest rate of each Auto Loan
during the immediately preceding calendar month calculated using the Actuarial
Method over (b) the aggregate interest accrued on all of the Auto Loans at an
annual interest rate of __% during the immediately preceding calendar month
calculated using the Actuarial Method.
"Servicing Officer" means any officer or employee of the [Master Servicer]
or the Servicer involved in, or responsible for, the administration and
servicing of Auto Loans whose name appears on a list of servicing officers
attached to Officer's Certificates furnished to the Trustee and the [Master
Administrator] by the [Master Servicer] and the Servicer, respectively, as such
lists may be amended from time to time.
"Shortfall" means, on any Distribution Date, an amount equal to the excess,
if any, of the amount of the interest calculated pursuant to Section
7.04(c)(i)(A) or Section 7.04(d)(i)(A), as the case may be, on any prior
Distribution Date over the amount of interest actually distributed to the
Investor Certificateholders on such Distribution Dates pursuant to Section
7.04(c)(i) or Section 7.04(d)(i), as the case may be.
"Simple Interest Auto Loan" means any Auto Loan under which the portion of
a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Simple Interest Method" means the method of allocating fixed level monthly
payments on an Auto Loan between interest and principal whereby the amount
allocable to interest is equal to daily interest on the Principal Balance
thereof at the stated APR for the actual number of days elapsed since the
preceding payment was made, which is computed on the basis of either 360 days or
365 days as required by applicable state law, and by application of amounts
received first to interest accrued on a daily basis and then to principal.
"Standard & Poor's" means Standard & Poor's Corporation, a nationally
recognized statistical rating organization, and any successor thereto.
"Subcontractor" means any Person with whom the [Master Administrator]
enters into a Subcontracting Agreement.
"Subcontracting Agreement" means any written contract between the [Master
Administrator] and any Subcontractor, relating to the administration of the
Trust Assets.
"Subservicer" means any Person with whom the Servicer enters into a
Subservicing Agreement.
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"Subservicing Agreement" means any written contract between the Servicer
and any Subservicer, relating to servicing, and collection of Auto Loans, in
such form as has been approved by the Servicer and the [Master Administrator].
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successor [Master Administrator]" has the meaning specified in Section
5.08(a).
"Successor [Master Servicer]" has the meaning specified in Section 4.13(a).
"Successor Servicer" has the meaning specified in Section 4.15(a).
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, gross receipts, profits,
withholding, excise, property, sales, use, occupation and franchise taxes
(including, in each such case, any interest, penalties or additions attributable
to or imposed on or with respect to any such taxes, charges, fees or other
assessments) imposed by the United States, any state or political subdivision
thereof, any foreign government or any other jurisdiction or taxing authority.
"Title Document" means, with respect to any Auto Loan and the related
Automobile, either (a) the certificate of title for, or other evidence of a
security interest in (including, without limitation, proof of application for
notice of lien), such Automobile or (b) with respect to any jurisdiction in
which the certificate of title or other evidence of ownership is not issued to
the holder of a lien, evidence of the security interest in the Automobile, in
each case issued by the department of motor vehicles or other appropriate
Governmental Authority in the jurisdiction in which such Automobile or the
Obligor is located.
"Transferred Assets" means the Auto Loans, the Insurance Policies (other
than any obligation to make any payment thereunder to the Insurance Companies
and taxes on premiums paid or payable thereon, which shall be obligations of the
[Master Administrator] during such time as _____ is the [Master Administrator],
and at any time thereafter, the Originator), all rights of the Sponsor under
each Sale Agreement, all monies due or to become due and all amounts received
with respect thereto and all proceeds thereof.
"Trust" has the meaning ascribed thereto in the recitals to this Agreement.
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"Trust Assets" has the meaning specified in Section 2.01.
"Trust Operating Expenses" means, with respect to each Distribution Date,
the amounts payable under Section 7.04(a) on such date, and, without
duplication, the immediately preceding two Monthly Fee Dates.
"Trust Termination Date" has the meaning specified in Section 11.01.
"UCC" means the Uniform Commercial Code as in effect in the relevant state.
"U.S. Person" means a citizen or resident of the United States, a
corporation or partnership organized in or under the laws of the United States
or any state thereof, or an estate or trust, the income of which is subject to
United States Federal income taxation regardless of its source.
SECTION 1.02. Provisions of General Application. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) All accounting terms not specifically defined herein shall be construed
in accordance with GAAP.
(b) All terms used in Article 9 of the UCC, and not specifically defined
herein, are used herein as defined in such Article 9.
(c) The terms defined in this Article include the plural as well as the
singular.
(d) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole. All references to Articles and
Sections shall be deemed to refer to Articles and Sections of this Agreement.
(e) References to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute to which reference
is made and all regulations promulgated pursuant to such statutes.
(f) For purposes of any calculations referred to in this Agreement (unless
otherwise specified), (a) all percentages resulting from such calculations will
be rounded up, if necessary, to the nearest one ten-thousandth of a percentage
point (e.g., 9.87654% (or .0987654) being rounded up to 9.8766% (or .098766))
and (b) all Dollar amounts used in or resulting from such calculations will be
rounded up to the nearest cent (e.g., $1,234.373 being rounded up to $1,234.38).
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SECTION 1.03. Calculation of Quarterly Interest. The calculation of the
amount of interest to be paid to Certificateholders on each Distribution Date
shall be made by the [Master Administrator] and shall be made on the basis of a
year consisting of 12 months each assumed to consist of 30 days; provided, that
in connection with any Due Period the duration of which is other than three
complete calendar months, interest for each completed calendar month shall be
computed at the monthly rate and any period since the last completed calendar
month shall be computed at the daily rate.
ARTICLE II
TRANSFER OF TRUST ASSETS
SECTION 2.01. Conveyance of Transferred Assets. On the Closing Date, the
Sponsor with the execution and delivery of this Agreement does hereby, and on
each Purchase Date, the Sponsor with the execution and delivery of each Purchase
Assignment will thereby, sell, grant, transfer, assign, set over and otherwise
convey to the Trustee, on behalf of the Trust, for the benefit of the
Certificateholders, without recourse, all right, title and interest of the
Sponsor in, to and under the Transferred Assets specified herein or therein, as
the case may be. Such property together with all funds on deposit in the
Collection Account and all funds on deposit in the Cash Reserve Account shall
constitute the assets of the Trust (the "Trust Assets").
SECTION 2.02. Acceptance by Trustee and Appointment of the [Master
Servicer] as Custodian. (a) The Trustee hereby acknowledges the conveyance of
the Transferred Assets and the receipt of the Loan Files and the other
Transferred Assets conveyed by the Sponsor hereunder and declares that the
Trustee, through a custodian, will hold such Auto Loans, the Loan Files, all
other Transferred Assets conveyed by the Sponsor and all other Trust Assets in
trust, for the use and benefit of all Certificateholders subject to the terms
and provisions hereof.
(b) The [Master Servicer] shall hold and acknowledges that it is holding
the Loan Files and all other Transferred Assets that it may from time to time
receive hereunder as custodian for the Trustee. The [Master Servicer] has
subcontracted the custodial duties hereunder to the Servicer; provided, that the
[Master Servicer] shall remain obligated and be liable to the Trustee on behalf
of the Certificateholders for the performance of such custodial duties without
diminution of such obligation and liability by virtue of the appointment of the
Servicer and to the same extent and under the same terms and conditions as if
the [Master Servicer] alone were the custodian of the Transferred Assets.
(c) The Servicer shall perform its duties under this Section 2.02 in
accordance with the standard set forth in Section
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4.01 as such standard applies to servicers acting as custodial agents. The
Servicer shall promptly report to the [Master Administrator], the [Master
Servicer] and the Trustee any failure by it to hold the complete Loan Files as
herein provided and shall promptly take appropriate action to remedy any such
failure but only to the extent (i) any such failure is caused by the acts or
omissions of the Servicer and (ii) such remedial action is otherwise within its
capabilities or control. As custodian, the Servicer shall have and perform the
following powers and duties:
(i) hold the Loan Files on behalf of the Trustee for the benefit
of the Trust, maintain accurate records pertaining to each Auto Loan to
enable it to comply with the terms and conditions of this Agreement, and
maintain a current inventory thereof;
(ii) implement policies and procedures in accordance with the
Servicer's normal business practices with respect to the handling and
custody of the Loan Files so that the integrity and physical possession of
the Loan Files will be maintained; and
(iii) attend to all details in connection with maintaining
custody of the Loan Files on behalf of the Trustee on behalf of the Trust.
(d) In acting as custodian of the Loan Files, the Servicer agrees further
that it does not and will not have or assert any beneficial ownership interest
in the Auto Loans or the Loan Files. Promptly upon the Trust's acquisition
thereof and the Servicer's receipt thereof, the Servicer on behalf of the Trust
shall mark conspicuously each original contractual document with an Obligor, and
its master data processing records evidencing each Auto Loan with a legend,
acceptable to the [Master Administrator] and the Trustee, evidencing that the
Trust has purchased the Auto Loans and all right and title thereto and interest
therein as provided herein and in the related Purchase Assignment.
(e) The Servicer agrees to maintain the related Loan Files at its office
located in _______________ or at such other offices of the Servicer as shall
from time to time be identified by prior written notice to the [Master
Administrator], the [Master Servicer] and the Trustee. Subject to the foregoing,
the Servicer may temporarily move individual Loan Files or any portion thereof
without notice as necessary to conduct collection and other servicing
activities.
SECTION 2.03. Additional Purchases. (a) Prior to the commencement of the
Principal Amortization Period, the Trust shall, upon the written request of the
Sponsor, purchase additional Auto Loans (each, a "Purchase") from the Sponsor on
the terms and subject to the conditions of this Agreement, in an aggregate
principal amount such that at any one time after giving effect to
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such Purchase, the total Principal Balance of Auto Loans acquired by the Trust
(determined as of the close of business on the last Business Day of the
immediately preceding Due Period) is up to, but not exceeding, the Available
Purchase Amount.
(b) On any Business Day which is a Purchase Date, the Sponsor shall give
the [Master Administrator] and the Servicer written notice of each Purchase (in
each case, a "Purchase Notice") (a) specifying the Individual Sold Balance of
each Auto Loan sold thereby to the Trust on such Purchase Date and (b) including
a representation by the Sponsor that the Purchase requested shall not be greater
than the Available Purchase Amount. The [Master Administrator] and the Servicer
may without any duty to make any independent investigation with respect thereto,
rely on the facts set forth in such Purchase Notice.
(c) On each Purchase Date, following its delivery of a Purchase Notice, the
Sponsor will complete, execute and deliver a Purchase Assignment to the [Master
Administrator]. The [Master Administrator] and the Servicer, as custodian for
and on behalf of the Trustee shall thereupon execute such Purchase Assignment
and deliver executed copies thereof to each other and to the Sponsor. The
Servicer shall, on the Closing Date and on each monthly anniversary thereof
until the beginning of the Principal Amortization Period, deliver to, or accept
as custodian for, the Trustee on behalf of the Trust all Assignments and Sale
Agreements delivered to it since the last such delivery to the Trustee
(including, any Assignments and Sale Agreements delivered to it pursuant to
Section 2.04).
(d) Following delivery of a duly executed Purchase Assignment, subject to
the satisfaction of the conditions set forth in Section 2.04, (i) the Dollar
amount of the Originator Certificate Principal Balance represented by the
Originator Certificate will increase in the amount of the aggregate Principal
Balance of the Auto Loans conveyed to the Trust on such Purchase Date and (ii)
the ownership of all Transferred Assets specified in such Purchase Assignment
(including Auto Loans transferred prior to the related Purchase Date) will be
vested in the Trustee for the benefit of the Certificateholders and such
Transferred Assets shall become part of the Trust Assets.
SECTION 2.04. Conditions Precedent to All Purchases. Each Purchase shall be
subject to the conditions precedent that:
(a) On the related Purchase Date, the Sponsor shall have certified in the
related Purchase Assignment that:
(i) the representations and warranties of the Sponsor, and, to
the best of its knowledge, the [Master Administrator], the [Master
Servicer] and the Servicer set forth in Sections 3.01, 3.02, 4.03 and 5.04
are true and
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correct on and as of such date, before and after giving effect to such
Purchase, as though made on and as of such date;
(ii) to the best of its knowledge, no event has occurred, or
would result from such Purchase or from the application of the proceeds
therefrom, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both;
(iii) the Sponsor is in compliance with each of its covenants set
forth herein;
(iv) to the best of its knowledge, no event has occurred which
constitutes an Event of Master Servicing Termination or would constitute an
Event of Master Servicing Termination but for the requirement that notice
be given or time elapse or both;
(v) to the best of its knowledge, no event has occurred which
constitutes an Event of Servicing Termination or would constitute an Event
of Servicing Termination but for the requirement that notice be given or
time elapse or both;
(vi) no event has occurred which constitutes an Event of
Administrator Termination or would constitute an Event of Administrator
Termination but for the requirement that notice be given or time elapse or
both;
(b) The Principal Amortization Period shall not have begun;
(c) The Sponsor shall have delivered to the Servicer as custodian for and
on behalf of the Trustee an executed copy of the related Sale Agreement (if such
Sale Agreement has not been previously delivered to the Trustee) and Sale
Assignment and an Officer's Certificate stating that all conditions precedent to
the effectiveness thereof shall have been satisfied to the extent that the
failure to do so would have a material adverse effect on the Certificateholders;
(d) Each of the Sponsor, the [Master Administrator], the [Master Servicer],
the Originator and the Servicer shall have taken such other action, including
delivery of approvals, consents, opinions, documents and instruments as may be
reasonably requested by each of them, the Trustee or the Rating Agency with
respect to the transactions contemplated by this Agreement or such Purchase
Assignment.
SECTION 2.05. Grant of Security Interest; Tax Treatment. (a) Except with
respect to the Intended Tax Characterization, it is the intention of the parties
hereto that the conveyance by the Sponsor of the Transferred Assets to the
Trustee on behalf of the
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Trust on the Closing Date and each Purchase to be made hereunder shall
constitute a purchase and sale of such Transferred Assets and not a loan. In the
event, however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement and each related
Purchase Assignment shall constitute a security agreement under applicable law,
and that the Sponsor shall be deemed to have granted to the Trustee, on behalf
of the Trust, a first priority perfected security interest in all of the
Sponsor's right, title and interest in, to and under the Transferred Assets and
the other Trust Assets. The conveyance by the Sponsor of the Transferred Assets
to the Trustee on behalf of the Trust on the Closing Date and the Purchases
shall not constitute and are not intended to result in an assumption by the
Trustee or any Certificateholder of any obligation of the Sponsor to the
Obligors, the Originator, the insurers under any insurance policies including
the Insurance Policies, or any other Person in connection with the Transferred
Assets.
(b) It is the intention of the Sponsor that, with respect to all Taxes, the
Investor Certificates will be treated as indebtedness of the Sponsor to the
Investor Certificateholders secured by the Transferred Assets (the "Intended Tax
Characterization"). The Sponsor and the Trustee, by entering into this
Agreement, and each Investor Certificateholder by the purchase of an Investor
Certificate, agree to report such transactions for purposes of all Taxes in a
manner consistent with the Intended Tax Characterization.
(c) The Sponsor shall take no action inconsistent with the Trust's
ownership of the Transferred Assets and shall indicate or shall cause to be
indicated in its records and records held on its behalf that ownership of each
Auto Loan and the other Transferred Assets is held by the Trustee on behalf of
the Trust. In addition, the Sponsor shall respond to any inquiries from third
parties with respect to ownership of an Auto Loan or any other Transferred Asset
by stating that it is not the owner of such Auto Loan and that ownership of such
Auto Loan or other Transferred Asset is held by the Trustee on behalf of the
Trust.
SECTION 2.06. Further Action Evidencing Assignments. (a) The Sponsor agrees
that, from time to time, at its expense, it will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or appropriate, or that the [Master Administrator], the [Master
Servicer], the Servicer or the Trustee may reasonably request, in order to
perfect, protect or more fully evidence the transfer of ownership of the
Transferred Assets or to enable the Trustee to exercise or enforce any of its
rights hereunder, and under any Purchase Assignment. Without limiting the
generality of the foregoing, the Sponsor will, upon the request of the [Master
Administrator] on its behalf or on behalf of the [Master Servicer],
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the Servicer or the Trustee execute and file (or cause to be executed and filed)
such financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate including, without limitation, recording and filing UCC-1 financing
statements, amendments or continuation statements with the office of the
Secretary of State of the state of the location of chief executive office of the
Sponsor (and other locations): (i) on or prior to the Closing Date; and (ii) not
more than five days after the effective date of any change of the name, identity
or structure or relocation of its chief executive office or any change that
would make any UCC-1 or continuation statement previously filed pursuant to this
Agreement seriously misleading within the meaning of applicable provisions of
the UCC.
(b) The Sponsor hereby grants to the [Master Administrator] a power of
attorney to execute all documents on behalf of the Sponsor as may be necessary
or desirable to effectuate the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Sponsor. The Sponsor
represents and warrants to the [Master Administrator], the [Master Servicer],
the Servicer and the Trustee, as of the Closing Date and on each day until the
Trust Termination Date, as follows:
(a) The Sponsor is a corporation duly organized, validly existing and in
good standing under the laws of the state of Nevada and is duly qualified to do
business, and is in good standing in each jurisdiction in which the nature of
its business requires it to be so qualified and which permits such
qualification;
(b) The Sponsor has the power and authority to own and convey all of its
properties and to execute and deliver this Agreement and the Related Documents
and to perform the transactions contemplated hereby and thereby;
(c) The Sponsor is operated in such a manner that it would not be
substantively consolidated in the bankruptcy trust estate of any Affiliate, such
that the separate existence of the Sponsor and any Affiliate would be
disregarded;
(d) The Sponsor has not engaged, and does not presently engage and shall
not engage, in any activity other than the activities substantially similar to
those undertaken pursuant to this Agreement and the Related Documents and
activities ancillary or incident thereto;
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(e) The Sponsor has not entered into any agreement or arrangement including
the Interim Financing (i) pursuant to which it grants rights in any of the Trust
Assets to any Person and (ii) which does not include a provision in form and
substance similar to Section 11.10;
(f) The execution, delivery and performance by the Sponsor of this
Agreement, the Related Documents and the transactions contemplated hereby and
thereby, (i) have been duly authorized by all necessary partnership or other
action on the part of the Sponsor, (ii) do not contravene or cause the Sponsor
to be in default under (A) the Sponsor's certificate of incorporation (B) any
contractual restriction contained in any indenture, loan or credit agreement,
lease, mortgage, security agreement, bond, note, or other agreement or
instrument binding on or affecting the Sponsor or its property, (C) any law,
rule, regulation, order, writ, judgment, award, injunction, or decree applicable
to, binding on or affecting the Sponsor or its property, and (iii) do not result
in or require the creation of any Adverse Claim upon or with respect to any of
the property of the Sponsor;
(g) This Agreement and the Related Documents have each been duly executed
and delivered on behalf of the Sponsor;
(h) No consent of, or other action by, and no notice to or filing with, any
Governmental Authority or any other party, is required for the due execution,
delivery and performance by the Sponsor of this Agreement or any of the Related
Documents or for the perfection of or the exercise by the Trustee of any of its
rights or remedies thereunder which have not been obtained;
(i) Each of this Agreement, and each other Related Document is the legal,
valid and binding obligation of the Sponsor enforceable against the Sponsor in
accordance with its respective terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium or other
laws relating to or affecting the rights of creditors generally, and by general
principles of equity (regardless of whether such enforcement is consideration in
a proceeding in law or in equity);
(j) There is no pending or threatened action, suit or proceeding, nor any
injunction, writ, restraining order or other order of any nature against or
affecting the Sponsor, its officers or directors, or the property of the
Sponsor, in any court or tribunal, or before any arbitrator of any kind or
before or by any Governmental Authority (i) asserting the invalidity of this
Agreement or any of the Related Documents, (ii) seeking to prevent the sale and
assignment of any Auto Loan or the consummation of any of the transactions
contemplated thereby, (iii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by the Sponsor of this
Agreement or any of the Related Documents, (B) the validity or enforceability of
this Agreement or any of the Related Documents, (C) any Auto Loan,
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(D) the federal income tax attributes of the Investor Certificates, or (iv)
asserting a claim for payment of money adverse to the Sponsor or the conduct of
its business or which is inconsistent with the due consummation of the
transactions contemplated by this Agreement or any of the Related Documents;
(k) The principal place of business and chief executive office of the
Sponsor are located at the address indicated in Section 11.04 and there are now
no, and there have not been any, other locations where the Sponsor is located
(as that term is used in the UCC) or keeps Records except, after the date of
this Agreement, as disclosed in writing to the Trustee and the [Master
Administrator];
(l) The legal name of the Sponsor is as set forth in the beginning of this
Agreement and the Sponsor does not use any tradenames, fictitious names, assumed
names or "doing business as" names;
(m) The Sponsor does not have any Subsidiary;
(n) The Sponsor is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement and each of the
Related Documents; and the Sponsor's transfers of Transferred Assets to the
Trust have been and will be made for reasonably equivalent value and fair
consideration; and
(o) The Sponsor has complied in all material respects with all applicable
laws, rules, regulations, and orders with respect to it, its business and
properties and all of the Transferred Assets.
SECTION 3.02. Representations and Warranties as to Each Auto Loan and the
other Transferred Assets. (a) The Sponsor represents and warrants, as to each
Auto Loan, that, to the best of its knowledge, as of the Purchase Date of such
Auto Loan:
(i) such Auto Loan is eligible for coverage under and is covered
by the Insurance Policies;
(ii) the Required Information in respect of such Auto Loan on the
List of Auto Loans delivered pursuant to Section 5.03(a)(iii) is true and
correct in all material respects as of the date of delivery thereof, and
such Auto Loan is denominated in and payable in Dollars;
(iii) such Auto Loan (A) includes a validly perfected first
priority security interest in the Automobile in favor of the Trustee or the
Originator (and if perfected in the name of the Originator, assigned
pursuant to the Sale Agreement to the Trustee on behalf of the Trust), as
provided in the related Sale Agreement, as secured party and has not been
released from such lien in whole or in part, and (B) is
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subject to a physical damage/collision insurance policy on the Automobile
with a maximum deductible of no more than $___, which security interest and
insurance are assignable and have been so assigned to the Trust;
(iv) such Auto Loan has not been satisfied, subordinated or
rescinded; and no provision of the Auto Loan has been waived, altered or
modified in any respect, except by instruments or documents identified in
the Loan File;
(v) such Auto Loan is not and will not be subject to any right of
rescission, set-off, recoupment, counterclaim or defense, whether arising
out of transactions concerning the Auto Loan or otherwise and no such right
has been asserted with respect thereto;
(vi) the Sponsor has conveyed to the Trust good and marketable
title to the Auto Loan, free and clear of any Adverse Claim;
(vii) there is no default, breach, violation, or event permitting
acceleration under the Auto Loan, and no event has occurred which, with
notice and the expiration of any grace or cure period or both, would
constitute a default, breach, violation, or event permitting acceleration
under such Auto Loan; and
(viii) such Auto Loan constitutes the legal, valid and binding
obligation of the Obligor thereunder enforceable against the Obligor in
accordance with their respective terms (except as may be limited by laws
affecting creditors' rights in similar transactions generally) and the
documents evidencing such Auto Loan contain enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for the
realization against the collateral for the benefit of the security afforded
thereby.
(b) With respect to each Auto Loan sold to the Sponsor pursuant to each
Sale Agreement, a true and complete copy of which has been delivered to the
Trustee and the [Master Administrator], on the date of such sale the Originator
made the additional representations and warranties as set forth in the related
Sale Agreement. The Sponsor hereby assigns to the Trustee on behalf of the Trust
such benefits and its rights under the Sale Agreements to cause the Originator
to repurchase an Auto Loan as to which there has occurred an uncured breach of a
representation or warranty in respect of the representations and warranties set
forth in the related Sale Agreement. The Trustee hereby acknowledges such
assignment.
(c) The Sponsor hereby certifies that the representations and warranties
described in this Section 3.02 shall survive the sale of the Auto Loans to the
Trust.
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SECTION 3.03. Repurchases and Purchases. (a) Upon discovery by any of the
Sponsor, the [Master Administrator], the [Master Servicer] or the Servicer, or
actual knowledge of a Responsible Officer of the Trustee, of (i) a breach of any
of the representations and warranties set forth in Sections 3.01 and 3.02,
without regard to any limitation set forth in such representation or warranty
concerning the knowledge of the Sponsor as to the facts stated therein, which
materially and adversely affects the interests of the Trust in any Auto Loan,
(ii) a failure of any Loan File to contain original documents as set forth in
Sections 2.02 and 4.04(a)(i), if the Trust is unable to enforce the obligations
of the related Obligor by reason of not having possession of such original
documentation, or (iii) a failure to make any filing referred to in Section
2.06, which materially and adversely affects the interest of the
Certificateholders in any Auto Loan or which results in a loss, the party
discovering such breach shall give prompt written notice to the others. If, on
the Deposit Date in the month following the expiration of a 90 day period since
the date of such notice referred to in the immediately preceding sentence, such
breach or failure shall remain uncured, the Auto Loan as to which the breach or
failure relates shall be repurchased or purchased for the Repurchase Price as
follows:
(i) in respect of matters set forth in Sections 2.06, 3.01, and
3.02(a), by the Sponsor;
(ii) in respect of the matters set forth in Section 3.02(b), the
[Master Administrator] shall enforce the Trust's right to effect a
repurchase of such Auto Loan against the Originator; and
(iii) in respect of matters set forth in Sections 2.02 and
4.04(a)(i), by the [Master Servicer];
provided, that (A) none of the foregoing shall relieve the Servicer of its
obligations to make claims under the Insurance Policies within the time period
required by the Insurance Policies and (B) receipt of any payment under the
Insurance Policies shall not lower the Repurchase Price nor result in any refund
in respect thereof as to any party purchasing or repurchasing an Auto Loan under
this Section 3.03.
(b) Upon receipt by the Trustee of written certification of the [Master
Administrator] to the effect that the Repurchase Price has been deposited in the
Collection Account, the Trustee on behalf of the Trust shall order the Servicer
to release such Auto Loan and the related Loan File to the Sponsor, the
Originator or the [Master Servicer], as the case may be, and the Trustee on
behalf of the Trust shall assign to the Sponsor, the Originator or the [Master
Servicer], as the case may be, all of the Trust's and the Certificateholders'
right, title and interest in such purchased or repurchased Auto Loan, and all
property and rights conveyed to the Trustee relating thereto (excluding,
however, payments
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previously received under the Insurance Policies), and the Assignments to the
extent such payments relate to such repurchased or purchased Auto Loans, without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of the Trustee
except as to liens, charges or encumbrances created or arising out of this
Agreement. The Trustee and the Sponsor shall execute and deliver to the Sponsor,
the Originator, or the [Master Servicer], as the case may be, an assignment
substantially in the form of Exhibit D to vest ownership of the repurchased Auto
Loan in such party. The repurchase and purchase obligations pursuant to this
Section 3.03 constitute the sole remedy available to the Trustee and the
Certificateholders for a breach of a representation or warranty or agreement of
the Sponsor, set forth in Sections 2.06, 3.01 and 3.02 or the agreements of the
[Master Servicer] and the Servicer, as the case may be, set forth in Section
2.02 and 4.04(a)(i); provided, that the foregoing limitation shall not be
construed to limit in any manner the right of the [Master Administrator], the
Trustee or the Investor Certificateholders to declare a Principal Amortization
Event to have occurred or to terminate the responsibilities of the [Master
Servicer] or the Servicer hereunder to the extent such breaches also constitute
or contribute to the determination of a Principal Amortization Event or an Event
of Master Servicing Termination or an Event of Servicing Termination. For the
purposes of this Agreement, an Auto Loan has not been "repurchased" or
"purchased" by the Sponsor, the Originator or the [Master Servicer], as the case
may be, pursuant to this Section 3.03 unless the Repurchase Price therefor has
been deposited into the Collection Account.
ARTICLE IV
SERVICING OF TRUST ASSETS
SECTION 4.01. [Appointment of [Master Servicer]. (a) ___ agrees to act as
the [Master Servicer] to perform all servicing duties under this Agreement
subject to the terms hereof.
(b) Except as specifically identified herein as duties of the [Master
Servicer], the [Master Servicer] hereby subcontracts all servicing duties
hereunder to the Servicer; provided, that the [Master Servicer] shall remain
obligated and be liable to the Trust and the Trustee for the servicing and
administration of the Auto Loans in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the appointment
of the Servicer and to the same extent and under the same terms and conditions
as if the [Master Servicer] alone were servicing and administrating the Auto
Loans.
(c) Each of the [Master Servicer] and the Servicer shall perform its
respective obligations pursuant to this Agreement on behalf of and for the
benefit of the Trust in accordance with the
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terms of this Agreement, the respective Auto Loans and applicable law and, to
the extent consistent with such terms, in the same manner in which, and with the
same care, skill, prudence and diligence with which, it services and administers
Auto Loans of similar credit quality for other portfolios, if any, giving due
consideration to customary and usual standards of practice of prudent
institutional automobile and loan servicers and, in each case, taking into
account its other obligations hereunder, but without regard to:
(i) any relationship that the [Master Servicer] or the Servicer,
any Subservicer or any Affiliate of the [Master Servicer] or the Servicer
or any Subservicer may have with the related Obligor;
(ii) the ownership of any Certificate by the [Master Servicer] or
the Servicer or any Affiliate of the [Master Servicer] or the Servicer;
(iii) the [Master Servicer]'s, the Servicer's or any
Subservicer's right to receive compensation for its services hereunder or
with respect to any particular transaction; or
(iv) the ownership, or servicing for others, by the [Master
Servicer] or the Servicer or any Subservicer, of any other automobile loans
or property.
In the event that the [Master Servicer] or the Servicer believes that it is
unable to comply with the requirements of this Section 4.01(c) with respect to
any particular Auto Loan as a result of one or more of the factors described in
the foregoing clauses (i) through (iv), it may enter into a Subservicing
Agreement pursuant to Section 4.02 pursuant to which a Subservicer shall perform
its duties with respect to such Auto Loan. In such event, so long as such
Subservicer performs such duties on behalf of the [Master Servicer] or the
Servicer, as applicable, in accordance with the requirements of this Section
4.01, then the [Master Servicer] or the Servicer shall be deemed to be in
compliance therewith. Subject to any express limitations set forth in this
Agreement, the [Master Servicer] and the Servicer shall also seek to maximize
the timely and complete recovery of principal and interest on Auto Loans;
provided, however, that nothing herein contained shall be construed as an
express or implied guarantee by the [Master Servicer] or the Servicer of the
collectibility of the Auto Loans. Notwithstanding any other provision of this
Agreement, the Servicer shall at all times service the Auto Loans in a manner
consistent with maintaining their eligibility for coverage under the Insurance
Policies.
(d) The [Master Servicer] and the Servicer are authorized and empowered by
the Trustee to execute and deliver, on behalf of themselves, the Trust, the
Certificateholders, or the Trustee or any of them, any and all instruments of
satisfaction or
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cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to the Auto Loans or the related Automobiles. Without
limiting the generality of the foregoing, the Trustee shall, upon the receipt of
a written request of a Servicing Officer, execute and deliver to the [Master
Servicer] or the Servicer any limited powers of attorney and other documents
prepared by the Servicer and necessary or appropriate (as certified in such
written request) to enable the [Master Servicer] or the Servicer, as applicable,
to carry out its servicing duties hereunder (including without limitation
matters relating to the Insurance Policies and certificates of title with
respect to the Automobiles), and the Trustee shall not be held responsible for
any negligence by the [Master Servicer] or the Servicer, as applicable, in its
use of such limited powers of attorney.]
SECTION 4.02. Subservicing Agreements Between Servicer and Subservicer. (a)
The Servicer may, with the prior written consent of the [Master Servicer] and
the [Master Administrator], enter into Subservicing Agreements with a
Subservicer for the performance of all or a part of the Servicer Duties.
References in this Agreement to actions taken or to be taken by the Servicer in
performance of the Servicer Duties include actions taken or to be taken by a
Subservicer on behalf of the Servicer. Each Subservicing Agreement will be upon
such terms and conditions as are not inconsistent with this Agreement. The
Servicer shall provide notice to the [Master Administrator], the [Master
Servicer], the Trustee and the Rating Agency in writing promptly upon the
appointment of any Subservicer. For purposes of this Agreement, the receipt by
the Subservicer of any amount with respect to an Auto Loan (other than amounts
representing servicing compensation or reimbursement or an advance) shall be
treated as the receipt by the Servicer of such amount.
(b) Except as provided in Section 4.02(e), the Servicer shall be entitled
to terminate any Subservicing Agreement that may exist in accordance with the
terms and conditions of such Subservicing Agreement and without any limitation
by virtue of this Agreement.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer or a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the [Master Servicer] and the Servicer shall remain obligated and liable to the
Trustee, the Trust and the [Master Administrator] for the servicing and
administering of the Auto Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability (including their
respective indemnity of obligations under Section 9.03) by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer or the Servicer and to the same extent and under the same terms and
conditions as if the [Master Servicer] and the Servicer alone were servicing and
administering the Auto Loans. The [Master Servicer]
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and the Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the [Master Servicer] and the Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
(d) Any Subservicing Agreement that may be entered into and any other
transaction or services relating to the Auto Loans involving a Subservicer in
its capacity as such and not as an Originator shall be deemed to be between the
Subservicer and the Servicer alone and the [Master Administrator], the [Master
Servicer], the Trustee and the Certificateholders shall not be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to the Subservicer.
(e) If the Servicer shall for any reason no longer be the Servicer
hereunder (including by reason of any Event of Servicing Termination), the
Servicer, upon prior written notice to the [Master Administrator] and the
Trustee, shall thereupon terminate each Subservicing Agreement that may have
been entered into, and the [Master Administrator], the Trustee and the successor
Servicer shall not be deemed to have assumed any of the Servicer's interest
therein or to have replaced the Servicer as a party to any such Subservicing
Agreement.
SECTION 4.03. Representations and Warranties of the Servicer and the
[Master Servicer]. Each of the [Master Servicer] and the Servicer, with respect
to itself, represents and warrants to the Sponsor, the [Master Administrator]
and the Trustee, as follows, as of the date hereof:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and is duly qualified to
do business, and is in good standing in every jurisdiction in which the nature
of its business requires it to be so qualified, it is or will be in compliance
with the laws of each state to the extent necessary to ensure the enforceability
of each Auto Loan and the servicing of the Auto Loans under this Agreement and
has obtained all necessary licenses with respect to it required by law to enable
it to perform its duties herein;
(b) It has the power and authority to execute, deliver and perform this
Agreement and the transactions contemplated hereby;
(c) The execution, delivery and performance by it of this Agreement, and
all other agreements, instruments and documents which may be delivered by it
pursuant hereto, and the transactions contemplated thereby, (i) have been duly
authorized by all necessary corporate or other action, on the part of it, (ii)
do not contravene or cause it to be in default under (A) its charter or by-laws,
(B) any contractual restriction with respect to any Debt of it or contained in
any indenture, loan or credit agreement, lease, mortgage, security agreement,
bond, note, or other agreement
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or instrument binding on or affecting it or its property or (C) any law, rule,
regulation, order, writ, judgment, award, injunction or decree applicable to or
binding on or affecting it or its property, and (iii) do not result in or
require the creation of any Adverse Claim upon or with respect to any of its
properties;
(d) This Agreement has been duly executed and delivered on behalf of it;
(e) No consent of, or other action by, and no notice to or filing with, any
Governmental Authority or any other party is required for the due execution,
delivery and performance by it of this Agreement or any other agreement,
document or instrument to be delivered hereunder;
(f) This Agreement is its legal, valid and binding obligation enforceable
against it in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium or
other laws relating to or affecting the rights of creditors generally, and by
general principles of equity (regardless of whether such enforcement is
consideration in a proceeding in law or in equity);
(g) There is no pending or threatened action, suit or proceeding, nor any
injunction, writ, restraining order or other order of a material nature against
or affecting it, its officers or directors, or its property, in any court or
tribunal, or before any arbitrator of any kind or before or by any Governmental
Authority (i) asserting the invalidity of this Agreement or any document to be
delivered by it hereunder or (ii) seeking any determination or ruling that might
materially and adversely affect (A) the performance by it of its obligations
under this Agreement, or (B) the validity or enforceability of this Agreement or
any document to be delivered by it hereunder or (iii) which is inconsistent with
the due consummation by it of the transactions contemplated by this Agreement;
and
(h) Its servicing facilities, plant, personnel, records and products are
adequate for the performance of its duties hereunder, including, in the case of
the [Master Servicer], the duties of the Servicer hereunder.
SECTION 4.04. Duties and Responsibilities of the Servicer. (a) The Servicer
shall service and make collections on the Auto Loans and otherwise enforce the
rights of the Trust in the Auto Loans and the other Trust Assets, in conformity
with Section 4.01 and as more specifically described in the Credit and
Collection Policies, as such Credit and Collection Policies are amended from
time to time (the "Servicer Duties"). The Servicer Duties shall include at all
times:
(i) certifying to the Sponsor and the Trustee on behalf of the
Trust prior to the Sponsor's purchase of an Auto
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Loan that it has received (A) the related Loan File containing each item
under the related Sale Agreement and (B) an executed Sale Assignment;
(ii) monitoring and tracking Automobile titles and insurance;
(iii) billing, collection and recording of Payments including
sending each Obligor a letter notifying it to send payments to the Eligible
Account maintained by the Servicer for such purpose; (provided that the
Servicer shall not make any change in its instructions to any Obligor
regarding payments to be made in respect of the Auto Loans other than
pursuant to Sections 4.04(d), 4.04(e) and 4.15(c));
(iv) communicating with and providing billing records to
Obligors;
(v) depositing of all Payments and other monies received in
respect of the Auto Loans (without offset or deduction) into an account
maintained by the Servicer in the name of the Trust (which account shall be
an Eligible Account), and thereafter (A) depositing all such sums into the
Collection Account in accordance with Section 7.02(b) and (B) paying all
investment earnings, if any, on sums in such account to the [Master
Administrator] on each Distribution Date;
(vi) administering and enforcing all rights and responsibilities
of the holder of the Auto Loans provided for in the Assignments and
Insurance Policies;
(vii) submitting information on the Auto Loans to the Insurance
Companies or their designated agents (as specified in the Credit and
Collection Policies) for coverage under the Insurance Policies; receiving
Payments as the Trust's agent on the Insurance Policies as well as on the
insurance policies maintained by the Obligors, filing claims with the
Insurance Companies with respect thereto and working with the [Master
Administrator] to resolve any disputes in respect thereto;
(viii) issuance of the reports to the [Master Administrator], the
Trustee and the Rating Agency required by this Agreement;
(ix) providing the [Master Administrator] with such assistance as
it may require for the preparation and timely delivery of the List of Auto
Loans pursuant to Section 5.03(a)(iii), and furnishing, on request of the
[Master Administrator], the Trustee or the Rating Agency, such reasonably
pertinent underlying data as can be generated by the Servicer's existing
data processing systems without, in the opinion of the Servicer, undue
modification or expense;
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(x) repossessing and remarketing of Automobiles following Obligor
defaults;
(xi) maintaining such books of account and other records as will
enable the [Master Administrator] and the Trustee to determine the status
of each Auto Loan;
(xii) providing the Obligors with any reports required by
applicable law; and
(xiii) making payments in respect of certain Auto Loan
origination reimbursement obligations of the Sponsor arising in connection
with the acquisition of the Auto Loans, as directed by the Sponsor, but in
no event shall the Servicer be required to make such a payment such that
the aggregate payments made by it exceed the aggregate Servicer Interest
Amount received by it unless the Sponsor shall have provided such funds to
it.
(b) The Servicer may sue to enforce or collect upon the Auto Loans in its
own name, or as agent for the Trust. If the Servicer elects to commence a legal
proceeding to enforce an Auto Loan in its own name, the act of commencement
shall be deemed to be an automatic assignment of the Auto Loan by the Trustee to
the Servicer for purposes of collection only. If in any enforcement suit or
legal proceeding it is held that the Servicer may not enforce an Auto Loan on
the grounds that it is not a real party in interest or a holder entitled to
enforce the Auto Loan, the Trustee, on behalf of the Trust, and with the consent
of the Servicer, shall take such steps as the Servicer deems necessary to assign
to the Servicer the Auto Loan solely for the purpose of permitting the Servicer
to enforce the Auto Loan.
(c) The Servicer shall exercise any rights of recourse against third
Persons that exist with respect to any Auto Loan (except with respect to any
repurchase obligation of the Originator, which shall be enforced by the [Master
Administrator] pursuant to Section 3.03) or otherwise in accordance with the
Servicer's usual practice and the standard of care required by Section 4.01.
(d) In accordance with the standard of care in Section 4.01 the Servicer
may grant to the Obligor on any Auto Loan any rebate, refund or adjustment that
the Servicer in good faith believes is required under the Auto Loan or
applicable law in connection with a prepayment in full of the Auto Loan, and may
deduct the amount of any such rebate, refund or adjustment from the amount
otherwise payable by the Servicer into the Collection Account. The Servicer may
not permit any rescission or cancellation of any Auto Loan nor may it take any
action with respect to any Auto Loan, Insurance Policy or Assignment which would
materially impair the rights of the Trust or the Certificateholders therein or
in the proceeds thereof.
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(e) The Automobile securing an Auto Loan shall not be released by or on
behalf of the Sponsor or the Servicer from the security interest granted by such
Auto Loan in whole or in part, except:
(i) when such Auto Loan has been paid in full;
(ii) immediately upon any exchange or substitution of such Automobile
by the Dealer or manufacturer thereof in settlement of claims as to defects,
breach of warranties, and similar matters, with an Automobile of equal or
greater collateral value as of the date of such exchange in the reasonable
judgment of the Servicer (subject to all the terms hereof including the
recordation of the Trustee's lien thereon and the requirements of the Insurance
Policies); or
(iii) as otherwise contemplated in Section 3.03; provided, however,
that the Servicer may extend any Auto Loan for credit related reasons,
consistent with the servicing standard in Section 4.01, subject to the
limitations on extensions and modifications on Auto Loans set forth in the
Insurance Policies.
(f) Except as expressly provided herein, neither the [Master Servicer] nor
the Servicer shall sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create any Adverse Claim upon or with respect to, any Auto Loan
(or any right to income in respect thereof), or any account in which any
Payments are deposited, or assign any right to receive income in respect of any
Auto Loan.
SECTION 4.05. Fidelity Bond, Errors and Omissions Insurance. The Servicer
shall maintain, at its own expense, a blanket fidelity bond and an errors and
omissions insurance policy, with broad coverage with responsible companies on
all officers, employees or other Persons acting on behalf of the Servicer in any
capacity with regard to the Trust Assets to handle funds, money, documents and
papers relating to the Trust Assets. Any such fidelity bond and errors and
omissions insurance shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Persons and shall be maintained in a form and amount that
would meet the requirements of prudent institutional auto loan servicers. No
provision of this Section 4.05 requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The Servicer shall be deemed to have
complied with this provision if one of its respective Affiliates has such
fidelity bond and errors and omissions policy coverage and, by the terms of such
fidelity bond and errors and omissions policy, the coverage afforded thereunder
extends to the Servicer. The Servicer shall cause each and every Subservicer for
it to maintain a policy of insurance covering errors and omissions and a
fidelity bond which would meet such requirements. Upon request of the [Master
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Administrator], the [Master Servicer] or the Trustee, the Servicer shall cause
to be delivered to the [Master Administrator] or the Trustee a certification
evidencing coverage under such fidelity bond and insurance policy. Any such
fidelity bond or insurance policy shall not be cancelled or modified in a
materially adverse manner without ten days' prior written notice to the [Master
Administrator] and the Rating Agency.
SECTION 4.06. Inspection. (a) At all times during the term hereof, each of
the [Master Servicer] and the Servicer shall afford the [Master Administrator]
and the Trustee and its authorized agents, upon reasonable notice, reasonable
access (subject to the security rules and regulations of the [Master Servicer]
or the Servicer, as the case may be) during normal business hours to their
respective records relating to the Auto Loans and the other Trust Assets
conveyed pursuant to Section 2.01 and Section 2.05 and will cause their
respective personnel to assist in any examination of such records by the
Trustee, provided, that the foregoing shall not require the [Master
Administrator] or Trustee to conduct any inspection. The examination referred to
in this Section 4.06 will be conducted in a manner which does not unreasonably
interfere with the [Master Servicer]'s or the Servicer's normal operations or
customer or employee relations or require the [Master Servicer] or the Servicer
to disclose or expose confidential information related to its services to their
other clients. Without otherwise limiting the scope of the examination, the
[Master Administrator] and the Trustee may, using generally accepted auditing
standards, verify the status of each Auto Loan and review the Loan Files,
Electronic Ledger and records relating thereto for conformity to reports
prepared pursuant to Section 4.19 and compliance with the standards represented
to exist as to each Auto Loan in this Agreement.
(b) All information obtained by the [Master Administrator] regarding the
Obligors and the Auto Loans, whether upon exercise of its rights under this
Section 4.06 or otherwise, shall be maintained by the [Master Administrator] in
confidence and shall not be disclosed to any other Person, except as otherwise
required by applicable law or regulation.
SECTION 4.07. Trustee to Cooperate. Upon payment in full on any Auto Loan,
the Servicer shall notify the Trustee in writing on the next succeeding Deposit
Date (which notification shall include a statement to the effect that all
amounts received in connection with such payment in full which are required to
be deposited in the Collection Account pursuant to Section 7.02(b) have been so
deposited) and if the related Loan File is not at the time held by the Servicer
as the custodian of the Trustee, shall request delivery of the Auto Loan and
Loan File to the Servicer. Upon receipt of such request, the Trustee shall
promptly release or cause to be released such Auto Loan and the related Loan
File if appropriate to the Servicer by executing a release and assignment
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in the form of Exhibit E hereto, which assignment shall be without recourse to
the Trustee (except as to the absence of liens, charges or encumbrances created
by or arising as a result of actions taken by the Trustee other than those
created by or arising from this Agreement). Upon receipt of such Auto Loan and
Loan File, the Servicer shall be authorized to execute an instrument in
satisfaction of such Auto Loan and to take such other actions and execute such
other documents as it deems necessary to discharge the Obligor thereunder and
eliminate the security interest in the Automobile related thereto. The Servicer
shall determine when an Auto Loan has been paid in full. Upon request of a
Servicing Officer, the Trustee shall perform such other acts as reasonably
requested by the Servicer and otherwise cooperate with the Servicer in
enforcement of the Certificateholder's rights and remedies with respect to the
Auto Loans, the Assignments and the Insurance Policies; provided, however, the
Trustee shall not be required to take any action in breach of its fiduciary
duties, and nothing herein shall require the Trustee to advance its own funds.
SECTION 4.08. Servicing Fee; Servicing Expenses. The [Master Servicer]
shall be paid the Monthly Servicing Fee in accordance with the provisions of
Section 7.04(a). No later than ten Business Days prior to the next Monthly Fee
Date, the Servicer shall provide the [Master Administrator] with a list of items
eligible for reimbursement under the Monthly Servicing Fee, in such reasonable
detail as the [Master Administrator] may request, together with its
certification by a Servicing Officer that all such items are eligible for
inclusion within the Monthly Servicing Fee. The [Master Administrator] may rely
on such certification without independent investigation of the matters set forth
therein. Except to the extent of the Monthly Servicing Fee, the [Master
Servicer] shall be required to pay for all expenses incurred by it and by the
Servicer in connection with their respective activities hereunder (including any
payments to accountants, counsel, Subservicers, or any other Person) and shall
not be entitled to any payment or reimbursement therefor. In the event that no
[Master Servicer] is appointed pursuant to Section 4.13(a), the Monthly
Servicing Fee shall be paid in accordance with the provisions of Section 7.04 to
the Servicer.
SECTION 4.09. [Master Servicer] To Maintain Computer Link. Without
limitation of its obligations in respect of the other provisions of this
Agreement, and in addition to the duties of the Servicer, the [Master Servicer]
has provided and will maintain on-line computer linkage capability with the
Servicer so as to enable the [Master Servicer] to convert and use the Servicer's
files in a form suitable for immediate assumption of its duties as Servicer
pursuant to Section 4.15.
SECTION 4.10. [Master Servicer] and Servicer Not to Resign. Neither the
[Master Servicer] nor the Servicer, as the case may be, shall resign from the
obligations and duties hereby
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imposed on it except upon its determination that (a) the performance of its
duties hereunder has become impermissible under applicable law and (b) there is
no reasonable action which the [Master Servicer] or the Servicer, as the case
may be, could take to make the performance of its duties hereunder permissible
under applicable law. Any such determination permitting the resignation of the
[Master Servicer] or the Servicer, as the case may be, shall be evidenced as to
clause (a) above by an Opinion of Counsel to such effect delivered to the
[Master Administrator] and the Trustee and as to clause (b) by on Officer's
Certificate to such effect delivered to the [Master Administrator] and the
Trustee. The action referred to in clause (b) above will not be considered
reasonable if it requires the payment of extraordinary fees or costs for which
the [Master Servicer] or the Servicer, as the case may be, are not eligible for
reimbursement under Section 4.08. Promptly upon any resignation pursuant to this
Section 4.10, the [Master Administrator] shall notify the Rating Agency thereof.
SECTION 4.11. Change in Business of the [Master Servicer] or the Servicer.
The Sponsor, the [Master Administrator] and the Trustee on behalf of the
Certificateholders have entered into this Agreement with the [Master Servicer]
and the Servicer, respectively as to each, in reliance upon its ability to
perform the servicing duties, if necessary, without any delegation thereof; the
adequacy of its plant, personnel, records and procedures; its integrity,
reputation and financial standing and the continuance of each of the foregoing.
Neither the [Master Servicer] nor the Servicer shall, without prior written
consent of the [Master Administrator] (a) make any material change in the
character of its business; or (b) merge with or into or consolidate with or
into, or convey, transfer, lease or otherwise dispose of all or substantially
all of its assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership interest of,
any other corporation; provided, however, that the sole remedy of the Trustee on
behalf of the Certificateholders and the [Master Administrator] shall have in
respect of the Servicer's noncompliance with the provisions of the preceding
clauses (a) and (b) shall be to terminate the Servicer's rights and
responsibilities pursuant to Section 4.14. The [Master Administrator] shall
consent to the changes referred to in the preceding clauses (a) and (b) if, but
only if, the Rating Agency indicates in writing to the [Master Administrator]
and the Trustee that such changes would not result in a review with negative
implications, suspension, downgrade, withdrawal or other adverse effect on the
rating of the Investor Certificates.
SECTION 4.12. Events of Master Servicing Termination. If any of the
following events (each, an "Event of Master Servicing Termination") shall occur
and be continuing:
(a) Failure on the part of the [Master Servicer] to observe or perform any
term, covenant or agreement in this
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Agreement, including the [Master Servicer] duties under Section 4.09, which
materially affects the rights of the Certificateholders and which continues
unremedied for five Business Days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the [Master
Servicer] by the [Master Administrator] or the Trustee; or
(b) Any proceeding shall be instituted against the [Master Servicer] (or,
if the [Master Servicer] is actively contesting the merits thereof, such
proceeding is not dismissed within 90 days) seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or any of its Debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
(c) The commencement by the [Master Servicer] of a voluntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the [Master Servicer] in an involuntary
case or proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the [Master Servicer] or
of any substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its inability
to pay its Debts generally as they become due, or the taking of corporate action
by the [Master Servicer] in furtherance of any such action; or
(d) There is at any time a material breach of any of the representations
and warranties of the [Master Servicer] set forth in Section 4.03; or
(e) The short term unsecured debt obligations of the [Master Servicer]
shall be rated no less than Duff-2 by Duff & Phelps (or if not at such time
rated by Duff & Phelps, (i) no less than A-2 by Standard & Poor's and P-2 by
Moody's (provided, that if only one such rating agency rates such party, such
single rating
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shall suffice) and (ii) the [Master Servicer] shall give prompt notice of any
downgrade by Standard & Poor's or Moody's to Duff & Phelps); and provided,
further, that an Event of Master Servicing Termination shall not be deemed to
have occurred if, following the occurrence of the [Master Servicer]'s short-term
unsecured debt rating falling below the foregoing ratings, the Rating Agency
confirms in writing to the [Master Administrator] and the Trustee that such
decline will not result in a review with negative implications, suspension,
downgrade, withdrawal or other adverse effect on the rating of the Certificates,
at which point such new rating shall be substituted in place of the ratings
provided above, subject to the same conditions as to any further downgrade;
then, and in any such event, either the [Master Administrator] or the Trustee
may by delivery to the [Master Servicer] of a written notice specifying the
occurrence of any of the foregoing events terminate the servicing and custodial
responsibilities of the [Master Servicer] hereunder, without demand, protest or
further notice of any kind, all of which are hereby waived by the [Master
Servicer]; provided, that, in the event any of the events described in
subsections (b) or (c) shall have occurred, termination of the duties and
responsibilities of the [Master Servicer] shall automatically occur, without,
demand, protest, or further notice of any kind, all of which are expressly
waived by the [Master Servicer]. The Trustee or the [Master Administrator], as
the case may be, shall simultaneously with any declaration of any Event of
Master Servicing Termination, give notice thereof to the Rating Agency, the
[Master Administrator], the [Master Servicer], the Servicer and the Trustee.
SECTION 4.13. Appointment of the Successor Master Servicer. (a) Upon
termination of the [Master Servicer]'s responsibilities under this Agreement
pursuant to Section 4.10 or Section 4.12, the [Master Administrator] may, but
shall not be obligated to unless the Rating Agency indicates by written notice
to the [Master Administrator] that such failure would result in a suspension,
downgrade, or withdrawal of the then current rating assigned to the Investor
Certificates, appoint a successor [Master Servicer] acceptable to the Trustee
and the Rating Agency (a "Successor [Master Servicer]"). Such Successor [Master
Servicer] shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the [Master Servicer] under this Agreement; provided,
that such Successor [Master Servicer] and the Trustee shall have no
responsibility for any actions of the [Master Servicer] prior to the date of the
appointment of such Successor [Master Servicer] as [Master Servicer]. Prior to
the appointment of such Successor [Master Servicer], the Trustee shall be
authorized and empowered to execute and deliver, on behalf of the [Master
Servicer], as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do any and all acts or things necessary or appropriate to
effect the purposes of such notice of termination and to perform the duties of
the [Master Servicer] hereunder
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(including its duties as Successor Servicer hereunder but excluding its duty to
indemnify pursuant to Article IX). The standard of care, representations and
warranties, covenants, liabilities, rights of indemnification, and all other
rights and obligations of the Trustee under this Agreement shall also be
applicable to the Trustee in its capacity hereunder. In the event no Successor
[Master Servicer] has been appointed within 60 days of the removal of a [Master
Servicer] and the Trustee has received written notice from the Rating Agency to
the effect that failure to appoint a successor [Master Servicer] will or has
resulted in suspension, downgrade or withdrawal of the rating assigned to the
Investor Certificates, the Trustee may petition a court of competent
jurisdiction to appoint a Successor [Master Servicer].
(b) Any Successor [Master Servicer] appointed hereunder (including the
Trustee during such time as it functions as the Successor [Master Servicer])
shall be entitled to reasonable compensation (including the estimated costs of
such servicing and a reasonable profit) which shall be determined by the [Master
Administrator]; provided, that if the [Master Administrator] or any of its
Affiliates is the Successor [Master Servicer], the Trustee shall agree to the
amount of such compensation. The amount of such compensation may result in an
increase or decrease in the Monthly Servicing Fee.
(c) The outgoing [Master Servicer], the [Master Administrator], the Trustee
and the Successor [Master Servicer] shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession, including,
without limitation, the express assumption by such Successor [Master Servicer]
of the duties and obligations of the outgoing [Master Servicer] hereunder.
(d) Upon appointment, any Successor [Master Servicer] shall be successor in
all respects to the outgoing [Master Servicer] under this Agreement and the
transactions set forth or provided for herein and shall be subject to all
responsibilities, duties and liabilities relating thereto placed upon the
[Master Servicer] by the terms and provisions hereof (subject to the same
limitations as are contained in this Section 4.13 with respect to a succession
to the outgoing [Master Servicer] by the Trustee).
SECTION 4.14. Events of Servicing Termination. If any of the following
events (each, an "Event of Servicing Termination") shall occur and be
continuing:
(a) Any failure by the Servicer to make any payment or deposit required to
be made by it hereunder and the continuance of such failure for a period of one
Business Day after the date upon which written notice of such failure shall have
been given to the Servicer by the [Master Administrator] or the Trustee; or
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(b) Failure on the part of the Servicer to observe or perform any term,
covenant or agreement in this Agreement which materially adversely affects the
rights of the Certificateholders and which continues unremedied for 30 Business
Days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the [Master
Administrator] or Trustee; or
(c) Any proceeding shall be instituted against the Servicer (or, if the
Servicer is actively contesting the merits thereof, such proceeding is not
dismissed within 90 days) seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or any of its Debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or
(d) The commencement by the Servicer of a voluntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Servicer in an involuntary case or proceeding under
any applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or state law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Servicer or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its Debts generally as
they become due, or the taking of corporate action by the Servicer in
furtherance of any such action; or
(e) The Servicer shall fail to deliver a report expressly required by this
Agreement, and the continuance of such failure for a period of five Business
Days after the date upon which written notice of such failure shall have been
given to the Servicer by the [Master Administrator] or the Trustee (except that
such five day period shall be deemed not to run as to any portion of such report
during such time as the Servicer's failure to provide such information is for
cause or inability beyond its control; or
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(f) There is at any time a material breach of any of the representations
and warranties of the Servicer set forth in Section 4.03; or
(g) An Event of Master Servicing Termination has occurred and the [Master
Administrator] or the Trustee has terminated the servicing and custodial
responsibilities of the [Master Servicer] pursuant to Section 4.12 and is
required to appoint a Successor [Master Servicer] pursuant to Section 4.13(a);
then, and in any such event, either the [Master Administrator] or the Trustee
may by delivery to the Servicer of a written notice specifying the occurrence of
any of the foregoing events terminate the servicing and custodial
responsibilities of the Servicer hereunder, without demand, protest or further
notice of any kind, all of which are hereby waived by the Servicer (such
termination being herein called a "Service Transfer"); provided, that, in the
event any of the events described in subsections (c) or (d) shall have occurred,
termination of the duties and responsibilities of the Servicer shall
automatically occur, without, demand, protest, or further notice of any kind,
all of which are expressly waived by the Servicer. The Trustee or the [Master
Administrator], as the case may be, shall simultaneously with any declaration of
any Event of Servicing Termination, give notice thereof to the Rating Agency,
the [Master Administrator], the [Master Servicer], the Servicer and the Trustee.
SECTION 4.15. Appointment of the Successor Servicer. (a) Upon termination
of the Servicer's responsibilities under this Agreement pursuant to Section 4.10
or Section 4.14 the [Master Servicer] shall immediately assume all of the
Servicer's responsibilities, duties and obligations as Servicer. On or at any
time after the date of such assumption, the [Master Servicer] may appoint a
successor Servicer acceptable to the [Master Administrator], the Trustee and the
Rating Agency (a "Successor Servicer"). Such Successor Servicer shall succeed to
all rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement; provided, that such Successor Servicer shall have
no responsibility for any actions of the Servicer prior to the date of the
appointment of such Successor Servicer as Servicer. In the event the [Master
Servicer] fails to assume the duties of the Servicer or appoint a Successor
Servicer pursuant to the terms of this Agreement, the Trustee shall be
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do any and all acts or things necessary or appropriate to effect the purposes
of such notice of termination or perform the duties of the Servicer hereunder
(excluding its duty to indemnify pursuant to Article IX). The standard of care,
representations and warranties, covenants, liabilities, rights of
indemnification, and all other rights and obligations of the Trustee under this
Agreement shall also be applicable to the Trustee in its capacity hereunder. The
Trustee
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may petition a court of competent jurisdiction to appoint a Successor Servicer
if the [Master Servicer] fails to assume the duties of the Servicer or appoint a
Successor Servicer within 60 days of the removal of a Servicer.
(b) Any Successor Servicer appointed hereunder (including the Trustee,
during such time as it functions as the successor Servicer) shall be entitled to
reasonable compensation (including the estimated costs of its servicing and a
reasonable profit) which shall be determined by the [Master Administrator],
provided that if the [Master Administrator] or any of its Affiliates is the
Successor Servicer, the Trustee shall agree to the amount of such compensation.
The amount of such compensation may result in an increase or decrease in the
Monthly Servicing Fee.
(c) The outgoing Servicer, the [Master Servicer], the [Master
Administrator], the Trustee and the Successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession, including, without limitation, (i) the express assumption by such
Successor Servicer of the duties and obligations of the outgoing Servicer
hereunder, (ii) notifying Obligors in writing to make payments under the Auto
Loans to the Successor Servicer, and (iii) providing such Successor Servicer
with all Records maintained or held by it as Servicer hereunder.
(d) Upon appointment, any Successor Servicer shall be successor in all
respects to the outgoing Servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all responsibilities,
duties and liabilities relating thereto placed upon the Servicer by the terms
and provisions hereof (subject to the same limitations as are contained in this
Section 4.15 with respect to a succession to the outgoing Servicer by the
Trustee).
SECTION 4.16. Effect of Service Transfer. (a) After any Service Transfer,
the Successor Servicer shall notify (or, to the extent that the Servicer
provided such notice pursuant to Section 4.15(c), confirm the instructions to)
Obligors to make payments under the Auto Loans directly to the Successor
Servicer.
(b) After any Service Transfer, the outgoing Servicer shall have no further
obligations with respect to the management, servicing, custody or collection of
the Auto Loans and the Successor Servicer shall have all of such obligations,
except that the outgoing Servicer will transmit or cause to be transmitted
directly to the Successor Servicer for its own account, promptly on receipt and
in the same form in which received, any amounts held by the outgoing Servicer
(properly endorsed where required for the Successor Servicer to collect them)
received as Payments upon or otherwise in connection with the Auto Loans.
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(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including, but not limited to, the obligations and
indemnities of the outgoing Servicer or the Sponsor pursuant to Section 9.02 and
Section 9.03) other than those relating to the management, servicing, custody or
collection of the Auto Loans.
SECTION 4.17. Annual Reports; Statements as to Compliance. (a) The [Master
Servicer] and the Servicer shall each deliver to the [Master Administrator] and
the Trustee as soon as available, but in any event within 120 days after the end
of each of its fiscal years, a consolidated and consolidating balance sheet of
it and its Subsidiaries, if any, as at such last day of the fiscal year, a
consolidated and consolidating statements of income and retained earnings and
statements of cash flow, for each such fiscal year, each prepared in accordance
with GAAP, in reasonable detail, and as to the consolidated statements,
certified without qualification by an Independent Public Accountant, who may
also render other services to the [Master Servicer], the Servicer, or any of
their Affiliates and certified, as to the consolidating statements by the chief
financial officer of the [Master Servicer] or the Servicer, as the case may be,
as fairly presenting the financial position and the results of operations of the
[Master Servicer] or the Servicer, respectively, as at and for the year ending
on its date and as having been prepared in accordance with GAAP.
(b) The [Master Servicer] and the Servicer shall each, and shall cause any
Subservicer (to the extent (a) such Person is in any manner receiving Payments
or (b) required by the [Master Administrator] or the Rating Agency by written
notice to the [Master Administrator] and the Trustee) hereunder to, deliver to
the [Master Administrator] and the Trustee on or before __________ of each year,
beginning with _________, 199_ an Officer's Certificate stating, as to each
signer thereof, that (a) a review of the activities of the [Master Servicer],
the Servicer, or the Subservicer, as the case may be, during the preceding
calendar year and of performance under this Agreement has been made under such
officer's supervision and (b) to the best of such officer's knowledge, based on
such review, the [Master Servicer], the Servicer or Subservicer, as the case may
be, has fulfilled all its respective obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof and remedies therefor being pursued.
(c) The [Master Servicer] and the Servicer shall promptly (but in any event
within five Business Days) notify the Trustee and the [Master Administrator]
upon receiving actual knowledge of any event which constitutes an Event of
Master Servicing Termination or and Event of Servicing Termination or would
constitute an Event of Master Servicing Termination or an
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Event of Servicing Termination but for the requirement that notice be given or
time elapse or both.
SECTION 4.18. Annual Independent Public Accountants' Servicing Report. On
or before __________ of each year, beginning with ________, 199_ each of the
[Master Servicer] (during such time that it directly performs the duties of the
Servicer hereunder), the Servicer and any Subservicer (to the extent (a) in any
manner receiving Payments or (b) required by the [Master Administrator] or the
Rating Agency by written notice to the [Master Administrator] and the Trustee)
hereunder, at its expense shall cause an Independent Public Accountant to
furnish a statement to the [Master Administrator] and the Trustee to the effect
that such firm has examined certain documents and records relating to the
servicing of the Auto Loans and the reporting requirements with respect thereto
and that, on the basis of such examination, such servicing and reporting
requirements applicable to each of the foregoing entities have been conducted in
compliance with this Agreement, except for (a) such exceptions as such firm
shall believe to be immaterial and (b) such other exceptions as shall be set
forth in such statement.
SECTION 4.19. Servicer Reports. (a) The Servicer shall furnish by the 13th
day of each month in which a Distribution Date occurs (or, if such day is not a
Business Day, the next succeeding Business Day), to the [Master Administrator]
and the Trustee, an Officer's Certificate, substantially in the form attached
hereto as Exhibit F (the "Servicer Report") which shall include the following
information with respect to the Due Period prior to the related Distribution
Date:
(i) the aggregate Principal Balance of the Auto Loans and the
number of Auto Loans at the beginning of such Due Period (and, by period of
delinquency, current, 30-59 days, 60-89 days, 90-119 days and over 120 days
delinquent);
(ii) the aggregate Principal Balance of the Auto Loans at the end
of the such Due Period (and, by period of delinquency, current, 30-59 days,
60-89 days, 90-119 days and over 120 days delinquent);
(iii) the amount of Payments collected by the Servicer and
deposited into the Collection Account during such Due Period (identifying
the components of such amount (e.g., interest payments, scheduled principal
payments, prepayments, etc.));
(iv) the amount and computation of the Monthly Servicing Fees
paid and to be paid to the [Master Servicer] in respect of such Due Period;
(v) the number of Auto Loans and their aggregate Principal
Balances which (A) became Defaulted Auto Loans during the such Due Period
and (B) have their payment
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schedules extended or modified in accordance with the provisions of Section
4.04(e);
(vi) the number and the aggregate Repurchase Price of all Auto
Loans to be repurchased by the Sponsor, the Originator, or the [Master
Servicer] pursuant to Section 3.03 during such Due Period (including on the
Deposit Date immediately preceding the Distribution Date with respect to
such Due Period);
(vii) Recoveries on Defaulted Auto Loans received by the Servicer
during such Due Period;
(viii) the number of Automobiles repossessed during such Due
Period, the aggregate Principal Balances of the related Auto Loans, and the
number of Automobiles disposed of following repossession during such Due
Period;
(ix) an Auto Loan by Auto Loan schedule of claims filed and
payments received under each of the Insurance Policies during such Due
Period, including the date and amount of claims filed and received and
identifying the components thereof as to principal and interest; and
(x) the total amount of net losses incurred during such Due
Period identifying the components of such loss (e.g., aggregate outstanding
Principal Balance written-off, deductibles on insurance claims and
uninsured claims).
(b) The Servicer shall furnish by the 13th day of each calendar month in
which a Distribution Date does not occur (or, if such day is not a Business Day
the next succeeding Business Day), to the [Master Administrator], a certificate
of a Servicing Officer, substantially in the form attached hereto as Exhibit F
(the "Servicer Report") which shall include the following information with
respect to the immediately preceding calendar month:
(i) the information and schedules referred to in Section 4.19(a)
determined with respect to such calendar month;
(ii) an Auto Loan by Auto Loan schedule of monthly amortization
of unearned interest on Actuarial Loans and Precomputed Loans with respect
to such calendar month;
(iii) an Auto Loan by Auto Loan schedule of interest accruals of
Simple Interest Loans, as of the end of such calendar month; and
(iv) reports with respect to the Originator including (A)
generation of Auto Loans by the Originator and (B) Delinquency Reports with
respect to Auto Loans originated
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by the Originator (computed as to the delinquency periods specified in
Section 4.19(a)(i)).
(c) Each Servicer Report shall include a certification that the information
contained in such certificate is accurate and that no Event of Servicing
Termination, or event that with notice or lapse of time or both would become an
Event of Servicing Termination, has occurred, or if an Event of Servicing
Termination or such event has occurred and is continuing, specifying the Event
of Servicing Termination or such event and its status.
[ARTICLE V]
[THE [Master Administrator]]
[SECTION 5.01. Appointment of [Master Administrator]. (a) _____ agrees to
act as the [Master Administrator] under this Agreement and the
Certificateholders by their acceptance of Certificates consent to _____ acting
as [Master Administrator].
(b) The [Master Administrator] shall conduct the duties specified in this
Agreement as duties of the [Master Administrator] (the "[Master Administrator]
Duties") in accordance with (i) customary and prudent business practices for the
performance of similar activities, all applicable laws, rules and regulations
with respect to it, its business and properties and all Auto Loans, Insurance
Policies, and other Trust Assets with respect thereto and, (ii) to the extent
consistent with the foregoing, in the same manner in which, and the same care,
skill, prudence and diligence with which, it performs similar management and
administrative services for its own account or on behalf of other Persons giving
due consideration to customary and prudent business practices.
SECTION 5.02. Subcontracting Agreements Between Master Administrator and
Subcontractor. The [Master Administrator] may enter into Subcontracting
Agreements with a Subcontractor for the performance of all or a part of the
duties to be performed by the [Master Administrator] hereunder if the [Master
Administrator] delivers to the Trustee and the Rating Agency an Officer's
Certificate of the [Master Administrator] notifying such parties of the
appointment of the Subcontractor and the entering into of the Subcontracting
Agreement; provided, that the [Master Administrator] shall remain obligated and
be liable to the Trustee and the Certificateholders for the performance of its
duties specified in this Agreement without diminution of such obligations and
liability by virtue of the appointment of a Subcontractor and to the same extent
and under the same terms and conditions as if the [Master Administrator] alone
were performing such duties. References in this Agreement to actions taken or to
be taken by the [Master Administrator] in performance of the [Master
Administrator] Duties include actions taken or to be taken by a Subcontractor on
behalf of the [Master Administrator]. The Servicer may be a Subcontractor
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and during such time as it is a Subcontractor, its relationship to the [Master
Administrator] shall be separate and apart from its obligations as the Servicer.
Each Subcontracting Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the [Master Administrator] and the
Subcontractor have agreed.
SECTION 5.03. Duties and Responsibilities of the Master Administrator. (a)
In addition to the other duties specified in this Agreement, the [Master
Administrator] Duties shall consist of: (i) filing periodic requests for
confirmation of coverage under the Insurance Policies; (ii) assisting the
Servicer in working with the Insurance Company on claims which are disputed or
not paid in a timely manner to effect their resolution; (iii) delivering the
List of Auto Loans as amended from time to time, on the Closing Date and each
monthly anniversary thereof until the beginning of the Principal Amortization
Period; (iv) furnishing reports on the foregoing matters in a timely manner as
reasonably requested by the Sponsor or the Trustee; and (v) formulating the
Credit and Collection Policies in consultation with the Servicer, from time to
time.
(b) The [Master Administrator] shall not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or written respect to, any Auto Loan (or any right to receive income
in respect thereof), or the Collection Account.
(c) The [Master Administrator] covenants and agrees to enforce the Sale
Agreements, the Assignments and the Insurance Policies in accordance with their
respective terms for the benefit of the Trust and the Certificateholders as
agent for the Trust and may sue to enforce or collect upon such Sale Agreements,
Assignments, and Insurance Policies as agent for the Trust. If, however, in any
enforcement suit or legal proceeding it is held that the [Master Administrator]
may not enforce a Sale Agreement or the related Assignment or Insurance Policy
on the grounds that it is not a real party in interest, the Trustee, on behalf
of the Trust, shall take such steps as the [Master Administrator] deems
necessary to assign to the [Master Administrator] the Sale Agreement, the
Assignment, or the Insurance Policy solely for the purpose of permitting the
[Master Administrator] to enforce the Sale Agreement, Assignment or the
Insurance Policy. The Trustee, at the request of an Authorized Officer of the
[Master Administrator], shall furnish the [Master Administrator] with any
limited powers of attorney or other documents prepared by the [Master
Administrator] necessary or appropriate to enable the [Master Administrator] to
carry out such duties.
SECTION 5.04. Representations and Warranties of the [Master Administrator].
The [Master Administrator] represents and warrants to the Sponsor, the [Master
Servicer], the Servicer and the Trustee as follows, as of the date hereof:
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(a) The [Master Administrator] is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and
is duly qualified to do business, and is in good standing in every jurisdiction
in which the nature of its business requires it to be so qualified;
(b) The [Master Administrator] has the power and authority to execute,
deliver and perform this Agreement and the transactions contemplated hereby;
(c) The execution, delivery and performance by the [Master Administrator]
of this Agreement, and all other agreements, instruments and documents which may
be delivered by it pursuant hereto, and the transactions contemplated thereby,
(i) have been duly authorized by all necessary corporate or other action, on the
part of the [Master Administrator], (ii) do not contravene or cause the [Master
Administrator] to be in default under (A) its charter or by-laws, (B) any
contractual restriction with respect to any Debt of the [Master Administrator]
or contained in any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note, or other agreement or instrument binding on or
affecting it or its property or (C) any law, rule, regulation, order, writ,
judgment, award, injunction or decree applicable to or binding on or affecting
it or its property, and (iii) do not result in or require the creation of any
Adverse Claim upon or with respect to any of its properties;
(d) This Agreement has been duly executed and delivered on behalf of the
[Master Administrator];
(e) No consent of, or other action by, and no notice to or filing with, any
Governmental Authority or any other party is required for the due execution,
delivery and performance by the [Master Administrator] of this Agreement or any
other agreement, document or instrument to be delivered hereunder;
(f) This Agreement is the legal, valid and binding obligation of the
[Master Administrator] enforceable against the [Master Administrator] in
accordance with its terms except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other laws
relating to or affecting the rights of creditors generally, and by general
principles of equity (regardless of whether such enforcement is consideration in
a proceeding in law or in equity); and
(g) There is no pending or threatened action, suit or proceeding, nor any
injunction, writ, restraining order or other order of a material nature against
or affecting the [Master Administrator], its officers or directors, or the
property of the [Master Administrator], in any court or tribunal, or before any
arbitrator of any kind or before or by any Governmental Authority (i) asserting
the invalidity of this Agreement or any document to be delivered by the [Master
Administrator] hereunder or
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(ii) seeking any determination or ruling that might materially and adversely
affect (A) the performance by the [Master Administrator] of its obligations
under this Agreement, or (B) the validity or enforceability of this Agreement or
any document to be delivered by the [Master Administrator] hereunder or (iii)
which is inconsistent with the due consummation of the transactions contemplated
by this Agreement.
SECTION 5.05. Monthly Administrator Fee; Administrator Expenses. As
compensation for its services hereunder, the Trustee shall remit to the [Master
Administrator] the Monthly Administrator Fee in accordance with the provisions
of Section 7.04(a) and the Servicer shall remit to the [Master Administrator]
the sums specified in Section 4.04(a)(v)(B). The [Master Administrator] shall be
required to pay for all expenses incurred by the [Master Administrator] in
connection with its activities hereunder (including any payments to accountants,
counsel, Subcontractors, or any other Person) and shall not be entitled to any
payment or reimbursement therefor.
SECTION 5.06. [Master Administrator] Not to Resign. The [Master
Administrator] shall not resign from the obligations and duties hereby imposed
on it except upon determination that (a) the performance of its duties hereunder
has become impermissible under applicable law and (b) there is no reasonable
action which the [Master Administrator] could take to make the performance of
its duties hereunder permissible under applicable law. Any such determination
permitting the resignation of the [Master Administrator] shall be evidenced as
to clause (a) above by an Opinion of Counsel to such effect delivered to the
Trustee. No such resignation shall become effective until a successor to the
[Master Administrator] shall have assumed the responsibilities and obligations
of the [Master Administrator] in accordance with Section 5.08.
SECTION 5.07. Events of Administrator Termination. If any of the following
events (each, an "Event of Administrator Termination") shall occur and be
continuing:
(a) Any failure by the [Master Administrator] to make any payment or
deposit required to be made hereunder and the continuance of such failure for a
period of five Business Days after the date upon which written notice of such
failure shall have been given to the [Master Administrator] by the Trustee,
except, in the case of a payment or deposit to be made on the Deposit Date
immediately preceding a Distribution Date, no later than such Distribution Date;
or
(b) Failure on the part of the [Master Administrator] to observe or perform
any term, covenant or agreement in this Agreement which materially affects the
rights of the Certificateholders and which continues unremedied for five
Business Days after the date on which written notice of such failure, requiring
the
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same to be remedied shall have been given to the [Master Administrator] by the
Trustee; or
(c) Any proceeding shall be instituted against the [Master Administrator]
(or, if the [Master Administrator] is actively contesting the merits thereof,
such proceeding is not dismissed within 90 days) seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or any of its
Debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, or any of the actions sought in
such proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
(d) The commencement by the [Master Administrator] of a voluntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the [Master Administrator] in an
involuntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the [Master
Administrator] or of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its Debts generally as they become due, or the taking of
corporate action by the [Master Administrator] in furtherance of any such
action; or
(e) There is a material breach of any of the representations and warranties
of the [Master Administrator] set forth in Section 5.04;
then, and in any such event, the Trustee may by delivery to the [Master
Administrator] of a written notice specifying the occurrence of any of the
foregoing events terminate the responsibilities of the [Master Administrator]
hereunder, without demand, protest or further notice of any kind, all of which
are hereby waived by the [Master Administrator]; provided, that, in the event
any of the events described in subsections (c) or (d) shall have occurred,
termination of the duties and responsibilities of the [Master Administrator]
shall automatically occur, without
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demand, protest, or further notice of any kind, all of which are expressly
waived by the [Master Administrator] (such termination being herein called an
"Administrator Transfer"). The Trustee shall simultaneously with any declaration
of any Event of Administrator Termination, give notice thereof to the Rating
Agency, the [Master Administrator], the [Master Servicer], the Servicer and the
Trustee.
SECTION 5.08. Appointment of the Successor Master Administrator. (a) Upon
termination of the [Master Administrator]'s responsibilities under this
Agreement pursuant to Section 5.06 or Section 5.07, the Trustee shall
immediately assume all of the [Master Administrator]'s responsibilities, duties
and obligations as [Master Administrator]. If the Trustee is unable, or
unwilling to act as the successor to the [Master Administrator], the Trustee may
appoint a successor to the [Master Administrator] acceptable to the Rating
Agency (a "Successor [Master Administrator]"), provided, that the Trustee shall
be the successor to the [Master Administrator] until such Successor [Master
Administrator] is appointed. Such Successor [Master Administrator] shall succeed
to all rights and assume all of the responsibilities, duties and liabilities of
the [Master Administrator] under this Agreement; provided further, that such
Successor [Master Administrator] and the Trustee shall have no responsibility
for any actions of the [Master Administrator] prior to the date of the
appointment of such Successor [Master Administrator] as [Master Administrator].
Prior to the appointment of such Successor [Master Administrator], the Trustee
shall be authorized and empowered to execute and deliver, on behalf of the
[Master Administrator], as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do any and all acts or things necessary or
appropriate to effect the purposes of such notice of termination, perform the
duties of the [Master Administrator] hereunder. The standard of care,
representations and warranties, covenants, liabilities, rights of
indemnification, and all other rights and obligations of the Trustee under this
Agreement shall also be applicable to the Trustee in its capacity hereunder. The
Trustee may petition a court of competent jurisdiction to appoint a Successor
[Master Administrator] if no Successor [Master Administrator] has been appointed
within 60 days of the removal of the [Master Administrator].
(b) Any successor of the [Master Administrator] appointed hereunder
(including the Trustee as the Successor [Master Administrator] during such time
as it functions as the Successor [Master Administrator]) shall be entitled to
compensation (including the estimated costs of such services and a reasonable
profit). Such compensation will be payable to the successor to the [Master
Administrator] in the manner provided in Section 7.04(a). The amount of such
compensation may result in an increase or decrease in the Monthly Administrator
Fee.
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(c) The outgoing [Master Administrator], the Trustee and the Successor
[Master Administrator] shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession, including, without
limitation, the express assumption by such Successor [Master Administrator] of
the duties and obligations of the outgoing [Master Administrator] hereunder.
(d) Upon appointment, any Successor [Master Administrator] shall be
successor in all respects to the outgoing [Master Administrator] this Agreement
and the transactions set forth or provided for herein and shall be subject to
all responsibilities, duties and liabilities relating thereto placed upon the
[Master Administrator] by the terms and provisions hereof (subject to the same
limitations as are contained in this Section 5.08 with respect to a succession
to the outgoing [Master Administrator] by the Trustee).
SECTION 5.09. Annual Reports; Annual Statement as to Compliance. (a) The
[Master Administrator] shall deliver to the Trustee and the Rating Agency as
soon as available, but in any event within 120 days after the end of each of its
fiscal years, a consolidated and consolidating balance sheet of it and its
Subsidiaries, if any, as at such last day of the fiscal year, a consolidated and
consolidating statements of income and retained earnings and statements of cash
flow, for each such fiscal year, each prepared in accordance with GAAP, in
reasonable detail, and as to the consolidated statements, certified without
qualification by an Independent Public Accountant, who may also render other
services to the [Master Administrator] or its Affiliates or certified, as to the
consolidating statements by the chief financial officer of the [Master
Administrator], as fairly presenting the financial position and the results of
operations of the [Master Administrator] as at and for the year ending on its
date and as having been prepared in accordance with GAAP.
(b) The [Master Administrator] shall, and shall cause any Subcontractor
hereunder having any responsibilities pertaining to the distribution of funds
to, deliver to the Trustee and the Rating Agency on or before __________ of each
year, beginning with _________, 199_, an Officer's Certificate stating, as to
each signer thereof, that (a) a review of the activities of the [Master
Administrator] or Subcontractor, as the case may be, during the preceding
calendar year and of performance under this Agreement has been made under such
officer's supervision and (b) to the best of such officer's knowledge, based on
such review, the [Master Administrator] or Subcontractor, as the case may be,
has fulfilled all its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof and remedies therefor being pursued.
(c) The [Master Administrator] shall promptly (but in any event within five
Business Days) notify the Trustee and the
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Rating Agency upon receiving actual knowledge of any event which constitutes or
an Event of Default, an Event of Master Servicing Termination, an Event of
Servicing Termination, an Event of Administrator Termination or would constitute
an Event of Default, an Event of Master Servicing Termination, an Event of
Servicing Termination or an Event of Administrator Termination but for the
requirement that notice be given or time elapse or both.
SECTION 5.10. Other Data. In addition to the statements and reports
expressly required to be furnished by the [Master Administrator] hereunder, the
[Master Administrator] shall, on request of the Trustee or the Rating Agency,
furnish such reasonably pertinent underlying data as can be generated by the
[Master Administrator]'s existing data processing systems without, in the
opinion of the [Master Administrator], undue modification or expense.
SECTION 5.11. Reports of the [Master Administrator]. On each Determination
Date immediately preceding a Distribution Date, the [Master Administrator] shall
furnish to the Trustee an Officer's Certificate, substantially in the form
attached hereto as Exhibit G (the "[Master Administrator]'s Report"), which
shall include the following information with respect to the related Distribution
Date (which may be substantially in the form of a Form 10-Q filed with the
Securities and Exchange Commission for such period):
(i) the Investor Certificate Principal Balance as of the end of
the second preceding Due Period (after giving effect to the disbursements
of principal, if any, made on the immediately preceding Distribution Date);
(ii) the Pool Factor with respect to the beginning of the Due
Period;
(iii) the Pool Factor with respect to the ending of the Due
Period;
(iv) the amount (each to be separately set forth) of Monthly
Servicing Fees paid to the [Master Servicer], and the Monthly Subrogation
Amounts and the Monthly Administrator Fees paid to the [Master
Administrator];
(v) the amount of Available Funds with respect to the related Due
Period;
(vi) the amount of the aggregate distribution to be made on such
Distribution Date which constitutes interest on the Investor Certificates
at the Certificate Rate, including any Shortfall so allocable;
(vii) the amount of the aggregate distribution to be made on such
Distribution Date which constitutes payments in
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reduction of principal with respect to the Investor Certificates;
(viii) the Investor Certificate Principal Balance as of the end
of the immediately preceding Due Period (after giving effect to the
disbursements in reduction of principal on such Distribution Date);
(ix) the Originator Certificate Principal Balance as of the end
of the second preceding Due Period (after giving effect to the
disbursements in reduction of principal, if any, on the immediately
preceding Distribution Date);
(x) the amount of the aggregate distribution to be made on such
Distribution Date which constitutes interest on the Originator Certificate
at the Certificate Rate;
(xi) the amount of the aggregate distribution to be made on such
Distribution Date which constitutes a reduction of principal with respect
to the Originator Certificate;
(xii) the Originator Certificate Principal Balance as of the end
of the immediately preceding Due Period (after giving effect to the
payments in reduction of principal on such Distribution Date);
(xiii) the Available Subordination Amount;
(xiv) the Maximum Subordination Amount;
(xv) the Cumulative Subordination Payments;
(xvi) the amount on deposit in the Cash Reserve Account and
available for deposit to the Collection Account for such Distribution Date;
(xviii) the amount to be withdrawn from or to be deposited to the
Cash Reserve Account with respect to such Distribution Date; and
(xix) the Required Cash Reserve Amount and the Available Cash
Reserve Amount (assuming all withdrawals or deposits to be made with
respect to the current Distribution Date are made).
Each such certificate will include a certification that the information
contained in such certificate is accurate and that no Event of Administrator
Termination, or event that with notice or lapse of time or both would become an
Event of Administrator Termination, has occurred, or if an Event of
Administrator Termination or such event has occurred and is continuing,
specifying the Event of Administrator Termination or such event and its status.]
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates. (a) The Investor Certificates shall be
substantially in the form of Exhibit H and the Originator Certificate shall be
substantially in the form of Exhibit I. The Certificates shall be issuable in
denominations of $1,000 of Initial Principal Amount or integral multiples
thereof (except that one Certificate may be issued in a denomination of less
than $1,000).
(b) The Investor Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Certificates representing the Certificates,
to be delivered to the Depository by, or on behalf of, the Sponsor (the
"Book-Entry Certificates"). The Investor Certificates shall initially be
registered on the Certificate Register in the name of Cede & Co., the nominee of
the Depository. No Certificateholder will receive a definitive certificate
representing such Certificateholder's interest in the Investor Certificates,
except as provided in Section 6.01(e). Unless and until definitive, fully
registered Investor Certificates (the "Definitive Certificates") have been
issued to Certificateholders pursuant to Section 6.01(e):
(i) the provision of this Section 6.01(b) shall be in full force and
effect with respect to the Investor Certificates;
(ii) the Sponsor, the [Master Administrator], the Paying Agent, the
Certificate Registrar and Transfer Agent and the Trustee may deal with the
Depository for all purposes, including the making of distributions on the
Investor Certificates as the authorized representatives of the respective
Certificateholders;
(iii) to the extent that the provisions of this Section 6.01 conflict
with any other provisions of this Agreement, the provisions of this Section
6.01 shall control; and
(iv) the rights of Certificateholders shall be exercised only through
the Depository and the applicable Depository Participants and shall be
limited to those established by law and agreements between such
Certificateholders and the Depository and/or the Depository Participants.
Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.01(e), the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of
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principal and interest on the Investor Certificates to such Depository
Participants.
(c) For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Investor Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
Investor Certificates, such direction or consent may be given by Investor
Certificateholders (acting through Depository and the Depository Participants)
owning Investor Certificates evidencing the requisite percentage of principal
amount of Investor Certificates.
(d) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificateholders pursuant to Section 6.01(e), the Trustee
shall give all such notices and communications specified herein to be given to
holders of the Investor Certificates to the Depository for distribution to the
Certificateholders.
(e) If (i) (A) the [Master Administrator] advises the Trustee in writing
that the Depository is no longer willing or able to discharge properly its
responsibilities, and (B) the [Master Administrator] is unable to locate a
qualified successor, (ii) the Sponsor, at its option, advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of an Event of Administrator Termination, Investor
Certificateholders with an aggregate Percentage of 50% advise the Trustee and
the applicable Depository through the applicable Depository Participants in
writing that the continuation of a book-entry system through the applicable
Depository is no longer in the best interests of the Certificateholders, the
Trustee shall notify all Certificateholders through the applicable Depository
Participants, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificateholders requesting the same. Upon
surrender to the Trustee of the Investor Certificates by the applicable
Depository, accompanied by registration instructions from the applicable
Depository for registration, the Trustee shall cause the Definitive Certificates
to be issued on behalf of the Trust. Neither the Sponsor nor the Trustee shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the applicable Depository shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with respect
to such Definitive Certificates, and the Trustee shall recognize the
Certificateholders of the Definitive Certificates as Certificateholders
hereunder.
SECTION 6.02. Authentication of Certificates. (a) The Trustee shall execute
on behalf of the Trust, authenticate and
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deliver the Originator Certificate to the Originator on the Closing Date.
Subject to the terms of Section 6.01(b) and Section 6.02(b), on the Issuance
Date, the Trustee shall authenticate and deliver the Investor Certificates, to
or upon the written order of the Sponsor to the underwriters, for the sale of
the Book-Entry Certificates evidenced by such Investor Certificates in an
aggregate principal amount equal to the Initial Principal Amount to or upon the
order of the Sponsor against payment to the Sponsor of the purchase price
therefor. Upon the receipt of such payment, the Investor Certificates shall be
fully paid and nonassessable.
(b) Upon satisfaction of the conditions set forth in clauses (i) through
(v) below on or before the Issuance Date, the Trustee will execute on behalf of
the Trust, authenticate and deliver the Investor Certificates and a newly issued
Originator Certificate. In connection with the issuance of the Investor
Certificates, the Originator will surrender the Originator Certificate to the
Trustee in exchange for a newly issued Originator Certificate. The following
conditions must be satisfied on or prior to the Issuance Date:
(i) on or before the fifth Business Day prior to the Issuance
Date, the Sponsor and the [Master Administrator] shall execute and deliver
to the Trustee, a notice (the "Issuance Notice") specifying (A) the
Certificate Rate, (B) the Initial Principal Amount, (C) the Expected Final
Payment Date and (D) the day on which the Investor Certificates are to be
authenticated and delivered by the Trustee;
(ii) the Originator shall have surrendered the original
Originator Certificate delivered to the Trustee;
(iii) the Rating Agency shall have indicated in writing that it
has assigned the Investor Certificates a rating of at least __;
(iv) such issuance will not result in an Event of Default and the
Sponsor shall have delivered to the Trustee an Officer's Certificate, dated
the Issuance Date to the effect that (A) the Rating Agency has not reduced
or withdrawn the rating of the Investor Certificates since the date of its
rating letter and (B) there is no Event of Default which has occurred and
is continuing as of the Issuance Date and the Sponsor reasonably believes
that such issuance is not reasonably expected to result in an Event of
Default at any time in the future;
(v) the Trustee shall have received an Opinion of Counsel (who
may be counsel to the Sponsor and the [Master Administrator]) with respect
to the Intended Tax Characterization; and
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(vi) the parties hereto shall have executed an Issuance
Supplement dated as of the Issuance Date substantially in the form of
Exhibit K, which shall specify certain relevant terms with respect to the
Investor Certificates, including, without limitation: (A) the manner of
determining when a Distribution Date shall occur, (B) the Expected Final
Payment Date, (C) the Initial Principal Amount, (D) the Certificate Rate,
(E) the Investor's Share, (F) the aggregate Principal Balance of the Auto
Loans to be used in the computation of the Maximum Subordination Amount,
(G) the Required Cash Reserve Amount, (H) the Originator Certificate
Principal Balance, (I) the Originator's Share, (G) the representations and
warranties referred to in Section 3.02(b)(ii) and (H) the List of Auto
Loans as of such Issuance Date.
(c) Subject to the provisions of Section 6.02(b), each Certificate shall be
authenticated by the Trustee by the manual signature of a duly authorized
signatory. Certificates bearing the signatures of individuals who were at the
time the proper officers or authorized signatories of the Trustee shall bind the
Trust, notwithstanding that such individuals or any of them have ceased to hold
such offices or positions prior to the delivery of such Certificates or did not
hold such offices or positions at the date of such Certificates. All
Certificates shall be dated the date of their authentication. The authentication
by the Trustee upon any Certificate shall be conclusive evidence, and the only
evidence, that the Certificate so authenticated has been duly authenticated and
delivered hereunder and is entitled to the benefit of this Agreement. The
authentication certification of the Trustee may be executed by any Person
authorized by the Trustee, but it shall not be necessary that the same
authorized Person sign the authentication certificates on all of the
Certificates.
SECTION 6.03. Registration of Transfer and Exchange of Certificates. (a)
The Trustee shall maintain, or cause to be maintained by a certificate registrar
and transfer agent (the "Certificate Registrar and Transfer Agent"), in
accordance with Section 6.03(b) a certificate register in which the Trustee
shall provide or cause to be provided for the registration of Investor
Certificates and transfers and exchanges of Investor Certificates as herein
provided (the "Certificate Register"). The Trustee is hereby initially appointed
the Certificate Registrar and Transfer Agent for the purpose of registering
Investor Certificates and transfers and exchanges of Investor Certificates as
provided herein. All Investor Certificates shall be so registered.
(b) The Certificate Registrar and Transfer Agent will maintain at its
expense in the City of __________ an office or offices or an agency or agencies
where Investor Certificates may be surrendered for registration of transfer or
exchange. The Certificate Registrar and Transfer Agent hereby appoints its
office at ______________________________________________________ for such
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purpose. Subject to the provisions of Section 6.01(b), at the option of an
Investor Certificateholder, Investor Certificates may be exchanged for other
Investor Certificates of authorized denominations, upon surrender of the
Investor Certificates to be exchanged at such office. Upon surrender for
registration or transfer of any Investor Certificate at such office, the Trustee
shall, on behalf of the Trust, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Investor Certificates of a
like aggregate Percentage and dated the date of authentication by the Trustee.
Whenever any Investor Certificates are so surrendered for exchange, the Trustee
shall execute, on behalf of the Trust, authenticate and deliver the Investor
Certificates which the Certificateholder making the exchange is entitled to
receive. Every certificate presented or surrendered for transfer or exchange
shall be duly endorsed by, or be accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder thereof or his or her attorney duly authorized in writing.
(c) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee or Certificate Registrar and Transfer Agent may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates. All Certificates surrendered for transfer and exchange shall be
disposed of in a manner approved by the Trustee.
(d) Except as provided in Section 6.02, in no event shall the Originator
Certificate or any interest therein be sold hereunder, in whole or in part,
unless the Originator shall have consented in writing to such transfer and
unless the Trustee shall have received (i) confirmation in writing from the
Rating Agency that such transfer will not result in the reduction or withdrawal
of its then-existing rating of the Investor Certificates, (ii) an Opinion of
Counsel that such transfer does not adversely affect the conclusions reached in
the federal income tax opinion dated the Issuance Date and (iii) an agreement
supplemental hereto executed and delivered to the Trustee, in form and substance
satisfactory to the Trustee, in which the transferee of the Originator
Certificate expressly assumes the obligations of the Originator hereunder
provided, however, that this Section 6.03(d) shall not prevent the Originator
from pledging its interest in the Originator Certificate in connection with any
interim financing.
SECTION 6.04 Appointment of Paying Agent. The Paying Agent shall make
distributions to Investor Certificateholders from the Collection Account
pursuant to Section 7.04 and shall report the amounts of such distributions to
the Trustee. Any Paying Agent shall have the revocable power to withdraw funds
from the Collection Account for the purpose of making the distributions referred
to above. The Trustee may revoke such power and remove the Paying Agent if the
Trustee determines in its sole discretion
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that the Paying Agent shall have failed to perform is obligations under this
Agreement in any material respect. The Paying Agent shall initially be _____.
_____ shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Trustee. In the event that _____ shall no longer be the Paying Agent, the
Trustee shall appoint a successor to act as Paying Agent (which shall be a bank
or trust company). The Trust shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Trustee to execute and deliver to the
Trustee an instrument in which such successor Paying Agent or additional Paying
Agent shall agree with the Trustee that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Investor Certificateholders in trust for the benefit of the
Investor Certificateholders entitled thereto until such sums shall be paid to
such Certificateholders. The Paying Agent shall return all unclaimed funds to
the Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Trustee.
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Definitive Certificate is surrendered to the Certificate Registrar and
Transfer Agent, or the Certificate Registrar and Transfer Agent receives
evidence to its satisfaction of the destruction, loss or theft of any Definitive
Certificate, and (b) there is delivered to the Certificate Registrar and
Transfer Agent and the Trustee such security or indemnity as may be required by
each to save it harmless, then in the absence of notice to the Certificate
Registrar and Transfer Agent or the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall on behalf of the Trust,
execute, authenticate and deliver, in exchange for and in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and percentage. Upon the issuance of any new Certificate under this
Section 6.05, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expense connected therewith. Any duplicate Certificate issued pursuant
to this Section 6.05 shall constitute complete and indefeasible evidence of
ownership of the Fractional Undivided Interest represented by the original
Certificate, as if originally issued, whether or not the destroyed, lost or
stolen Certificate shall be found at any time.
SECTION 6.06. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Sponsor, the [Master
Administrator], the Paying Agent, the Trustee, and the Certificate Registrar and
Transfer Agent may treat the Person in whose name any Certificate is registered
as the owner of such Certificate for the purpose of receiving remittances
pursuant to Section 7.04 and for all other purposes whatsoever, and none of the
Sponsor, the [Master Administrator], the Paying Agent, the Trustee, the
Certificate Registrar and Transfer Agent nor any agent of the Sponsor, the
[Master Administrator], the Paying Agent, the
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Trustee, or the Certificate Registrar and Transfer Agent shall be affected by
notice to the contrary. Any action taken by the Trustee pursuant to this
Agreement upon the request or authority or consent of any Person who at the time
of making such request or giving such authority or consent is a
Certificateholder shall be conclusive and binding upon all future holders of the
same Certificate and upon Certificates issued in exchange therefor or in place
thereof.
SECTION 6.07. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar and Transfer Agent will furnish to the Trustee, the
Paying Agent, the Sponsor, and the [Master Administrator] promptly upon request
therefor from any of them in writing, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. Upon written application
by Investor Certificateholders with an aggregate Percentage of 10% or more
(hereinafter referred to as "Applicants") to the Trustee stating that the
Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this Agreement or under the Investor Certificates
accompanied by a copy of the communication which such Applicants propose to
transmit, the Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants access during normal business hours to the
most recent list of Investor Certificateholders held by the Trustee. If such
list is as of a date more than 90 days prior to the date of receipt of such
Applicants' request, the Trustee shall promptly request from the Certificate
Registrar and Transfer Agent a current list as provided above, and shall afford
such Applicants access to such list promptly upon receipt. Every
Certificateholder, by receiving and holding an Investor Certificate, agrees with
the Certificate Registrar and Transfer Agent and the Trustee that none of the
Sponsor, the [Master Administrator], the Paying Agent, the Certificate Registrar
and Transfer Agent nor the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was obtained.
SECTION 6.08. Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Investor Certificateholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Investor Certificateholders in Person or by an agent duly
appointed in writing; and except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and where required, to the Sponsor and the [Master
Administrator]. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 10.01) conclusive in favor of the Trustee, the Sponsor,
the
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[Master Administrator], the [Master Servicer] and the Servicer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Investor Certificateholders
of any such instrument or writing may be provided in any reasonable manner which
the Trustee deems sufficient.
(c) The ownership of Investor Certificates shall be proved by the
Certificate Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Investor Certificateholder shall bind every holder of every
Investor Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or omitted to
be done by the Trustee, the Sponsor, the [Master Administrator], the [Master
Servicer] or the Servicer in reliance thereon, whether or not notation of such
action is made upon such Certificate.
(e) The Trustee may require such additional proof of any matter referred to
in this Section as it shall deem necessary.
SECTION 6.09 Notices to Depository. Whenever any notice, report or other
communication is required to be given to Certificateholders with respect to
which Book-Entry Certificates have been issued, unless and until Definitive
Certificates shall have been issued to the related Investor Certificateholders,
the Trustee shall give all such notices, reports and communications to the
Depository.
ARTICLE VII
DEPOSITS AND DISTRIBUTIONS
SECTION 7.01. Rights of Certificateholders. (a) The Investor Certificates
and the Originator Certificate shall represent fractional undivided interests in
the Trust, consisting of the right to receive, to the extent necessary to make
the required payments with respect to the Investor Certificates at the times and
in the amounts specified in this Agreement, in, to and under Trust Assets (the
"Certificateholders' Interest").
(b) Amounts held by the Trustee for future distribution to the
Certificateholders, including, without limitation, in the Collection Account and
the Cash Reserve Account, shall not be distributed except in accordance with the
terms of this Agreement. The Originator as holder of the Originator Certificate
is deemed to have granted a security interest in rights to receive monies from
the Collection Account and the Cash Reserve Account to Investor
Certificateholders to secure the rights of the Investor
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Certificateholders to receive distributions in priority over the Originator
Certificate as provided herein. Whenever requested by the Trustee, and without
prejudice to the intent of the parties that the Collection Account and the Cash
Reserve Account be held exclusively in the name of the Trustee for the benefit
of the Trust, the Sponsor or the Originator Certificate, or both, will make,
execute and deliver or cause to be made, executed and delivered any and all
further and other notices instruments and assurances, and will furnish such
information and will make such filings with Governmental Authorities, including
but not limited to financing statements on Form UCC-1, as may be necessary or
appropriate to carry out the intention or to facilitate the performance of the
terms of this Agreement, including without limitation, the foregoing
subordination provisions, to ensure the perfection of the security interest of
the Investor Certificateholders in the Cash Reserve Account, or otherwise to
protect and preserve the rights and remedies hereunder of the Investor
Certificateholders. Amounts properly distributed to the holder of the Originator
Certificate pursuant to Section 7.04 shall be deemed released from the security
interest established by this Section 7.01, and the holder of the Originator
Certificate will not in any event be required to refund any such distributed
amounts.
SECTION 7.02. Establishment and Administration of the Collection Account.
(a) The Trustee, shall cause to be established and maintained at all times the
Collection Account on behalf of and in the name of the Trustee for the benefit
of the Trust. The Collection Account shall be an Eligible Account initially
established at the office of the Trustee, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Trust. The Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Collection Account and in all proceeds thereof.
The Collection Account shall be under the sole dominion and control of the
Trustee for the benefit of the Certificateholders as their interests appear in
the Trust. If, at any time, the Collection Account ceases to be an Eligible
Account, the [Master Administrator], on behalf of the Trustee, shall within 20
Business Days establish a new Collection Account which shall be an Eligible
Account, transfer any cash and/or any investments to such new Collection Account
and from the date such new Collection Account is established, it shall be the
"Collection Account".
(b) The Servicer shall deposit into the Collection Account, as soon as
practicable, but in no event later than the close of business on the fifth
Business Day after the date of receipt thereof (i) all amounts representing
Payments collected by the Servicer, (ii) all Recoveries on Defaulted Auto Loans
received by the Servicer during such Due Period and (iii) the Repurchase Price
of Auto Loans repurchased by the Sponsor or an Originator or purchased by the
[Master Servicer] pursuant to Section 3.03.
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(c) The [Master Administrator] shall deposit into the Collection Account,
as soon as practicable, but in no event later than the close of business on the
fifth Business Day after receipt thereof the Repurchase Price of Auto Loans
repurchased by an Originator pursuant to the related Sale Agreement and Section
3.03.
(d) The [Master Administrator] shall direct the Trustee in writing to
invest, and the Trustee shall so invest, the amounts in the Collection Account
in specified Eligible Investments that mature not later than the next succeeding
Deposit Date; provided, that any Eligible Investment as to which the Trustee is
the obligor in its individual capacity may mature not later than such
Distribution Date; and provided further, that all Eligible Investments shall be
held to maturity.
(e) The [Master Administrator] shall instruct the Trustee to make
withdrawals and payments from the Collection Account for the purposes of
carrying out the [Master Administrator]'s or the Trustee's duties hereunder.
SECTION 7.03. Establishment and Administration of the Cash Reserve Account.
(a) On or prior to the Issuance Date, the Trustee shall cause to be established
and maintained at all times the Cash Reserve Account on behalf of and in the
name of the Trustee for the benefit of the Trust. The Cash Reserve Account shall
be an Eligible Account initially established at the offices of the Trustee,
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Trust. The Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Cash Reserve
Account and in all proceeds thereof. The Cash Reserve Account shall be under the
sole dominion and control of the Trustee for the benefit of the Trust. If, at
any time, the Cash Reserve Account ceases to be an Eligible Account, the [Master
Administrator] on behalf of the Trustee shall within 20 Business Days establish
a new Cash Reserve Account which shall be an Eligible Account, transfer any cash
and/or any investments to such new Cash Reserve Account and from the date such
new Cash Reserve Account is established, it shall be the "Cash Reserve Account".
(b) The [Master Administrator] shall direct the Trustee in writing to
invest, and the Trustee shall so invest, the amounts in the Cash Reserve Account
in specified Eligible Investments that mature not later than the Deposit Date
preceding the next Distribution Date; provided that any Eligible Investment as
to which the Trustee is the obligor in its individual capacity may mature not
later than such Distribution Date; and provided further, that all Eligible
Investments shall be held to maturity.
(c) If on any Distribution Date the amounts disbursed pursuant to Sections
7.04(a), 7.04(c) and 7.04(d) are insufficient to pay the amounts required to be
disbursed pursuant to Sections 7.04(a)(i) and (ii), 7.04(c)(i) and
7.04(d)(i)-(ii), the Trustee
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shall withdraw from the Cash Reserve Account and deposit in the Collection
Account the least of (i) the Available Cash Reserve Amount, (ii) the Available
Subordination Amount and (iii) the amount necessary to make up such deficiency
and shall disburse such amounts in accordance with Section 7.04; provided,
however, that in no event will any amount representing net investment earnings
on amounts held in the Cash Reserve Account be remitted or otherwise used in any
manner for the benefit of the Certificateholders.
(d) If the Available Cash Reserve Amount, after giving effect to the
distributions to the Investor Certificateholders on any Distribution Date, is
greater than the Required Cash Reserve Amount on such Distribution Date, the
amount of such excess shall be distributed to the Servicer. Amounts properly
distributed to the Servicer pursuant to this Section 7.03(d), either directly
without deposit in the Cash Reserve Account or from amounts in excess of the
Required Cash Reserve Amount, shall be deemed released from the security
interest established by Section 7.01, and the Servicer will not in any event be
required to refund any such distributed amounts.
(e) On the first Distribution Date following the earlier to occur of (i)
the Distribution Date on which the Investor Certificateholders have been paid in
full and (ii) the Available Subordination Amount has been reduced to zero, the
Trustee shall disburse all amounts held in the Cash Reserve Account, if any, to
the Servicer.
(f) The [Master Administrator] shall instruct the Trustee to make
withdrawals and payments from the Cash Reserve Account for the purposes of
carrying out the [Master Administrator]'s or the Trustee's duties hereunder.
SECTION 7.04. Distributions.
(a) On each Monthly Fee Date, the Trustee, at the direction of the [Master
Administrator], shall disburse Available Funds, including the amounts deposited
in the Collection Account from the Cash Reserve Account pursuant to Section
7.03(c) in the following priority (to the extent available) (and, if such date
is also a Distribution Date, in priority to the amounts to be disbursed pursuant
to subsection (b), (c) and (d) below):
(i) to the [Master Servicer] (or the Servicer subject to the
provisions of Section 4.08), the Monthly Servicing Fee plus any accrued but
unpaid Monthly Servicing Fee with respect to any prior month; and
(ii) to the [Master Administrator], the Monthly Subrogation
Amount plus any accrued but unpaid Monthly Subrogation Amount with respect
to any prior month; and
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(iii) to the [Master Administrator], the Monthly Administrator
Fee plus any accrued but unpaid Monthly Administrator Fee with respect to
any prior month.
(b) On each Monthly Fee Date occurring prior to the Issuance Date, the
Trustee, at the direction of the [Master Administrator], shall disburse the
balance of Available Funds (to the extent available after making the
disbursements under Section 7.04(a) owing on such date) to the holder of the
Originator Certificate.
(c) On each Distribution Date occurring during the Interest-Only Period,
the Trustee, at the direction of the [Master Administrator], shall disburse the
balance of Available Funds (to the extent available after making the
disbursements under Section 7.04(a) owing on such date) in the following
priority:
(i) to the Investor Certificateholders, interest in an amount
equal to the lesser of (A) the sum of (1) one-quarter of the Certificate
Rate times the Investor Certificate Principal Balance and (2) any Shortfall
and (B) the sum of the Investor's Share of the Available Distribution
Amount plus the Available Subordination Amount;
(ii) to the holder of the Originator Certificate, in reduction of
the Originator Certificate Principal Balance, an amount equal to the excess
of (A) the Originator Certificate Principal Balance over (B) the
Originator's Share of the aggregate Principal Balance of the Auto Loans
determined as of the end of the immediately preceding Due Period;
(iii) to the holder of the Originator Certificate, interest in an
amount equal to one-quarter of the Certificate Rate times the Originator
Certificate Principal Balance;
(iv) to the Cash Reserve Account, an amount equal to the lesser
of (A) the Aggregate Excess Interest on such Distribution Date and, (B) the
Required Cash Reserve Amount minus the Available Cash Reserve Amount;
(v) to the holder of the Originator Certificate, an amount equal
to the excess, if any, of the Aggregate Excess Interest over the amount
disbursed to the Cash Reserve Account in accordance with the provisions of
7.04(c)(iv); and
(vi) the remainder of funds held in the Collection Account
following the distributions in clauses (i) - (v) above shall be retained in
the Collection Account.
(d) On each Distribution Date occurring during the Principal
Amortization Period, the Trustee, at the direction of the [Master Administrator]
shall disburse the balance of Available
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Funds (to the extent available after making the disbursements under Section
7.04(a) owing on such date) in the following priority:
(i) to the Investor Certificateholders, interest in an amount
equal to the lesser of (A) the sum of (1) one-quarter of the Certificate
Rate times the Investor Certificate Principal Balance and (2) any Shortfall
and (B) the sum of the Investor's Share of the Available Distribution
Amount plus the Available Subordination Amount;
(ii) to the Investor Certificateholders, in reduction of the
Investor Certificate Principal Balance, an amount equal to the lesser of
(A) principal in an amount equal to the excess of (1) the Investor
Certificate Principal Balance over (2) the Investor's Share of the
aggregate Principal Balance of the Auto Loans determined as of the end of
the immediately preceding Due Period and (B) the sum of the balance of the
Investor's Share of the Available Distribution Amount plus the Available
Subordination Amount;
(iii) to the holder of the Originator Certificate, interest in an
amount equal to one-quarter of the Certificate Rate times the Originator
Certificate Principal Balance;
(iv) to the holder of the Originator Certificate, in reduction of
the Originator Certificate Principal Balance, an amount equal to the excess
of (A) the Originator Certificate Principal Balance over (B) the
Originator's Share of the aggregate Principal Balance of the Auto Loans
determined as of the end of the immediately preceding Due Period;
(v) to the Cash Reserve Account, an amount equal to the sum of
the (A) the Required Cash Reserve Amount minus (B) the Available Cash
Reserve Amount;
(vi) to the holder of the Originator Certificate, the balance of
Available Funds minus the Partial Prepayment Amount; and
(vii) the remainder of funds held in the Collection Account
following the distribution in Clauses (i) - (vi) above shall be retained in
the Collection Account.
(e) With respect to each reference in this Section 7.04 as to payments to
Certificateholders, the Trustee shall permit the Paying Agent to disburse such
Funds to the Certificateholders pursuant to Section 6.04.
(f) On the first Distribution Date following the Distribution Date on which
the Investor Certificateholders have been paid in full, all amounts held in the
Collection Account and the Cash Reserve Account, if any, shall be disbursed to
the holder of the Originator Certificate and all interests of the Trust in all
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Auto Loans which have an outstanding balance shall be reconveyed by the Trustee
to, or at the direction of, the Sponsor. Such disbursement and reconveyance
shall constitute the final payment to which the holder of the Originator
Certificate is entitled with respect to its Originator's Interest pursuant to
the terms of this Agreement.
SECTION 7.05. Reports to Certificateholders. On each Distribution Date,
concurrently with the distribution to the Certificateholders, the Trustee shall
furnish, or cause to be furnished by the Paying Agent to the Certificateholders,
a report prepared by the [Master Administrator] substantially in the form of
Exhibit G.
ARTICLE VIII
REMEDIES
SECTION 8.01. Events of Default. "Event of Default", whenever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any Governmental Authority):
(a) Default in the payment to the Investor Certificateholders of any
interest or principal due hereunder in accordance with the provisions of Section
7.04 or Section 11.01 when such payment becomes due and payable and continuance
of such default for a period of three Business Days; or
(b) Default in the performance, or breach, of any covenant or agreement of
the Sponsor in this Agreement (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section 8.01 specifically
dealt with), and continuance of such default or breach for a period of 30 days
after there has been given, by registered or certified mail, to the Sponsor by
the [Master Administrator] or the Trustee, or to the Sponsor, the [Master
Administrator] and the Trustee by the Certificateholders of at least 50% in
aggregate principal amount of the outstanding Investor Certificates a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder, or if, in any such
case, the Sponsor shall have consented in writing that any such event shall be
an Event of Default; or
(c) Any proceeding shall be instituted against the Sponsor (or, if the
Sponsor is actively contesting the merits thereof, such proceeding is not
dismissed within 90 days) seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or any of its Debts under any law
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relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or
(d) The commencement by the Sponsor of a voluntary case or proceeding under
any applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or order for relief in
respect of the Sponsor in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, or the
consent by it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Sponsor or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its Debts generally as they
become due, or the taking of corporate action by the Sponsor in furtherance of
any such action; or
(e) Judgments or orders for the payment of money (other than such judgments
or orders in respect of which adequate insurance is maintained for the payment
thereof) against the Sponsor shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 30 days or more; or
(f) There is a material breach of any of the representations and warranties
of the Sponsor set forth in Section 3.01(a); or
(g) An Event of Master Servicing Termination shall have occurred and the
[Master Administrator] or the Trustee has terminated the servicing
responsibilities of the [Master Servicer] pursuant to Section 4.12; or
(h) An Event of Servicing Termination shall have occurred and the [Master
Administrator] or the Trustee has terminated the servicing responsibilities of
the Servicer pursuant to Section 4.14; or
(i) Either of the [Master Servicer] or the Servicer shall have resigned
pursuant to Section 4.10; or
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(j) An Event of Administrator Termination shall have occurred and the
Trustee has terminated the administrative responsibilities of the [Master
Administrator] pursuant to Section 5.07.
SECTION 8.02. Declaration of Principal Amortization Event. (a) If an Event
of Default occurs under Sections 8.01(a), (c), or (d), and is continuing, the
Trustee, upon a Responsible Officer receiving written notice thereof, shall
promptly declare that a Principal Amortization Event has occurred, without
demand, protest, or notice of any kind all of which are expressly waived by the
Sponsor; provided, that, in the event any of the events described in Sections
8.01 (c) or (d) shall have occurred, an Event of Default shall automatically
occur, without demand, protest, or notice of any kind all of which are expressly
waived by the Sponsor. If an Event of Default occurs and is continuing, other
than under Section 8.01(a), (c), or (d), then and in every such case the Trustee
may at any time in the case of any such other Event of Default, or Investor
Certificateholders of an aggregate Percentage of not less than 50% may instruct
the Trustee to and the Trustee shall, declare that a Principal Amortization
Event has occurred by a notice in writing to the Sponsor. The Trustee shall
simultaneously with any declaration of any Principal Amortization Event, give
notice thereof to the Rating Agency, the [Master Administrator], the [Master
Servicer] and the Servicer.
(c) The Sponsor shall promptly (but in any event within five Business Days)
notify the Trustee upon receiving actual knowledge of any event which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.
SECTION 8.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Certificateholders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Agreement or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
The Trustee shall notify the Sponsor, the [Master Administrator], the [Master
Servicer], the Servicer and the Rating Agency of any such action.
SECTION 8.04. Trustee May File Proofs of Claim. (a) In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Sponsor, or any other obligor upon the Investor Certificates, or the
property of the Sponsor, or such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Investor Certificates shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee
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shall have made any demand on the Sponsor for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise:
(i) to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Investor Certificates or
any amount owing on the Auto Loans or the other Trust Assets and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee and any predecessor Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee and any predecessor Trustee, their agents and counsel) and
of the Certificateholders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Certificateholder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Certificateholders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel, and any other amounts due the
Trustee and any predecessor Trustee under Section 10.06.
(b) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Certificateholder
any plan or reorganization, agreement, adjustment or composition affecting the
Investor Certificates or the rights of any Certificateholder thereof or
affecting the Auto Loans or the other Trust Assets or to authorize the Trustee
to vote in respect of the claim of any Certificateholder in any such proceeding.
SECTION 8.05. Trustee May Enforce Claims Without Possession of Investor
Certificates. All rights of action and claims under this Agreement, the Investor
Certificates, the Auto Loans or the other Trust Assets may be prosecuted and
enforced by the Trustee without the possession of any of the Investor
Certificates or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provisions for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee and any predecessor Trustee, their
agents and counsel, be for the ratable benefit of the Certificateholders in
respect of which such judgment has been recovered.
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SECTION 8.06. Application of Money Collected. Any money collected by the
Trustee pursuant to this Article VIII shall be deposited in the Collection
Account for disbursement in accordance with the provisions of Article VII.
SECTION 8.07. Limitation on Suits. No Investor Certificateholder shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Agreement, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(a) there is a continuing Event of Default and such Certificateholder has
previously given written notice to the Trustee of a continuing Event of Default;
(b) the Investor Certificateholders of an aggregate Percentage of not less
than 50% shall have made written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Investor Certificateholder or Investor Certificateholders have
offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee, for 60 days after its receipt of such notice, request and
offer of indemnity, has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Investor Certificateholders of a
majority in aggregate principal amount of the outstanding Investor Certificates;
it being understood and intended that no one or more Investor Certificateholders
shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Certificateholders, or to obtain or to seek to obtain priority or
preference over any other Certificateholders or to enforce any right under this
Agreement, except in the manner herein provided and for the ratable benefit of
all the Certificateholders.
SECTION 8.08. Restoration of Rights and Remedies. If the Trustee or any
Certificateholder has instituted any proceeding to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such
Certificateholder, then and in every such case, subject to any determination in
such proceeding, the Sponsor, the Trustee and the Certificateholders shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and
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remedies of the Trustee and the Certificateholders shall continue as though no
such proceeding had been instituted.
SECTION 8.09. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Investor Certificates in Section 6.05, no right or remedy herein
conferred upon or reserved to the Trustee or to the Certificateholders is
intended to be exclusive of any other right or remedy and every right and remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 8.10. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Certificateholder to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the
Certificateholders may be exercised from time to time, and as often as may be
deemed expedient, as permitted under the terms hereof, by the Trustee or by the
Certificateholders, as the case may be.
SECTION 8.11. Control by Certificateholders. Investor Certificateholders of
an aggregate Percentage of not less than 50% shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee, provided,
that (a) such direction shall not be in conflict with any rule of law or with
this Agreement, and (b) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 8.12. Waiver of Past Defaults. The Certificateholders of not less
than a majority in aggregate principal amount of the outstanding Investor
Certificates may on behalf of the Certificateholders of all the Investor
Certificates waive any past default hereunder and its consequences, except a
default:
(a) in the payment of the principal of or interest on any Investor
Certificate, or
(b) in respect of a covenant or provision hereof which under Article XI
cannot be modified or amended without the consent of an aggregate Percentage of
[66 2/3%] of the outstanding Investor Certificates affected, or
(c) described under Section 8.01(c) or (d).
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Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Agreement; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 8.13. Undertaking for Costs. All parties to this Agreement agree,
and each Investor Certificateholder by his acceptance of an Investor Certificate
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Agreement, or in
any suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees and disbursements,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 8.13 shall not apply to any suit instituted by the
Sponsor, to any suit instituted by the Trustee, to any suit instituted by any
Certificateholder or group of Certificateholders holding in the aggregate more
than 10% in principal amount of the outstanding Investor Certificates, or to any
suit instituted by any Certificateholder for the enforcement of the payment of
any principal of or interest on any Investor Certificate.
SECTION 8.14. Waiver of Stay or Extension Laws. The Sponsor covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Agreement; and
the Sponsor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE IX
LIMITATION ON LIABILITY; INDEMNITIES
SECTION 9.01. Liabilities of Obligors and Insurers. No obligation or
liability of any Obligor under any of the Auto Loans or any insurer under any
Insurance Policy is intended to be assumed by the Sponsor, the [Master
Administrator], the [Master Servicer], the Servicer, the Trust, the Trustee or
the Certificateholders under or as a result of this Agreement and the
transactions contemplated hereby and, to the maximum extent permitted and valid
under mandatory provisions of law, the Sponsor, the [Master Administrator], the
[Master Servicer], the Servicer, the Trust, the
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Trustee and the Certificateholders expressly disclaim such assumption.
SECTION 9.02. Limitation on Liability of the Sponsor, the [Master
Servicer], Servicer and the [Master Administrator].
(a) The Sponsor, the [Master Servicer], the Servicer and the [Master
Administrator], shall each be liable in accordance herewith only to the extent
of the obligations specifically imposed by this Agreement.
(b) None of the Sponsor, the [Master Servicer], Servicer, or the [Master
Administrator] nor any of the directors, officers, employees or agents of the
Sponsor, the [Master Servicer], the Servicer, or the [Master Administrator]
shall be under any liability to the Trust or the Certificateholders for any
action taken, or for refraining from the taking of any action, in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Sponsor, the [Master Servicer], the
Servicer, or the [Master Administrator] or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on each such party pursuant to this Agreement or against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations or duties hereunder. The Sponsor, the [Master Servicer], the
Servicer, the [Master Administrator] and any director, officer, employee or
agent of the Sponsor, the [Master Servicer], the Servicer or the [Master
Administrator] may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any appropriate Person respecting
any matters arising hereunder.
SECTION 9.03. Indemnities of the [Master Servicer], the Servicer and the
[Master Administrator].
(a) The [Master Servicer] agrees to indemnify the Trust, the Trustee, the
[Master Administrator] and any of their respective directors, officers,
employees or agents from, and hold them harmless against, any and all costs,
expenses, losses, claims, damages (except for consequential damages) and
liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Trust, the Trustee or the
[Master Administrator] through:
(i) the [Master Servicer]'s acts or omissions in violation of
this Agreement (subject to the servicing standard set forth in Section
4.01(c)); and
(ii) the gross negligence, willful misfeasance or bad faith of
the Servicer in the performance of its duties under this Agreement or by
reason of the Servicer's reckless disregard of its obligations and duties
hereunder;
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except (x) as to clause (ii) for any losses, liability, damages, claims or
expenses arising out of the actions or omissions in the performance of
repossession activities in respect of Defaulted Auto Loans, and (y) as to
clauses (i) and (ii), to the extent the Trustee's or the [Master
Administrator]'s, as the case may be, own bad faith, willful misconduct, or
negligence contributes to the cost, expense, loss, claim, damage or liability.
(b) The Servicer agrees to indemnify the Trust, the Trustee, and any of its
directors, officers, employees or agents and the [Master Administrator], and any
of its directors, officers and employees, from, and hold them harmless against,
any and all losses, liabilities, damages (except for consequential damages),
claims or expenses (including reasonable attorneys' fees of counsel reasonably
acceptable to the Servicer) arising as a result of the Servicer's acts or
omissions (subject to the servicing standard set forth in Section 4.01(c)) in
violation of this Agreement except to the extent the Trustee's or the [Master
Administrator]'s, as the case may be, own bad faith, willful misconduct, or
negligence contributes to the loss, liability, damage, claim or expense.
(c) The [Master Administrator] agrees to indemnify (i) the Trust from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses (including reasonable attorneys' fees of counsel reasonably acceptable
to the [Master Administrator]) arising as a result of the [Master
Administrator]'s acts or omissions (subject to the administration standard set
forth in Section 5.01(b)) in violation of this Agreement and (ii) the Trustee,
its directors, officers, employees or agents from, and hold it harmless against,
any and all losses, liabilities, damages, claims, expenses (including attorneys
fees and disbursements), fines or penalties, or judgments arising out of or in
connection with the performance by the Trustee of its duties hereunder or in
connection with the Trust, or the issuance by the Trust of the Certificates
except to the extent the Trustee's own bad faith, willful misconduct or gross
negligence contributes to the loss, liability, damage, claim or expense.
(d) This Section 9.03 shall survive the termination of this Agreement or
the resignation or removal of the Trustee in respect of rights accrued prior to
such resignation or removal.
ARTICLE X
THE TRUSTEE
SECTION 10.01. Certain Duties. (a) The Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this Agreement against
the Trustee (including, without limitation the duties referred to in Section
4.13, 4.15 and 5.08 during the continuance of an Event of Master Servicing
Termination, an Event of Servicing Termination or
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an Event of Administrator Termination resulting in the appointment of the
Trustee as Successor [Master Servicer], Successor Servicer or Successor [Master
Administrator], respectively).
(b) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement; but in the case of any such
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(c) In case an Event of Default, an Event of Master Servicing Termination
(resulting in the appointment of the Trustee as Successor [Master Servicer]), an
Event of Servicing Termination (resulting in the appointment of the Trustee as
Successor Servicer) or an Event of Administrator Termination (resulting in the
appointment of the Trustee as Successor [Master Administrator]) has occurred and
is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs, provided, however, that no provision
in this Indenture shall be construed to limit the obligations of the Trustee to
provide notices under Section 10.02.
(d) No provision of this Agreement shall be construed to relieve the
Trustee of any obligation to exercise any of its duties under the Agreement in
any case in which the Trustee has not been offered reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in the exercise of such duty.
(e) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(i) this Section shall not be construed to limit the effect of
Section 10.01(a) and (b);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
written direction of the Certificateholders of a majority (or such lesser
percentage as may be specified by certain provisions hereunder) in
principal amount of the outstanding Investor Certificates relating to the
time, method and place of conducting any proceeding for
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any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement; and
(iv) no provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(f) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
10.01.
(g) The Trustee shall have no liability in connection with compliance of
the [Master Administrator], the [Master Servicer], the Servicer or the Sponsor
with statutory or regulatory requirements related to the Trust Assets. The
Trustee makes no representations or warranties with respect to the Trust Assets
or the validity or sufficiency of any assignment of the Auto Loans to the
Sponsor or to the Trustee.
SECTION 10.02. Notice of Defaults. The Trustee shall promptly (but in any
event within 10 Business Days) notify the Rating Agency upon a Responsible
Officer obtaining actual knowledge of any event which constitutes an Event of
Default, an Event of Master Servicing Termination, an Event of Servicing
Termination, or an Event of Administrator Termination or would constitute an
Event of Default, an Event of Master Servicing Termination, an Event of
Servicing Termination, or an Event of Administrator Termination but for the
requirement that notice be given or time elapse or both. In addition, the
Trustee shall, within 10 Business Days following a Responsible Officer receiving
actual knowledge of any Event of Default, Event of Master Servicing Termination,
Event of Servicing Termination or Event of Administrator Termination specified
in the immediately preceding sentence, transmit to all Certificateholders, as
their names and addresses appear in the Certificate Register notice of such
event known to the Trustee, unless such default shall have been cured or waived;
provided further, that this Section 10.02 shall not limit the obligations of the
Trustee to provide notices expressly required by this Agreement.
SECTION 10.03. Certain Matters Affecting the Trustee. Subject to the
provisions of Section 10.01:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
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genuine and to have been signed or presented by the proper party or parties;
(b) Any request or direction of any Certificateholders, the [Master
Administrator], the Sponsor, the [Master Servicer] or the Servicer mentioned
herein shall be in writing;
(c) Whenever in the performance of its duties hereunder the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate or Opinion of Counsel;
(d) The Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered, or omitted by it hereunder in good
faith and in reliance thereon;
(e) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the request or direction of any of
the Certificateholders pursuant to this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(f) Prior to the occurrence of an Event of Default, an Event of Master
Servicing Termination, an Event of Servicing Termination, or an Event of
Administrator Termination, or after the curing of all Events of Default, Events
of Master Servicing Termination, Events of Servicing Termination or Events of
Administrator Termination which may have occurred, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper document, unless
requested in writing so to do by Certificateholders with an aggregate Percentage
of 50% or more; provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the [Master Administrator] or, if paid
by the Trustee, shall be reimbursed by the [Master Administrator] upon demand;
and
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian (which may be Affiliates
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of the Trustee) and the Trustee shall not be liable for any acts or omissions of
such agents, attorneys or custodians (i) appointed with due care by it hereunder
and (ii) in respect of the Servicer as custodian of the Loan Files hereunder.
SECTION 10.04. Trustee Not Liable for Certificates or Auto Loans. (a) The
Trustee makes no representations as to the validity or sufficiency of this
Agreement or any Related Document, the Certificates (other than the execution
and authentication thereof) or of any Auto Loan. The Trustee shall not be
accountable for the use or application by the Sponsor of funds paid to the
Sponsor in consideration of conveyance of the Auto Loans to the Trust.
(b) Except with respect to the Trustee in its capacity as Successor [Master
Servicer] or Successor Servicer pursuant to Article IV or Successor [Master
Administrator] pursuant to Article V, the Trustee shall have no responsibility
or liability for or with respect to: the validity of any security interest in
any Automobile; the perfection of any such security interest (whether as of the
date hereof or at any future time) or the maintenance of or the taking of any
action to maintain such perfection; the existence or validity of any Auto Loan,
the validity of the assignment of any Auto Loan to the Trust or of any
intervening assignment; the review of any Auto Loan, any Loan File or the
Electronic Ledger, the completeness of any Loan File, the receipt by it or its
custodian of any Auto Loan or Loan File or (it being understood that the Trustee
has not reviewed and does not intend to review such matters); the performance or
enforcement of any Auto Loan; the compliance by the [Master Administrator], the
Sponsor or the Servicer with any covenant or the breach by the [Master
Administrator], the Sponsor or the Servicer of any warranty or representation
made hereunder or in any related document or the accuracy of any such warranty
or representation; any investment of monies in the Collection Account and the
Cash Reserve Account (except as specified in this Agreement) or any loss
resulting therefrom; the acts or omissions of the [Master Administrator], the
[Master Servicer], the Servicer or any Obligor or Dealer; any action of the
[Master Administrator], the [Master Servicer] or the Servicer taken in the name
of the Trustee; any action by the Trustee taken at the instruction of the
[Master Administrator]. Except as provided in Article IX hereof, no recourse
shall be had for any claim based on any provision of this Agreement, the
Certificates or any Auto Loan or Assignment thereof against the Trustee in its
individual capacity, and the Trustee shall not have any personal obligation,
liability or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim, and any such claim shall be asserted solely against
the Trust or any indemnitor who shall furnish indemnity as provided herein.
SECTION 10.05. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the
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owner or pledgee of Investor Certificates with the same rights as it would have
if it were not Trustee.
SECTION 10.06. The [Master Administrator] to Pay Trustee's Fees and
Expenses. The [Master Administrator] agrees:
(a) to pay to the Trustee from time to time reasonable compensation for all
services rendered by it as Trustee hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust); and
(b) to reimburse the Trustee upon its request for all reasonable
third-party expenses, disbursements and advances incurred or made by the Trustee
in its capacity as such in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and disbursement of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith.
The obligations of the [Master Administrator] under this Section 10.06 shall
survive the termination of this Agreement.
SECTION 10.07. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times (a) be a corporation, depository institution, or trust
company organized and doing business under the laws of the United States of
America or any state thereof authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000, (b)
be subject to supervision or examination by federal or state authority, (c) be
capable of maintaining an Eligible Account and (d) have a long-term unsecured
debt rating of not less than BBB from a nationally recognized statistical rating
organization or such other rating as may be acceptable to the Rating Agency. If
such institution publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 10.07, the combined capital and surplus of
such institution shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 10.07, the Trustee shall resign immediately in the manner and with the
effect specified in Section 10.08.
SECTION 10.08. Resignation or Removal of Trustee. (a) The Trustee may at
any time resign and be discharged from the Trust hereby created by giving 30
days' written notice thereof to the [Master Administrator], the [Master
Servicer], the Servicer, the Sponsor and the Rating Agency. Upon receiving such
notice of resignation, the [Master Administrator] shall promptly appoint a
successor Trustee by written instrument, in quintuplicate, one counterpart of
which instrument shall be delivered to each of the Sponsor, the [Master
Servicer], the Servicer, the successor Trustee
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and the predecessor Trustee. A copy of such instrument shall be delivered to the
Rating Agency. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 10.07 and shall fail to resign after written
request therefor by the [Master Administrator], or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
[Master Administrator] may remove the Trustee. If it removes the Trustee under
the authority of the immediately preceding sentence, the [Master Administrator]
shall promptly appoint a successor Trustee by written instrument, in
quintuplicate, one counterpart of which instrument shall be delivered to each of
the Sponsor, the [Master Servicer], the Servicer, the successor Trustee and the
predecessor Trustee. Copies of such instrument shall also be delivered by the
[Master Administrator] to the Rating Agency.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 10.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 10.09.
SECTION 10.09. Successor Trustee. (a) Any successor Trustee appointed as
provided in Section 10.08 shall execute, acknowledge and deliver to each of the
[Master Administrator], the Sponsor, the [Master Servicer], the Servicer, and to
its predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee. The predecessor Trustee shall deliver or cause to be delivered to the
successor Trustee or its custodian and any related documents and statements held
by it or its custodian hereunder (provided, that so long as no Event of
Servicing Termination shall have occurred, the Servicer shall continue as
custodian of the Loan Files hereunder); and the [Master Administrator], the
Sponsor, the [Master Servicer], the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for the full and certain vesting and confirmation in the successor
Trustee of all such rights, powers, duties and obligations.
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<PAGE>
(b) No successor Trustee shall accept appointment as provided in this
Section 10.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 10.07.
(c) Upon acceptance of appointment by a successor Trustee as provided in
this Section 10.09, the Servicer shall mail notice of the succession of such
Trustee hereunder to each Certificateholder at its address as shown in the
Certificate Register and to the Rating Agency. If the [Master Administrator]
fails to mail such notice within 10 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Sponsor.
SECTION 10.10. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 10.07, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 10.11. Tax Matters. (a) The [Master Administrator] shall prepare
all tax returns and any other information, returns or reports, if any, that need
to be filed for the Trust. The Trustee shall thereupon execute and file all such
tax returns and other information, returns or reports.
(b) The [Master Administrator], shall take all action reasonably necessary
to assure compliance with the provisions of the Code relating to (i) certain
withholding requirements applicable to non-U.S. Person taxpayers; (ii) backup
withholding requirements and (iii) certain taxpayer certification requirements
relating to clauses (i) and (ii) above.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Agreement; Optional Repurchase. (a) This
Agreement and the respective obligations and responsibilities of the Sponsor,
the [Master Administrator], the [Master Servicer], the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Certificateholders as hereinafter set forth) shall terminate on the date (the
"Trust Termination Date") which is the earlier to occur of:
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<PAGE>
(i) the day after the day on which the Certificateholders are
paid in full; and
(ii) December 31, 20__.
(b) Upon at least 15 days' written notice to the Trustee (and to Investor
Certificateholders) prior to a Distribution Date, provided the Investor
Certificate Principal Balance on such Distribution Date is 10% or less of the
Initial Principal Amount, the [Master Administrator] may, but is not required
to, purchase as of the last day of the preceding Due Period all, but not less
than all, outstanding Auto Loans at a price equal to the aggregate Principal
Balances of all Auto Loans on the next preceding Distribution Date plus accrued
and unpaid interest thereon at the sum of the weighted average APR through the
last day of such preceding Due Period. Such price shall be deposited to the
Collection Account in immediately available funds by 10:00 a.m., New York City
time, on the relevant Distribution Date and the Trustee shall release (or cause
its custodian to release) the Auto Loans and, if at such time the [Master
Administrator] does not have possession of the Loan Files, the Loan Files to the
[Master Administrator], whereupon the Investor Certificates shall no longer
evidence any right or interest in the Auto Loans or the Loan Files, the
Assignments, or any Insurance Policies or any proceeds of the foregoing. Upon
the request of the [Master Administrator], the Trustee shall perform such other
acts as reasonably requested by the [Master Administrator] and otherwise
cooperate with the [Master Administrator] in connection with the transfer of the
Transferred Assets pursuant to this Section 11.01(b) including, but not limited
to, the execution of any Title Document to the extent necessary to effectuate
the termination of such Auto Loan and the disposition of the related Automobile.
(c) If by the Expected Final Payment Date, the Investor Certificate
Principal Balance (after giving effect to any distributions to be made on such
date) is greater than zero, the Trustee on behalf of the Trust, or the [Master
Administrator] on behalf of the Trustee, will use its best efforts to sell,
dispose of or otherwise liquidate the Transferred Assets in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids. The proceeds of any such sale, disposition or
liquidation of the Transferred Assets will be treated as Payments and will be
immediately deposited in the Collection Account and such proceeds, in addition
to the Available Funds on deposit in the Collection Account, shall be disbursed
in accordance with the provisions of Section 7.04.
(d) The [Master Administrator] shall give the Trustee, the [Master
Servicer], and the Servicer at least 30 days prior written notice of the date on
which the Trust is expected to terminate in accordance with subsection 11.01(a).
Such notice shall be accompanied by an Officer's Certificate setting forth the
information specified in Section 4.19 covering the period during
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<PAGE>
the then-current calendar year through the date of such notice. Not later than
the fifth Business Day in the Due Period in which the final distribution in
respect to the Investor Certificates is payable to the Investor
Certificateholders, the Trustee shall mail to the Certificateholders a notice
specifying the procedures with respect to such final distribution. The Trustee
shall give a copy of such notice to the Rating Agency at the time such notice is
given to Certificateholders.
SECTION 11.02. Beneficiaries. This Agreement will inure to the benefit of
and be binding upon the parties hereto, the Certificateholders and their
respective successors and permitted assigns. No other Person will have any right
or obligation hereunder.
SECTION 11.03. Amendment. (a) This Agreement may be amended from time to
time by the Sponsor, the [Master Administrator], the [Master Servicer], the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity or defect of, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein or to add any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect in any material respect the
interests of any Certificateholder. Such Opinion of Counsel shall be at the
expense of the party requesting such amendment or, if such Amendment is required
by any Rating Agency to maintain the rating issued by it on the Investor
Certificates or requested by the Trustee in order to clarify any ambiguity or
resolve any inconsistency, then the related Opinion of Counsel shall be at the
expense of the [Master Administrator].
(b) This Agreement may also be amended from time to time by the Sponsor,
the [Master Administrator], the [Master Servicer], the Servicer and the Trustee,
with the consent of the Certificateholders of not less than an aggregate
Percentage of [66 2/3%] of outstanding Investor Certificates, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (a) reduce
in any manner the amount of, or delay the timing of, collections of payments on
the Auto Loans or distributions which are required to be made on any Certificate
then outstanding, (b) reduce the aforesaid percentage required to consent to any
such amendment or (c) modify this Section 11.03(b) without the consent of the
holders of all Certificates then outstanding. The [Master Administrator] may set
a record date for purposes of determining the holders entitled to give a written
consent or waive compliance as authorized or permitted by this Section 11.03(b).
Such record date shall not be more than 30 days prior to the first solicitation
to such consent or waiver.
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(c) Promptly after the execution of any amendment or consent pursuant to
this Section 11.03, the Trustee shall furnish such amendment to each Investor
Certificateholder or a written summary of such amendment prepared by the [Master
Administrator] and, not later than the tenth Business Day preceding the
effectiveness of any such amendment, the Rating Agency.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 11.03 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Investor Certificateholders shall
be subject to such reasonable requirements as the Trustee may prescribe.
(e) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section 11.03, the
Trustee shall be entitled to receive an Opinion of Counsel to the effect that
such amendment is authorized or permitted by the Agreement.
SECTION 11.04. Notices. (a) All communications and notices to the parties
hereto shall be in writing and delivered or mailed first class mail, postage
prepaid to it at the following address:
If to the Sponsor:
Advanta Auto Finance Corporation
500 Office Center Drive
Fort Washington, Pennsylvania 19034
Attention: _________________
Facsimile Number: (215) 283-4280
Telephone Number: (215) 283-4200
If to the [Master Administrator] or the Paying Agent:
______________________________
______________________________
Attention: _________________________________
Facsimile Number: ( ) ________
Telephone Number: ( ) ________
If to the [Master Servicer]:
89
<PAGE>
____________________________________________
____________________________________________
Attention: _________________________________
Facsimile Number: ( ) ________
Telephone Number: ( ) ________
If to the Servicer:
Advanta Auto Finance Corporation
500 Office Center Drive
Fort Washington, Pennsylvania 19034
Attention: ______________
Facsimile Number: (215) 283-4280
Telephone Number: (215) 283-4200
If to the Trustee:
____________________________________________
____________________________________________
Attention: _________________________________
Facsimile Number: ( ) ________
Telephone Number: ( ) ________
If to the Rating Agency:
____________________________________________
____________________________________________
____________________________________________
Attention:
Facsimile Number:
Telephone Number:
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(b) All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed first class mail, postage prepaid at
the address shown in the Certificate Register.
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SECTION 11.05. Notices and Reports to be Delivered to the Rating Agency. On
or before the later to occur of each Distribution Date and, the Business Day
following its receipt thereof, the [Master Administrator] shall promptly deliver
to the Rating Agency the notices, reports and certificates referred to in
Sections 4.10, 4.17, 4.18, 4.19 and 7.05 which notices, reports and certificates
are required to be delivered to the [Master Administrator] by the [Master
Servicer] and the Servicer. Each report or certificate specified in Sections
4.17(b), 4.18 and 4.19 shall be accompanied by a certificate of the [Master
Administrator] certifying that (a) the [Master Administrator] has reviewed such
report and that nothing came to its attention based on such review which would
lead it to believe that such report or certificate was not accurate or in
compliance with the terms of this Agreement governing the content and
preparation of such report or certificate except as specified therein or as to
which it shall believe to be immaterial and (b) that the [Master Administrator]
has no actual knowledge of any event that has occurred and is continuing which
constitutes an Event of Default, an Event of Master Servicing Termination, an
Event of Servicing Termination, or an Event of Administrator Termination or
would constitute such an event but for the requirement that notice be given or
time elapse or both.
SECTION 11.06. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 11.07. Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
SECTION 11.08. Certificates Nonassessable and Fully Paid. The interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee pursuant to Section 6.01 and 6.02, each Certificate shall
be deemed fully paid.
SECTION 11.09. Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement, of the Certificates or the rights of the
Certificateholders.
SECTION 11.10. No Proceedings. The [Master Servicer], the Servicer, the
[Master Administrator] and the Trustee each hereby agrees that it will not,
directly or indirectly institute,
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or cause to be instituted, against the Sponsor or the Trust any proceeding of
the type referred to in Section 8.01(c) so long as there shall not have elapsed
one year plus one day since the Trust Termination Date.
SECTION 11.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE Sponsor, THE [MASTER SERVICER], THE ORIGINATOR, THE SERVICER, THE
[MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING
AGENT, AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN
THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 11.04
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE
SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE Sponsor,
THE [MASTER SERVICER], THE ORIGINATOR, THE SERVICER, THE [MASTER ADMINISTRATOR],
THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT, AND THE TRUSTEE
EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION
TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT OF THE Sponsor, THE [MASTER SERVICER], THE
ORIGINATOR, THE SERVICER, THE [MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR
AND TRANSFER AGENT, THE PAYING AGENT, AND THE TRUSTEE TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION
OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE Sponsor, THE [MASTER SERVICER], THE ORIGINATOR, THE SERVICER, THE
[MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING
AGENT, AND THE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
SECTION 11.12. Counterparts. This Agreement may be executed in counterparts
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized this ____ day of
________, 199_.
ADVANTA AUTO FINANCE CORPORATION
as Sponsor
By_______________________________________
Name:
Title:
ADVANTA AUTO FINANCE CORPORATION
_________________________________________
as Servicer
_________________________________________
as [Master Administrator]
By_______________________________________
Name:
Title:
_________________________________________
as [Master Servicer]
By_______________________________________
Name:
Title:
_________________________________________
as Originator
By_______________________________________
Name:
Title:
_________________________________________
as Trustee
By_______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF PURCHASE ASSIGNMENT]
PURCHASE ASSIGNMENT, dated as of __________, 199_ between Advanta Auto
Finance Corporation (the "Sponsor") and ____________________, as Trustee (the
"Trustee").
1. We refer to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of ___________, 199_, by and among the Sponsor;
_________________________________, as [Master Administrator];
_____________________________________, as [Master Servicer]; ______________, as
Originator and Servicer; and the Trustee. All provisions of such Pooling and
Servicing Agreement are incorporated by reference. All capitalized terms shall
have the meanings set forth in the Pooling and Servicing Agreement.
2. The Sponsor does hereby sell, transfer, assign, set over and convey to
the Trustee on behalf of the Trust, without recourse, and the Trust does hereby
purchase, all right, title and interest of the Sponsor in, to and under the
Transferred Assets listed on Schedule 1 hereto.
3. The Sponsor does hereby certify:
(i) the representations and warranties of the Sponsor, the
[Master Administrator], and to its best knowledge, the [Master
Servicer] and the Servicer set forth in Sections 3.01, 3.02, 4.03
and 5.04 of the Pooling and Servicing Agreement, are true and
correct on and as of the date hereof, before and after giving effect
to the Purchase evidenced hereby and to the application of the
proceeds therefrom, as though made on and as of such date;
(ii) no event has occurred, or would result from such Purchase
or from the application of the proceeds therefrom, which constitutes
an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both;
(iii) the Sponsor is in compliance with each of its covenants
set forth in the Pooling and Servicing Agreement;
(iv) to the best of its knowledge, no event has occurred which
constitutes an Event of Master Servicing Termination or would
constitute an Event of Master
<PAGE>
Servicing Termination but for the requirement that notice
be given or time elapse or both;
(v) to the best of its knowledge, no event has occurred which
constitutes an Event of Servicing Termination or would constitute an
Event of Servicing Termination but for the requirement that notice
be given or time elapse or both;
(vi) no event has occurred which constitutes an Event of
Administrator Termination or would constitute an Event of
Administrator Termination but for the requirement that notice be
given or time elapse or both; and
(vii) the aggregate Individual Sold Balance of the Auto Loans
listed on Schedule 1 hereto to be purchased by the Trust pursuant to
this Purchase Assignment is $______ which amount does not exceed the
Available Purchase Amount.
4. In consideration of the Transferred Assets sold and purchased hereby
the Originator Certificate Principal Balance is increased by $__________.
A-2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Purchase Assignment
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
ADVANTA AUTO FINANCE CORPORATION
as Sponsor
By:_____________________________
Name:
Title:
ACKNOWLEDGED:
ADVANTA AUTO FINANCE CORPORATION
in its capacity as Servicer
and in its capacity as custodian
for and on behalf of the Trustee
By:_____________________________
Name:
Title:
________________________________,
as [Master Administrator]
By:_____________________________
Name:
Title:
A-3
<PAGE>
EXHIBIT B
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
AUTO LOAN PROTECTION POLICY
<PAGE>
EXHIBIT C
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ____________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
BLANKET COLLATERAL PROTECTION POLICY
<PAGE>
EXHIBIT D
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ____________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF ASSIGNMENT]
ASSIGNMENT, dated as of __________, 199_ between ___________ Company, as
Trustee (the "Trustee") and _________________________ [ORIGINATOR]
_________________________________.
1. We refer to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of ___________, 199_, by and among Advanta Auto
Finance Corporation as Sponsor and as Servicer; ___________________________, as
[Master Administrator]; _________________________, as [Master Servicer];
________________, as Originator; and the Trustee. All provisions of such Pooling
and Servicing Agreement are incorporated by reference. All capitalized terms
shall have the meanings set forth in the Pooling and Servicing Agreement.
2. Pursuant to Section 3.03 of the Pooling and Servicing Agreement, the
Trust does hereby, transfer, assign, set over and convey to __________________
[Originator] __________________, without recourse or warranty, express or
implied, all right, title and interest of the Trust in, to and under the Auto
Loans listed on Schedule 1 hereto (each, a "Repurchased Auto Loan") and
[Originator] does hereby purchase such Auto Loans.
3. The aggregate Repurchase Price for such [repurchased] [purchased] Auto
Loan(s) is $___________.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
____________________________,
as Trustee
By:_____________________________
Name:
Title:
[ORIGINATOR]
By:_____________________________
Name:
Title:
ACKNOWLEDGED:
________________________________,
as Originator
By:_____________________________
Name:
Title:
________________________________,
as [Master Administrator]
By:_____________________________
Name:
Title:
D-2
<PAGE>
EXHIBIT E
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF RELEASE AND ASSIGNMENT]
RELEASE AND ASSIGNMENT, dated as of __________, 199_ between
_________________, as Trustee (the "Trustee") and _______________, as Servicer
(the "Servicer").
1. We refer to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of _________, 199_ by and among Advanta Auto
Finance Corporation, as Sponsor and as Servicer; ____________________________,
as [Master Administrator]; _________________________, as [Master Servicer];
________________, as Originator; and the Trustee. All provisions of such Pooling
and Servicing Agreement are incorporated by reference. All capitalized terms
shall have the meanings set forth in the Pooling and Servicing Agreement.
2. Pursuant to Section 4.07 of the Pooling and Servicing Agreement, the
Trustee does hereby transfer, assign, set over and convey to the Servicer
without recourse or warranty, express or implied, all right, title and interest,
in, to and under the Auto Loans (and the related Loan Files) listed on Schedule
1 hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Release and Assignment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
____________________________,
as Trustee
By:_____________________________
Name:
Title:
ACKNOWLEDGED:
________________________________,
as Servicer
By:_____________________________
Name:
Title:
________________________________,
as [Master Administrator]
By:_____________________________
Name:
Title:
E-2
<PAGE>
EXHIBIT F
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF SERVICER REPORT]
<PAGE>
EXHIBIT G
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ____________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF [Master Administrator] REPORT]
(To be delivered pursuant to Section 5.11 of the
Pooling and Servicing Agreement on each
Determination Date immediately
preceding a Distribution Date to the
Trustee and the Rating Agency and pursuant
to Section 7.05 to the Certificateholders)
G-1
<PAGE>
EXHIBIT H
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_
[FORM OF INVESTOR CERTIFICATE]
INVESTOR CERTIFICATE
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
% Certificates
No. __________ CUSIP No. ________
Original Principal
Amount: $_________
UNLESS THIS INVESTOR CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE SPONSOR TRUST COMPANY TO THE CERTIFICATE REGISTRAR AND
TRANSFER AGENT OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE SPONSOR TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
This certifies that Cede & Co. (the "Investor Certificateholder") is
the registered owner of a fractional undivided interest in a trust (the "Trust")
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of ___________, 199_, among Advanta Auto Finance Corporation, as Sponsor and
as Servicer (the "Sponsor"), ___________________, as [Master Administrator] (the
"[Master Administrator]"), ______________________________________, as [Master
Servicer] (the "[Master Servicer]"), ______________, as Originator (the
"Originator") and ___________________, as Trustee (the "Trustee"). The Trust
includes among its assets the Auto Loans, the Insurance Policies, all rights of
the Sponsor under each Sale Agreement, all monies due or to become due and all
amounts received with respect thereto and all proceeds thereof (the "Transferred
Assets") together with all funds on deposit in the Collection Account and all
funds on deposit in the Cash Reserve Account (collectively the "Trust Assets").
This Investor Certificate is described in the Agreement and is issued pursuant
and subject to the Agreement and the Investor Certificateholder acknowledges and
agrees to be bound by the terms and conditions of the Agreement to the same
extent as if the Investor Certificateholder were a party thereto. By acceptance
of this Investor Certificate the Investor Certificateholder assents to and
becomes bound by the Agreement.
<PAGE>
To the extent not defined herein, all capitalized terms have the meanings
assigned in the Agreement.
Under the Agreement, on each Distribution Date the Trustee at the
direction of the [Master Administrator] shall disburse Available Funds (to the
extent available after making the disbursements of the Monthly Servicing Fee,
the Monthly Subrogation Amounts and the Monthly Administrator Fee owing to the
[Master Servicer] and the [Master Administrator] respectively, as the case may
be on such day) in the following priority: (a) during the Interest-Only Period:
(i) to the Investor Certificateholders, interest in an amount equal to the
lesser of (A) the sum of (1) one-quarter of the Certificate Rate times the
Investor Certificate Principal Balance and (2) any Shortfall and (B) the sum of
the Investor's Share of the Available Distribution Amount plus the Available
Subordination Amount ("Investor Interest"); (ii) to the holder of the Originator
Certificate, in reduction of the Originator Certificate Principal Balance, an
amount equal to the excess of (A) the Originator Certificate Principal Balance
over (B) Originator's Share of the aggregate Principal Balance of the Auto Loans
determined as of the end of the immediately preceding Due Period ("Originator
Certificate Principal"); (iii) to the holder of the Originator Certificate,
interest in an amount equal to one-quarter of the Certificate Rate times the
Originator Certificate Principal Balance ("Originator Certificate Interest");
(iv) to the Cash Reserve Account, an amount equal to the lesser of (A) the
Aggregate Excess Interest on such Distribution Date and (B) the Required Cash
Reserve Amount minus the Available Cash Reserve Amount; (v) to the Originator
Certificateholder, an amount equal to the excess, if any, of the Aggregate
Excess Interest over the amount disbursed to the Cash Reserve Account in
accordance with the provisions of clause (iv); and (vi) the remainder of funds
held in the Collection Account following the distributions in clauses (i) -
(v) above shall be retained in the Collection Account and (b) during the
Principal Amortization Period: (i) to the Investor Certificateholders, Investor
Interest; (ii) to the Investor Certificateholders, in reduction of the Investor
Certificate Principal Balance, an amount equal to the lesser of (A) principal in
an amount equal to the excess of (1) the Investor Certificate Principal Balance
over (2) the Investor's Share of the aggregate Principal Balance of the Auto
Loans determined as of the end of the immediately preceding Due Period and (B)
the sum of the balance of the Investor's Share of the Available Distribution
Amount plus the Available Subordination Amount; (iii) to the holder of the
Originator Certificate, Originator Certificate Interest; (iv) to the holder of
the Originator Certificate, in reduction of the Originator Certificate Principal
Balance, Originator Certificate Principal; (v) to the Cash Reserve Account, an
amount equal to the sum of (A) the Required Cash Reserve Amount minus (B) the
Available Cash Reserve Amount; and (vi) to the holder of the Originator
Certificate, the balance. The Available Subordination Amount equals $___________
less all payments made to the Investor
H-2
<PAGE>
Certificateholders in excess of the Investor's Share of the Available
Distribution Amount for all Distribution Dates.
On the first Distribution Date following the Distribution Date on
which the Investor Certificateholders have been paid in full, all amounts held
in the Collection Account and the Cash Reserve Account, if any, shall be
disbursed to the holder of the Originator Certificate and all interests of the
Trust in all Auto Loans which have an outstanding balance shall be reconveyed by
the Trustee to, or at the direction of, the Sponsor. Such disbursement and
reconveyance shall constitute the final payment to which the holder of the
Originator Certificate is entitled with respect to its Originator's Interest
pursuant to the terms of this Agreement.
Distributions on this Investor Certificate will be made by same day
funds to the Investor Certificateholder at the address for such Investor
Certificateholder appearing on the Certificate Register on the relevant
Distribution Date without the presentation or surrender of this Investor
Certificate or the making of any notation hereon. Except as otherwise provided
in the Agreement and notwithstanding the above, the final distribution on this
Investor Certificate will be made upon satisfaction of the procedures indicated
in the notice mailed to the Certificateholders as stated in the Agreement.
The Investor Certificateholder will have the benefit of a Cash
Reserve Account to compensate them to the limited extent described in the
Agreement for losses and delinquencies on the Trust Assets to the extent of the
lesser of the amount on deposit in the Cash Reserve Account (after giving effect
to any withdrawals made in respect of the Monthly Servicing Fee and the Monthly
Subrogation Amount) and the Available Subordination Amount. The amount initially
on deposit in the Cash Reserve Account is $___________________. In addition to
withdrawals as a result of losses and delinquencies on the Auto Loans the amount
required to be on deposit in the Cash Reserve Account may be reduced from time
to time upon satisfaction of certain conditions set forth in the Agreement. On
the first Distribution Date following the earlier to occur of (a) payment in
full of the Investor Certificates and (b) the reduction to zero of the Available
Subordination Amount, the Trustee shall disburse all amounts held in the Cash
Reserve Account to the Servicer.
The Agreement may be amended from time to time by the Sponsor, the
[Master Administrator], the [Master Servicer], the Servicer and the Trustee,
without the consent of any of the Certificateholders, to cure any ambiguity or
defect of, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein or to add any other provisions
with respect to matters or questions arising under the Agreement which shall not
be inconsistent with the provisions of the Agreement; provided, however, that
such action shall not, as evidenced by an
H-3
<PAGE>
Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder.
The Agreement may also be amended from time to time by the Sponsor,
the [Master Administrator], the [Master Servicer], the Servicer and the Trustee,
with the consent of Investor Certificateholders of not less than an aggregate
Percentage of [66 2/3%], for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Agreement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (a) reduce in any manner the amount of, or delay
the timing of, collections of payments on the Auto Loans or distributions which
are required to be made on any Certificate then outstanding, (b) reduce the
aforesaid percentage required to consent to any such amendment or (c) modify
Section 11.03(b) of the Agreement without the consent of the holders of all
Investor Certificates then outstanding. The [Master Administrator] may set a
record date for purposes of determining the holders entitled to give a written
consent or waive compliance as authorized or permitted by this Section 11.03(b)
of the Agreement. Such record date shall not be more than 30 days prior to the
first solicitation to such consent or waiver. Promptly after the execution of
any amendment or consent pursuant to Section 11.03 of the Agreement, the Trustee
shall furnish such amendment to each Investor Certificateholder or a written
summary of such amendment prepared by the [Master Administrator] and, not later
than the tenth Business Day preceding the effectiveness of any such amendment,
the Rating Agency. It shall not be necessary for the consent of Investor
Certificateholders under Section 11.03 of the Agreement to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Investor Certificateholders shall be subject to such reasonable requirements as
the Trustee may prescribe. In connection with any amendment pursuant to Section
11.03 of the Agreement, the Trustee shall be entitled to receive an Opinion of
Counsel to the effect that such amendment is authorized or permitted by the
Agreement.
No sale, transfer or other disposition of this Investor Certificate
shall be permitted other than in accordance with the provisions of Sections 6.03
or 6.09 of the Agreement.
The Agreement and the respective obligations and responsibilities of
the Sponsor, the Certificateholders, the [Master Administrator], the [Master
Servicer], the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Certificateholders as hereinafter
set forth) shall terminate on the earlier of:
(i) the day after the day on which the Certificateholders
are paid in full; and
H-4
<PAGE>
(ii) December 31, 20__.
Upon at least 15 days' written notice to the Trustee (and to
Investor Certificateholder) prior to a Distribution Date, provided the Investor
Certificate Principal Balance on such Distribution Date is 10% or less of the
Initial Principal Amount, the [Master Administrator] may, but is not required
to, purchase as of the last day of the preceding Due Period all, but not less
than all, outstanding Auto Loans at a price equal to the aggregate Principal
Balances of all Auto Loans the next preceding Distribution Date plus accrued and
unpaid interest thereon at the sum of the weighted average APR through the last
day of such preceding Due Period. Such price shall be deposited to the
Collection Account in immediately available funds by 10:00 a.m., New York City
time, on the relevant Distribution Date and the Trustee shall release (or cause
its custodian to release) the Auto Loans and, if at such time the [Master
Administrator] does not have possession of the Loan Files, the Trustee shall
release the Loan Files, to the [Master Administrator], whereupon the Investor
Certificate shall no longer evidence any right or interest in the Auto Loans or
the Loan Files, the Assignments, or any Insurance Policies or any proceeds of
the foregoing. Upon the request of the [Master Administrator], the Trustee shall
perform such other acts as reasonably requested by the [Master Administrator]
and otherwise cooperate with the [Master Administrator] in connection with the
transfer of the Transferred Assets pursuant to Section 11.01(b) of the Agreement
including, but not limited to, the execution of (any Title Document to the
extent necessary to effectuate the termination of such Auto Loan and the
disposition of the related Automobile.
It is the intention of the Sponsor that, with respect to all Taxes,
the Investor Certificates will be treated as indebtedness of the Sponsor to the
Investor Certificateholders secured by the Transferred Assets (the "Intended Tax
Characterization"). The Sponsor and the Trustee, by entering into the Pooling
and Servicing Agreement, and each Investor Certificateholder by the purchase of
this Investor Certificate, agree to report such transactions for purposes of all
Taxes in a manner consistent with the Intended Tax Characterization.
This Investor Certificate does not represent an obligation of, or an
interest in the Servicer, the Originator or the Sponsor or any Affiliate
thereof. This Investor Certificate is limited in right of payment to certain
collections respecting the Trust Assets, all as more specifically set forth
herein and in the Agreement.
The holder hereof, by its acceptance of this Investor Certificate,
agrees to look solely to the funds in the Collection Account to the extent
available for distribution to the holder hereof as provided in the Agreement for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to
H-5
<PAGE>
the holder hereof for any amounts payable under this Investor
Certificate or the Agreement.
This Investor Certificate does not purport to summarize the
Agreement and is qualified in its entirety by the Agreement. Reference is made
to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be made available for review and inspection by any Investor
Certificateholder during normal business hours at the office of the Trustee,
____________________________________________upon the prior written request of
the Investor Certificateholder.
H-6
<PAGE>
IN WITNESS WHEREOF, [ADVANTA AUTO RECEIVABLES TRUST 199_- _ has
caused this Investor Certificate to be duly executed by the manual or facsimile
signature of the duly authorized officer of the Trustee.
[ADVANTA AUTO RECEIVABLES
TRUST 199_-_]
By [TRUSTEE], not in its
individual capacity, but solely as
Trustee
By________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within mentioned
Agreement.
[TRUSTEE], as Trustee
By_______________________________
Authorized Officer
Dated: ___________, 199_
H-7
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee
___________________.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto ________________________________________________
________________________________________________________________________________
(name and address of assignee)
the written certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________, attorney, to transfer
said certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:____________________
(1) A Non U.S. Person as Note: The signature(s) to
defined in the Code must this Assignment
certify to the Trustee in must correspond
writing as to its Non U.S. with the name(s) as
Person status and such written on the face
further information as may of the within
be required under the Code certificate in
or reasonably requested by every particular
the Trustee without alteration
or enlargement or
any change
whatsoever
H-8
<PAGE>
EXHIBIT I
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF ORIGINATOR CERTIFICATE]
ORIGINATOR CERTIFICATE
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
__% Interest Rate
No. __________ CUSIP No. ________
Original Principal
Amount: $_________
THIS ORIGINATOR CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS ORIGINATOR CERTIFICATE NOR ANY
PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION PROVISIONS.
THIS ORIGINATOR CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED,
ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
This certifies that _____________________ (the "Originator
Certificateholder") is the registered owner of a fractional undivided interest
in a trust (the "Trust") created pursuant to a Pooling and Servicing Agreement
(the "Agreement"), dated as of ___________, 1993, among Advanta Auto Finance
Corporation, as Sponsor and as Servicer (the "Sponsor"), ___________, as [Master
Administrator] (the "[Master Administrator]"), _____________________________, as
[Master Servicer] (the "[Master Servicer]"), __________________, as Originator
(the "Originator") and , as Trustee (the "Trustee"). The Trust includes among
its assets the Auto Loans, the Insurance Policies (other than any obligation to
make any payment thereunder to the Insurance Companies and taxes on premiums
paid or payable thereon which shall be obligations of the [Master Administrator]
during such time as _________ is the [Master Administrator], and at any time
thereafter, the Sponsor), all rights of the Sponsor under each Sale Agreement,
all monies due or to become due and all amounts received with respect thereto
and all proceeds thereof (the "Transferred Assets") together with all funds on
deposit in the Collection Account and all funds on deposit in the Cash Reserve
Account (collectively the "Trust Assets"). This Originator Certificate is
described in the Agreement and is issued pursuant and subject to the Agreement
and the Originator Certificateholder acknowledges and agrees to be bound by the
terms and conditions of the Agreement to the same extent as if the
<PAGE>
Originator Certificateholder were a party thereto. By acceptance of this
Originator Certificate the Originator Certificateholder assents to and becomes
bound by the Agreement. To the extent not defined herein, all capitalized terms
have the meanings assigned in
the Agreement.
Upon the satisfaction of the requirements contained in Section
6.02(b) of the Agreement, the Originator Certificateholder may surrender the
Originator Certificate to the Trustee, and the Trustee will execute on behalf of
the Trust, authenticate and deliver the Investor Certificates and a newly issued
Originator
Certificate.
On the 20th day of each month (or, if such day is not a Business
Day, the following Business Day) the Trustee, at the direction of the [Master
Administrator], shall disburse the balance of Available Funds (to the extent
available after making the disbursements of the Monthly Servicing Fee, the
Monthly Subrogation Amounts and the Monthly Administrator Fee owing to the
[Master Servicer] and the [Master Administrator] respectively, as the case may
be on such day) to the Originator Certificateholder. Under the Agreement, on
each Distribution Date the Trustee at the direction of the [Master
Administrator] shall disburse Available Funds (to the extent available after
making the disbursements of the Monthly Servicing Fee, the Monthly Subrogation
Amounts and the Monthly Administrator Fee owing to the [Master Servicer] and the
[Master Administrator] respectively, as the case may be on such day) in the
following priority: (a) during the Interest-Only Period: (i) to the Investor
Certificateholders, interest in an amount equal to the lesser of (A) the sum of
(1) one-quarter of the Certificate Rate times the Investor Certificate Principal
Balance and (2) any Shortfall and (B) the sum of the Investor's Share of the
Available Distribution Amount plus the Available Subordination Amount ("Investor
Interest"); (ii) to the Originator Certificateholder, in reduction of the
Originator Certificate Principal Balance, an amount equal to the excess of (A)
the Originator Certificate Principal Balance over (B) Originator's Share of the
aggregate Principal Balance of the Auto Loans determined as of the end of the
immediately preceding Due Period ("Originator Certificate Principal"); (iii) to
the Originator Certificateholder, interest in an amount equal to one-quarter of
the Certificate Rate times the Originator Certificate Principal Balance
("Originator Certificate Interest"); (iv) to the Cash Reserve Account, an amount
equal to the least of (A) the Aggregate Excess Interest on such Distribution
Date, (B) the Required Cash Reserve Amount minus the Available Cash Reserve
Amount and (C) the Available Subordination Amount; (v) to the Originator
Certificateholder, an amount equal to the excess, if any, of the Aggregate
Excess Interest over the amount disbursed to the Cash Reserve Account in
accordance with the provisions of clause (iv); and (vi) the remainder of funds
held in the Collection Account following the distributions in clauses (i) - (v)
above shall be retained in the Collection Account and (b) during the Principal
Amortization Period: (i) to the Investor
I-2
<PAGE>
Certificateholders, Investor Interest; (ii) to the Investor Certificateholders,
in reduction of the Investor Certificate Principal Balance, an amount equal to
the lesser of (A) principal in an amount equal to the excess of (1) the Investor
Certificate Principal Balance over (2) the Investor's Share of the aggregate
Principal Balance of the Auto Loans determined as of the end of the immediately
preceding Due Period and (B) the sum of the balance of the Investor's Share of
the Available Distribution Amount plus the Available Subordination Amount; (iii)
to the Originator Certificateholder, Originator Certificate Interest; (iv) to
the Originator Certificateholder, in reduction of the Originator Certificate
Principal Balance, Originator Certificate Principal; (v) to the Cash Reserve
Account, an amount equal to the sum of the lesser of (A) the Required Cash
Reserve Amount minus the Available Cash Reserve Amount and (B) the Available
Subordination Amount; and (vi) to the Originator Certificateholder, the balance.
The Available Subordination Amount equals $___________ less all payments made to
the Investor Certificateholders in excess of the Investor's Share of the
Available Distribution Amount for all Distribution Dates.
On the first Distribution Date following the Distribution Date on
which the Investor Certificateholders have been paid in full, all amounts held
in the Collection Account and the Cash Reserve Account, if any, shall be
disbursed to the Originator Certificateholder and all interests of the Trust in
all Auto Loans which have an outstanding balance shall be reconveyed by the
Trustee to, or at the direction of, the Sponsor. Such disbursement and
reconveyance shall constitute the final payment to which the Originator
Certificateholder is entitled with respect to its Originator's Interest pursuant
to the terms of this Agreement.
Distributions on this Originator Certificate will be made by wire
transfer in immediately available funds to the account specified by the
Originator Certificateholder in writing, on the relevant Distribution Date
without the presentation or surrender of this Originator Certificate or the
making of any notation hereon. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Originator Certificate
will be made upon satisfaction of the procedures indicated in the notice mailed
to the Certificateholders as stated in the Agreement.
The Agreement may be amended from time to time by the Sponsor, the
[Master Administrator], the [Master Servicer], the Servicer and the Trustee,
without the consent of any of the Certificateholders, to cure any ambiguity or
defect of, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein or to add any other provisions
with respect to matters or questions arising under the Agreement which shall not
be inconsistent with the provisions of the Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Certificateholder.
I-3
<PAGE>
The Agreement may also be amended from time to time by the Sponsor,
the [Master Administrator], the [Master Servicer], the Servicer and the Trustee,
with the consent of Investor Certificateholders of not less than an aggregate
Percentage of 66 2/3%, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Agreement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (a) reduce in any manner the amount of, or delay
the timing of, collections of payments on the Auto Loans or distributions which
are required to be made on any Certificate then outstanding, (b) reduce the
aforesaid percentage required to consent to any such amendment or (c) modify
Section 11.03(b) of the Agreement without the consent of the holders of all
Investor Certificates then outstanding. The [Master Administrator] may set a
record date for purposes of determining the holders entitled to give a written
consent or waive compliance as authorized or permitted by this Section 11.03(b)
of the Agreement. Such record date shall not be more than 30 days prior to the
first solicitation to such consent or waiver. Promptly after the execution of
any amendment or consent pursuant to Section 11.03 of the Agreement, the Trustee
shall furnish such amendment to each Originator Certificateholder or a written
summary of such amendment prepared by the [Master Administrator] and, not later
than the tenth Business Day preceding the effectiveness of any such amendment,
the Rating Agency. It shall not be necessary for the consent of Investor
Certificateholders under Section 11.03 of the Agreement to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Investor Certificateholders shall be subject to such reasonable requirements as
the Trustee may prescribe. In connection with any amendment pursuant to Section
11.03 of the Agreement, the Trustee shall be entitled to receive an Opinion of
Counsel to the effect that such amendment is authorized or permitted by the
Agreement.
No sale, transfer or other disposition of this Originator
Certificate shall be permitted other than in accordance with the provisions of
Sections 6.03 or 6.09 of the Agreement.
The Agreement and the respective obligations and responsibilities of
the Sponsor, the Certificateholders, the [Master Administrator], the [Master
Servicer], the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Certificateholders as hereinafter
set forth) shall terminate on the earlier of:
(i) the day after the day on which the
Certificateholders are paid in full; and
(ii) December __, ____.
I-4
<PAGE>
Upon at least __ days' written notice to the Trustee (and to
Investor Certificateholder) prior to a Distribution Date, provided the Investor
Certificate Principal Balance on such Distribution Date is __% or less of the
Initial Principal Amount, the [Master Administrator] may, but is not required
to, purchase as of the last day of the preceding Due Period all, but not less
than all, outstanding Auto Loans at a price equal to the aggregate Principal
Balances of all Auto Loans the next preceding Distribution Date plus accrued and
unpaid interest thereon at the sum of the weighted average APR through the last
day of such preceding Due Period. Such price shall be deposited to the
Collection Account in immediately available funds by 10:00 a.m., New York City
time, on the relevant Distribution Date and the Trustee shall release (or cause
its custodian to release) the Auto Loans and, if at such time the [Master
Administrator] does not have possession of the Loan Files, the Trustee shall
release the Loan Files, to the [Master Administrator], whereupon the Investor
Certificate shall no longer evidence any right or interest in the Auto Loans or
the Loan Files, the Assignments, or any Insurance Policies or any proceeds of
the foregoing. Upon the request of the [Master Administrator], the Trustee shall
perform such other acts as reasonably requested by the [Master Administrator]
and otherwise cooperate with the [Master Administrator] in connection with the
transfer of the Transferred Assets pursuant to Section 11.01(b) of the Agreement
including, but not limited to, the execution of (any Title Document to the
extent necessary to effectuate the termination of such Auto Loan and the
disposition of the related Automobile.
This Originator Certificate does not represent an obligation of, or
an interest in the Servicer, the Originator or the Sponsor or any Affiliate
thereof. This Originator Certificate is limited in right of payment to certain
collections respecting the Trust Assets, all as more specifically set forth
herein and in the Agreement.
The holder hereof, by its acceptance of this Originator Certificate,
agrees to look solely to the funds in the Collection Account to the extent
available for distribution to the holder hereof as provided in the Agreement for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to the holder hereof for any amounts payable under this
Originator Certificate or the Agreement.
This Originator Certificate does not purport to summarize the
Agreement and is qualified in its entirety by the Agreement. Reference is made
to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be made available for review and inspection by any Originator
Certificateholder during normal business hours at the office of the
I-5
<PAGE>
Trustee, _________________________________________ upon the prior written
request of the holder of the Originator Certificate.
I-6
<PAGE>
IN WITNESS WHEREOF, [ADVANTA AUTO RECEIVABLES TRUST 199_- _ has
caused this Originator Certificate to be duly executed by the manual or
facsimile signature of the duly authorized officer of the Trustee.
[ADVANTA AUTO RECEIVABLES
TRUST 199_-_]
By [TRUSTEE], not in its
individual capacity, but solely as
Trustee
By ______________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Originator Certificate referred to in the within
mentioned Agreement.
[TRUSTEE], as Trustee
By ______________________________
Authorized Officer
Dated: ___________, 199_
I-7
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee
___________________.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto ________________________________________________
________________________________________________________________________________
(name and address of assignee)
the written certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________, attorney, to transfer
said certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:____________________
(1) A Non U.S. Person as Note: The signature(s) to
defined in the Code must this Assignment
certify to the Trustee in must correspond
writing as to its Non U.S. with the name(s) as
Person status and such written on the face
further information as may of the within
be required under the Code certificate in
or reasonably requested by every particular
the Trustee without alteration
or enlargement or
any change
whatsoever
I-8
<PAGE>
EXHIBIT J
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF SPONSOR AGREEMENT]
<PAGE>
EXHIBIT K
TO
POOLING AND SERVICING AGREEMENT
DATED AS OF ___________, 199_
[ADVANTA AUTO RECEIVABLES TRUST 199_-_]
[FORM OF ISSUANCE SUPPLEMENT]
ISSUANCE SUPPLEMENT, dated as of _______, 199_, among ADVANTA AUTO
FINANCE CORPORATION, a Nevada corporation, its successors and permitted assigns,
as Sponsor and as Servicer (the "Sponsor" and "Servicer" respectively),
________________________________, a ________ corporation, its successors and
permitted assigns as [Master Administrator] (the "[Master Administrator]"),
_________________, a ________ corporation, its successors and permitted assigns,
as [Master Servicer] (the "[Master Servicer]"), _________________, a ___________
corporation, its successors and permitted assigns, as Originator (the
"Original"), and __________________, a ______________________ corporation, its
successors and permitted assigns, as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, Section 6.02(b) of the Agreement provides that the parties
hereto shall execute and deliver an Issuance Supplement in connection with the
issuance, authentication and delivery of the Investor Certificates.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. (a) Certain Defined Terms. As used herein, the following
terms shall have the following meanings:
"Certificate Rate" means interest paid at the rate per annum equal
to ___%.
"Distribution Date" means the 20th day of each [month], [month],
[month] and [month] (or, if such day is not a Business Day, the next succeeding
Business Day).
"Expected Final Payment Date" means ____________, 199_.
"Initial Principal Amount" means $_____________.
"Investor's Share" means ___%.
"Issuance Date" means __________________, 199_.
<PAGE>
"Maximum Subordination Amount" means, on any Distribution Date, an
amount equal to $__________________ [the product of (a) the Originator's Share
and (b) the aggregate Principal Balance of the Auto Loans determined as of the
end of the calendar month immediately preceding the Issuance Date].
"Required Cash Reserve Amount" means _______.
"Originator Certificate Principal Balance" means, as of
the Issuance Date, $________.
"Originator's Share" means ___%.
(b) All capitalized terms used and not defined herein, shall have
the meaning specified in the Pooling and Servicing Agreement.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Issuance Supplement as a whole. All references to
Articles and Sections shall be deemed to refer to Articles and Sections of this
Issuance Supplement or the Pooling and Servicing Agreement, as the context
requires.
Section 2. Representations, Warranties and Covenants of the Sponsor.
(a) Pursuant to this Issuance Supplement, as of the Issuance Date, the Sponsor
makes the following representations and warranties:
(i) the representations and warranties set forth in Section 3.01 and
Section 3.02(a) of the Pooling and Servicing Agreement (such representations and
warranties are incorporated by reference in this Section 2 and may be relied on
as if such representations and warranties were fully set forth herein as of the
Issuance Date);
(ii) pursuant to Section 3.02(b) of the Pooling and Servicing
Agreement, with respect to each Auto Loan sold to the Sponsor pursuant to each
Sale Agreement, on the date of such sale the Originator made the representations
and warranties to the Sponsor as set forth in its respective Sale Agreement,
copies of which have been delivered to the Trustee, the [Master Servicer] and
the Servicer.
(iii) no event has occurred and is continuing, or would result from the
execution, delivery or performance of this Issuance Supplement by the Sponsor,or
from the application of the proceeds therefrom, which constitutes an Event of
Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both; and
(iv) the Sponsor is in compliance with each of its covenants set
forth herein.
K-2
<PAGE>
Section 3. Representations, Warranties and Covenants of the [Master
Servicer] and the Servicer. (a) Pursuant to this Issuance Supplement, as of the
Issuance Date, each of the [Master Servicer] and the Servicer makes the
representations and warranties set forth in Section 4.03 of the Pooling and
Servicing Agreement. Such representations and warranties are incorporated by
reference in this Section 3 and may be relied on by the [Master Administrator]
and the Trustee as if such representations and warranties were fully set forth
herein as of the Issuance Date.
(b) Each of the [Master Servicer] and the Servicer also represents,
warrants and covenants as of the Issuance Date that no event has occurred and is
continuing which constitutes an Event of Master Servicing Termination or an
Event of Servicing Termination, as the case may be, or would constitute an Event
of Master Servicing Termination or an Event of Servicing Termination, as the
case may be, but for the requirement that notice be given or time elapse or
both.
Section 4. Representations, Warranties and Covenants of the [Master
Administrator]. (a) Pursuant to this Issuance Supplement, as of the Issuance
Date, the [Master Administrator] makes the representations and warranties set
forth in Section 5.04 of the Pooling and Servicing Agreement. Such
representations and warranties are incorporated by reference in this Section 4
and may be relied on by the Sponsor, the [Master Servicer], the Servicer and the
Trustee as if such representations and warranties were fully set forth herein as
of the Issuance Date.
(b) The [Master Administrator] also represents, warrants and
covenants as of the Issuance Date that no event has occurred and is continuing
which constitutes an Event of Administrator Termination or would constitute an
Event of Administrator Termination but for the requirement that notice be given
or time elapse or both.
Section 5. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (A) THIS ISSUANCE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(B) THE Sponsor, THE [MASTER SERVICER], THE SERVICER, THE [MASTER
ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT,
AND THE TRUSTEE HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE
BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 11.04 OF THE
POOLING AND SERVICING AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS,
POSTAGE PREPAID.
K-3
<PAGE>
THE Sponsor, THE [MASTER SERVICER], THE [MASTER ADMINISTRATOR], THE CERTIFICATE
REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT, AND THE TRUSTEE EACH HEREBY
WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF
ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE Sponsor, THE [MASTER SERVICER], THE SERVICER, THE
[MASTER ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING
AGENT, AND THE TRUSTEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF
ANY OTHER JURISDICTION.
(C) THE Sponsor, THE [MASTER SERVICER], THE SERVICER, THE [MASTER
ADMINISTRATOR], THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT,
AND THE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS ISSUANCE
SUPPLEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
Section 8. Counterparts. This Issuance Supplement may be executed in
counterparts each of which shall be an original, but all of which together shall
constitute one and the same instrument.
K-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Issuance
Supplement to be executed by their respective officers thereunto duly authorized
this ____ day of __________, 199_.
ADVANTA AUTO FINANCE CORPORATION
as Sponsor and as Servicer
By:_____________________________
Name:
Title:
________________________________,
as [Master Administrator],
By:_____________________________
Name:
Title:
________________________________,
as [Master Servicer]
By:_____________________________
Name:
Title:
________________________________,
as Originator
By:_____________________________
Name:
Title:
________________________________,
as Trustee
By:_____________________________
Name:
Title:
K-5
<PAGE>
EXHIBIT 4.4
II-13
<PAGE>
================================================================================
TRUST AGREEMENT
among
ADVANTA AUTO FINANCE CORPORATION
_____________________________,
not in its individual capacity but solely as Owner Trustee,
and
_____________________________,
as Servicer
Dated as of _______, 199_
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS................................................ 2
SECTION 1.1 Capitalized Terms............................ 2
SECTION 1.2 Other Definitional Provisions................ 4
ARTICLE II ORGANIZATION............................................... 5
SECTION 2.1 Name......................................... 5
SECTION 2.2 Office....................................... 5
SECTION 2.3 Purposes and Powers.......................... 5
SECTION 2.4 Appointment of Owner Trustee................. 6
SECTION 2.5 Organizational Expenses...................... 6
SECTION 2.6 Declaration of Trust......................... 6
SECTION 2.7 Liability of the Certificateholders.......... 7
SECTION 2.8 Title to Trust Property...................... 7
SECTION 2.9 Situs of Trust............................... 7
SECTION 2.10 Representations and Warranties of
the Sponsor............................... 7
SECTION 2.11 Books and Records; Tax Returns............... 8
SECTION 2.12 Authorized Representative.................... 9
ARTICLE III THE CERTIFICATES......................................... 9
SECTION 3.1 The Certificates............................. 9
SECTION 3.2 Registration of Transfer and
Exchange of Certificates.................. 9
SECTION 3.3 No Charge; Destruction of Void
Certificates.............................. 10
SECTION 3.4 Mutilated, Destroyed, Lost or
Stolen Certificates....................... 10
SECTION 3.5 Persons Deemed Certificateholders............ 11
SECTION 3.6 Access to List of
Certificateholders' Names and
Addresses................................. 11
SECTION 3.7 Acts of Certificateholders................... 11
SECTION 3.8 Limitation on Transfer and
Exchange.................................. 12
SECTION 3.9 Payments to Certificateholders............... 13
ARTICLE IV ACTIONS BY THE OWNER TRUSTEE.............................. 13
SECTION 4.1 Prior Notice to Certificateholders
with Respect to Certain Matters........... 13
SECTION 4.2 Bankruptcy................................... 13
SECTION 4.3 Rights of Certificateholders to
Direct Owner Trustee...................... 13
SECTION 4.4 Suits for Enforcement........................ 14
i
<PAGE>
Page
----
SECTION 4.5 Owner Trustee May Enforce Claims
without Possession of
Certificates.............................. 14
SECTION 4.6 Limitation on Rights of
Certificateholders........................ 14
ARTICLE V AUTHORITY AND DUTIES OF THE OWNER TRUSTEE.................. 15
SECTION 5.1 General Authority............................ 15
SECTION 5.2 General Duties............................... 15
SECTION 5.3 Action upon Instruction...................... 16
SECTION 5.4 No Duties Except as Specified in
this Agreement or in Instructions......... 16
SECTION 5.5 No Action Except Under Specified
Documents or Instructions................. 17
SECTION 5.6 Restrictions................................. 17
ARTICLE VI CONCERNING THE OWNER TRUSTEE.............................. 17
SECTION 6.1 Acceptance of Trusts and Duties.............. 17
SECTION 6.2 Furnishing of Documents...................... 18
SECTION 6.3 Representations and Warranties............... 19
SECTION 6.4 Reliance; Advice of Counsel.................. 19
SECTION 6.5 Owner Trustee Not Liable for
Certificates or Contracts................. 20
SECTION 6.6 Not Acting in Individual Capacity............ 21
SECTION 6.7 Interpretation of Trust Agreement............ 21
ARTICLE VII COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE........ 21
SECTION 7.1 Owner Trustee's Fees and Expenses............ 21
SECTION 7.2 Indemnification.............................. 22
ARTICLE VIII SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES.. 22
SECTION 8.1 Eligibility Requirements for Owner
Trustee................................... 22
SECTION 8.2 Resignation or Removal of Owner
Trustee................................... 23
SECTION 8.3 Successor Owner Trustee...................... 23
SECTION 8.4 Merger or Consolidation of Owner
Trustee................................... 24
SECTION 8.5 Appointment of Co-Owner Trustee or
Separate Owner Trustee.................... 24
ii
<PAGE>
Page
----
ARTICLE IX TERMINATION OF TRUST AGREEMENT............................ 26
SECTION 9.1 Termination of Trust Agreement............... 26
SECTION 9.2 Dissolution upon Bankruptcy of the
Sponsor................................... 27
ARTICLE X MISCELLANEOUS.............................................. 28
SECTION 10.1 Supplements and Amendments................... 28
SECTION 10.2 Notices...................................... 29
SECTION 10.3 Merger and Integration....................... 30
SECTION 10.4 Headings..................................... 30
SECTION 10.5 Governing Law................................ 30
SECTION 10.6 Counterparts................................. 30
SECTION 10.7 No Legal Title to Trust Estate in
Certificateholder......................... 30
SECTION 10.8 Limitation on Rights of Others............... 31
SECTION 10.9 Severability................................. 31
SECTION 10.10 Successors and Assigns....................... 31
SECTION 10.11 No Implied Waiver............................ 31
SECTION 10.12 No Petition.................................. 31
SECTION 10.13 No Recourse.................................. 32
Exhibit A Form of Certificate........................................A-1
Exhibit B Investment Letter..........................................B-1
iii
<PAGE>
THIS TRUST AGREEMENT, dated as of _______________, 199_ (the "Trust
Agreement"), among ADVANTA AUTO FINANCE Corporation, a Nevada corporation (the
"Sponsor"), _____________________, a ____________ banking corporation, not in
its individual capacity but solely as trustee (together with its permitted
successors in the trusts hereunder, the "Owner Trustee") of the [Advanta Auto
Receivables Trust 199__-_] (the "Trust"), ____________________, as Servicer (the
"Servicer") and the holders (the "Certificateholders") of undivided percentage
interests in the Trust.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements, covenants and undertakings herein contained, the parties
intending to be legally bound, hereby agree as follows:
PRELIMINARY STATEMENTS
In the regular course of its business, ____________________, a
__________ corporation (the "Originator"), has acquired the Receivables. All
capitalized terms used in these Preliminary Statements which are not defined
shall have the meanings ascribed to such terms in Article I.
Pursuant to the Receivables Acquisition Agreement, dated _______,
199_, between the Originator and the Sponsor, the Originator assigned the
Contracts and the Vehicles to the Sponsor.
The Sponsor will immediately thereafter transfer and assign the
Contracts and grant a security interest in the related Vehicles to the Trust.
The Receivables will be serviced by the Servicer, pursuant to a Servicing
Agreement, dated as of the date hereof (the "Servicing Agreement"), among the
Servicer, the Sponsor, _______________________, not in its individual capacity
but solely as Collateral Trustee (the "Collateral Trustee"),
____________________, and the Trust.
Each Certificateholder by accepting its Certificate shall be deemed
to have agreed to the terms of this Agreement and to have authorized the Trust
to acquire the Contracts from the Sponsor and hold such Contracts and other
assets described in the Receivables Acquisition Agreement in trust for the use
and benefit of the Certificateholders. Subject to the terms and conditions set
forth in this Agreement, the Owner Trustee will issue auto receivables backed
certificates (the "Certificates") to the Certificateholders.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 Capitalized Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"Agreement" means this Trust Agreement as originally executed and,
if from time to time supplemented or amended by one or more amendments entered
into pursuant to the applicable provisions hereof, as so supplemented or
amended.
"Applicants" has the meaning ascribed to such term in Section 3.6.
"Basic Documents" means this Agreement, the Servicing Agreement, the
Indenture, the Receivables Acquisition Agreement, and the other documents and
certificates delivered in connection therewith.
"Certificate" means a Certificate evidencing a Percentage Interest
in the Trust, executed and delivered by the Owner Trustee to an investor
substantially in the form of Exhibit A.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register, other than the Sponsor.
"Certificate Register" means the register maintained pursuant to
Section 3.2.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 3.2.
"Closing Date" means _______________, 199_.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Trustee" has the meaning ascribed to such term in the
Preliminary Statements.
"Contracts" means the installment sale contracts for new and used
automobiles and light duty trucks described in the List of Contracts and
includes, without limitation: the originally, manually executed counterpart of
each Contract, including all amendments thereto, and all rights to receive the
Scheduled Payments which are due pursuant thereto; any and all security
interests and any and all rights to enforce the monetary and non-monetary
covenants of each Obligor thereunder; and all proceeds of the any of the
foregoing.
2
<PAGE>
"Corporate Trust Office" means the office of the Owner Trustee
located at ___________________; or at such other address as the Owner Trustee
may designate by notice to the Certificateholders and the Sponsor, or the
principal trust office of any successor Owner Trustee.
"Sponsor" means Advanta Auto Finance Corporation, a Nevada
corporation.
"Eligible Bank" means [Trustee], so long as such bank continues to
act as Owner Trustee hereunder; thereafter, Eligible Bank means any depository
institution with trust powers organized under the laws of the United States or
any state having capital and surplus in excess of $50,000,000, the deposits of
which are insured to the full extent permitted by law by the Federal Deposit
Insurance Corporation and which is subject to supervision and examination by
federal or state authorities. If such depository institution publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
"Expenses" has the meaning ascribed to such term in Section 7.2.
"Indenture" means the Indenture, dated as of the date hereof,
between _______________, not in its individual capacity but solely as Indenture
Trustee, and the Trust, as such agreement may be further amended, modified or
supplemented from time to time.
"Note" means a debt instrument issued by the Trust pursuant to the
Indenture and secured by the assets of the Trust, executed and delivered by the
Owner Trustee to an investor.
"Noteholders" means any Person in whose name a Note is registered,
other than the Sponsor.
"Obligor" means the obligor under each Contract, its successors and
assigns and any other person who owes or has guaranteed payment under a
Contract.
"Owner Trustee" means ______________, not in its individual capacity
but solely as trustee under this Agreement, until a successor Owner Trustee
shall have been appointed pursuant to the applicable provisions of this
Agreement, and thereafter such successor Owner Trustee.
3
<PAGE>
"Percentage" or "Percentage Interest", means the undivided interest
in the Trust expressed as a percentage owned by the holder of a particular
Certificate.
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Receivables Acquisition Agreement" has the meaning ascribed to such
term in the Preliminary Statements.
"Servicer" has the meaning ascribed to such term in the first
paragraph hereof.
"Servicing Agreement" has the meaning ascribed to such term in the
Preliminary Statements.
"Trust Estate" means all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to the Receivables
Acquisition Agreement, and all other property of the Trust from time to time,
including any rights of the Owner Trustee and the Trust pursuant to the
Servicing Agreement.
"Vehicles" means the new and used automobiles and light duty trucks
sold to Obligors as described in the Contracts.
SECTION 1.2 Other Definitional Provisions. (a) Capitalized terms
used herein and not otherwise defined have the meanings assigned to them in the
Servicing Agreement or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles in effect on the
date hereof. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
4
<PAGE>
definitions contained in this Agreement or in any such certificate or other
documents shall control.
(d) The words "hereof", "herein", "hereunder", and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as
["Advanta Auto Receivables Trust 199_-_"], in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Sponsor.
SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement and to sell the Notes and/or
Certificates in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to pay such proceeds to, or as directed in writing by, the
Sponsor;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and distribute
to the Certificateholders pursuant to the terms of the Servicing Agreement
any portion of the Trust Estate released from the lien of, and remitted to
the Trust pursuant to, the Indenture;
5
<PAGE>
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Trust Estate and the making of distributions to the
Certificateholders and the Noteholders.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the Basic Documents.
SECTION 2.4 Appointment of Owner Trustee. The Seller hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
SECTION 2.5 Organizational Expenses. The Sponsor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Estate in trust upon and subject to the condition
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a trust and that this Agreement
constitute the governing instrument of such trust. It is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Trust
shall be treated as a partnership, with the assets of the partnership being the
Receivables and other assets held by the Trust, the partners of the partnership
being the Certificateholders and the Notes being the debt of the partnership.
The parties agree that, unless otherwise required by appropriate tax
authorities, the Trust will file or cause to be filed annual or other necessary
returns, reports and other forms consistent with the characterization of the
Trust as a partnership for such tax purposes. Effective as of the date hereof,
the Servicer and the Owner Trustee (subject to the provisions hereof) shall have
all rights, powers and duties set forth herein with respect to accomplishing the
purposes of the Trust.
6
<PAGE>
SECTION 2.7 Liability of the Certificateholders. (a) The Sponsor
shall be liable directly to and will indemnify the Certificateholders,
Noteholders or any other injured party for all losses, claims, damages,
liabilities and expenses of the Trust (including expenses, to the extent not
paid out of the Trust Estate) to the extent that the Sponsor would be liable if
the Trust were a ________________ limited partnership in which the Sponsor were
a general partner; provided, however, that the Sponsor shall not be liable (i)
to any Certificateholder or Noteholder for any losses incurred by such
Certificateholder in the capacity of an investor in the Certificates or such
Noteholder in the capacity of an investor in the Notes or (ii) to any Person for
any losses incurred by such Person as a result of the fraudulent actions,
misrepresentations or willful misconduct of such Person.
(b) No Certificateholder (other than to the extent set forth in
paragraph (a) above) shall have any personal liability for any liability or
obligation of the Trust.
SECTION 2.8 Title to Trust Property. Legal title to all the Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust Estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 2.9 Situs of Trust. The Trust will be located and
administered in the State of ____________. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
_____________. The Trust shall not have any employees in any state other than
____________; provided, however, that nothing herein shall restrict or prohibit
the Owner Trustee from having employees within or without the State of
_______________. The only office of the Trust will be at the Corporate Trust
Office in _______________.
SECTION 2.10 Representations and Warranties of the Sponsor. The
Sponsor hereby represents and warrants to the Owner Trustee that:
(a) The Sponsor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Nevada, with
corporate power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(b) The Sponsor is duly qualified to do business as a foreign
limited liability company in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of property
7
<PAGE>
or the conduct of its business shall require such qualifications.
(c) The Sponsor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms; the Sponsor
has full power and authority to sell and assign the property to be sold
and assigned to and deposited with the Trust and the Sponsor shall have
duly authorized such sale and assignment and deposit to the Trust by all
necessary corporate action; and the execution, delivery and performance of
this Agreement has been duly authorized by the Sponsor by all necessary
corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the Articles of
Incorporation of the Sponsor, or any indenture, agreement or other
instrument to which the Sponsor is a party or by which it is bound; nor
result in the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any
law or, to the best of the Sponsor's knowledge, any order, rule or
regulation applicable to the Sponsor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Sponsor or its properties.
SECTION 2.11 Books and Records; Tax Returns. Except as otherwise
expressly provided in this Agreement, the Owner Trustee shall be responsible for
the keeping of all appropriate books and records relating to the receipt and
disbursement by the Owner Trustee of all monies under this Agreement or any
agreement contemplated hereby. The Owner Trustee agrees to file an application
prepared by the Servicer with the Internal Revenue Service for a taxpayer
identification number with respect to the trust created hereby. The Sponsor
shall cause to be timely prepared and the Sponsor shall cause to be timely filed
at the expense of the Sponsor the federal fiduciary tax return for the Trust
created hereby and, upon the request of the Sponsor, such other tax returns as
are required to be executed by the Owner Trustee. The Owner Trustee and the
Sponsor, upon request, will furnish each other with all such information as may
reasonably be requested and shall otherwise cooperate with each other in
connection with the preparation of such income tax returns. The Owner Trustee
shall keep copies of all returns delivered to or filed by it. The Owner Trustee
will give to the Sponsor, upon request, periodic information concerning
8
<PAGE>
receipts and disbursements by it with respect to the Trust created by this
Agreement.
SECTION 2.12 Authorized Representative. Any officer of the Servicer
will be authorized to act as an authorized representative ("Authorized
Representative") for the Trust in matters relating to the Trust and must be
identified on a list of Authorized Representatives delivered by the Servicer to
the Indenture Trustee on the Closing Date and such list may be modified or
supplemented from time to time thereafter. The Servicer agrees to cause its
Authorized Representatives to execute and deliver all documents and to perform
all acts required by the Basic Documents to be executed, delivered and performed
by such Authorized Representatives.
ARTICLE III
THE CERTIFICATES
SECTION 3.1 The Certificates. The Certificates shall be
substantially in the form of Exhibit A. The Certificates shall be issuable only
as registered Certificates representing undivided interests in the Trust. The
rights to receive payments with respect to the Certificates are subordinated to
the prior payment in full of all amounts of principal and interest on the Notes.
The Certificates shall be executed by the Owner Trustee on behalf of the Trust
by the manual signature of a duly authorized officer of the Owner Trustee under
the seal of and attested by the manual signature of the Secretary or an
Assistant Secretary or other authorized officer of the Owner Trustee.
Certificates bearing the signatures of individuals who were at the time the
proper officers or authorized signatories of the Owner Trustee shall bind the
Owner Trustee, notwithstanding that such individuals or any of them have ceased
to hold such offices or positions prior to the delivery of such Certificates or
did not hold such offices or positions at the date of such Certificates. All
Certificates shall be dated the date of their execution.
SECTION 3.2 Registration of Transfer and Exchange of Certificates.
(a) The Owner Trustee shall maintain, or cause to be maintained, at the
Corporate Trust Office a Certificate Register in which the Owner Trustee shall
provide or cause to be provided the registration of Certificates and transfers
and exchanges of Certificates as herein provided. The Owner Trustee is hereby
initially appointed the "Certificate Registrar" and transfer agent for the
purpose of registering Certificates and transfers and exchanges of Certificates
as provided herein.
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(b) Subject to Section 3.3 and subject to the conditions set forth
in Section 3.8 hereof, upon surrender for registration or transfer of any
Certificate at such office, the Owner Trustee shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of a like aggregate Percentage Interest and dated the date of execution by the
Owner Trustee.
(c) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates representing undivided interests in the Trust
and of a like aggregate Percentage Interest, upon surrender of the Certificates
to be exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Owner Trustee shall execute and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall be duly endorsed by, or
be accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar, duly executed by the holder thereof
or his or her attorney duly authorized in writing.
SECTION 3.3 No Charge; Destruction of Void Certificates. No service
charge shall be made to the Certificateholder for any transfer or exchange of
Certificates, but the Owner Trustee or Certificate Registrar may require payment
or a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates. All
Certificates surrendered for transfer and exchange shall be disposed of in a
manner approved by the Owner Trustee. All Certificates surrendered to the Paying
Agent for payment, shall be delivered by the Paying Agent to the Owner Trustee
for disposition as aforesaid.
SECTION 3.4 Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Certificate Registrar, or
the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (b) there is delivered to the
Certificate Registrar and the Owner Trustee such security or indemnity as may be
required by each to save it harmless, then in the absence of notice to the
Certificate Registrar or the Owner Trustee that such Certificate has been
acquired by a bona fide purchaser, the Owner Trustee shall execute and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and Percentage. Upon the issuance
of any new Certificate under this Section 3.4, the Owner Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
Any
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duplicate Certificate issued pursuant to this Section 3.4 shall constitute
complete and indefeasible evidence of ownership of the Percentage Interest
evidenced thereby, as if originally issued, whether or not the mutilated,
destroyed, lost or stolen Certificate shall be found at any time.
SECTION 3.5 Persons Deemed Certificateholders. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee
and the Certificate Registrar may treat the person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 3.3(e) of the Servicing Agreement and for all
other purposes whatsoever, and neither the Owner Trustee, the Certificate
Registrar nor any agent of the Owner Trustee or the Certificate Registrar shall
be affected by notice to the contrary.
SECTION 3.6 Access to List of Certificateholders' Names and
Addresses. The Certificate Registrar will furnish to the Sponsor and the
Servicer, within five days after receipt by the Certificate Registrar of a
request therefor from the Sponsor or the Servicer in writing, a list, in such
form as the Owner Trustee may reasonably require, of the names and addresses of
the Certificateholders as of the most recent Record Date. If Certificateholders
with an aggregate Percentage of 25% or more (hereinafter referred to as
"Applicants") apply in writing to the Owner Trustee, and such application states
that the Applicants desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such Applicants access during normal
business hours to the most recent list of Certificateholders held by the Owner
Trustee. If such list is as of a date more than 90 days prior to the date of
receipt of such Applicants' request, the Owner Trustee shall promptly request
from the Certificate Registrar a current list as provided above, and shall
afford such Applicants access to such list promptly upon receipt. Every
Certificateholder, by receiving and holding a Certificate, agrees with the
Certificate Registrar and the Owner Trustee that neither the Sponsor, the
Servicer, the Certificate Registrar nor the Owner Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
SECTION 3.7 Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders or Noteholders may be
embodied
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in and evidenced by one or more instruments of substantially similar tenor
signed by such Certificateholders or Noteholders in person or by agent duly
appointed in writing; and except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Owner Trustee. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Owner Trustee, the Sponsor and the Servicer, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder or
Noteholder of any such instrument or writing may be proved in any reasonable
manner which the Owner Trustee deems sufficient.
(c) The ownership of Certificates and Notes shall be proved by the
Certificate Register and the Note Register, respectively.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder or a Noteholder shall bind every
holder of every Certificate or Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything done,
or omitted to be done by the Owner Trustee or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Certificate or Note.
(e) The Owner Trustee may require such additional proof of any
matter referred to in this Section as it shall deem necessary.
SECTION 3.8 Limitation on Transfer and Exchange. (a) No
Certificateholder may sell or transfer any Certificate (whether voluntarily,
involuntarily or by operation of law) except with the prior written consent of
the other Certificateholders, which consent shall not be unreasonably withheld
or delayed. Any sale or transfer without the prior written consent of the
Certificateholders shall be null and void and confer no rights on the purchaser
or transferee with respect to the Trust, this Agreement or the Owner Trustee.
(b) No Certificate may be transferred to the Owner Trustee, the
Collateral Trustee or the Indenture Trustee.
(c) The Owner Trustee shall have no liability to the Trust Estate or
any Certificateholder arising from a transfer of any such Certificate in
reliance upon a certification described in this Section 3.8. No transfer or
exchange of a Certificate shall be made unless the transferee delivers to the
Owner Trustee the Investment Letter required by this Section 3.8.
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SECTION 3.9 Payments to Certificateholders. The Owner Trustee, by
executing this Agreement, is deemed to have instructed the Collateral Trustee to
distribute to the Certificateholders on each applicable Payment Date, in
accordance with their respective Percentage Interests, amounts due and payable
to the Certificateholders on deposit in the Certificate Account pursuant to
Section 3.3(e) of the Servicing Agreement.
ARTICLE IV
ACTIONS BY THE OWNER TRUSTEE
SECTION 4.1 Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, the Owner Trustee shall
not take action unless, at least 30 days before the taking of such action, the
Owner Trustee shall have notified the Certificateholders in writing of the
proposed action and the Certificateholders shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Contracts) and the compromise of any action, claim or lawsuit brought by
or against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of Receivables);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required; and
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the
Certificateholders.
SECTION 4.2 Bankruptcy. The Owner Trustee shall not have the power
to commence a voluntary proceeding in bankruptcy relating to the Trust without
the unanimous prior approval of all Certificateholders and the delivery to the
Owner Trustee by each such Certificateholder of a certificate certifying that
such Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.3 Rights of Certificateholders to Direct Owner Trustee.
Certificateholders with aggregate Percentage Interests representing [51%] or
more shall have the right to direct the time, method, and place of conducting
any
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proceeding for any remedy available to the Owner Trustee, or exercising any
trust or power conferred on the Owner Trustee; provided, however, that, the
Owner Trustee shall have the right to decline to follow any such direction if
the Owner Trustee, being advised by counsel, determines that the action so
directed may not lawfully be taken, or if the Owner Trustee in good faith
determines that the action so directed would be illegal or involve it in
personal liability or be unduly prejudicial to the rights of Certificateholders
not parties to such direction; and provided, further that nothing in this
Agreement shall impair the right of the Owner Trustee to take any action deemed
proper by the Owner Trustee and which is not inconsistent with such direction by
the Certificateholders.
SECTION 4.4 Suits for Enforcement. The Owner Trustee, in its
discretion may, subject to the provisions of this Article IV, proceed to protect
and enforce its rights and the rights of the Certificateholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Owner Trustee, being advised by counsel, shall deem most effectual to protect
and enforce any of the rights of the Owner Trustee or the Certificateholders.
SECTION 4.5 Owner Trustee May Enforce Claims without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Owner Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceedings instituted by the Owner
Trustee shall be brought in its own name or in its capacity as Owner Trustee.
Any recovery of judgment shall, after provision of or the payment of the
reasonable compensation, expenses, disbursements and advances of the Owner
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.
SECTION 4.6 Limitation on Rights of Certificateholders. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
(b) Except as provided herein, no Certificateholder shall have any
right to vote or in any manner otherwise
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control the operation and management of the Certificateholders' interest or the
obligations of the parties hereto.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Certificateholder previously shall have given to the
Owner Trustee a written notice of default and of the continuance thereof as
hereinbefore provided, and unless also the holders of Certificates evidencing a
Percentage of 51% or more shall have made written request upon the Owner Trustee
to institute such action, suit or proceeding in its own name as Owner Trustee
hereunder and shall have offered to the Owner Trustee such reasonable indemnity
as it may require against the costs, expenses, and liabilities to be incurred
therein or thereby, and the Owner Trustee, for 30 days after its receipt of such
notice, request, and offer of indemnity, shall have neglected or refused to
institute any such actions, suit, or proceeding; it being understood and
intended, and being expressly covenanted by each Certificateholder with every
other Certificateholder and the Owner Trustee, that no one or more
Certificateholders shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of any other Certificateholders, or to obtain
or seek to obtain priority over or preference to any other such
Certificateholder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable, and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder and the Owner Trustee shall be
entitled to such relief as can be given either at law or in equity.
ARTICLE V
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party, in each
case, in such form as the Sponsor shall have approved as evidenced conclusively
by the Owner Trustee's execution thereof. In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents.
SECTION 5.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged)
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all of its responsibilities pursuant to the terms of this Agreement and the
Basic Documents to which the Trust is a party and to administer the Trust in the
interest of the Certificateholders, subject to the Basic Documents and in
accordance with the provisions of this Agreement.
SECTION 5.3 Action upon Instruction. (a) Subject to Article IV, the
Certificateholders may by written instruction direct the Owner Trustee in the
management of the Trust (except with respect to any actions to be taken by the
Servicer pursuant to the terms of the Servicing Agreement or under any other
Basic Document). Such direction may be exercised at any time by written
instruction of the Certificateholders pursuant to Article IV.
(b) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Certificateholders with aggregate Percentage
Interests of 51% or more received, the Owner Trustee shall not be liable on
account of such action to any Person. If the Owner Trustee shall not have
received appropriate instruction from the Certificateholders with aggregate
Percentage Interests of 51% or more within 10 days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 5.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligations to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 5.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to record this
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Agreement or any Basic Document. The Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be necessary
to discharge any liens on any part of the Owner Trustee Estate that result from
actions by, or claims against, the Owner Trustee that are not related to the
ownership or the administration of the Trust Estate.
SECTION 5.5 No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Estate except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Basic Documents and
(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 5.3.
SECTION 5.6 Restrictions. The Owner Trustee shall not take any
action that is inconsistent with the purposes of the Trust set forth in Section
2.3.
ARTICLE VI
CONCERNING THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the express terms of this Agreement.
The Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Trust Estate upon the terms of the Basic Documents and
this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Basic Document under any circumstances, except (i) for
its own willful misconduct or gross negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 6.3 expressly
made by the Owner Trustee. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by an officer of the Owner Trustee absent willful misconduct or gross
negligence by such officer;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of
the Servicer or any Certificateholder;
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(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document, if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes, or for any amounts
due with respect to the Certificates;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiently of this Agreement or for the due execution
hereof by the Sponsor or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate or for or in
respect of the validity or sufficiency of the Basic Documents, other than
the certificate of authentication on the Certificates, and the Owner
Trustee shall in no event assume or incur any liability, duty, or
obligation to any Noteholder or to any Certificateholder, other than is
expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Sponsor, the Indenture Trustee, the Collateral Trustee
or the Servicer under any of the Basic Documents or otherwise; and
(g) the Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of the Certificateholders with aggregate Percentage Interests of
[51%] or more, unless such Certificateholders have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner Trustee therein
or thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any Basic Document shall not be
construed as a duty, and the Owner Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of any
such act.
SECTION 6.2 Furnishing of Documents. The Owner Trustee shall furnish
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of
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all reports, notices, requests, demands, certificates, financial statements and
any other instruments furnished to the Owner Trustee under the Basic Documents.
SECTION 6.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Sponsor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of _________. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and the other Basic Documents to
which it is a party.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and such other Basic
Documents to which it is a party, and this Agreement and such other
documents will be executed and delivered by one of its officers who is
duly authorized to execute and deliver this Agreement and such other
documents on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement
and the other Basic Documents to which it is a party, nor the consummation
by it of the transactions contemplated hereby or thereby nor compliance by
it with any of the terms or provisions hereof or thereof will contravene
any federal or _________ law, governmental rule or regulation governing
the banking or trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or
by-laws.
SECTION 6.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may, for all purposes hereof, rely on a
certificate, signed by the President or any Vice President or by the Treasurer
or other authorized officer of the relevant party, as to such fact of matter and
such certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance thereon.
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(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Basic Document.
SECTION 6.5 Owner Trustee Not Liable for Certificates or Contracts.
(a) Without limiting the representations and warranties of the Owner Trustee set
forth in Section 6.3, the Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, any other Basic Document or of the
Certificates (other than its execution thereof) or of any Contract or related
document.
(b) The Owner Trustee shall have no responsibility for or with
respect to the validity of any security interest in any Contract or Vehicle, the
perfection of any such security interest (whether as of the date hereof or at
any future time), the maintenance of or the taking of any action to maintain
such perfection, the existence or validity of any Contract, the validity of the
assignment of any Contract to the Trust or of any intervening assignment, the
review of any Contract, the completeness of any Contract, the receipt by it or
the Collateral Trustee of any Contract, the performance or enforcement of any
Contract, the existence, condition and ownership of any Vehicle, the existence
and enforceability of any insurance thereon, the compliance by the Servicer, the
Sponsor, the Indenture Trustee or the Collateral Trustee with any covenant,
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, the acts or
omissions of the Servicer, the Sponsor, the Collateral Trustee, the Indenture
Trustee or any Obligor, any action of the Servicer or the Collateral Trustee
taken in the name of the Owner Trustee or the Trust, any action by the Owner
Trustee taken at the instruction of the Servicer or the preparation and filing
of tax returns for the Trust. No recourse shall be had for any claim based on
any provision of this Agreement, the Basic Documents, the Certificates or any
Contract or assignment thereof against [Trustee] in its individual capacity, and
[Trustee] shall not have any personal obligation, liability or duty whatsoever
to any Certificateholder or any other Person with respect to any such claim, and
any such claim shall be
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asserted solely against the Trust or any indemnitor who
shall furnish indemnity as provided herein, except for such liability as is
finally determined to have resulted from its own gross negligence or willful
misconduct.
SECTION 6.6 Not Acting in Individual Capacity. In accepting the
trusts hereby created, the Owner Trustee acts in its individual capacity, but in
the performance of its duties as Owner Trustee hereunder and under any document
authorized hereby, the Owner Trustee acts solely as trustee hereunder and not in
its individual capacity, except to the extent expressly agreed otherwise, and
all Persons, other than the Certificateholders as provided herein, having any
claim against the Owner Trustee by reason of the transactions contemplated
hereby shall look only to the Trust Estate for payment or satisfaction thereof,
except to the extent the Owner Trustee shall expressly agree otherwise in any
Basic Document to which it is a party.
SECTION 6.7 Interpretation of Trust Agreement. In the event that the
Owner Trustee is uncertain as to the application of any provision of this
Agreement or any other agreement relating to the transactions contemplated
hereby, or such provision is ambiguous as to its application or is, or appears
to be, in conflict with any other applicable provision hereof or any other
agreement relating to the transactions contemplated hereby, or in the event that
this Agreement or any other agreement relating to the transactions contemplated
hereby permits any determination by the Owner Trustee or is silent or incomplete
as to the course of action which the Owner Trustee is required to take with
respect to a particular set of facts, the Owner Trustee may seek instructions
from the Certificateholders and shall not be liable to any person to the extent
that it acts in good faith in accordance with the instructions of the
Certificateholders.
ARTICLE VII
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
SECTION 7.1 Owner Trustee's Fees and Expenses. Until the Trust has
been terminated in accordance with Section 9.1, as compensation for its services
hereunder, the Owner Trustee shall be entitled to receive the Owner Trustee's
Fee pursuant to Section ______ of the Servicing Agreement, payable in advance on
the Closing Date and on each [January] Payment Date. The following fees and
expenses of the Owner Trustee (in addition to the Owner Trustee's Fee) shall be
payable from the Trust Estate:
(a) except as otherwise expressly provided herein, all reasonable
expenses, disbursements and advances
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incurred or made by the Owner Trustee in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(b) any loss, liability or expense incurred by the Owner Trustee
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this Trust and its
duties hereunder and under any Basic Documents, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
SECTION 7.2 Indemnification. The Servicer shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Trust Estate, the
administration of the Trust Estate or the action or inaction of the Owner
Trustee hereunder, except only that the Servicer shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from (i) its own willful misconduct or gross negligence or (ii) with
respect to the Owner Trustee, the inaccuracy of any representation or warranty
contained in Section 6.3 expressly made by the Owner Trustee. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In the event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Servicer, which approval shall not be unreasonably withheld.
ARTICLE VIII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 8.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee hereunder shall at all times be an Eligible Bank. In case at any time
the Owner Trustee shall cease to be eligible in accordance with the provisions
of this
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Section 8.1, the Owner Trustee shall resign immediately in the manner and with
the effect specified in Section 8.2.
SECTION 8.2 Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Sponsor. Upon receiving such notice of
resignation, the Sponsor shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Sponsor and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 8.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Sponsor or any Certificateholder on behalf of itself and
all others similarly situated may petition any court of competent jurisdiction
for the removal of the Owner Trustee and the appointment of a successor Owner
Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.2 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.3.
SECTION 8.3 Successor Owner Trustee. Any successor Owner Trustee
appointed as provided in Section 8.2 shall execute, acknowledge and deliver to
the Sponsor, and to its predecessor Owner Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall, upon payment of its charges, deliver or cause
to be delivered to the successor Owner Trustee the Contracts and any related
documents and statements held by it hereunder; and the Sponsor and the
predecessor Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be
23
<PAGE>
requested by the successor Owner Trustee for fully and certain vesting and
confirming in the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section 8.3 unless, at the time of such acceptance, such successor Owner
Trustee shall be eligible under the provisions of Section 8.1.
Upon acceptance of appointment by a successor Owner Trustee as
provided in this Section 8.3, the successor Owner Trustee shall mail notice of
such succession to each Certificateholder at their addresses as shown in the
Certificate Register.
SECTION 8.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Owner Trustee,
shall be the successor for the Owner Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 8.1 without the
execution or filing of any paper or any further act on the party of any of the
parties hereto, anything herein to the contrary notwithstanding.
SECTION 8.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust may at the time be located, the Sponsor and the Owner
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner Trustee to act
as co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person, in
such capacity, such title to the Trust Estate, or any part thereof, and, subject
to the other provisions of this Section, such powers, duties, obligations,
rights and trusts as the Sponsor and the Owner Trustee may consider necessary or
desirable. If the Sponsor shall not have joined in such appointment within [15]
days after receipt by it of a request so to do, the Owner Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 8.1 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 8.3.
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Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties, and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Sponsor and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Sponsor.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
25
<PAGE>
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement
(other than Article VII) and the Trust shall terminate and be of no further
force or effect, (i) upon the final distribution by the Paying Agent or the
Servicer, as the case may be, of all moneys or other property or proceeds of the
Trust Estate in accordance with Section ______ of the Servicing Agreement or
(ii) at the time provided in Section ________. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, other than the
Sponsor as described in Section _________, shall not (i) operate to terminate
this Agreement or the Trust, nor (ii) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Trust Estate nor (iii) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the Sponsor nor
any Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment
Date upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given promptly by the Owner Trustee by letter to Certificateholders mailed
within five Business Days of receipt of notice of termination of the Servicing
Agreement from the Servicer given pursuant to Section _________ of the Servicing
Agreement stating (i) the Payment Date upon which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Paying Agent therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Paying Agent at the time such notice
is given to Certificateholders.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Owner Trustee shall give a second
written
26
<PAGE>
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall be distributed by the Owner Trustee to the Sponsor.
(d) In no event shall the Trust established pursuant to this
Agreement remain in existence for more than 10 years from ____________, 199_.
SECTION 9.2 Dissolution upon Bankruptcy of the Sponsor. In the event
that any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding, voluntary or involuntary, under any federal or
state bankruptcy or similar law (each, an "Insolvency Event") shall occur with
respect to the Sponsor, this Agreement shall be terminated in accordance with
Section 9.1 60 days after the date of such Insolvency Event, unless, before the
end of such 60-day period the Owner Trustee shall have received written
instructions from each of the Certificateholders (other than the Sponsor) and
each of the Noteholders, to the effect that each such party disapproves of the
liquidation of the Contracts and termination of the Trust. Promptly after the
occurrence of any Insolvency Event with respect to the Sponsor, (i) the Sponsor
shall give the Indenture Trustee and the Owner Trustee written notice of such
Insolvency Event, (ii) the Owner Trustee shall, upon the receipt of such written
notice from the Sponsor, give prompt written notice to the Certificateholders of
the occurrence of such event and (iii) the Indenture Trustee shall, upon receipt
of written notice of such Insolvency Event from the Owner Trustee or the
Sponsor, give prompt written notice to the Noteholders of the occurrence of such
event; provided, however, that any failure to give a notice required by this
sentence shall not prevent or delay, in any manner, a termination of the Trust
pursuant to the first sentence of this Section 9.2. Upon a termination pursuant
to this Section, the Owner Trustee shall direct the Collateral Trustee promptly
to sell the assets of the Trust in a commercially reasonable manner and on
commercially reasonable terms. The proceeds of such a sale of the assets of the
Trust shall be treated as collections under the Servicing Agreement.
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<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Supplements and Amendments. (a) This Agreement may be
amended from time to time by the Owner Trustee and the Sponsor, without the
consent of any of the Certificateholders or Noteholders, to cure any ambiguity,
to correct or supplement any provisions herein or therein which may be
inconsistent with any other provisions herein or therein, as the case may be, or
to add any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
opinion of counsel for the Sponsor or the Servicer, adversely affect in any
material respect the interests of any Certificateholder or any Noteholder.
(b) This Agreement may also be amended from time to time by the
Sponsor and the Owner Trustee, with the consent of (x) Noteholders owning a
majority in principal amount of the Notes outstanding and (y) Certificateholders
with an aggregate Percentage Interest of [51%] or more, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (a) reduce
in any manner the amount of, or delay the timing of, collections of Receivables
or distributions which are required to be made on any Note or any Certificate or
(b) reduce the aforesaid percentage of Note principal balance or Certificate
Percentage Interest required to consent to any such amendment, without the
unanimous consent of the Noteholders and the Certificateholders.
(c) Promptly after the execution of any amendment or consent
pursuant to this Section 10.1, the Owner Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder.
(d) It shall not be necessary for the consent of Certificateholders
or Noteholders under this Section 10.1 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders or Noteholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
(e) The Owner Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
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(f) Upon the execution of any amendment to this Agreement, this
Agreement shall be modified in accordance therewith, and such amendment shall
form a part of this Agreement for all purposes; and every holder of a
Certificate theretofore or thereafter executed and delivered hereunder shall be
bound thereby.
(g) In connection with any amendment pursuant to this Section 10.1
the Owner Trustee shall be entitled to receive an opinion of counsel to the
Sponsor or the Servicer acceptable to the Owner Trustee to the effect that such
amendment is authorized or permitted by the Agreement.
SECTION 10.2 Notices. All communications and notices pursuant hereto
to the Sponsor, the Servicer, the Owner Trustee or the Certificate Registrar or
the Indenture Trustee shall be in writing and delivered or mailed to it at the
following address:
If to the Sponsor:
Advanta Auto Finance Corporation
500 Office Center Drive
Fort Washington, Pennsylvania 19034
Attention:
Telecopy Number:
If to the Servicer:
_____________________________
_____________________________
_____________________________
Attention:
Telecopy Number:
If to the Owner Trustee:
_____________________________
_____________________________
_____________________________
Attention:
Telecopy Number:
If to the Certificate Registrar:
_____________________________
_____________________________
_____________________________
Attention:
Telecopy Number:
29
<PAGE>
If to the Indenture Trustee or to the Noteholders:
_____________________________
_____________________________
_____________________________
Attention:
Telecopy Number:
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
All communications and notices pursuant hereto to a
Certificateholder shall be in writing and delivered or mailed at the address
shown in the Certificate Register.
SECTION 10.3 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 10.4 Headings. The headings of the various Articles and
Sections herein and the Table of Contents are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
SECTION 10.5 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of ___________.
SECTION 10.6 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
SECTION 10.7 No Legal Title to Trust Estate in Certificateholder.
The Certificateholders shall not have legal title to any part of the Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided ownership interest only in accordance with Section
3.9 and Article IX. No transfer, by operation of law or otherwise, of any right,
title or interest of the Certificateholders to and in their ownership interest
in the Trust Estate shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it of
legal title to any part of the Trust Estate.
30
<PAGE>
SECTION 10.8 Limitation on Rights of Others. Except for the terms of
Section 2.7, nothing in this Agreement, whether express or implied, shall be
construed to give to any Person other than the Owner Trustee and the Sponsor any
legal or equitable right, remedy or claim under or in respect of this Trust
Agreement or any covenants, conditions or provisions contained herein. Such
covenants, conditions and provisions are, and shall be held to be, for the sole
and exclusive benefit of the Owner Trustee and the Sponsor.
SECTION 10.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or of any provision in any other
Basic Document, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. The provisions of this Agreement shall remain valid and
enforceable notwithstanding the invalidity, unenforceability, impossibility or
illegality of performance of any Basic Document.
SECTION 10.10 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee, the Sponsor and each Certificateholder and their respective successors
and assigns. Any request, notice, direction, consent, waiver or other instrument
or action by a Certificateholder shall bind its successors and assigns.
SECTION 10.11 No Implied Waiver. No term or provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing entered into as provided in Section 10.1 hereof; and
any such waiver of the terms hereof shall be effective only in the specific
instance and for the specific purpose given.
SECTION 10.12 No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not at any time institute against the Sponsor or the Trust,
or join in any institution against the Sponsor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law in connection
with any obligations relating to the Certificates, the Notes, this Agreement or
any of the Basic Documents.
31
<PAGE>
SECTION 10.13 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Sponsor, the Servicer, the Owner Trustee, the Indenture
Trustee, the Collateral Trustee or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the Certificates or the Basic Documents.
32
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this ____ day
of ____________, 199_.
ADVANTA AUTO FINANCE CORPORATION
By:________________________________
Name:
Title:
___________________,
not in its individual capacity
but solely as Owner Trustee of
[ADVANTA AUTO RECEIVABLES TRUST
199 - ]
By:_______________________________________
Name:
Title:
__________________________________________,
as Servicer
By:_______________________________________
Name:
Title:
33
<PAGE>
EXHIBIT A
[Form of Face Certificate]
FORM OF CERTIFICATE
[ADVANTA AUTO RECEIVABLES TRUST 199 - ]
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST
IN ADVANTA AUTO FINANCE CORPORATION, [TRUSTEE] OR ANY AFFILIATES THEREOF, AND
NEITHER THIS CERTIFICATE NOR THE CONTRACTS NOR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
No. R _________ ____% Percentage Interest
This certifies that ___________________________ is the registered
owner of an undivided _____ Percentage Interest in the [Advanta Auto Receivables
Trust 199_-_] (the "Trust"). The Trust Estate held by the Trust includes among
its assets a pool of installment sale contracts for new and used automobiles and
light duty trucks (the "Contracts") [and a security interest in the related
vehicles (the "Vehicles")], including, without limitation, and any and all
rights to receive payments thereunder after the close of business on _______,
199_. The Trust has been created pursuant to a Trust Agreement dated as of
_______, 199_ among Advanta Auto Finance Corporation, a Nevada corporation (the
"Sponsor"), __________, a ____________ banking corporation, not in its
individual capacity but solely as Owner Trustee (herein, together with its
permitted successors in the trusts hereunder, called the "Owner Trustee") of the
Trust, ____________________, a __________ corporation, as servicer (the
"Servicer") and the holders (the "Certificateholders") of undivided percentage
interests in the Trust, as amended and restated as of __________, 199_ (the
"Agreement").
This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate, the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to them in the Agreement.
THE RIGHTS TO RECEIVE PAYMENTS WITH RESPECT TO THIS CERTIFICATE ARE
SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF ALL AMOUNTS OF PRINCIPAL AND
INTEREST ON THE NOTES.
A-1
<PAGE>
Distributions on this Certificate will be made in accordance with
the terms of the Servicing Agreement by wire transfer to a bank account
previously identified by each Certificateholder of record and appearing on the
Certificate Register, without the presentation or surrender of this Certificate
or the making of any notation hereon. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Owner Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office of the Collateral Trustee maintained for that purpose
at __________________________________________.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall have
the same effect as if set forth at this place.
The holder hereof, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Trust Estate to the extent
available for distribution to the holder hereof as provided in the Servicing
Agreement for payment hereunder and that the Owner Trustee in its individual
capacity is not personally liable to the holder hereof for any amounts payable
under this Certificate, the Agreement or the Servicing Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement or any Basic Document.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Owner Trustee. Copies of the
Agreement and all amendments thereto will be provided to any Certificateholder
free of charge upon a written request to the Owner Trustee.
A-2
<PAGE>
IN WITNESS WHEREOF, [Advanta Auto Receivables Trust 199_-_] has
caused this Certificate to be duly executed by an authorized officer of the
Owner Trustee and attested by one of the Owner Trustee's authorized officers and
has caused the Owner Trustee's corporate seal to be impressed thereon.
Date: _____________ [ADVANTA AUTO RECEIVABLES TRUST
199_-_]
By: [Trustee], not in its individual
capacity but solely as Owner Trustee
[Seal] By:___________________________
Authorized Officer
Attest:
_______________________
Authorized Officer
A-3
<PAGE>
[Form of Reverse of Certificate]
This Certificate represents a fractional undivided interest in the
Trust. This Certificate is limited in right of payment to certain collections
respecting the Contracts, all as more specifically set forth herein and in the
Agreement. This Certificate is not insured or guaranteed by any person or
governmental agency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Certificateholders under the Agreement at any time by the Sponsor and the Owner
Trustee with the consent of the holders of Certificates evidencing [51%] of the
aggregate Percentage Interests and Noteholders owning a majority in principal
amount of the Notes outstanding. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of any of the
Certificateholders or Noteholders.
As provided in the Agreement and subject to the limitations set
forth in the following paragraph, the transfer of this Certificate is
registerable in the Certificate Register of the Certificate Registrar upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Owner Trustee at ________________, accompanied by a
written instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing, and thereupon one or more new Certificates
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same Percentage Interest as requested by
the holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
A-4
<PAGE>
The Owner Trustee and the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Owner Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement (other
than Article VII) and the Trust created thereby shall terminate on the Payment
Date next succeeding the Due Period during which the last Contract shall have
been liquidated (but not later than six months after completion of all
collection efforts).
ASSIGNMENT
For value received, the undersigned, subject to the provisions of
Sections 3.2 and 3.8 of the Agreement, sells, assigns and transfers unto (name
and address, including zip code and taxpayer I.D. or social security number of
assignee) _____________________________________ the within Certificate and does
hereby irrevocably constitute and appoint _______________________ attorney to
transfer the said Certificate on the books kept for registration thereof with
full power of subscription on the premises.
Dated: ______________________
Signature Guaranteed:
NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change whatsoever. Such
signature must be guaranteed by a member of the New York Stock Exchange or a
commercial bank or trust company.
A-5
<PAGE>
EXHIBIT 5.1
<PAGE>
_____________ __, 199__
Advanta Auto Finance Corporation
500 Office Center Drive
Fort Washington, Pennsylvania 19034
Re: Advanta Auto Finance Corporation
Automobile Receivables-Backed Securities
Series 199__-
Gentlemen:
We have acted as counsel to [Advanta Auto Finance Corporation] (the
"Registrant") in connection with the preparation and filing of the registration
statement on Form S-3 (such registration statement, the "Registration
Statement") being filed today with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act"), in respect of
Automobile Receivables-Backed Securities, Series 199__- ("Securities") which the
Registrant plans to offer in series, each series to be issued under a separate
[pooling and servicing agreement] [Trust Agreement] (a "[Pooling and Servicing
Agreement]" [Trust Agreement]), in substantially one of the forms incorporated
by reference as Exhibits to the Registration Statement, among Advanta Auto
Finance Corporation (the "Company"), ___________________, as issuer,
_____________________, as seller, __________________, as back-up servicer, and a
trustee to be identified in the prospectus supplement for such series of
Securities (the "Trustee" for such series).
We have examined and relied on the originals or copies certified or
otherwise identified to our satisfaction of all such documents and records of
the Company and such other instruments and other certificates of public
officials, officers and representatives of the Company and such other persons,
and we have made such investigations of law, as we have deemed appropriate as a
basis for the opinions expressed below.
The opinions expressed below are subject to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
<PAGE>
Advanta Auto Finance Corporation
______________ __, 199__
Page 2
We are admitted to the Bar of the State of New York and we express
no opinion as to the laws of any other jurisdiction except as to matters that
are governed by Federal law or the laws of the State of New York. All opinions
expressed herein are based on laws, regulations and policy guidelines currently
in force and may be affected by future regulations.
Based upon the foregoing, we are of the opinion that:
1. When, in respect of a series of Securities, a [Pooling and
Servicing Agreement] [Trust Agreement] has been duly authorized by all
necessary action and duly executed and delivered by the Company, the
issuer, the seller, the back-up servicer and the Trustee for such series,
such Pooling and Servicing Agreement will be a valid and legally binding
obligation of the Company; and
2. When a [Pooling and Servicing Agreement] [Trust Agreement] for a
series of Securities has been duly authorized by all necessary action and
duly executed and delivered by the Company, the issuer, the seller, the
back-up servicer and the Trustee for such series, and when the Securities
of such series have been duly executed and authenticated in accordance
with the provisions of the [Pooling and Servicing Agreement] [Trust
Agreement], and issued and sold as contemplated in the Registration
Statement and the prospectus, as amended or supplemented and delivered
pursuant to Section 5 of the Act in connection therewith, such Securities
will be legally and validly issued, fully paid and nonassessable, and the
holders of such Securities will be entitled to the benefits of such
[Pooling and Servicing Agreement] [Trust Agreement].
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and the related prospectus under the heading "Legal
Matters."
This opinion is furnished by us as counsel to the Registrant and is
solely for the benefit of the addressees hereof. It may not be relied upon by
any other person or for any other purpose without our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT 8.1
<PAGE>
_____________ __, 199__
Advanta Auto Finance Corporation
500 Office Center Drive
Fort Washington, Pennsylvania 19034
Re: Advanta Auto Finance Corporation
Automobile Receivables-Backed Securities
Series 199_-_
Gentlemen:
We have acted as counsel to Advanta Auto Finance Corporation in
connection with the preparation and filing of a registration statement on Form
S-3 (the "Registration Statement") being filed today with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), in respect of Automobile Receivables-Backed Securities, Series 199__-
("Securities") which the Registrant plans to offer in series.
The opinion contained in the relevant prospectus supplement
constitutes a part of the Registration Statement under the heading "Certain
Federal Income Tax Consequences", to the extent they constitute legal
conclusions with respect to matters federal law, have been prepared by us and,
in our opinion, provide a fair and accurate summary of such law or conclusions.
We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and related prospectus under the heading "Certain Federal
Income Tax Consequences."
Very truly yours,
<PAGE>
EXHIBIT 10.1
<PAGE>
================================================================================
_______________________,
ORIGINATOR
AND
ADVANTA AUTO FINANCE CORPORATION
_________________________________
RECEIVABLES ACQUISITION AGREEMENT
Dated as of ________ __, 199__
_________________________________
================================================================================
ALL RIGHTS, TITLE AND INTEREST IN AND TO THIS AGREEMENT ON THE PART OF ADVANTA
AUTO FINANCE CORPORATION HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF _________________________, AS TRUSTEE, UNDER [A [POOLING
AND SERVICING AGREEMENT] [A TRUST AGREEMENT]] [AN INDENTURE] DATED AS OF
_____________, 199__ FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN DEFINITIONS................................... 1
ARTICLE II TRANSFER OF RECEIVABLES............................... 4
Section 2.01. Transfer of Receivables....................... 4
Section 2.02. The Closing................................... 6
Section 2.03. The Funding Events............................ 6
ARTICLE III REPRESENTATIONS AND WARRANTIES........................ 6
Section 3.01. Representations and Warranties of
the Depositor....................................... 6
Section 3.02. Representations and Warranties of
the Originator...................................... 7
ARTICLE IV CONDITIONS............................................ 18
Section 4.01. Conditions to Obligation of the
Depositor........................................... 18
Section 4.02. Conditions to Obligation of the
Originator.......................................... 19
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE ORIGINATOR..................................................... 20
Section 5.01. Protection of Right, Title and
Interest............................................ 20
Section 5.02. Other Liens or Interests...................... 20
Section 5.03. Principal Executive Office.................... 21
Section 5.04. Trustee as Additional Insured................. 21
Section 5.05. Costs and Expenses............................ 21
Section 5.06. No Waiver..................................... 21
Section 5.07. Location of Servicer Files.................... 21
Section 5.08. Transfer of Receivables....................... 21
Section 5.09. Originator's Records.......................... 21
Section 5.10. Transfer of Additional
Receivables......................................... 21
Section 5.11. No Bankruptcy Petition........................ 22
Section 5.12. Covenants Regarding Operations................ 22
ARTICLE VI INDEMNIFICATION....................................... 23
i
<PAGE>
Page
----
ARTICLE VII MISCELLANEOUS PROVISIONS.............................. 23
Section 7.01. Obligations of Originator..................... 23
Section 7.02. Reacquisition Events.......................... 23
Section 7.03. The Depositor................................. 23
Section 7.04. Trust......................................... 23
Section 7.05. Amendment..................................... 24
Section 7.06. Waivers....................................... 24
Section 7.07. Notices....................................... 24
Section 7.08. Costs and Expenses............................ 24
Section 7.09. Representations............................... 24
Section 7.10. Confidential Information...................... 24
Section 7.11. Headings and Cross-References................. 24
Section 7.12. Governing Law................................. 25
Section 7.13. Counterparts.................................. 25
EXHIBIT A ASSIGNMENT
EXHIBIT B SCHEDULE OF RECEIVABLES
ii
<PAGE>
RECEIVABLES ACQUISITION AGREEMENT
This RECEIVABLES ACQUISITION AGREEMENT is made as of this __th day
of ____, 199__, by and between ________________, a ___________ [corporation],
having its principal executive office at _______________________ (the
"Originator") and Advanta Auto Finance Corporation, a Nevada corporation, having
its principal place of business at 500 Office Center Drive, Fort Washington,
Pennsylvania 19034 (the "Depositor").
WHEREAS, the Originator and the Depositor wish to set forth the
terms pursuant to which (i) the Receivables (as hereinafter defined) are to be
pledged, transferred, assigned and otherwise conveyed by the Originator to the
Depositor, which Receivables will be transferred and assigned by the Depositor,
pursuant to the [[Pooling and Servicing Agreement] [Trust Agreement]] (as
hereinafter defined), to Advanta Auto Receivables Trust 199__-__ (the "Trust")
to be created thereunder, which Trust will issue [certificates as security for
the loan from the securityholders to the Originator (the "Class __
[Certificates] [Notes]"); and (ii) additional Receivables will from time to time
be pledged, transferred, assigned and otherwise conveyed by the Originator to
the Depositor, which Receivables will then be transferred and assigned by the
Depositor to the Trust on Funding Dates (as hereinafter defined); and
WHEREAS, all Receivables transferred pursuant to this Agreement
shall constitute Eligible Receivables (as hereinafter defined) as of the Closing
Date or the Funding Date, as the case may be, on which they are transferred
hereunder.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth
in the [[Pooling and Servicing Agreement] [Trust Agreement]] dated as of
_______, 199__ among the Depositor, the Originator, and _________________, as
trustee ("[Pooling and Servicing Agreement] [Trust Agreement]"). As used in this
Agreement, the following terms shall, unless the context otherwise requires,
have the following meanings (such meanings to be equally applicable to the
singular and plural forms of the terms defined):
<PAGE>
"Agreement" shall mean this Receivables Acquisition Agreement and
all amendments hereof and supplements hereto.
"Assignment" shall mean the document of assignment attached to this
Agreement as Exhibit A.
"Class __ [Certificate] [Note]" shall have the meaning specified in
the [Pooling and Servicing Agreement] [Trust Agreement].
"Closing Date" shall mean ________, 199__.
"Closing Date Receivables" shall mean the Receivables acquired by
the Depositor from the Originator pursuant to the Agreement on the Closing Date.
"Collections" shall mean all amounts collected by the [Master
Servicer] or any Servicer or Subservicer (as defined in the [Pooling and
Servicing Agreement] [Trust Agreement]) (from whatever source) on or with
respect to the Receivables.
"Custodian Files" shall have the meaning specified in the [Pooling
and Servicing Agreement] [Trust Agreement].
"Cutoff Date" shall mean __________, 199__ with respect to the
Closing Date and the last Business Day of each calendar week preceding the
calendar week of a Funding Date, with respect to each Funding Date.
"Eligible Receivable" means any Receivable as to which all of the
representations set forth in Section 3.02(b) hereof are true.
"Funding Date" shall mean each date occurring no more than once per
calendar week during the period beginning on the Closing Date and ending on
_________, 199__.
"Funding Date Receivables" means, with respect to a Funding Date,
the Eligible Receivables to be pledged, transferred, assigned and otherwise
conveyed by the Originator to the Depositor on such date and identified on
Schedule I attached to an Assignment substantially in the form of Exhibit A
hereto delivered on such Funding Date.
"Funding Event" shall mean, with respect to a Funding Date, the
occurrence of the events described in the definition of Funding Date.
"[Master Servicer]" shall mean ______________________________, a
_________ [corporation], its successors and assigns.
2
<PAGE>
"Obligor" shall have the meaning specified in the [Pooling and
Servicing Agreement] [Trust Agreement].
"Originator" shall mean ________________________, a ___________
[corporation], its successors and assigns.
"Person" shall have the meaning specified in the [Pooling and
Servicing Agreement] [Trust Agreement].
"[Pooling and Servicing Agreement] [Trust Agreement]" shall mean the
[Pooling and Servicing Agreement] [Trust Agreement] by and among the Originator;
the Depositor; and , as trustee, dated as of _________, 199__.
["Pre-Funding Review" means a review conducted by the Review Firm
prior to the Closing Date and each Funding Date with respect to Receivables to
be included in the Trust Fund as of such date and prior to the Closing Date with
respect to certain historical data included in the Prospectus Supplement dated
____________, 199__ (the "Prospectus Supplement"). The Review Firm will review
the Receivable files to determine:
(A) with respect to a randomly selected, statistically valid
sample of such Receivables, whether such Receivables constitute
Eligible Receivables;
(B) with respect to each Receivable, the existence and
delivery to the Trustee of:
(1) the original retail installment sale contract
evidencing such Receivable,
(2) an original certificate or an original or copy of a
guarantee of title or a copy of dealer guarantee of title, and
(3) a copy of an application for, or an instrument
certificate issued by the Risk Default Insurer; and
(C) with respect to the Receivables to be included in the
Trust Fund as of the Closing Date or a Funding Date, as the case may
be, confirmation of certain figures stated on a report substantially
in the form of Exhibit to the [Pooling and Servicing Agreement]
[Trust Agreement].]
"Rating Agency" shall mean ___________________________ or any
successors thereto.
3
<PAGE>
"Receivable" shall mean any retail installment sale contract and
installment loan identified on Exhibit B hereto which shall be amended from time
to time on Funding Dates.
"Receivables Cash Purchase Price" with respect to each Eligible
Receivable pledged, transferred, assigned and otherwise conveyed on the Closing
Date, and each Eligible Receivable pledged, transferred, assigned and otherwise
conveyed on a Funding Date, shall mean __% of the Principal Amount thereof plus
accrued interest from the respective Cutoff Date to the Closing Date or the
Funding Date, as the case may be.
"Replacement Receivable" shall mean a Receivable which (i)
previously secured a receivable originated by the Originator and (ii) was
repossessed due to a default on such prior receivable or a voluntary return of
such vehicle by the Obligor.
"Reacquisition Event" shall have the meaning specified in Section
7.02 hereof.
["Review Firm" shall mean ________________, its successors and
assigns or another firm of independent certified public accountants selected by
the Depositor]
"Risk Default Insurance Policy" or "Risk Default Policy" means auto
loan protection insurance naming the Trustee as an insured, which covers the
Receivables, and which insurance is currently issued by
_______________________________.
"Risk Default Insurer" means _____________________, its successors
and assigns.
"Schedule of Receivables" shall mean the list of Receivables annexed
hereto as Exhibit B.
"Servicer Files" shall have the meaning specified in the [Pooling
and Servicing Agreement] [Trust Agreement].
"Trust" shall mean the Advanta Auto Receivables Trust 199__-__.
"Trustee" shall mean _______________________________, its successors
and assigns.
"UCC" shall mean the Uniform Commercial Code, as in effect from time
to time in the relevant jurisdictions.
"Underwriter" shall mean _______________, its successors and
assigns.
4
<PAGE>
ARTICLE II
TRANSFER OF RECEIVABLES
Section 2.01. Transfer of Receivables. On the Closing Date and on
each Funding Date, subject to the terms and conditions of this Agreement, the
Originator agrees to pledge, transfer, assign and otherwise convey to the
Depositor, and the Depositor agrees to acquire from the Originator, Eligible
Receivables and the other Trust Property relating thereto (as defined in Section
2.01(a) below). The Receivables transferred on the Closing Date are identified
in an exhibit substantially in the form of Exhibit B hereto and shall be covered
by an Assignment substantially in the form of Exhibit A hereto. The Receivables
pledged, transferred, assigned and otherwise conveyed on each Funding Date shall
be identified on Schedule I to Exhibit B attached to an Assignment substantially
in the form of Exhibit A hereto.
(a) Initial Transfer of Receivables and Trust Property. On the
Closing Date and simultaneously with the transactions pursuant to the
[Pooling and Servicing Agreement] [Trust Agreement], the Originator shall
pledge, transfer, assign and otherwise convey to the Depositor, without
recourse, a 100% interest in (i) all right, title and interest of the
Originator in and to the Closing Date Receivables, and all moneys due
thereon (with respect to Precomputed Receivables), on and after the Cutoff
Date (ii) the security interest of the Originator in the security
interests in the Financed Vehicles granted by the Obligors pursuant to the
Closing Date Receivables and all certificates of title to such Financed
Vehicles; (iii) the interest of the Originator in any proceeds from claims
on any physical damage, credit life, risk default or disability insurance
policies covering the Financed Vehicles or the Obligors from the Cutoff
Date; and (iv) the proceeds of any and all of the foregoing and any
recourse in equity or by contract against the Originator. (All of the
property identified in this subsection (a) and the following subsection
(c) shall constitute the "Trust Property.")
(b) Receivables Cash Purchase Price--Closing Date. In consideration
for the Receivables and Trust Property described in Section 2.01(a), the
Depositor shall, on the Closing Date, pay to the Originator 100% of the
Receivables Cash Purchase Price in cash by federal wire transfer (same
day) funds.
(c) Transfer of Receivables and Trust Property on Funding Dates. On
each Funding Date, the Originator shall pledge, transfer, assign and
otherwise convey to the Depositor, without recourse, a 100% interest in
(i)
5
<PAGE>
all right, title and interest of the Originator in and to the Funding Date
Receivables identified on an Exhibit substantially in the form of Schedule
I to Exhibit B hereto delivered on such Funding Date, and all moneys
received thereon subsequent to the respective Cutoff Date; (ii) the
security interest of the Originator in the Financed Vehicles granted by
the Obligors pursuant to such Receivables and the certificates of title to
such Financed Vehicles; (iii) the interest of the Originator in any
proceeds from claims on any physical damage, credit life, risk default or
disability insurance policies covering such Financed Vehicles or such
Obligors from the related Cutoff Date; and (iv) the proceeds of any and
all of the foregoing; provided, however, that (A) the minimum amount of
Receivables pledged, transferred, assigned or otherwise conveyed to the
Depositor on any Funding Date, other than the Final Funding Date, shall be
not less than $____________, (B) the Depositor shall comply with the
requirements specified in Section ___ of the [Pooling and Servicing
Agreement] [Trust Agreement] as a condition to any such pledge, transfer,
assignment or other conveyance and (C) the Pre-Funding Account shall
contain available funds in an amount at least equal to the Receivables
Cash Purchase Price for such Funding Date Receivables immediately prior to
the Funding Event.
(d) Receivables Cash Purchase Price--Funding Date. In consideration
for the Funding Date Receivables and other Trust Property relating thereto
described in Section 2.1(c), upon one Business Days' prior notice given by
the Depositor to the Trustee, the Depositor shall cause the Trustee, on
each Funding Date, to pay to the Originator an amount equal to 100% of the
Receivables Cash Purchase Price in cash by federal wire transfer funds.
The Originator acknowledges that the funds to effect the transfer of the
Funding Date Receivables and other Trust Property relating thereto on each
Funding Date shall be disbursed by the Trustee solely from the Pre-Funding
Account pursuant to Section ______ of the [Pooling and Servicing
Agreement] [Trust Agreement].
(e) Assignment by the Depositor In addition, concurrently with the
transfer by the Depositor of the Receivables to the Trust, on the Closing
Date, the Depositor shall assign to the Originator all of the Depositor's
remaining rights to the Trust Fund and all rights of the Depositor under
the [Pooling and Servicing Agreement] [Trust Agreement].
Section 2.02. The Closing. The transfer of the Receivables shall
take place at a closing (the "Closing") at the offices of Dewey Ballantine, 1301
Avenue of the Americas, New York, New York 10019 on the Closing Date,
simultaneously
6
<PAGE>
with the closings under: (a) the [Pooling and Servicing Agreement] [Trust
Agreement] pursuant to which (i) the Depositor will assign all of its right,
title and interest in and to the Receivables and other Trust Property to the
Trustee for the benefit of the [Certificateholders] [Noteholders]; and (ii) the
Trustee will deposit the foregoing into the Trust in exchange for the Class __
[Certificates] [Notes]; and (b) the purchase of the [Certificates] [Notes] by
the Class __ [Certificateholders] [Noteholders].
Section 2.03. The Funding Events. The transfer of the Funding Date
Receivables on each Funding Date shall take place at the offices of the Trustee
or at such other location as the Depositor and the Originator may reasonably
agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Originator and for the benefit
of the Trustee, the [Certificateholders] [Noteholders] and the Trust as of the
date hereof and as of the Closing Date and as of each Funding Date:
(a) Organization, Etc. The Depositor is a corporation duly organized
under the laws of the State of Nevada pursuant to its Articles of
Incorporation and is validly existing as a corporation and in good
standing under the laws of the State of Nevada, and has full power and
authority to execute and deliver this Agreement and to perform the terms
and provisions hereof and thereof.
(b) Due Authorization. The execution, delivery and performance by
the Depositor of this Agreement have been duly authorized by all necessary
corporate action, do not require any approval or consent of any
governmental agency or authority, do not and will not conflict with any
material provision of the Articles of Incorporation or Bylaws of the
Depositor, and do not and will not conflict with or result in a breach
which would constitute a material default under any agreement for borrowed
money binding upon or applicable to it or such of its property which is
material to it, or to the best of the Depositor's knowledge, any law or
governmental regulation or court decree applicable to it or such material
property, and this Agreement is the legal, valid and binding obligation of
the Depositor enforceable in accordance with its terms except as the same
may be limited by insolvency, bankruptcy, reorganization or
7
<PAGE>
other laws relating to or affecting the enforcement of creditors' rights
or by general equity principles.
(c) No Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is presently pending, or
to the knowledge of the Depositor threatened, against the Depositor or its
properties or with respect to this Agreement, which, if adversely
determined would, in the opinion of the Depositor, have a material adverse
effect on the transactions contemplated by this Agreement.
(d) Business Purpose. The Depositor will acquire and transfer the
Receivables for a bona fide business purpose.
Section 3.02. Representations and Warranties of the Originator.
(a) The Originator hereby represents and warrants to the Depositor
and its successors and assigns and for the benefit of the Trustee, the
[Certificateholders] [Noteholders] and the Trust as of the date hereof and
as of each Funding Date:
(i) Organization, Etc. The Originator has been duly organized
and is validly existing as a _______________ in good standing under
the laws of the State of __________, with power and authority to own
its properties and to conduct its business as such properties are
currently owned and such business is presently conducted and had at
all relevant times, and shall have, the power, authority and legal
right to acquire and own the Receivables.
(ii) Due Qualification. The Originator is duly qualified to do
business as a foreign entity in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(iii) Power and Authority. The Originator has the power and
authority to execute and deliver this Agreement and to carry out its
terms; the Originator has full power and authority to pledge,
transfer, assign and otherwise convey the property pledged,
transferred, assigned and otherwise conveyed to the Depositor and
has duly authorized such pledge and assignment to the Depositor by
all necessary corporate action; and the execution,
8
<PAGE>
delivery, and performance of this Agreement have been duly
authorized by all necessary corporate action and the Agreement is
the legal, valid and binding obligation of the Originator
enforceable in accordance with its terms except as the same may be
limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditor's rights or by
general equity principles. The Originator has delivered this
Agreement and any other agreements and documents necessary to
effectuate the transfer contemplated hereby.
(iv) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms do
not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or bylaws of
the Originator, or any indenture, agreement or other instrument to
which the Originator is a party or by which it is bound; nor result
in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other
instrument (other than this Agreement); nor violate any law or, to
the best of the Originator's knowledge, any order, rule or
regulation applicable to the Originator of any court or of any
federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Originator
or its properties.
(v) No Proceedings. There are no proceedings or investigations
pending or, to the Originator's best knowledge, threatened before
any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Originator
or its properties: (A) asserting the invalidity of this Agreement;
(B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement; or (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Originator of its obligations under, or the validity or
enforceability of, this Agreement.
(vi) No Consents, Approvals. Neither the execution nor the
delivery by the Originator of this Agreement required the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any
9
<PAGE>
governmental authority or agency under any existing federal or state
law governing the Originator, except such as have been obtained,
made or taken. The Originator complies in all material respects with
all applicable laws, rules and orders with respect to itself, its
business and properties and the Receivables. The Originator
maintains all applicable permits and certifications.
(vii) No Unpaid Taxes. All tax returns required and due to be
filed by the Originator in any jurisdiction have in fact been filed,
and all taxes, assessments, fees and other governmental charges upon
it or any subsidiary or upon any of their respective properties,
income or franchises, shown to be due and payable on such returns
have been paid. To the best of the Originator's knowledge all such
tax returns were true and correct. Neither the Originator nor any
subsidiary knows of any proposed additional tax assessment against
it in any material amount or of any basis therefor.
(viii) Adequate Provisions for Taxes. The provisions for taxes
on the Originator's books are in accordance with generally accepted
accounting principles.
(ix) Pension/Profit Sharing Plans. No contribution failure has
occurred with respect to any pension or profit sharing plan and all
such plans have been fully funded as of the date of this Agreement.
(x) Trade Names. "_______________________________" is the only
trade name under which the Originator is currently operating its
business and under which the Originator operated its business for
the six years (or such shorter period of time during which the
Originator was in existence) preceding the Closing Date.
(xi) Ability to Perform. There is no material impairment in
the ability of Originator to perform its obligations under this
Agreement.
(xii) Valid Business Reasons; No Fraudulent Transfers. The
Originator has valid business reasons to acquire and pledge,
transfer, assign and otherwise convey the Receivables rather than to
obtain a secured loan with the Receivables as collateral and has
undertaken the transaction
10
<PAGE>
contemplated herein as principal rather than as agent of any other
person. At the time of the transfer: (i) the Originator transferred
the Receivables to the Depositor without any intent to hinder,
delay, or defraud any current or future creditor of the Originator;
(ii) the Originator was not insolvent or did not become insolvent as
a result of the transfer; (iii) the Originator was not engaged and
was not about to engage in any business or transaction for which any
property remaining with the Originator was an unreasonably small
capital or for which the remaining assets of the Originator were
unreasonably small in relation to the business of the Originator or
the transaction; (iv) the Originator did not intend to incur, and
did not believe or reasonably should not have believed that it would
incur, debts beyond its ability to pay as they become due; and (v)
the consideration paid by the Depositor to the Originator for the
Receivables was equivalent to the fair market value of such
Receivables.
(xiii) Principal Executive Office. Since its inception the
Originator has maintained, and from the date of this Agreement shall
maintain, its principal executive office in the State of __________
and there have been no other locations of the Originator's principal
executive office during the four months preceding the Closing Date.
(b) The Originator makes the following representations and
warranties as to all of the Receivables subject to this Agreement on which
the Depositor relies in accepting the Receivables. Such representations
and warranties speak as of the execution and delivery of this Agreement
and each Funding Date, as the case may be, but shall survive the pledge,
transfer, assignment and other conveyance hereby of the Receivables to the
Depositor and the subsequent assignment and transfer to the Trustee
pursuant to the [Pooling and Servicing Agreement] [Trust Agreement]. The
Originator hereby acknowledges and expressly agrees that any or all of the
Depositor, the Trustee or the [Certificateholders] [Noteholders] may
enforce the Originator's obligations pursuant to Section 7.02 hereof for
any breach of any of the following representations and warranties:
Eligible Receivables. Each Receivable pledged, transferred, assigned
and otherwise conveyed hereunder shall have all of the following characteristics
(any such Receivable referred to hereinafter as an "Eligible Receivable") as of
the Closing Date or as of the Funding Date on which such
11
<PAGE>
Receivable is pledged, transferred, assigned or otherwise conveyed hereunder, as
the case may be:
(i) Characteristics of Receivables. Each Receivable (a) shall
have been originated in the United States of America by the
Originator or a Dealer for the retail sale of a Financed Vehicle in
the ordinary course of the Originator or such Dealer's business, has
been fully and properly executed by the parties thereto, and, if
originated by a Dealer, has been purchased by the Originator from
such Dealer or has been financed for such Dealer under an existing
agreement with the Originator, (b) shall have created or shall
create a valid, subsisting, and enforceable first priority security
interest in favor of the Dealer in the Financed Vehicle, which
security interest has been assigned by the Dealer to the Originator
and which security interest shall be assigned by the Originator to
the Depositor, (c) is covered by a Risk Default Insurance Policy and
by a VSI Insurance Policy, as evidenced by certificate(s) of the
insurer dated as of and delivered to the Trustee on the Closing
Date, (d) shall contain customary and enforceable provisions such
that the rights and remedies of the holder thereof shall be adequate
for realization against the collateral of the benefits of the
security, (e) shall provide for level monthly payments (provided
that the payment in the first or last month in the life of the
Receivable may be minimally different from the level payment) that
fully amortize the Amount Financed by maturity and yield interest at
the Annual Percentage Rate, and (f) provides in the case of
Precomputed Receivables, in the event that any such contract is
prepaid, for a prepayment that fully pays the principal amount plus
unearned interest to the next Scheduled Payment.
(ii) Schedule of Receivables. The information set forth in
Exhibit B to this Agreement with respect to the Receivables acquired
on such date shall be true and correct in all material respects as
of the close of business on the Cutoff Date, and no selection
procedures believed to be adverse to the [Certificateholders]
[Noteholders] have been utilized in selecting the Receivables. The
information on the computer tape regarding the Receivables made
available to the Depositor and its assigns is true and correct in
all material respects.
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(iii) Form of Receivables. Each of the Receivables is
substantially in the form of Exhibit C attached hereto.
(iv) Compliance with Law. Each Receivable and the sale of the
Financed Vehicle shall (A) have complied at the time it was
originated or made and at the Closing Date or Funding Date, as the
case may be, shall comply in all material respects with all
requirements of applicable federal, state and local laws, and
regulations thereunder, including, without limitation, usury laws,
the Fair Credit Reporting Act, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty
Act, the Federal Reserve Board's Regulations B and Z, the California
Consumer Credit Act, State adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code, and other consumer credit
laws and equal credit opportunity and disclosure laws and (B) does
not contravene any applicable contracts to which the Originator is a
party and no party to such contract is in violation of any
applicable law, rule or regulation which is material to the
Receivable or the sale of the Financed Vehicle.
(v) Binding Obligation. Each Receivable shall represent the
genuine, legal, valid and binding payment obligation in writing of
the Obligor, enforceable by the holder thereof in accordance with
its terms.
(vi) No Government Obligor. None of the Receivables shall be
due from the United States of America or any State or from any
agency, department or instrumentality of the United States of
America or any State.
(vii) Security Interest in Financed Vehicle. Immediately prior
to the pledge, transfer, assignment and other conveyance thereof,
each Receivable shall be secured by a validly perfected first
security interest in the Financed Vehicle in favor of the Originator
as secured party or all necessary and appropriate actions shall have
been commenced that would result in the valid perfection of a first
security interest in the Financed Vehicle upon completion of
processing by the applicable state agency. The Originator shall
cause each certificate of title to be delivered to the Custodian
pursuant to Section ____ of the
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[Pooling and Servicing Agreement] [Trust Agreement], together with a
power of attorney, duly executed by the Originator in favor of the
Trustee, which power of attorney shall be sufficient to grant a
validly perfected first security interest in the Financed Vehicles
in favor of the Trustee, as Secured Party.
(viii) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been
released from the lien granted by the related Receivable in whole or
in part.
(ix) No Waiver. No provision of a Receivable has been waived,
impaired, altered or modified in any respect except in accordance
with the Servicing Agreement, the substance of which is reflected in
the Schedule of Receivables as it relates to the information
included thereon.
(x) No Amendments. No Receivable has been amended such that
either the original Scheduled Payment or the number of the
originally scheduled due dates have been increased except as
permitted under the terms of the Risk Default Policy covering such
Receivable.
(xi) No Defenses. No right of rescission, recoupment, setoff,
counterclaim or defense has been asserted or threatened with respect
to any Receivable.
(xii) No Liens. No liens or claims shall have been filed for
work, labor or materials relating to any Financed Vehicle that would
be Liens prior to, or equal or coordinate with, the security
interest in a Financed Vehicle granted by the related Obligor
pursuant to a Receivable, nor has any Receivable been satisfied,
subordinated or rescinded.
(xiii) No Default. Except for payment delinquencies continuing
for a period of not more than 30 days as of the Cutoff Date, no
default, breach, violation or event permitting acceleration under
the terms of any Receivable has occurred; and no continuing
condition that with notice or the lapse of time would constitute a
default, breach, violation or event permitting acceleration under
the terms of any Receivable has arisen, and the Originator has not
waived any of the foregoing. There has not been any other default or
delinquency
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under the terms of the Receivable that remained uncured for more
than thirty (30) days after notice to the Obligor. As of such date,
the Originator has no knowledge of any reason why any Receivable
would not be paid in full.
(xiv) Insurance. The Originator, in accordance with its
customary procedures, has (A) required that each Obligor obtain, and
has determined that each Obligor has obtained, physical damage
insurance covering the Financed Vehicle as of the execution of the
Receivable insuring repair or replacement of such Financed Vehicle
subject to a deductibility not in excess of $1,000; and (B) obtained
a Risk Default Policy and a VSI Policy covering each of the
Receivables as of the Closing Date or Funding Date, as the case may
be, and until each Receivable has been paid in full.
(xv) Title. Immediately prior to the transfer and assignment
herein contemplated, the Originator had good and marketable title to
each Receivable free and clear of all Liens and rights of others
and, immediately upon the transfer thereof, the Depositor will have
good and marketable title to each Receivable, free and clear of all
Liens and rights of others except for certain Originator investors'
liens or liens of certain financial institutions, all of which will
be released prior to conveyance hereunder, and the security interest
in the Financed Vehicle and other underlying collateral has been
validly perfected under the UCC and other applicable law, if any.
(xvi) Lawful Assignment. No Receivable shall have been
originated in, or is subject to the laws of, any jurisdiction under
which the pledge, transfer, assignment or other conveyance of such
Receivable under this Agreement or pursuant to transfers of the
[Certificates] [Notes] would be unlawful, void or voidable.
(xvii) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Depositor a first perfected ownership interest in the Receivables
shall have been made.
(xviii) One Original. There shall be only one original of the
retail installment sale contract evidencing each Receivable.
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(xix) Down Payment. At least __% of the Receivables included
in the Trust Fund may have a down payment of at least __% of the
total purchase price of the related Finance Vehicle; up to __% of
the Receivables included in the Trust Fund may have a down payment
of between __% and __% of the total purchase of the related Financed
Vehicle; provided, that no Receivable included in the Trust Fund
shall have a down payment of less than __% of the purchase price of
the related Financed Vehicle.
(xx) Maturity of Receivables. Each Receivable shall have an
original maturity of not more than 61 months; the weighted average
original term to maturity of the Receivables to be acquired on the
Closing Date shall be __ months as of the Cutoff Date, while the
weighted average remaining term to maturity as of such Cutoff Date
for such Receivables is __ months; the remaining maturity of each
Receivable shall be 61 months or less as of the respective Cutoff
Date.
(xxi) Scheduled Payments. Each Receivable which is acquired on
the Closing Date shall have an outstanding Principal Balance of at
least $__________, a next scheduled payment due date on or prior to
_________, 199__ and no Receivable whenever acquired shall have a
payment that is more than 30 days overdue as of the applicable
Cutoff Date; and shall have a final scheduled payment date no later
than the Final Scheduled Distribution Date.
(xxii) Monthly Payments. Each Receivable shall provide for
level monthly payments (provided that the payment in the first or
last month in the life of the Receivable may be minimally different
from such level payment) which fully amortize the amount financed
over the original term; [provided, however, that, as permitted by
the terms of the Risk Default Policy, each Receivable may be
extended for one month for each 12 months in the Receivable's term
provided, that extensions are limited to two, one month extensions
in any consecutive 12 month period; provided, further, that a
Receivable cannot be extended unless six consecutive payments have
been made by the Obligor; further provided, however, that at the
time the extension is made, a sufficient amount of interest due must
be collected to forward the due date of the Receivable.]
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(xxiii) Remaining Maturity. Each Receivable shall have a
remaining maturity of __ months or less as of the respective Cutoff
Date, and the latest scheduled maturity of any Receivable acquired
on the final Funding Date is no later than ________, 20__.
(xxiv) Financing. ___% of the Receivables shall represent
Precomputed Receivables.
(xxv) Bankruptcy Proceeding. No Receivable as of the Cutoff
Date shall be noted in the Originator's records as a dischargeable
debt under a bankruptcy proceeding.
(xxvi) Chattel Paper, Valid and Binding. Each Receivable
constitutes "chattel paper" as deemed in the UCC and is legal, valid
and binding in accordance with its terms.
(xxvii) State of Origination. At the time of origination, each
Receivable was originated by the Originator or a Dealer located in
the State of _________; provided, however, that no more than ___% of
the Principal Balance of the Receivable included in the Trust Fund
on the Closing Date or any Funding Date shall be Replacement
Receivables.
(xxviii) Age of Financed Vehicles. Approximately _____% of the
Receivables acquired on the Closing Date relate to new Financed
Vehicles and approximately ___% related to used Financed Vehicles.
(xxix) No Future Advances. The full principal amount of each
Receivable has been advanced to each Obligor or advanced in
accordance with the directions of each such Obligor, and there is no
requirement for future advances thereunder. The Obligor with respect
to the Receivable does not have any options under their Receivable
to borrow from any person additional funds secured by the Financed
Vehicle. The Principal Balance of each Receivable as of the Closing
Date is fully secured by the related Financed Vehicle.
(xxx) Underwriting Guidelines. Each Receivable has been
originated in accordance with the underwriting guidelines of the
Originator, a copy of which has been provided to the Underwriter,
and in accordance with the underwriting guidelines established by
the Risk Default Insurer, which
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guidelines include, but are not limited to, the following:
(A) the purchase of the Financed Vehicle by the Obligor, at
the time of funding of the Receivable, was affordable to
the Obligor based upon the Originator's underwriting
guidelines with respect to discretionary income; and
(B) at the time of funding of the Receivable, the Financed
Vehicle was purchased from, and the Receivable originated
by, the Originator or a Dealer located in the State of
___________.
(xxxi) Financed Vehicle in Good Repair. Each Financed Vehicle
is in good repair and working order.
(xxxii) Principal Balance. No Receivable has a Principal
Balance which includes capitalized interest, physical damage
insurance and/or late charges.
(xxxiii) Servicing. At the Closing Date, each Receivable was
being serviced by a Servicer.
(xxxiv) Eligible Loan. Each Receivable constitutes an
"Eligible Loan" as defined in and for purposes for the Risk Default
Policy.
(xxxv) Original Principal Amount. With respect to Receivables
acquired on the Closing Date or a Funding Date, as the case may be,
the original principal amount of each Receivable was not more than
(A) in the case of new Financed Vehicles, ___% of the manufacturer's
suggested retail price or, (B) in the case of used Financed
Vehicles, ___% of the retail value of the Financed Vehicle at the
time of origination of the Receivable as set forth in the Kelley
"Blue Book" for the appropriate region.
(xxxvi) Agreement. The representations and warranties of the
Originators in this Agreement shall be true.
(xxxvii) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Originator
threatened before any court, regulatory body, administrative agency
or other governmental instrumentality having jurisdiction
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over the Originator or its properties: (A) asserting the invalidity
of any of the Receivables; (B) seeking to prevent the enforcement of
any of the Receivables; of (C) seeking any determination or ruling
that might materially and adversely affect the payment on or
enforceability of any Receivable.
(xxxviii) Location of Servicer Files. The Servicer Files shall
be kept at the location listed in Schedule A hereto provided that
the Servicer Files shall not include (A) the original titles or the
original or copies of the dealer blanket guarantees of title with
respect to the Financed Vehicles, (B) the original retail
installment sale contracts evidencing the Receivables and (C)
original instrument certificates or copies of applications for
instrument certificates under the Risk Default Insurance Policy,
which documents shall be kept at an office of the Custodian.
(xxxix) Balance of Receivables. No Receivable which is
acquired on the Closing Date shall have an outstanding Principal
Balance in excess of $__________ as of the Cutoff Date with respect
to the Closing Date.
(xl) Insurance Coverage. Each Receivable shall be covered, as
of the Closing Date or as of a Funding Date, as the case may be, and
throughout the shorter of the term of the Trust or the term of the
Receivable, under a Risk Default Insurance Policy and a VSI
Insurance Policy, as evidenced by copies of applications for, or
original instrument certificates from the Risk Default Insurer
delivered to the Trustee on the Closing Date or a Funding Date, as
the case may be; provided, however, that any original instrument
certificate of Risk Default Insurance not so delivered on the
Closing Date or a Funding Date, as the case may be, shall be
delivered from the Originator to the Trustee within 45 days after
the Closing Date or a Funding Date, as the case may be; provided,
further, that for any original instrument certificate not so
delivered to the Trustee, the Originator shall be deemed to be in
breach of its representations and warranties contained in this
Section 3.02, and, unless such breach is cured within the cure
period defined in Section 7.02 hereof, such occurrence shall cause a
Reacquisition Event (as defined in Section 7.02). Prior to the
Closing Date or a Funding Date, as the case may be, a request shall
have been made to have the Trustee
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named as an additional insured as of the Closing Date or as of a
Funding Date, as the case may be, and as of such date, the Trustee
shall be an additional named insured on each such policy of
insurance; provided, however, that the Originator shall assign to
the Trustee for the benefit of the [Certificateholders]
[Noteholders] any proceeds received by the Originator as a named
insured under either of such insurance policies with respect to a
Receivable from the applicable Cutoff Date; provided, further, that
the Trustee shall have no duties or obligations of a named insured
on any such policy of insurance.
(xli) Original Titles. On the Closing Date or a Funding Date,
as the case may be, the Originator shall deliver or cause to be
delivered to the Trustee an original certificate or a copy of a
dealer blanket guarantee of title for each Financed Vehicle relating
to each Receivable pledged, transferred, assigned and conveyed
hereunder; provided, however, that any original certificate of title
not so delivered on the Closing Date or a Funding Date, as the case
may be, due to the fact that such title has not yet been issued by a
state title registration agency and delivered to the Originator as
of the Closing Date or Funding Date, as the case may be, shall be
delivered by the Originator to the Trustee within 135 days after the
Closing Date or a Funding Date, as the case may be; provided,
further, that for any original certificate of title not so delivered
to the Trustee, the Originator shall be obligated to reacquire such
Receivable pursuant to Section 7.02 hereof.
(xlii) Dealer Blanket Guarantee of Title. A dealer blanket
guarantee of title has been executed for each Receivable conveyed
hereunder.
(xliii) Not Previously Past Due. No Receivable has been more
than three times past due over 60 days or more than two times past
due over 90 days, nor has any Receivable been more than 30 days past
due as of the Closing Date or a Funding Date, as the case may be.
(xliv) No Litigation. No Receivable has been in litigation or
restructured.
(xlv) No Charge Off. No Receivable has been charged off for
accounting purposes by the Originator.
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(xlvi) Normal Procedures. Each Receivable has been
administered pursuant to the Originator's normal credit,
administration, collection and charge-off procedures, which
procedures are satisfactory to the Depositor.
(xlvii) No Fraud, Misrepresentation. No Receivable has been
originated with any fraud or misrepresentation.
(xlviii) Payments Received. The Originator has not received
any payment from any payor other than the Obligor.
(xlix) Prepayment. The prepayment from the Obligor under a
related Precomputed Receivable is equal to or greater than the
Principal Balance of such Precomputed Receivable at the Closing Date
or at any date of determination thereafter, as applicable.
(l) Eligibility Criteria. Each Receivable meets the
eligibility criteria with respect to each of the Risk Default
Insurance Policy and the VSI Insurance Policy, including, but not
limited to, the receipt in full of the applicable down payment with
respect to such Receivable and no deferment with respect to such
down payment has been granted.
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of the Depositor. The
obligation of the Depositor to take receipt of the Receivables under this
Agreement is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Originator hereunder shall be true and correct on the
Closing Date or the Funding Date, as the case may be, with the same effect
as if then made, and the Originator shall have performed all obligations
to be performed by it hereunder on or prior to the Closing Date or the
Funding Date, as the case may be.
(b) Files Marked; Files and Records owned by Trust. The Originator
shall, at its own expense, on or prior to the Closing Date or the Funding
Date, as the case may be, indicate in its files that receivables created
in connection with the Receivables have been assigned to the Depositor
pursuant to this Agreement and the Originator
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shall deliver to the Depositor the Schedule of Receivables certified by
the Originator to be true, correct and complete. Further, the Originator
hereby agrees that the computer files and other physical records of the
Receivables maintained by the Originator will bear an indication
reflecting that the Receivables and all documents held by the Originator
pursuant to a certain Servicing Agreement or otherwise are pledged to the
Trust.
(c) Documents to be Delivered by the Originator at the Closing and
on each Funding Date.
(i) The Assignment. At the Closing and on each Funding Date,
the Originator will execute and deliver the Assignment. The
Assignment shall be substantially in the form of Exhibit A hereto.
(ii) Original Receivables,- Original Titles. At the Closing
and on each Funding Date, the Originator shall deliver to the
Trustee for the benefit of the Depositor and its assigns (A) the
original retail installment sale contracts evidencing such
Receivable, (B) the original certificate or a copy of dealer blanket
guarantee of title for each Financed Vehicle relating to each such
Receivable sold hereunder, and (C) original or copies of
applications for instrument certificates under the Risk Default
Policy, which delivery shall be accompanied by a Certificate of
Delivery substantially in the form of Exhibit E-1 to the Initial
Purchase Agreement; provided, however, that any original certificate
of title not so delivered at Closing due to the fact that such title
has not yet been issued by a state title registration agency and
delivered to the Originator as of the Closing Date or a Funding
Date, as the case may be, shall be delivered by the Originator to
the Depositor, for immediate delivery to the Trustee, within 135
days of the Closing Date or a Funding Date, as the case may be;
provided, further, that for any certificate of title not so
delivered to the Trustee, the Originator shall be obligated to
reacquire such Receivable pursuant to Section 7.02 hereof.
(iii) Evidence of UCC Filings. On or prior to the Closing
Date, the Originator shall record and file, at its own expense, (A)
UCC-3 termination statements in each jurisdiction in which required
by applicable law, to release any prior security interests in the
Receivables granted by the Originator and (B) a UCC financing
statement in
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each jurisdiction in which required by applicable law, executed by
the Originator, as seller or debtor, and naming the Depositor, as
purchaser or secured party, identifying the Receivables and the
other Trust Property as collateral, meeting the requirements of the
laws of each such jurisdiction and in such manner as is necessary to
perfect the pledge, transfer, assignment and conveyance of such
Receivables to the Depositor. The Originator shall deliver a
file-stamped copy, or other evidence satisfactory to the Depositor
of such filing, to the Depositor on or prior to the Closing Date.
(iv) Evidence of Insurance and Payment. On the Closing Date
and on each Funding Date, the Originator shall deliver to the
Depositor (i) certificates of the respective insurance companies
indicating that each Receivable is covered by Risk Default Insurance
and VSI Insurance and (ii) evidence of payment in full of all
premiums due under either or both of the Risk Default Insurance and
VSI Insurance Policies with respect to the Receivables.
(v) Other Documents. Such other documents as the Depositor may
reasonably request.
(d) Other Transactions. The transactions contemplated by the
[Pooling and Servicing Agreement] [Trust Agreement] shall be consummated
on the Closing Date.
(e) [Review of Receivables. Prior to the Closing Date and each
Funding Date, the Depositor shall have received satisfactory results from
the Review Finn of the Pre-Funding Review. The Depositor further agrees to
give written notice of the results of the Pre-Funding Review to the
Originator.]
Section 4.02. Conditions to Obligation of the Originator. The
obligation of the Originator to pledge, transfer, assign or otherwise convey the
Receivables on the Closing Date or a Funding Date, as the case may be, to the
Depositor is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The warranties of the
Depositor hereunder shall be true and correct on the Closing Date or the
Funding Date, as the case may be, and the Depositor shall have performed
all obligations to be performed by it hereunder on or prior to the Closing
Date or the Funding Date, as the case may be.
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(b) Receivables Cash Purchase Price. At the Closing Date or the
Funding Date, as the case may be, the Depositor will deliver to the
Originator the Receivables Cash Purchase Price, as provided in Section
2.01(b).
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ORIGINATOR
The Originator agrees with the Depositor as follows; provided,
however, that to the extent that any provision of this Article V conflicts with
any provision of the [Pooling and Servicing Agreement] [Trust Agreement], the
[Pooling and Servicing Agreement] [Trust Agreement] shall govern:
Section 5.01. Protection of Right, Title and Interest.
(a) Filings. The Originator shall cause all financing statements and
continuation statements and any other necessary documents covering the
right, title and interest of the Depositor in and to the Receivables, and
the other Trust Property to be promptly filed, and at all times to be kept
recorded, registered and filed, all in such manner and in such places as
may be required by law fully to preserve and protect the right, title and
interest of the Depositor hereunder to the Receivables and the other Trust
Property. The Originator shall deliver to the Depositor file-stamped
copies of, or filing receipts for, any document recorded, registered or
filed as provided above, as soon as available following such recordation,
registration or filing. The Depositor shall cooperate fully with the
Originator in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of
this Section 5.01(a).
(b) Name Change. Within 15 days after the Originator makes any
change in its name, identity or corporate structure which would make any
financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the applicable provisions
of the UCC or any title statute, the Originator shall give the Depositor
notice of any such change and no later than five days after the effective
date thereof, shall file such financing statements or amendments as may be
necessary to continue the perfection of the Depositor's security interest
in the Trust Property.
Section 5.02. Other Liens or Interests. Except for the conveyances
hereunder and pursuant to the [Pooling and
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Servicing Agreement] [Trust Agreement], the Originator will not pledge,
transfer, assign or otherwise convey to any other person, or grant, create,
incur, assume or suffer to exist any lien on any interest therein, and the
Originator shall defend the right, title, and interest of the Depositor in, to
and under such Receivables against all claims of third parties claiming through
or under the Originator; provided, however, that the Originator's obligations
under this Section 5.02 shall terminate upon the termination of the Trust
pursuant to the [Pooling and Servicing Agreement] [Trust Agreement].
Section 5.03. Principal Executive Office. Since its inception, the
Originator has maintained, and from the date of this Agreement, shall maintain,
its principal executive office in the State of _____.
Section 5.04. Trustee as Additional Insured. The Originator shall
cause notice to be given to the insurers under the Risk Default Policy and the
VSI Policy to identify the Trustee as an additional named insured, as its
interest may appear, under each such policy. The Originator hereby assigns to
the Trustee for the benefit of the [Certificateholders] [Noteholders] any and
all proceeds received by the Originator as named insured with respect to a
Receivable under the terms of either of the foregoing insurance policies for
claims made from the Cutoff Date.
Section 5.05. Costs and Expenses. The Originator agrees to pay all
reasonable costs and disbursements in connection with the perfection, as against
all third parties, of the Depositor's right, title and interest in and to the
Receivables.
Section 5.06. No Waiver. The Originator shall not waive any default,
breach, violation or event permitting acceleration under the terms of any
Receivable.
Section 5.07. Location of Servicer Files. The Servicer Files,
exclusive of the original titles to the Financed Vehicles and exclusive of the
originals of the Receivables, are to be kept at the location listed in Exhibit D
hereto. The original titles and the originals of the Receivables are to be kept
at the principal executive office of the Custodian as specified in the [Pooling
and Servicing Agreement] [Trust Agreement].
Section 5.08. Transfer of Receivables. The Originator will take no
action inconsistent with the pledge, transfer and assignment of the Receivables
to the Depositor If a third party, including a potential purchaser of the
Receivables, should inquire, the Originator will promptly indicate that the
Receivables have been pledged, transferred and assigned to the Depositor
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Section 5.09. Originator's Records. This Agreement and all related
documents describe the transfer of the Receivables from the Originator as a
pledge by the Originator to the Depositor
Section 5.10. Transfer of Additional Receivables. The Originator
shall use its best efforts in good faith to make available for pledge, transfer,
assignment and other conveyance to the Depositor in accordance with Section 2.01
hereof additional Receivables originated or acquired by the Originator or its
Affiliates which are Eligible Receivables. This covenant shall be for the
benefit of the Depositor, the Trustee and the [Certificateholders]
[Noteholders], and any other such Person may enforce its legal or eligible
rights, remedies or claims hereunder.
Section 5.11. No Bankruptcy Petition. The Originator covenants and
agrees that prior to the date which is one year and one day after the payment in
full of all securities issued by the Depositor or by a trust for which the
Depositor was the depositor which securities were rated by any nationally
recognized statistical rating organization it will not institute any bankruptcy
procedures, or other proceedings under any federal or state bankruptcy law.
Section 5.12. Covenants Regarding Operations.
(a) The Originator shall not engage in any business or activity
other than in connection with or relating to the issuance of the Class __
[Certificates] [Notes], except as otherwise may be permitted herein or in
the Articles of Incorporation of the Originator.
(b) The Originator shall not consolidate or merge with or into any
other entity or convey or transfer its properties and assets substantially
as an entirety to any entity unless (i) the entity (if other than the
Originator) formed or surviving such consolidation or merger, or that
acquires by conveyance or transfer the properties and assets of the
Originator substantially as an entirety, shall be organized and existing
under the laws of the United States of America or any State thereof or the
District of Columbia, and shall expressly assume in form satisfactory to
the Rating Agency, the due and punctual payment of the Class __
[Certificates] [Notes] then outstanding and the performance of every
covenant on the part of the Originator to be performed or observed
pursuant to this Agreement and the [Pooling and Servicing Agreement]
[Trust Agreement], (ii) immediately after giving effect to such
transaction, no default or event of default under this Agreement shall
have occurred and be continuing and (iii) the Originator shall have
delivered to the Rating Agency and the Trustee an officer's
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certificate and an opinion of counsel, each stating that such
consolidation, merger, conveyance or transfer comply with this Agreement.
(c) So long as any Class A [Certificates] [Notes] are outstanding,
the Originator shall not dissolve or liquidate, in whole or in part,
except (i) as permitted in paragraph (b) above or (ii) with the prior
written consent of the Trustee and prior written confirmation from the
Rating Agency (a copy of which shall be provided to the Trustee by the
Originator) that such dissolution or liquidation will have no adverse
effect on the rating assigned to the Class __ [Certificates] [Notes].
(d) The funds and other assets of the Originator shall not be
commingled with those of any other corporation, entity or Person,
including, but not limited to, the parents or affiliates of the
Originator.
ARTICLE VI
INDEMNIFICATION
The Originator shall indemnify the Depositor for any liability as a
result of the failure of a Receivable to be originated in compliance with all
requirements of law and for any by each of any of its representations and
warranties contained herein. These indemnity obligations shall be in addition to
any obligation that the Originator may otherwise have.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Obligations of Originator. The obligations of the
Originator under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable.
Section 7.02. Reacquisition Events. The Originator hereby covenants
and agrees with the Depositor for the benefit of the Depositor, the Trustee and
the [Certificateholders] [Noteholders] that upon the occurrence of (i) a breach
of any of the Originator's representations and warranties contained in Section
3.02(b) hereof with respect to a Receivable or (ii) the failure of the
Originator to deliver original certificates of title pursuant to Section
4.01(c)(ii), and unless (i) such breach shall have been cured by the thirtieth
day following the discovery or receipt by the Originator of notice from the
Depositor or the Trustee thereof or (ii) such failure to deliver shall have been
cured by the
27
<PAGE>
seventh Business Day following receipt by the Originator of notice from the
Depositor or the Trustee of such non-delivery, the Originator shall be obligated
to reacquire such Receivable hereunder from the Depositor ("Reacquisition
Event"), at the Repurchase Price as defined in the Initial Purchase Agreement on
a date which shall be no later than (i) the fifth Business Day following such
30-day cure period or (ii) relating to the non-delivery on the fifth Business
Day following such seven Business Day cure period. The reacquisition obligation
of the Originator shall constitute the sole remedy to the [Certificateholders]
[Noteholders], or to the Trustee, or to the Depositor against the Originator
with respect to any Reacquisition Event. The Originator acknowledges that the
Trustee and the [Certificateholders] [Noteholders] are beneficiaries with
respect to the rights of the Depositor hereunder and that the Trustee or the
[Certificateholders] [Noteholders] may enforce the rights of the Depositor with
respect thereto.
Section 7.03. The Depositor's Assignment of Reacquired Receivables.
With respect to all Receivables reacquired by the Originator pursuant to this
Agreement, the Depositor shall assign, without recourse, representation or
warranty, to the Originator all the Depositor's right, title and interest in and
to such Receivables, and all security and documents relating thereto.
Section 7.04. Trust. The Originator acknowledges that the Depositor
will, pursuant to the [Pooling and Servicing Agreement] [Trust Agreement],
assign the Receivables to the Trust and assign its rights under this Agreement
to the Trustee for the benefit of the [Certificateholder] [Noteholder]s, and
that the representations and warranties contained in this Agreement and the
rights of the Depositor under Section 7.02 hereof are intended to benefit such
Trust and any [Certificateholders] [Noteholders] and the Trustee and any
[Certificateholders] [Noteholders] shall have the right to enforce the same. The
Originator hereby consents to such transfers and assignments.
Section 7.05. Amendment. This Agreement may be amended from time to
time by a written amendment duly executed and delivered by the Originator and
the Depositor; provided, however, that any such amendment that materially
adversely affects the rights of the [Certificateholder] [Noteholder] under the
[Pooling and Servicing Agreement] [Trust Agreement] must be consented to by the
]Holders of at least 51% of the Class __ [Certificates] [Notes].
Section 7.06. Waivers. No failure or delay on the part of the
Depositor in exercising any power, right or remedy under this Agreement or the
Assignment shall operate as a waiver thereof, nor shall any single or partial
exercise of
28
<PAGE>
any such power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy.
Section 7.07. Notices. All communications and notices pursuant
hereto to any party shall be in writing or by telegraph or telex and addressed
or delivered to it at its address (or in case of telex, at its telex number at
such address) shown in the opening portion of this Agreement or at such other
address as may be designated by it by notice to the other party and, if mailed
or sent by telegraph or telex, shall be deemed given when mailed, communicated
to the telegraph office or transmitted by telex.
Section 7.08. Costs and Expenses. The Originator will pay all
expenses, including fees and expenses of counsel, incident to the performance of
its obligations under this Agreement and the Originator agrees to pay all
reasonable out-of-pocket costs in connection with the enforcement of any
obligation of the Originator hereunder.
Section 7.09. Representations. The respective agreements,
representations, warranties and other statements by the Originator and the
Depositor set forth in or made pursuant to this Agreement shall remain in full
force and effect and will survive the closing under Section 2.02 hereof.
Section 7.10. Confidential Information. The Depositor agrees that it
will neither use nor disclose to any person the names and addresses of the
Obligors, except in connection with the enforcement of the Depositor's rights
hereunder, under the Receivable, under any [Pooling and Servicing Agreement]
[Trust Agreement] or as required by law.
Section 7.11. Headings and Cross-References. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in this
Agreement to section names or numbers are to such sections of this Agreement.
Section 7.12. Governing Law. This Agreement and the Assignment shall
be governed by and construed in accordance with the internal laws of the State
of [New York].
Section 7.13. Counterparts. This Agreement may be executed in two or
more counterparts and by different parties on separate counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date and year first above written.
[ORIGINATOR]
By_________________________________________
Name:
Title:
ADVANTA AUTO FINANCE CORPORATION
By_________________________________________
Name:
Title:
30
<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Receivables Acquisition
Agreement dated as of _______, 199__, by and between the undersigned and Advanta
Auto Finance Corporation ("the Depositor") (the "Receivables Acquisition
Agreement"), the undersigned (the "Originator") does hereby (A) pledge,
transfer, assign and otherwise convey unto the Depositor, without recourse
(capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Receivables Acquisition Agreement), (i) all right, title
and interest of the undersigned in and to the Receivables identified on the
Schedule attached as Exhibit B to the Receivables Acquisition Agreement and all
moneys due thereon, on and after the Cutoff Date; (ii) the interest of the
Originator in the security interests in the Financed Vehicles granted by the
Obligors pursuant to the Receivables and the certificates of title to such
Financed Vehicles; (iii) the interest of the Originator in any proceeds from
claims on any physical damage, credit. life, risk default or disability
insurance policies covering the Financed Vehicles or Obligors; and (iv) the
proceeds of any and all of the foregoing and any recourse in equity or by
contract against the Originator and (B) grant to the Trustee a security interest
in the Reserve Fund (as defined in the [[Pooling and Servicing Agreement] [Trust
Agreement]) and the Residual Interest (as defined in the [Pooling and Servicing
Agreement] [Trust Agreement]). The Originator hereby acknowledges that the
Trustee is entitled to hold such Reserve Fund and Residual Interest pending
distributions as stated in Section _____ of the [Pooling and Servicing
Agreement] [Trust Agreement]. The foregoing assignment does not constitute and
is not intended to result in any assumption by the Depositor of any obligation
of the undersigned to the Obligors, insurers or any other person in connection
with the Receivables, Custodian Files (as defined in the [Pooling and Servicing
Agreement] [Trust Agreement]), Servicer Fees (as defined in the [Pooling and
Servicing Agreement] [Trust Agreement]), any insurance policies or any agreement
or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Receivables Acquisition Agreement and is to be governed by the Receivables
Acquisition Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of _________, 199__.
<PAGE>
[ORIGINATOR]
By_________________________________________
Name:
Title:
A-2
<PAGE>
EXHIBIT B
SCHEDULE OF RECEIVABLES
<PAGE>
EXHIBIT 99.1
<PAGE>
SUBJECT TO COMPLETION DATED _______________, 1996
[Exhibit 99.1 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Securities will be filed with the
Commission under the Securities Act of 1933, as amended, pursuant to Rule 424
(b) promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED __________, 1996)
- -------------------------------------------------------------------------------
ADVANTA AUTO RECEIVABLES FINANCE CORPORATION
199__-__
$____________ [Class A-1] [Floating Rate] [ %] Auto Receivables Backed
Notes
$____________ [Class A-2 [ %] Auto Receivables Backed Notes
$____________ [Floating Rate] [ %] Auto Receivables Backed Certificates
ADVANTA AUTO FINANCE CORPORATION, Sponsor
ADVANTA AUTO FINANCE CORPORATION, Servicer
- -------------------------------------------------------------------------------
ADVANTA AUTO RECEIVABLES FINANCE CORPORATION 199__-__ (the "Trust" or
the "Issuer") will be formed pursuant to a Trust Agreement, to be dated as of
____________, 199__ between Advanta Auto Finance Corporation (the "Sponsor")
and __________________, as [Owner] Trustee, and will issue $____________
aggregate principal amount of [Class A-1] [Floating Rate] [ %] Auto Receivables
Backed Notes (the ["A-1 Notes"]) and $____________ aggregate principal amount
of [Class A-2] [Floating Rate] [ %] Auto Receivables Backed Notes (the ["A-2
Notes"] and, together with the [A-1 Notes], the "Notes"). The Notes will be
issued pursuant to an Indenture, to be dated as of ____________, 199__ (the
"Indenture"), between the Trust and __________________, as Indenture Trustee.
The Trust will also issue $____________ aggregate principal amount of [Floating
Rate] [ %] Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities"). The assets of the Trust will
consist of any combination of [retail installment sales contracts between
manufacturers, dealers or certain other originators and retail purchasers
secured by new and used automobiles and light duty trucks financed thereby, or
participation interests therein,] all monies relating thereto (the
"Contracts"), [the underlying new and used automobiles and light duty trucks
(the "Vehicles," together with the Contracts], the "Receivables"), and the
proceeds thereof received by the Trust from the Sponsor on or prior to the date
of the issuance of the Notes and the Certificates. The Sponsor will acquire the
Receivables from _________________________ (the "Originator") concurrently with
their transfer to the Issuer. The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
---------------------------
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF
THE SPONSOR, THE SERVICER, THE ORIGINATOR OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THE NOTES NOR THE CERTIFICATES OR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY. SEE ALSO "RISK
FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH
UNDER "RISK FACTORS" HEREIN AND IN THE PROSPECTUS.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Initial Public Underwriting Proceeds to the
Offering Price(1) Discount(2) Issuer(1)(3)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
[Per A-1 Note]................................
[Per A-2 Note]................................
[Per Certificate].............................
Total.........................................
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from ______________________, 199__.
(2) The Sponsor has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting estimated expenses of $____________ payable by the Issuer.
---------------------------
[The Notes are offered by __________________ and the Certificates are
offered by __________________ (collectively, the "Underwriter[s]"), subject to
prior sale, when, as and if issued to and accepted by the Underwriter(s) and
subject to the approval of certain legal matters by Dewey Ballantine, counsel
for the Underwriter(s). It is expected that delivery of the Notes will be made
only in book-entry form through the Same Day Funds Settlement System of The
Depository Trust Company on or about ____________, 199__. It is expected that
the Certificates will be ready for delivery in New York, New York on or about
____________, 199__.]
<PAGE>
---------------------------
[Name(s) of the Underwriter(s)]
S-2
<PAGE>
Interest on both the [A-1 Notes] and the [A-2 Notes] will be payable
[monthly] on or about the [15th] day of each [month] (each a "Payment Date")
commencing on ____________, 199__. Principal of the Notes will be payable on
each Payment Date to the extent described herein; provided, however, that no
principal payments in respect of the [A-2 Notes] will be made until the [A-1
Notes] have been paid in full.
The final scheduled payment date for the [A-1 Notes] will be
____________, 199__, and the final scheduled payment date for the [A-2 Notes]
will be ____________, 199__. However, the actual payment in full of the [A-1
Notes] and the [A-2 Notes] could occur sooner.
The interest rate for the [A-1 Notes] will be [__% per annum] [set for
each Payment Date to LIBOR (as defined herein) [minus] [plus] ______%]. The
interest rate for the [A-2 Notes] will be [______% per annum] [set for each
Payment Date to LIBOR [minus] [plus] __%], except as otherwise described
herein.
The [A-1 Notes] [A-2 Notes] may be subject to redemption in whole, but
not in part, on any Payment Date if the Servicer exercises its option to
purchase the Receivables when the aggregate principal amount of the Receivables
is reduced to less than ______% of the initial Pool Balance of the Receivables
assigned to the Trust.
The Certificates represent fractional undivided interests in the
Trust. Principal, to the extent described herein, and interest, to the extent
of the Pass-Through Rate which is [__% per annum] [generally equal to ______%
per annum plus an amount equal to the product of ______ multiplied by LIBOR,
subject to a maximum rate described herein,] will be distributed on each
Payment Date, commencing on ____________, 199__. The final scheduled payment
date for the Certificates will be ____________, 199__.
The Issuer will be a newly formed limited-purpose Nevada business
trust and will generally be prohibited from incurring any indebtedness other
than the Notes, and its assets will include the Receivables, the Collection
Account, the Note Distribution Account, the Certificate Distribution Account,
the Reserve Account, the [Class A-1] Maturity Account and the [Class A-2]
Lockout Account.
Prospective investors should consider the factors set forth under
"Risk Factors" herein and in the accompanying Prospectus.
----------------------
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR
THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED
BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
----------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES
AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------------
S-3
<PAGE>
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes are issued, periodic and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co.
("Cede"), as nominee of The Depository Trust Company ("DTC") and registered
holder of the Notes. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Reports to Securityholders" in the
accompanying Prospectus (the "Prospectus"). Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. The Trust will file with the Securities and Exchange Commission
(the "Commission") such periodic reports as are required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder and as are otherwise agreed to by the Commission. Copies
of such periodic reports may be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
S-4
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus.
Issuer......................... Advanta Auto Receivables Finance Corporation
199__-__, a business trust organized under the
laws of the state of Nevada (the "Trust" or
the "Issuer").
Sponsor........................ Advanta Auto Finance Corporation (the "Sponsor"
or "Advanta"), a corporation organized under
the laws of the state of Nevada. The principal
executive offices of the Sponsor are located at
500 Office Center Drive, Fort Washington,
Pennsylvania 19034, and its telephone number is
(215) 283-4200.
Servicer....................... Advanta Auto Finance Corporation (the
"Servicer"), a Nevada corporation. The
principal executive offices of the Servicer are
located at 500 Office Center Drive, Fort
Washington, Pennsylvania 19034, and its
telephone number is (215) 283-4200.
Originator..................... ________________________ (the "Originator").
The principal executive offices ______________
of the Originator are located at _____________
_________________ and its telephone number
is ________________.
Indenture Trustee.............. __________________, as indenture trustee under
the Indenture (the "Indenture Trustee"). The
principal executive offices of the Indenture
Trustee are located at _______________, and its
telephone number is ___________.
[Owner] Trustee................ __________________, as trustee under the Trust
Agreement (the "[Owner] Trustee"). The
principal executive offices of the [Owner]
Trustee are located at ________________, and
its telephone number is ________________.
Cut-off Date................... ______________, 19__.
Closing Date................... ______________, 19__.
The Notes...................... [Class A-1] [Floating Rate] [____%] Auto
Receivables Backed Notes (the ["A-1 Notes"]) in
the aggregate principal amount of $____________
and [Class A-2] [Floating Rate] [______%] Auto
Receivables Backed Notes (the ["A-2 Notes"]
and, together with the [A-1 Notes], the
"Notes") in the aggregate principal amount of
$____________.
The Notes will be available for purchase in
denominations of [$1,000] and integral
multiples thereof in book-entry form only. The
Noteholders will not be entitled to receive a
Definitive [A-1 Note] or a Definitive [A-2
Note], as the case may be, except in the event
that Definitive [A-1 Notes] and Definitive [A-2
Notes] are issued in the limited circumstances
described herein or in the Prospectus. See
"Description of the Securities--Definitive
Notes" in the Prospectus. The Notes will be
issued pursuant to an Indenture to be dated as
of ____________, 199__ (the "Indenture")
between the Issuer and the Indenture Trustee.
S-5
<PAGE>
The Certificates............... [Floating Rate] [____%] Auto Receivables Backed
Certificates (the "Certificates") in the
aggregate principal amount of $____________
will be offered. The Sponsor will purchase the
remaining $____________ principal amount of the
Certificates. The Certificates will be
available for purchase in denominations of
$100,000 and integral multiples of $100,000 in
excess thereof.
[The Certificates will be issued in fully
registered, certificated form ("Definitive
Certificates") to Certificateholders or their
nominees.] The Certificates will be issued
pursuant to a Trust Agreement to be dated as of
____________, 199__ (the "Trust Agreement")
between the Sponsor and the [Owner] Trustee,
acting thereunder not in its individual
capacity but solely as trustee of the Trust.
Purchasers of Certificates and their assignees
must represent that they are United States
persons.
The Trust...................... The Trust will be a trust established under the
laws of the State of ________. The activities
of the Trust are limited by the terms of the
Trust Agreement to purchasing, owning and
managing the Receivables, issuing and making
payments on the Notes and the Certificates and
other activities related thereto. The property
of the Trust includes (i) the Receivables, (ii)
all monies (including accrued interest) due
thereunder on or after the Cut-off Date, (iii)
such amounts as from time to time may be held
in one or more accounts established and
maintained by the Servicer pursuant to the
Pooling and Servicing Agreement among the
Seller, the Servicer and the Trustee (the
"Pooling and Servicing Agreement"), as
described below, [(iv) the security interests
in the Vehicles, (v) the rights to proceeds
from claims on physical damage, credit life and
disability insurance policies, if any, covering
Vehicles or Obligors, as the case may be, (vi)
any proceeds of repossessed Vehicles,] (vii)
the rights of the Sponsor under the agreement
pursuant to which the Sponsor is acquiring the
Receivables (the "Receivables Acquisition
Agreement") and (viii) interest earned on
short-term investments made by the Trust.
Receivables.................... The Receivables consist of noncancelable
[retail installment sales contracts between
manufacturers, dealers or certain other
originators and retail purchasers secured by
new and used automobiles and light duty trucks
financed thereby or participation interest
therein.] Each Obligor's obligation under its
Contract is a full recourse obligation. The
"Obligor" is the obligor under each Contract
including any guarantor. The Contracts contain
provisions which unconditionally obligate the
Obligor to make all payments thereon (the
"Contract Payments").
[All of the Contracts were purchased by the
Sponsor from the Originator in the ordinary
course of business and the Contracts constitute
substantially all of the automobile and light
duty truck retail installment sale contracts
included in the Originator's portfolio meeting
the selection criteria described herein. Such
selection criteria included that: (i) each
Contract is secured by a new or used automobile
or light duty truck; (ii) each Contract was
originated in the United States; (iii) each
Contract provides for level monthly payments
that fully amortize the amount financed over
its original term except that the payment in
the first or last month in the life of the
Contract may be
S-6
<PAGE>
minimally different from the level payment, and
a minimal number of the Contracts provide for
monthly payments for a period of time not
exceeding one year after origination in an
amount less than such level payment, provided
that as of the Cutoff Date the monthly payment
currently due under each such Contract is equal
to such level payment; (iv) each Contract was
originated on or prior to _____, 199_; (v) each
Contract has an original term of to months and,
as of the Cutoff Date, had a remaining term to
maturity of not less than three months nor more
than month; (vi) each Contract provides for the
payment of a finance charge at an APR ranging
from __% to __%; (vii) each Contract shall not
have a Scheduled Payment that is more than 30
days past due as of the Cutoff Date; (viii) no
Contract shall be due, to the best knowledge of
the Originator, from any Obligor who is
presently the subject of a bankruptcy
proceeding or is bankrupt or insolvent; (ix) no
Vehicle has been repossessed without
reinstatement as of the Cutoff Date; and (x) as
of the Cutoff Date, physical damage insurance
relating to each Vehicle is not being
force-placed by the Servicer.]
[As of the Cutoff Date, approximately __% and
approximately __% of the Aggregate Discounted
Contract Balance are expected to represent
Contracts secured by automobiles and light duty
trucks, respectively. Based on the Aggregate
Discounted Contract Balance, approximately __%
and approximately __% of the Contracts are
expected to represent financing of new vehicles
and used vehicles, respectively, and no more
than __% of the Contracts are expected to be
due from employees of the Originator or any of
its respective affiliates. As of the Cutoff
Date, the average Principal Balance of
Contracts secured by automobiles and light duty
trucks is expected to be approximately $______
and approximately $______, respectively. The
majority of the Vehicles are expected to be
foreign and domestic automobiles and light duty
trucks. Except in the case of any breach of
representations and warranties by the
Originator, it is expected that none of the
Contracts provide for recourse to the
Originator who originated the related
Contract.]
The "Pool Balance" at any time represents the
Discounted Contract Balance of the Receivables
at the end of the preceding Collection Period
after giving effect to all payments received
from Obligors, and any other amounts to be
remitted by the Servicer or the Sponsor, as the
case may be, all for such preceding Collection
Period and all losses realized on Receivables
liquidated during such preceding Collection
Period.
Terms of the Notes:
A. Interest Payments.......... Interest on the outstanding principal amount of
the Notes will accrue from and including the
Closing Date, or from and including the most
recent Payment Date on which interest has been
paid to but excluding the following Payment
Date and will be payable [monthly] on the [___]
day of each [month] or, if any such date is not
a Business Day, on the next succeeding Business
Day (each a "Payment Date") commencing
_______________, 199__, to the holders of
record of the [A-1 Notes] (the ["A-1
Noteholders"]) and the holders of record of the
[A-2 Notes] (the ["A-2 Noteholders"]; together
with the [A-1 Noteholders], the "Noteholders",
in each case as of the [____] day of the
calendar
S-7
<PAGE>
month in which such Payment Date occurs (the
"Note Record Date"). Interest shall be
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.
[On each Payment Date, the per annum interest
rate for the [A-1 Notes] [A-2 Notes] (the "[A-1
Note] [A-2 Note] Interest Rate") will be a rate
equal to the London interbank offered rate for
one-month United States dollar deposits
("LIBOR") as of the second LIBOR Business Day
prior to the immediately preceding Payment Date
(or, in the case of the initial Payment Date,
the second LIBOR Business Day prior to the
Closing Date) [minus] [plus] ______%. See
"Description of the Notes--The [A-1 Notes]
[A-2 Notes]" herein.]
[On each Payment Date, the per annum interest
rate for the [A-1 Notes] [A-2 Notes] (the "[A-1
Note] [A-2 Note] Interest Rate") will be
_______, but shall not exceed, subject to a
minimum rate, the Receivables Rate borne by the
Receivables for the Collection Period preceding
such Payment Date less the Servicing Fee Rate;
provided, however, that, to the extent that the
interest paid to the [A-1 Noteholders] [A-2
Noteholders] is less than ___% per annum, the
difference between the amount paid and ___% per
annum shall be payable on subsequent Payment
Dates as [Class A-1] [Class A-2] Noteholders'
Interest Carryover Amount. See "Description of
the Notes--The [A-1 Notes] [A-2 Notes]" herein.
B. Principal Payments....... Principal of the Notes will be payable on each
Payment Date in an amount calculated as a
percentage of the Principal Distribution Amount
for such Payment Date to the extent of funds
available therefor as described herein. The
Principal Distribution Amount for a Payment
Date will be based upon decreases in the
present value of the scheduled and unpaid
payments on the Receivables (the "Note Value")
of the Receivables and/or collections on and
losses in respect of the principal of the
Receivables during the related Collection
Period. "Collection Period" means, with respect
to the first Payment Date, the period from the
Cut-off Date through the ____ fiscal month(s)]
ending on _______________, 199_ and with
respect to each subsequent Payment Date, the
Collection Period means the [____ fiscal
month(s)] immediately following the previous
Collection Period. See "Description of the
Transfers and Servicing
Agreements-Distributions" herein.
On each Payment Date, principal of the [A-1
Notes] will be payable in an amount equal to
100% of the Principal Distribution Amount and,
on and after the latest of (i) the Payment Date
on which the [A-1 Notes] have been paid in
full, (ii) the _______________, 199_ Payment
Date and (iii) the Payment Date on which the
lesser of the full amount of the funds
withdrawn from the Reserve Account in order to
pay the [A-1 Noteholders'] Monthly Principal
Distributable Amount on the ________, 19___
Payment Date (the "Maturity Draw") and the
amount of the Maturity Draw, if any, necessary
to increase the amount on deposit in the
Reserve Account to the amount required to be on
deposit in the Reserve Account (the "Specified
Reserve Account Balance") has been deposited
into the Reserve Account, principal of the [A-2
Notes] will be payable in an amount equal to
the [A-2 Noteholders'] Percentage of the
Principal Distribution Amount for such Payment
Date, less any
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portion thereof applied on such Payment Date to
reduce the outstanding principal amount of the
[A-1 Notes] to zero and any portion thereof
deposited on such date to the Reserve Account
in respect of a Maturity Draw. See "Description
of the Transfer and Servicing
Agreement--Distributions" herein.
The Servicer will calculate the [A-2
Noteholders'] Percentage in the manner
described under "Description of the Transfer
and Servicing Agreement--Distributions" herein.
The outstanding principal amount, if any, of
the [A-1 Notes] will be payable in full on
_______________, 199__ (the "[A-1] Final
Scheduled Payment Date") and the outstanding
principal amount, if any, of the [A-2 Notes]
will be payable in full on _______________,
______ (the "[A-2] Final Scheduled Payment
Date").
C. Optional Redemption...... The [A-2 Notes] may be redeemed in whole, but
not in part, on any Payment Date after the [A-1
Notes] have been paid in full if the Servicer
exercises its option to purchase the
Receivables when the aggregate principal amount
of the Receivables is less than ___% of the
initial Pool Balance, at a redemption price
(the "[A-2] Redemption Price") equal to the
unpaid amount of the [A-2 Notes], plus accrued
and unpaid interest thereon.
Terms of the Certificates:
A. Pass-Through Rate........ A rate equal to [__%] [the sum of ______% per
annum plus an amount equal to the product of
______ multiplied by LIBOR as of the second
LIBOR business day prior to the immediately
preceding Payment Date (or, in the case of the
initial Payment Date, the second LIBOR business
day prior to the Closing Date)]; provided,
however, that on and after the _______________,
199__ Payment Date, if the aggregate amount of
Realized Losses during the period from the
Cut-off Date through the end of the fiscal
month ending in ________, 199___ is an amount,
expressed as a percentage, that is (x) _____%
or less (but greater than _____%) of the Pool
Balance as of the Cut-off Date, the
Pass-Through Rate (as determined in the clause
preceding this proviso) for any Payment Date
shall be increased by _____% per annum or (y)
_____% or less of the Pool Balance as of the
Cut-off Date, the Pass-Through Rate (as
determined in the clause preceding this
proviso) for any Payment Date shall be
increased by _____% per annum; provided further
that, notwithstanding the preceding proviso,
the Pass-Through Rate shall be subject to a
maximum rate based on the applicable weighted
average Receivable Rate borne by the
Receivable; for the Collection Period preceding
such Payment Date less the Servicing Fee Rate.
B. Interest................. On each Payment Date, the [Owner] Trustee shall
distribute pro rata to the holders of record of
the Certificates (the "Certificateholders" and
together with the Noteholders, the
"Securityholders") as of the [last day] of the
immediately preceding [calendar month] (the
"Certificate Record Date") interest at the
Pass-Through Rate on the Certificate Balance as
of the preceding Payment Date (after giving
effect to distributions made on such date)
generally to the extent of funds available
therefor following payment of the Servicing Fee
and distributions in respect of the Notes.
Interest for a Payment Date will
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accrue from and including the most recent
Payment Date on which interest has been paid
(or, in the case of the first Payment Date,
from the Closing Date) to but excluding such
current Payment Date and will be 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. In
addition, Certificateholders will receive on
each Payment Date, if on such Payment Date the
amount on deposit in the Reserve Account, after
giving effect to all withdrawals and deposits
required to be made on such Payment Date,
exceeds the Specified Reserve Account Balance,
an amount equal to the lesser of (1) such
excess and (2) [one-twelfth] of the product of
(a) [___%] of the excess, if any, of (i) the
amount of the positive spread, if any, between
the Base Rate in effect on the date that LIBOR
for such Payment Date is established and LIBOR
for such Payment Date over (ii) _____% times
(b) [___%] of the Certificate Balance on the
preceding Payment Date.
C. Principal................ Principal of the Certificates will be payable
on each Payment Date on and after the latest of
(i) the Payment Date following the Payment Date
on which the [A-1 Notes] have been paid in
full, (ii) the _______________, 199_ Payment
Date and (iii) the Payment Date following the
Payment Date on which the lesser of the full
amount of the Maturity Draw or the amount of
the Maturity Draw, if any, necessary to
increase the amount on deposit in the Reserve
Account to the Specified Reserve Account
Balance is deposited into the Reserve Account,
in an amount generally equal to the
Certificateholders' Principal Distributable
Amount for the Collection Period preceding such
Payment Date, to the extent of funds available
therefor following payment of the Servicing Fee
and distributions of interest and principal in
respect of the Notes and interest in respect of
the Certificates. The Certificateholders'
Principal Distributable Amount generally will
be based on the Certificateholders' Percentage
of the Principal Distribution Amount, which for
any Payment Date will be based upon decreases
in the Note Value of the Receivables and/or
collections on and losses in respect of the
principal of the Receivables during the related
Collection Period. See "Description of the
Transfer and Servicing
Agreements--Distributions" herein.
The outstanding amount, if any, of the
Certificates will be payable in full on
_______________, 199_.
D. Optional Purchase........ If the Servicer exercises its option to
purchase the Receivables when the aggregate
principal amount of the Receivables is less
than _____% of the Pool Balance as of the
Cut-off Date, the Certificateholders will
receive an amount in respect of the
Certificates equal to the Certificate Balance
together with accrued interest at the
Pass-Through Rate and the Certificates will be
retired. See "Description of the
Certificates--Optional Purchase" herein.
Reserve Account................ The Servicer will be obligated to deposit into
the Collection Account an amount equal to the
sum of the interest due, but not collected,
with respect to delinquent Receivables during
the prior Collection Period, but only if, in
its good faith business judgment, the Servicer
believes that such amount will ultimately be
recovered from the related Receivable. Such
amounts are "Delinquency Interest Advances."
Delinquency Interest Advances may be funded by
the Servicer from
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subsequent collections on the Receivables
generally, and are reimbursable from (i) future
collections on the Receivable which gave rise
to the Delinquency Interest Advance and (ii)
Net Liquidation Proceeds for such Mortgage
Loan. See "Description of the Transfer and
Servicing Agreements--Reserve Account" herein.
Collection Account............. Except under certain conditions described
herein, the Servicer will be required to remit
collections received with respect to the
Receivables within two business days of receipt
thereof to one or more accounts in the name of
the Indenture Trustee (the "Collection
Account"). Pursuant to the Pooling and
Servicing Agreement, the Servicer will have the
revocable power to instruct the Indenture
Trustee to withdraw funds on deposit in the
Collection Account and to apply, except as
otherwise described herein, such funds on each
Payment Date to the following (in the priority
indicated): (i) the Servicing Fee for the prior
Collection Period and any overdue Servicing
Fees to the Servicer, (ii) the Noteholders'
Interest Distributable Amount (which is an
amount generally equal to the aggregate amount
of accrued interest on the Notes), the [A-1]
Noteholders' Principal Distributable Amount and
the [A-2] Noteholders' Principal Distributable
Amount into the Note Distribution Account,
(iii) the Certificateholders Interest
Distributable Amount into the Certificate
Distribution Account, (iv) the
Certificateholders' Principal Distributable
Amount into the Certificate Distribution
Account, (v) an amount necessary to make the
amount on deposit in the Reserve Account equal
to the Specified Reserve Account Balance into
the Reserve Account, (vi) the [Class A-2]
Noteholders' Interest Carryover Amount into the
Note Distribution Account and (vii) the
remaining balance, if any, to the Reserve
Account for distribution in accordance with the
Pooling and Servicing Agreement. See
"Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve
Account" herein.
Servicing...................... The Servicer will be responsible for servicing,
managing, arranging, making collections on and
otherwise enforcing the Contracts. The Servicer
will be required to exercise the degree of
skill and care in performing these functions
that it customarily exercises with respect to
similar contracts owned by the Servicer. The
Servicer will be entitled to receive a monthly
fee (the "Servicing Fee") of the product of (i)
one-twelfth, (ii) ___% (the "Servicing Fee
Rate") and (iii) the Aggregate Discounted
Contract Balance as of the beginning of the
previous Collection Period, payable out of the
Collection Account, plus late payment fees and
certain other fees paid by the Obligors
("Servicing Charges") and investment earnings
on amounts held in the Collection Account
("Investment Earnings"), as compensation for
acting as Servicer.
Except as hereinafter provided, on the day
prior to any Payment Date, the Servicer will be
required to make an advance (a "Servicer
Advance") to the Indenture Trustee in an amount
sufficient to cover all amounts due and unpaid
on any Delinquent Contract as of the previous
Determination Date ("Delinquency Amounts"). A
"Delinquent Contract" will mean, as of any
Determination Date, any Contract (other than a
Contract which became a Defaulted Contract
prior to such Determination Date) with respect
to which the Obligor has not paid all Contract
Payments then due. With respect to any
Delinquent
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Contract, whenever the Servicer shall have
determined that it will be unable to recover a
Delinquency Amount or portion thereof on such
Delinquent Contract, the Servicer shall not be
required to make a Servicer Advance on such
unrecoverable Delinquency Amount or portion
thereof, but will be required to enforce its
remedies (including acceleration) under such
Contract. Furthermore, if at any time the
Originator is no longer the Servicer, no
Servicer Advances will be required. In the
event that the Servicer determines that any
Servicer Advances previously made are not
recoverable (the "Nonrecoverable Advances"), or
any Delinquent Contracts for which the
Originator has made advances of Delinquency
Amounts in respect thereof become Defaulted
Contracts, then the Indenture Trustee shall
have the right to draw on the Collection
Account and the Reserve Account to repay such
Servicer Advances.
Under the Pooling and Servicing Agreement, a
Contract will constitute a "Defaulted Contract"
at the earlier of the date on which (i) [four]
Contract Payments are due and unpaid as of any
Calculation Date or (ii) the Servicer has
declined to advance any delinquent Contract
Payment in accordance with Section ____ of the
Pooling and Servicing Agreement on the grounds
that such advance would be a Nonrecoverable
Advance or (iii) such Contract has been
rejected by or on behalf of the Obligor in a
bankruptcy proceeding.
Under certain limited circumstances, the
Servicer may resign or be removed, in which
event the Indenture Trustee will be appointed
as successor Servicer.
The Servicer will be required to cause amounts
collected on the Contracts on behalf of the
Issuer to be deposited in an eligible deposit
account in the name of the Indenture Trustee on
behalf of the [A-1 Noteholders] (the "[Class
A-1] Maturity Account") and in an eligible
deposit account in the name of the Indenture
Trustee on behalf of the [A-2 Noteholders] (the
"[Class A-2] Lockout Account") maintained by
the Trustee in accordance with the Pooling and
Servicing Agreement. See "Description of
Transfer and Servicing Agreement -- Accounts",
--"[Class A-1] Maturity Account]" and--
"[Class A-2 Lockout Account]" herein.
Certain Legal Aspects
of the Contracts
and the Vehicles............. The Issuer will be required to take such action
as is required to perfect the Indenture
Trustee's security interest in the Contracts,
the Contract Payments [and the Vehicles] as of
the Closing Date, or in any event, within
[___(__)] days from the date thereof. The
Issuer will warrant that the Indenture Trustee
will have a first priority perfected security
interest in the Contracts, the Contract
Payments [and the Vehicles] owned by the
Issuer, [and a perfected security interest in
the Vehicles owned by Obligors,] except for
certain liens which by operation of law have
priority over previously perfected security
interests, and, with certain exceptions, in the
proceeds thereof. The Indenture Trustee will
act as custodian of the Receivables on behalf
of the [A-1 Noteholders], [the A-2 Noteholders]
and the Certificateholders.
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<PAGE>
Certain Federal and
State Income Tax
Considerations............... In the opinion of Dewey Ballantine, counsel for
the Trust, the Notes will be characterized as
debt for federal income tax purposes and the
Trust will not be characterized as an
association (or a publicly traded partnership)
taxable as a corporation. The
Certificateholders (including the Sponsor) will
agree to treat the Trust as a partnership in
which they are partners for purposes of federal
and state income tax, franchise tax and any
other income tax, with the assets of the
partnership being the assets held by the Trust,
the partners of the partnership being the
Certificateholders and the Notes being debt of
the partnership. Alternative characterizations
of the Trust and the Securities are possible,
as more fully described herein. See "Certain
Federal Income Tax Considerations" and "Certain
State Tax Considerations" herein for
information regarding the application of
federal and [Nevada] tax laws to the Securities
and the Trust.
ERISA Considerations........... The acquisition of Notes or Certificates by an
employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA") or the provisions of Section
4975 of the Code (the "Plan"), could result in
a prohibited transaction under "ERISA" or
Section 4975 of the Code, unless such
acquisition is subject to a statutory or
administrative exemption, if, by virtue of such
acquisition, assets held by the Issuer and
pledged to the Indenture Trustee were deemed to
be assets of the Plan. In addition, the Issuer
or other parties may be considered to be a
fiduciary with respect to any Plan. Therefore,
the acquisition and transfer of the Notes or
Certificates are subject to certain
restrictions. See "ERISA Considerations."
Rating of the Securities....... It is a condition to the issuance of the Notes
that the [A-1 Notes] be rated in the _____
rating category, the [A-2 Notes] be rated in
the [_____ rating category] and the
Certificates be rated at least [___] or its
equivalent, in each case by at least two
nationally recognized rating agencies. There is
no assurance that a rating will not be lowered
or withdrawn by a rating agency based on a
change in circumstances deemed by such rating
agency to adversely affect the Securities. A
security rating is not a recommendation to buy,
sell or hold securities, inasmuch as such
rating does not comment as to market price or
suitability for a particular investor. The
ratings of the Securities are also based on the
rating of the security insurer. Upon a security
insurer default, the rating on the Securities
may be lowered or withdrawn entirely. In the
event that any rating initially assigned to the
Securities were subsequently lowered or
withdrawn for any reason, including by reason
of a downgrading of the security insurer's
claims- paying ability, no person or entity
will be obligated to provide any additional
credit enhancement with respect to the
Securities. Any reduction or withdrawal of a
rating will have an adverse effect on the
liquidity and market price of the Securities.
See "Ratings."
Risk Factors................... For a discussion of certain factors that should
be considered by prospective investors in the
Notes and Certificates, see "Risk Factors"
herein and in the Prospectus.
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Certain Legal Matters.......... Certain legal matters relating to the validity
of the issuance of the Notes and Certificates
will be passed upon for the Issuer and the
Underwriter by Dewey Ballantine, New York, NY.
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<PAGE>
RISK FACTORS
Risk of Losses on Investment Associated with Limited Obligations of the
Trust. Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the Notes.
The Certificateholders will not receive any distributions with respect to a
Payment Date until the full amount of interest on and principal of the Notes on
such Payment Date has been deposited in the Note Distribution Account. The
Trust does not have, nor is it permitted or expected to have, any significant
assets or sources of funds other than the Receivables and the Trust Accounts.
The Securities represent solely obligations of, or interests in, the Trust and
the Securities will not be insured or guaranteed by the Sponsor, the
Originator, the Servicer, the [Owner] Trustee or any other person or entity.
Consequently, holders of the Securities must rely for repayment upon payments
on the Receivables and, if and to the extent available, amounts on deposit in
the Reserve Account. Amounts to be deposited in the Reserve Account are limited
in amount, and the amount required to be on deposit in the Reserve Account will
be reduced as the Pool Balance is reduced. In addition, funds in the Reserve
Account will be available on each Payment Date to cover shortfalls in
distributions of interest and principal on the Notes prior to the application
thereof to cover shortfalls on the Certificates. If the Reserve Account is
exhausted, the Trust will depend solely on current payments on the Receivables
to make payments on the Securities. Although the Trust will covenant to sell
the Receivables if directed to do so by the Indenture Trustee in accordance
with the Indenture following an acceleration of the Notes upon an Event of
Default, there is no assurance that the market value of the Receivables will at
any time be equal to or greater than the aggregate principal amount of
outstanding Notes. Therefore, upon an Event of Default with respect to the
Notes there can be no assurance that sufficient funds will be available to
repay Noteholders in full and consequently the Noteholders run the risk of loss
on their investment. In addition, the amount of principal required to be
distributed to Noteholders under the Indenture is generally limited to amounts
available therefor in the Note Distribution Account. Therefore, the failure to
pay principal on the Notes may not result in the occurrence of an Event of
Default until the [A-1] Final Scheduled Payment Date or the [A-2] Final
Scheduled Payment Date.
Risk of Limited Liquidity and Lower Market Price Associated with a
Reduction or Withdrawal of Ratings of the Securities. It is a condition to the
issuance of the Notes and the Certificates that the [A-1 Notes] be rated in the
[_____] rating category, the [A-2 Notes] be rated in the [____] rating category
and the Certificates be rated at least [___] or its equivalent, in each case by
at least two nationally recognized rating agencies (the "Rating Agencies"). A
rating is not a recommendation to purchase, hold or sell Securities, inasmuch
as such rating does not comment as to market price or suitability for a
particular investor. The rating of the Securities addresses the likelihood of
the timely payment of interest on and the ultimate repayment of principal of
the Securities pursuant to their terms. There is no assurance that a rating
will remain for any given period of time or that a rating will not be lowered
or withdrawn entirely by a Rating Agency if in its judgment circumstances in
the future so warrant. The rating of the Notes is based primarily on the
creditworthiness of the Receivables, the subordination provided by the
Certificates and the availability of funds in the Reserve Account. The rating
of the Certificates is based primarily on the creditworthiness of the
Receivables and the availability of funds in the Reserve Account. The ratings
of the Securities are also based on the rating of the security insurer. Upon a
security insurer default, the rating on the Securities may be lowered or
withdrawn entirely. In the event that any rating initially assigned to the
Securities were subsequently lowered or withdrawn for any reason, including by
reason of a downgrading of the security insurer's claims-paying ability, no
person or entity will be obligated to provide any additional credit enhancement
with respect to the Securities. Any reduction or withdrawal of a rating will
have an adverse effect on the liquidity and market price of the Securities. See
"Ratings."
[Risk of Reduced Rate of Return Associated with Relationship Between Base
Rate and LIBOR. Allocations of payments on the variable rate Receivables to
principal and interest depend upon the applicable Base Rate. Interest on the
[A-1 Notes], [A-2 Notes] and [the Certificates] accrues at a rate generally
based upon LIBOR. These two rates can and will vary with respect to each other.
Historically, they have increased or decreased roughly in tandem and, during
the last ten years, LIBOR always has remained below the Base Rate. However, no
assurance can be given that these historical trends will continue. There is a
risk that if LIBOR were to more above the Base Rate, the spread used to pay
interest to the Securityholders would disappear and the rate of return to
investors would be reduced.]
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[The variable rate Receivables bear interest at the Base Rate plus a Base
Rate Additive ranging from _____% to _____%. Each of the [A-1 Note], [A-2]
Interest Rate and the [Pass-Through Rate] is based upon LIBOR. If, in respect
of any Payment Date, there does not exist a positive spread between the
weighted average of the Receivables Rate [A-1 Note Interest Rate] [the A-2 Note
Interest Rate] less the Servicing Fee Rate (such difference between the
Receivables Rate and the Servicing Fee Rate being the "Net Receivables Rate")
for the Collection Period preceding such Payment Date, on the one hand, and the
[A-1 Note Interest Rate], [the A-2 Note Interest Rate] [Pass-Through Rate] for
such Payment Date (calculated before giving effect to this sentence), on the
other hand, then the [Pass-Through Rate] for such Payment Date shall not exceed
the Net Receivables Rate.]
[Risk of Reduced Rate of Return Associated with Yield Considerations. The
Certificateholders will bear the risk associated with the possible narrowing of
the spread between the [A-1 Note Interest Rate] [the A-2 Note Interest Rate]
[Pass-Through Rate], on the one hand, and the Net Receivables Rate, on the
other hand. If this spread disappears (i.e., if the [A-1 Note Interest Rate]
[the A-2 Note Interest Rate] [Pass-Through Rate] exceeds or equals the Net
Receivables Rate), the interest payable on the [A-1 Notes] [A-2 Notes]
[Certificates] for the related Payment Date will not exceed such Net
Receivables Rate. A substantial change in LIBOR at a time when the Net
Receivables Rate does not experience a similar change could result in limiting
the [A-1 Note Interest Rate] [A-2 Note Interest Rate] [Pass-Through Rate] and
consequently could reduce the rate of return to investors as described above.]
Risk of Lower Yield Associated with Prepayment Considerations. If
purchased at other than par, the yield to maturity on the Securities will be
affected by the rate of the payment of principal of the Contracts. If the
actual rate of payments on the Contracts is slower than the rate anticipated by
an investor who purchases the Securities at a discount, the actual yield to
such investor will be lower than such investor's anticipate yield. If the
actual rate of payments on the Contracts is faster than the rate anticipated by
an investor who purchases the Securities at a premium, the actual yield to such
investor will be lower than such investor's anticipated yield.
[All of the Contracts are fixed-rate contracts. The rate of prepayments
with respect to conventional fixed contracts has fluctuated significantly in
recent years. In general, if prevailing interest rates fall significantly below
the interest rates on fixed rate contracts, such contracts are likely to be
subject to higher prepayment rates than if prevailing rates remain at or above
the interest rate on such contracts. However, the monthly payment on contracts
similar to the Contracts is often smaller than the monthly payment on other
types of consumer debt, for example, a typical mortgage loan. Consequently, a
decrease in the interest rate payable as a result of a refinancing would result
in a relatively small reduction in the amount of the contracts monthly payment,
as a result of the relatively small loan balance. Conversely, if prevailing
interest rates rise appreciably above the interest rates on fixed rate
contracts, such contracts are likely to experience a lower prepayment rate than
if prevailing rates remain at or below the interest rates on such contracts. As
of the Cut-off Date, ____% of the aggregate principal balance of the Contracts
had prepayment penalties.]
[All of the Contracts are adjustable rate contracts. As is the case with
conventional fixed rate contracts, adjustable rate contracts may be subject to
a greater rate of principal prepayments in a declining interest rate
environment. For example, if prevailing interest rates fall significantly,
adjustable rate contracts could be subject to higher prepayment rates than if
prevailing interest rates remain constant because the availability of
fixed-rate contracts at competitive interest rates may encourage obligors to
refinance their adjustable rate contracts to "lock in" a lower fixed interest
rate. However, no assurance can be given as to the level of prepayments that
the contracts will experience. As of the Cut-off Date, ____% of the aggregate
principal balance of the Contracts had prepayment penalties.]
THE RECEIVABLES
Contracts
[Description of collateral is transaction dependent - an example
of disclosure language is set forth below.]
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[All of the Contracts were purchased by the Sponsor from the Originator in
the ordinary course of business and the Contracts constitute substantially all
of the automobile and light duty truck retail installment sale contracts
included in the Originator's portfolio meeting the selection criteria described
herein. Such selection criteria included that: (i) each Contract is secured by
a new or used automobile or light duty truck; (ii) each Contract was originated
in the United States; (iii) each Contract provides for level monthly payments
that fully amortize the amount financed over its original term except that the
payment in the first or last month in the life of the Contract may be minimally
different from the level payment, and a minimal number of the Contracts provide
for monthly payments for a period of time not exceeding one year after
origination in an amount less than such level payment, provided that as of the
Cutoff Date the monthly payment currently due under each such Contract is equal
to such level payment; (iv) each Contract was originated on or prior to , 199 ;
(v) each Contract has an original term of to months and, as of the Cutoff Date,
had a remaining term to maturity of not less than three months nor more than
month; (vi) each Contract provides for the payment of a finance charge at an
APR ranging from % to %; (vii) each Contract shall not have a Scheduled Payment
that is more than 30 days past due as of the Cutoff Date; (viii) no Contract
shall be due, to the best knowledge of the Originator, from any Obligor who is
presently the subject of a bankruptcy proceeding or is bankrupt or insolvent;
(ix) no Vehicle has been repossessed without reinstatement as of the Cutoff
Date; and (x) as of the Cutoff Date, physical damage insurance relating to each
Vehicle is not being force-placed by the Servicer.
Certain information with respect to the Receivables expected to be sold by
the Originator to the Sponsor pursuant to the Receivables Acquisition Agreement
and in turn sold by the Sponsor to the Trust pursuant to the Pooling and
Servicing Agreement is set forth below. The description of the Receivables
presented in this Prospectus Supplement is based upon the pool of Receivables
as it is expected to be constituted on the Cutoff Date. While information as of
the Closing Date for the Receivables that actually will be sold to the Trust
may differ somewhat from the information presented herein, the Sponsor does not
expect that the characteristics of the Receivables that are sold to the Trust
will vary materially from the information presented in this Prospectus
Supplement concerning the Receivables.
As of the Cutoff Date, approximately ___% and approximately ___% of the
Aggregate Discounted Contract Balance are expected to represent Contracts
secured by automobiles and light duty trucks, respectively. Based on the
Aggregate Discounted Contract Balance, approximately ___% and approximately
___% of the Contracts are expected to represent financing of new vehicles and
used vehicles, respectively, and no more than ___% of the Contracts are expected
to be due from employees of the Originator or any of its respective affiliates.
As of the Cutoff Date, the average Principal Balance of Contracts secured by
automobiles and light duty trucks is expected to be approximately $_______ and
approximately $_______, respectively. The majority of the Vehicles are
expected to be foreign and domestic automobiles and light duty trucks. Except
in the case of any breach of representations and warranties by the Originator,
it is expected that none of the Contracts provide for recourse to the
Originator who originated the related Contract.
Each Contract provides for fixed level monthly payments which will
amortize the full amount of the Contract over its term. The Contracts provide
for allocation of payments according to the "sum of periodic balances" or "sum
of monthly payments" method (the "Rule of 78s"). Each Contract provides for the
payment by the Obligor of a specified total amount of payments, payable in
monthly installments on the related due date, which total represents the
principal amount financed and finance charges in an amount calculated on the
basis of a stated annual percentage rate ("APR") for the term of such Contract.
The rate at which such amount of finance charges is earned and,
correspondingly, the amount of each fixed monthly payment allocated to
reduction of the outstanding principal balance of the related Contract are
calculated in accordance with the Rule of 78s. Under the Rule of 78s, the
portion of each payment allocable to interest is higher during the early months
of the term of a Contract and lower during later months than that under a
constant yield method for allocating payments between interest and principal.
Notwithstanding the foregoing, all payments received by the Servicer on or in
respect of the Contract will be allocated pursuant to the Pooling and Servicing
Agreement on an actuarial basis.
If an Obligor elects to prepay a Contract in full, it is entitled to a
rebate of the portion of the outstanding balance then due and payable
attributable to unearned finance charges, calculated in
S-17
<PAGE>
accordance with the Rule of 78s. The amount of a rebate under a Contract
calculated in this manner will always be less than had such rebate been
calculated on an actuarial basis. Distributions to Noteholders and
Certificateholders will not be affected by Rule of 78s rebates under the
Contract because pursuant to the Pooling and Servicing Agreement such
distributions will be determined using the actuarial method.]
S-18
<PAGE>
The expected composition, distribution by APR and geographical
distribution of the Contracts are as set forth in the following tables.
Expected Composition of the Contracts
<TABLE>
<S> <C>
Aggregate Discounted Contract Balance .................................... $
Number of Contracts ...................................................... ____
Average Original Principal Balance ....................................... $
Range of Original Principal Balances ................................... $______ to $______
Weighted Average APR(1)................................................... ____%
Range of APRs .......................................................... ____% to ____%
Weighted Average Original Maturity(1) .................................... ___ months
Range of Original Maturities ........................................... ___ months to ___ months
Weighted Average Remaining Maturity(1) ................................... ___ months
Range of Remaining Maturities .......................................... ___ months to ___ months
</TABLE>
- ------------------
(1) Weighted by Aggregate Discounted Contract Balance as of the Cutoff Date.
Expected Distribution of the Contracts by APR
<TABLE>
<CAPTION>
Percentage of
Percentage of Aggregate Aggregate
Aggregate Discounted Discounted
Number of Number Contract Contract
Range of APRs Contracts of Contracts Balance Balance
- ------------- --------- -------------- --------- --------
<S> <C> <C> <C> <C>
% to % ............ % $ %
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
% to % ............
Total ............... % $ %
======== ========= ======= =========
</TABLE>
S-19
<PAGE>
Expected Distribution of the Contracts by State
<TABLE>
<CAPTION>
Percentage of Aggregate Aggregate
Aggregate Discounted Discounted
Number of Number Contract Contract
State(1) Contracts of Contracts Balance Balance
- -------- ---------- -------------- --------- --------
<S> <C> <C> <C> <C>
% $ %
Total................ % $ %
========= ======== ======== ======
</TABLE>
- -------------------------
(1) Based on the addresses of the Obligors.
Substitution
Pursuant to the Pooling and Servicing Agreement, the Servicer
will have the right (but not the obligation) at any time to substitute one or
more Eligible Receivables (each a "Substitute Receivable") [and the Vehicles
subject thereto (or a perfected security interest therein)] for a Receivable
("Predecessor Receivable") [and the Vehicles subject thereto (or a perfected
security interest therein)] if:
(i) the Predecessor Receivable is then in default and, as of the
most recent Determination Date, has been in default for at least
[____(__)] consecutive days or a bankruptcy petition has been filed by or
against the Obligor;
[(ii) the Vehicles subject to the Substitute Receivable or
Receivables has a current estimated fair market value and a projected
residual value, respectively, equal to or greater than the current fair
market value and projected residual value of the Vehicles subject to the
Predecessor Receivable;] and
(iii) the Substitute Receivable or Receivables require the
obligor or obligors thereunder to make Contract Payments during each month
ending on or prior to the final Scheduled Payment Date of the Certificates
in an amount which is at least as great as the Contract Payment required
under the Predecessor Receivable during each such month.
[provided, however, that the Aggregate Discounted Contract Balance of all
Contracts substituted shall not exceed [10%] of the Aggregate Discounted
Contract Balance of the Initial Receivables and the Additional Receivables.]
[Upon repossession and disposition of any Vehicles subject to a
Defaulted Contract, any deficiency remaining will be pursued to the extent
deemed practicable by the Servicer. [The Servicer on behalf of the Issuer is
directed to maximize the Net Residual Value of the Vehicles relating to any
Defaulted Contract, and, in such regard, the Servicer may sell such Vehicles at
the best available price, refurbish such Vehicles and re-lease such Vehicles to
third parties, or take any other commercially reasonable steps to maximize such
Vehicles's Net Residual Value. Liquidation proceeds with respect to any such
Defaulted Contract, including any future payments received with respect to such
Defaulted Contracts, shall be paid to the Collection Account. If the Servicer
reasonably believes that the Net Residual Value of any Vehicles is zero or de
minimis, it will dispose of such Vehicles in accordance with its standard
procedures.]
S-20
<PAGE>
[The original counterpart of each Contract constituting chattel
paper and the Contract Files will be held by _________________, as Trustee on
behalf of the [A-1 Noteholders] [A-2 Noteholders] and the Certificateholders.
The Trustee will be required to indicate that the Contracts have been
transferred by the Originator to the Issuer.]
S-21
<PAGE>
THE ORIGINATOR AND THE SERVICER
General
The Originator is principally a company engaged in the business of
originating and acquiring retail installment sale contract financing to retail
customers of automotive dealers. The Originator provides full-service
financing, primarily through installment sales contracts, to retail purchasers
of new and used automobiles and light duty trucks through dealer programs.
[The Originator has financed over $___ million of vehicles, representing
over _______ vehicles. The Originator currently services over ___ customers
through its direct servicing activities and an additional ______ customers in
connection with its subsidiaries' activities. As of ____________________, the
Originator had __ employees.]
Delinquency and Default Experience
There can be no assurance that the levels of delinquency and loss
experience reflected in Table 1 and Table 2, below, are indicative of the
performance of the Receivables included in the Collateral for the Notes.
S-22
<PAGE>
TABLE 1
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
=========================================================================================================================
Year Ended December 31,
-----------------------------------------------------------------------------------------------
1991 1992 1993
===============================================================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Originator Portfolio
at Year End
Delinquencies:
31-60 Days
61+ Days
Total Delinquencies
Total Delinquencies as a
% of Total Portfolio
</TABLE>
TABLE 2
<TABLE>
<CAPTION>
LOSS EXPERIENCE
=========================================================================================================================
Year Ended December 31,
-----------------------------------------------------------------------------------------------
1991 1992 1993
===============================================================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Acquisitions (1)
Gross Defaults
Gross Recoveries
Net Losses
</TABLE>
- -----------------------
(1) Total Acquisition = total cost (aggregate purchase price of the Vehicles)
to the Originator since inception in ____ thru and including the year
end set forth above.
Litigation
Originator is not involved in any legal proceedings, and is not aware of
any pending or threatened legal proceedings that would have a material adverse
effect upon its financial condition or results of operations.
Underwriting
[Description of the underwriting guidelines of the Originator is
transaction dependent - an example of disclosure language is set forth below.]
[The Originator's underwriting standards are intended to evaluate a
prospective buyer's credit standing and repayment ability and the adequacy of
the related financed vehicle as collateral. Generally, a prospective buyer is
required by the Originator to complete a credit application on a form prepared
or approved by the Originator. As part of the description of the applicant's
financial condition, the applicant is required to provide current information
enumerating, among other things, employment history, bank account information,
debts and credit references. Upon receipt, all application data is entered into
a centralized computer network that automatically obtains an independent credit
bureau report and then "scores" the application with the use of a scorecard.
The scorecard enables the Originator to review an
S-23
<PAGE>
application and establish the probability that the proposed retail installment
sale contract will be paid in accordance with its terms. The credit scores are
expressed as a numerical estimate of the "odds of repayment" on a scheduled
basis. For example, a score of 15 means that, based on the Originator's past
retail automobile and light duty truck installment sale contract experience,
the odds are 15 to 1 that over the life of the contract that the related
account will not (i) be delinquent for in excess of 30 days more than twice,
(ii) be delinquent in excess of 60 days more than once, (iii) ever be
delinquent for more than 90 days or (iv) require the related financed vehicle
to be repossessed.
This numerical credit scoring system was developed by _______________
(the "Credit Score Analysts"), an automobile lending and leasing consulting
firm, specifically for the Originator, based upon an analysis of the historical
performance of the retail automobile and light duty truck installment sale and
lease contract portfolios of the Originator. To determine the appropriate
characteristics for credit scoring, the Credit Score Analysts reviewed a random
sample of 10,000 retail installment sale contracts and 10,000 lease contracts
from the portfolio of the Originator. The Credit Score Analysts then compiled a
list of ten to twelve characteristics that cumulatively carried the most weight
in predicting historical performance and assigned point values and weighting to
each of these characteristics. Each scorecard assigns at least a 50% weighting
to the credit bureau report. This weighting system is particularly significant
because the credit bureau report is beyond the control of the Originator and
cannot be manipulated. The Credit Score Analysts determined that the most
accurate determinative of the performance of an installment sale or lease
contract was the credit bureau report. Based on such historical performance, the
Credit Score Analysts prepared two retail credit scorecards (which differ
according to type of contract and the geographical location of the applicant)
and two lease scorecards.
The Credit Score Analysts' scorecard system was implemented in __________
and has been used for all retail installment sale contracts originated
subsequent thereto. Prior to this time, the Originator used a scoring model
which, while not developed specifically for it, is used extensively in the
automobile lending industry. This scoring model evaluated an applicant's
creditworthiness based on specific characteristics gathered from the credit
investigation process and the amount of the contract requested. Based on the
applicant's score, each applicant was identified as falling into one of four
credit risk categories ranging from A to D. Applicants with a risk category of A
or B were normally approved by the credit supervisor at the branch. Those in a
risk category below B went to local office management for review and final
approval, qualification or rejection.
Both the alphabetical and numerical scoring models are intended to provide
a means of analysis to assist in decision making, but the final decision rests
with the Originator's credit specialists. Notwithstanding the foregoing, the
ability of a credit specialist to override the scorecard analysis is limited to
no more than 10% of all applications, and both the number of overrides granted
by each credit specialist and the aggregate number of overrides granted by all
credit specialists are tracked by the Originator daily in order to insure the
statistical validity of the scoring models. Detailed reporting on all aspects
of the numerical scoring model is utilized to track performance of the
Originator's retail automobile and light duty truck installment sale contract
portfolio and to enable the Originator, with the assistance of the Credit Score
Analysts, to fine tune the scoring model according to statistical indications
in order to continually assure the statistical validity of the scoring models.
Approximately % and approximately % of the Contracts, based on Aggregate
Discounted Contract Balance, are expected to have been underwritten using the
Credit Score Analysts' numerical scorecard and using the alphabetical scoring
model, respectively. The remaining Contracts were not underwritten using either
scoring model.
For the period _________ through __________, the Originator booked
approximately ___% of all credit applications.
The amount of a retail installment sale contract generally will not exceed
(i) when secured by a new vehicle, the price paid by the dealer for such
vehicle or (ii) when secured by a used vehicle, the average wholesale value of
such vehicle stated in the most recent edition of the National Auto Dealers
Association Used Car Guide, plus in each case various taxes and fees in
connection with the sale. The Originator regularly reviews the quality of the
contracts which it purchases and periodically conducts quality audits to ensure
compliance with its established policies and procedures.]
S-24
<PAGE>
Insurance
[The Originator requires each obligor under an automobile or light duty
truck retail installment sale contract to obtain comprehensive and collision
insurance with respect to the related financed vehicle and verifies the
existence of such insurance before it will purchase such contract. Following
such purchase, the Originator monitors the maintenance of such physical damage
insurance but does not force-place physical damage insurance if the related
obligor does not maintain such insurance. Instead, each such financed vehicle
is covered by a policy of vendor's single interest physical damage insurance in
favor of the Originator issued by ______________ (the "VSI Insurance Policy"),
which provides limited coverage (subject to deductibles) for, among other
things, (i) physical loss or damage from any external cause to such financed
vehicle and (ii) inability to locate such financed vehicle or the related
obligor. The VSI Insurance Policy is in effect from the date a contract is
purchased from the related Dealer and the premium for such VSI Insurance Policy
is paid for by the Originator. The Originator will represent and warrant in the
Receivables Acquisition Agreement, and the Sponsor will represent and warrant
in the Indenture, as to each Contract, that the related Vehicle is insured
under the VSI Insurance Policy, the premiums for which have been paid in full,
and that such VSI Insurance Policy is in full force and effect.
The Originator does not require obligors to maintain credit disability or
life or credit or health insurance or other similar insurance coverage which
provides for payments to be made on the automobile and light duty truck retail
installment sale contracts which it purchases on behalf of such obligors in the
event of disability or death. To the extent that any such insurance coverage is
obtained on behalf of an Obligor, payments received in respect of such coverage
may be applied to payments on the related Contract to the extent that the
Obligor's beneficiary chooses to do so.]
Servicing
The Receivables will be serviced by the Originator, as Servicer, pursuant
to the Receivables Acquisition Agreement.
The Receivables Acquisition Agreement requires that servicing of the
Receivables by Originator shall be carried out in the same manner in which it
services contracts and vehicles held for its own account and consistent with
customary practices of servicers in the retail automobile industry, but in
performing its duties hereunder, Originator will act on behalf and for the
benefit of the Issuer, the Trustee and the holders of the Notes, subject at all
times to the provisions of the Indenture, without regard to any relationship
which Originator or any Affiliate of Originator may otherwise have with an
Obligor. Except as permitted by the terms of any Contract following a default
thereunder, Originator shall not take any action which would result in the
interference with the Obligor's right to quiet enjoyment of the Vehicles
subject to the Contract during the term thereof.
Following each Determination Date, Originator shall advance and remit to
the Trustee, in such manner as will ensure that the Trustee will have
immediately available funds on account thereof by 11:00 a.m. New York time on
the [_______] Business Day prior to the next succeeding Payment Date, a
Servicer Advance equal to the Contract Payment due during the preceding
Collection Period with respect to each Contract (other than a Contract which
became a Defaulted Contract on or prior to such Determination Date) under which
the Obligor has not made such payment by such Determination Date; provided,
however, that Originator will not be obligated to make a Servicer Advance with
respect to any Contract if Originator, in its good faith judgment, believes
that such Servicer Advance would be a Nonrecoverable Advance. If Originator
determines that any Contract Payment it has made, or is contemplating making,
would be a Nonrecoverable Advance, Originator shall deliver to the Trustee an
Officers' Certificate stating the basis for such determination.
Servicing Compensation and Payment of Expenses
For its servicing of the Receivables, Originator will be entitled to
receive a monthly Servicing Fee equal to the product of (i) one-twelfth, (ii)
___% and (iii) the Aggregate Discounted Contract Balance of all Contracts as of
the preceding Determination Date, payable out of the Collection Account, plus
Servicing Charges and Investment Earnings.
S-25
<PAGE>
All costs of servicing each Receivable in the manner required by the
Receivables Acquisition Agreement shall be borne by Originator, but Originator
shall be entitled to retain, out of any amounts actually recovered with respect
to any Defaulted Contract [or the Vehicles subject thereto,] Originator's
actual out-of-pocket expenses reasonably incurred with respect to such
Defaulted Contract [or Vehicles]. In addition, Originator shall be entitled to
receive on each Payment Date any unreimbursed Nonrecoverable Advances or
Servicer Advances with respect to any Defaulted Contract and the Servicing Fee.
Evidence as to Compliance
The Receivables Acquisition Agreement requires that with each set of
financial statements delivered pursuant to the Receivables Acquisition
Agreement, Originator will deliver an Officers' Certificate stating (i) that
the officers signing such Certificate have reviewed the relevant terms of the
Receivables Acquisition Agreement and have made, or caused to be made under
such officers' supervision, a review of the activities of Originator during the
period covered by the statements then being furnished, (ii) that the review has
not disclosed the existence of any Servicer Event of Default or, if a Servicer
Event of Default exists, describing its nature and what action Originator has
taken and is taking with respect thereto, and (iii) that on the basis of such
review the officers signing such certificate are of the opinion that during
such period Originator has serviced the Receivables in compliance with the
required procedures except as described in such certificate.
Originator shall cause a firm of independent certified public accountants
(who may also render other services to Originator) to deliver to the Trustee,
with a copy to the Rating Agency and each holder of the Notes, within [90] days
following the end of each fiscal year of Originator, beginning with
Originator's fiscal year ending ____________, 199__, a written statement to the
effect that such firm has examined in accordance with generally accepted
practices samples of the accounts, records, and computer systems of Originator
for the fiscal year ended on the previous ________ relating to the Receivables
(which accounts, records, and computer systems shall be described in one or
more schedules to such statement), that such firm has compared the information
contained in Originator's reports delivered in the relevant period with
information contained in the accounts, records, and computer systems for such
period, and that, on the basis of such examination and comparison, such firm is
of the opinion that Originator has, during the relevant period, serviced the
Receivables in compliance with such servicing procedures, manuals, and guides
and in the same manner as it services comparable contracts for itself or
others, that such accounts, records, and computer systems have been maintained,
and that such certificates, accounts, records, and computer systems have been
properly prepared and maintained in all material respects, except in each case
for (a) such exceptions as such firm shall believe to be immaterial and (b)
such other exceptions as shall be set forth in such statement.
Other Servicing Procedures
At least [___] days prior to each Payment Date, Originator shall deliver a
report in writing (the "[Monthly] Servicer Report") to each holder of the
Notes, the Trustee and the Rating Agency.
If an Obligor has [___] Contract Payments which are due and unpaid as of
any Determination Date, such Obligor's Contract shall become a Defaulted
Contract. Where no satisfactory arrangements can be made for collection of
delinquent payments within [__] days of a Contract becoming a Defaulted
Contract, Originator shall foreclose or otherwise liquidate any such Defaulted
Contract [(together with the related Vehicles)] within [60] days of such
Contract becoming a Defaulted Contract. In connection with any foreclosure or
other liquidation, Originator will take such action as is appropriate,
consistent with Originator's administration of contracts in its own portfolio,
including such action as may be necessary to cause, or attempt to cause, the
Obligor thereunder to cure such default (if the same may be cured) or to
terminate or attempt to terminate such Contract and to recover, or attempt to
recover, all damages resulting from such default.
[Originator will use its best efforts (i) to sell or re-lease any Vehicles
subject to a Defaulted Contract in a timely manner and upon reasonable terms
and conditions so as to reduce as expeditiously as is consistent with sound
commercial practice any unreimbursed amounts drawn by the Trustee on the
Reserve Account and (ii) to sell or re-lease any Vehicles remaining subject to
the lien of the Indenture
S-26
<PAGE>
upon the expiration of the Contract to which such Vehicles is subject, in a
timely manner and in a manner consistent with that utilized by Originator with
respect to vehicles owned by it so as to realize, to the extent possible under
then prevailing market conditions, the Net Residual Value of such Vehicles.]
[All Residual Payments realized by Originator in the performance of its
duties with respect to any item of Vehicles remaining subject to the Lien of
the Indenture (net of Originator's actual out-of-pocket expenses reasonably
incurred in such realization) shall be held in trust by Originator, as agent
for the Trustee, and turned over to the Trustee within [___] Business Days for
application in accordance with the provisions of the Indenture, provided that,
to the extent that (i) Originator has made any advances with respect to any
Contract which thereafter became a Defaulted Contract and (ii) Originator has
not otherwise been fully reimbursed for such advances, Originator shall
reimburse itself for such advances from any Residual Payments recovered with
respect to such Defaulted Contract before remitting to the Trustee any such
amounts for deposit in the Collection Account.]
Removal of the Servicer
The Receivables Acquisition Agreement will provide that Originator may not
resign from its obligations and duties as Servicer thereunder, except upon a
determination that Originator's performance of such duties is no longer
permissible under applicable law. Originator can only be removed pursuant to a
Servicer Event of Default. If a Servicer Event of Default shall have occurred
and be continuing, the Trustee shall give written notice to Originator of the
termination of all of the rights and obligations of Originator (but none of the
Originator's obligations thereunder, which shall survive any such termination)
under the Receivables Acquisition Agreement. On and after the time Originator
receives a notice of termination, the Trustee shall be the successor in all
respects to Originator in its capacity as servicer under the Receivables
Acquisition Agreement of the Receivables. The Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act, give notice of such
fact to each holder of the Notes and (i) appoint an established institution,
satisfactory to the holders of Notes evidencing not less than [_______] of the
Voting Rights, as the successor to Originator to assume all of the rights and
obligations of Originator, including, without limitation, Originator's right to
receive the Servicing Fee (but not the obligations of the Originator contained
in the Receivables Acquisition Agreement) or, (ii) if no such institution is so
appointed, petition a court of competent jurisdiction to appoint an institution
meeting such criteria as Originator.
THE INDENTURE TRUSTEE
The Indenture Trustee, ____________, has an office at
________________________.
The Indenture Trustee may resign, subject to the conditions set
forth below, at any time upon written notice to the Sponsor, the Servicer and
the [Owner] Trustee, in which event the Servicer will be obligated to appoint a
successor Indenture Trustee. If no successor Indenture Trustee shall have been
so appointed and have accepted such appointment within [30] days after the
giving of such notice of resignation, the resigning Indenture Trustee may
petition a court of competent jurisdiction for the appointment of a successor
Indenture Trustee. Any successor Indenture Trustee shall meet the financial and
other standards for qualifying as a successor Indenture Trustee under the
Pooling and Servicing Agreement. The Servicer, the [Owner] Trustee or
Noteholders evidencing more than [___%] of the Pool Balance may also remove the
Indenture Trustee if the Indenture Trustee ceases to be eligible to continue as
such under the Pooling Agreement and fails to resign after written request
therefor, or is legally unable to act, or if the Indenture Trustee is
adjudicated to be insolvent. In such circumstances, the Servicer, the [Owner]
Trustee or such Noteholders will also be obligated to appoint a successor
Indenture Trustee. Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee will not become effective until
acceptance of the appointment by the successor Indenture Trustee.
S-27
<PAGE>
THE [OWNER] TRUSTEE
______________________________ will be the [Owner] Trustee under
the Trust Agreement. __________________________ is a banking corporation and
its principal offices are located at ________________________________________.
The [Owner] Trustee's liability in connection with the issuance and sale of the
Notes and the Certificates is limited solely to the express obligations of the
[Owner] Trustee set forth in the Trust Agreement and the Pooling and Servicing
Agreement.
THE TRUST
The Trust will be formed in accordance with the laws of the State
of _______________, pursuant to the Trust Agreement, solely for the purpose of
effectuating the transactions described herein. Prior to formation, the Trust
will have had no assets or obligations and no operating history. Upon
formation, the Trust will not engage in any business activity other than
acquiring and holding the Receivables, issuing the Securities Certificates and
distributing payments thereon. As described under "Description of the Transfer
and Servicing Agreements - Servicing Compensation," a portion of the monthly
collections with respect to the Contracts will be paid to the Servicer as
servicing compensation. All other expenses of the Trust will be paid on behalf
of the Sponsor by the Servicer or by the Originator, as provided in the Trust
Agreement.
The Trust Fund will consist of the [Vehicles], the Contracts and
any Scheduled Contract Payments to be made by Obligors (but not including any
payments due on or prior to the Cut-Off Date or, with respect to an Additional
Receivable, the day prior to the Payment Date on which the Trust acquires such
Additional Receivable; any guaranties of an Obligor's obligations under a
Contract; any documents in the Contract Files; the insurance policies
maintained by the Obligors with respect to the Vehicles (the "Insurance
Policies") and the proceeds of such Insurance Policies; any rights of the
Sponsor under the Receivables Acquisition Agreement (including the right to
instruct the Originator to exercise any unassignable rights of enforcement
under the Contracts and any guaranties thereof, the Originator's rights
("Vendor Agreement Rights") under agreements with any vendors from which the
Contracts were acquired, and the Insurance Policies); a security interest in
the Reserve Account and amounts on deposit therein; and any and all income and
proceeds of the foregoing. Neither the Pooling and Servicing Agreement permit
the Trust to acquire any additional assets. Because the Trust does not have any
operating history and will not engage in any business activity other than
owning the Trust Fund, issuing the Securities and making distributions thereon,
there has not been included any historical or pro forma ratio of earnings to
fixed charges with respect to the Trust.
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the terms of the Indenture. A copy of
the Indenture will be filed with the Commission following the issuance of the
Securities. The following summary describes certain terms of the Notes and the
Indenture. The summary does not purport to be complete and is qualified in its
entirety by reference to the provisions of the Notes and the Indenture. The
following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the Prospectus, to
which description reference is hereby made. ______________________, a
_______________ banking corporation, will be the Indenture Trustee under the
Indenture.
The [A-1 Notes]
Payments of Interest. Interest on the principal balance of the [A-1 Notes]
will be payable to the [A-1 Noteholders] [monthly] on each Payment Date
commencing _______________, 199__. "Payment Date" shall mean the [____] day of
each [month] or, if any such date is not a business day, on the next succeeding
business day. Interest will accrue from and including the Closing Date or from
and including the most recent Payment Date to but excluding such Payment Date
and will be calculated on the basis
S-28
<PAGE>
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. Interest accrued as of any
Payment Date but not paid on such Payment Date will be due on the next Payment
Date together with interest on such amount at the rate per annum specified
below. Interest payments on the [A-1 Notes] will generally be derived from the
Total Distribution Amount remaining after the payment of the Servicing Fee and
amounts from the Reserve Account. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Reserve Account" herein. If the
amount of interest on the principal balance of the [A-1 Notes] and the [A-2
Notes] payable on any Payment Date exceeds the excess of (A) the sum of (i)
collections on the Receivables for the related Collection Period plus (ii) the
amount of cash on deposit in the Reserve Account over (B) the amount of the
Servicing Fees payable on such Payment Date, the [A-1 Noteholders] and the [A-2
Noteholders] will receive their ratable share (based upon the total amount of
interest due to the [A-1 Noteholders] and the [A-2 Noteholders], as the case
may be) of the amount available to be distributed in respect of interest on the
[A-1 Notes] and the [A-2 Notes].
[On each Payment Date, the [A-1 Note] Interest Rate will equal LIBOR for
such Payment Date [minus][plus] _____%. "LIBOR" with respect to any Payment
Date shall be established by the Indenture Trustee and shall equal the
arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of
one percent) of the offered rates for United States dollar deposits for one
month which appear on the Reuters Screen LIBO Page (as defined below) as of
11:00 A.M., London time, on the second LIBOR Business Day prior to the
immediately preceding Payment Date (or, in the case of the initial Payment
Date, the second LIBOR Business Day prior to the Closing Date); provided that
at least two such offered rates appear on the Reuters Screen LIBO Page on such
date. If fewer than two offered rates appear, LIBOR will be determined on such
date as described in the paragraph below. "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates Service
(or such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks). "LIBOR
Business Day", for purposes of the Indenture, is a day that is both a Business
Day and a day on which banking institutions in the City of London, England, are
not required or authorized by law to be closed. A "Business Day" is a day other
than a Saturday, a Sunday or a day on which banking institutions or trust
companies in New York City are authorized or obligated by law, regulation or
executive order to remain closed.]
[If on such date fewer than two offered rates appear on the Reuters Screen
LIBO Page, the Indenture Trustee will request of each of the reference banks
(which shall be major banks that are engaged in transactions in the London
interbank market, selected by the Indenture Trustee after consultation with the
Sponsor) to provide the Indenture Trustee with its offered quotation for United
States dollar deposits for one month to prime banks in the London inter-bank
market as of 11:00 A.M., London time, on such date. If at least two reference
banks provide the Indenture Trustee with such offered quotations, LIBOR on such
date will be the arithmetic mean (rounded upwards, if necessary, to the nearest
one-sixteenth of one percent) of all such quotations. If on such date fewer
than two of the Reference Banks provide the Indenture Trustee with such an
offered quotation, LIBOR on such date will be the arithmetic mean (rounded
upwards, if necessary, to the nearest one-sixteenth of one percent) of the
offered per annum rates which one or more leading banks in The City of New York
selected by the Indenture Trustee after consultation with the Sponsor are
quoting as of 11:00 A.M., New York City time, on such date to leading European
banks for United States dollar deposits for one month; provided, however, that
if such banks are not quoting as described above, LIBOR will be the LIBOR
applicable to the immediately preceding Payment Date.]
[On each Payment Date the [A-1 Note] Interest Rate will equal _____%;
provided, however, that it the [A-1 Note] Interest Rate for such Payment Date
computed without giving effect to this proviso exceeds the Net Receivables Rate
borne by the Receivables during the related Collection Period, then the [A-1
Note] Interest Rate for such Payment Date will be the [A-1 Note] Alternative
Interest Rate. The "[A-1 Note] Alternative Interest Rate" for any Payment Date
means the Net Receivables Rate borne by the Receivables during the related
Collection Period; provided, however, that in no event shall the [A-1 Note]
Alternative Interest Rate be less than _____% per annum; provided further that
to the extent that the interest paid to the [A-1 Noteholders] is less than
_____% per annum, the difference between the amount of interest paid and
interest at _____% per annum shall be payable on subsequent Payment Dates as
[Class A-1] Noteholders' Interest Carryover Amount.]
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Payments of Principal. Principal payments will be made to the [A-1
Noteholders] on each Payment Date in an amount generally equal to the Principal
Distribution Amount until the principal balance of the [A-1 Notes] is reduced
to zero. Principal payments on the [A-1 Notes] will generally be derived from
the Total Distribution Amount remaining after the payment of the Servicing Fee
and the Noteholders' Interest Distributable Amount, and from funds, if any, in
the Reserve Account remaining after the payment of the Noteholders' Interest
Distributable Amount and from funds, if any, in the [Class A-1] Maturity
Account. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. The outstanding
principal amount, if any, of the [A-1 Notes] will be payable in full on the
[A-1] Final Scheduled Payment Date.
The A-2 Notes
Payments of Interest. Interest on the principal balance of the [A-2 Notes]
will be payable to the [A-2 Noteholders] [monthly] on each Payment Date
commencing _______________, 199__. Interest will accrue from and including the
Closing Date or the most recent Payment Date to but excluding each Payment Date
and will be 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. Interest accrued as of any Payment Date but not paid on such Payment
Date will be due on the next Payment Date together with interest on such amount
at the rate per annum specified below. Interest payments on the [A-2 Notes]
will generally be derived from the Total Distribution Amount remaining after
the payment of the Servicing Fee and from the Reserve Account. See "Description
of the Transfer and Servicing Agreements--Distributions" and "--Reserve
Account" herein. If the amount of interest on the principal balance of the [A-1
Notes] and the [A-2 Notes] payable on any Payment Date exceeds the excess of
(A) the sum of (i) collections on the Receivables plus (ii) the amount of cash
on deposit in the Reserve Account over (B) the amount of the Servicing Fees
payable on such Payment Date, the [A-1 Noteholders] and the [A-2 Noteholders]
will receive their ratable share (based upon the total amount of interest due
to the [A-1 Noteholders] and the [A-2 Noteholders], as the case may be) of the
amount available to be distributed in respect of interest on the [A-1 Notes]
and the [A-2 Notes].
[On each Payment Date, the [A-1 Note] Interest Rate will equal LIBOR for
such Payment Date [minus][plus] _____%. "LIBOR" with respect to any Payment
Date shall be established by the Indenture Trustee and shall equal the
arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of
one percent) of the offered rates for United States dollar deposits for one
month which appear on the Reuters Screen LIBO Page (as defined below) as of
11:00 A.M., London time, on the second LIBOR Business Day prior to the
immediately preceding Payment Date (or, in the case of the initial Payment
Date, the second LIBOR Business Day prior to the Closing Date); provided that
at least two such offered rates appear on the Reuters Screen LIBO Page on such
date. If fewer than two offered rates appear, LIBOR will be determined on such
date as described in the paragraph below. "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates Service
(or such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks). "LIBOR
Business Day", for purposes of the Indenture, is a day that is both a Business
Day and a day on which banking institutions in the City of London, England, are
not required or authorized by law to be closed. A "Business Day" is a day other
than a Saturday, a Sunday or a day on which banking institutions or trust
companies in New York City are authorized or obligated by law, regulation or
executive order to remain closed.]
[If on such date fewer than two offered rates appear on the Reuters Screen
LIBO Page, the Indenture Trustee will request of each of the reference banks
(which shall be major banks that are engaged in transactions in the London
interbank market, selected by the Indenture Trustee after consultation with the
Sponsor) to provide the Indenture Trustee with its offered quotation for United
States dollar deposits for one month to prime banks in the London inter-bank
market as of 11:00 A.M., London time, on such date. If at least two reference
banks provide the Indenture Trustee with such offered quotations, LIBOR on such
date will be the arithmetic mean (rounded upwards, if necessary, to the nearest
one-sixteenth of one percent) of all such quotations. If on such date fewer
than two of the Reference Banks provide the Indenture Trustee with such an
offered quotation, LIBOR on such date will be the arithmetic mean (rounded
upwards, if necessary, to the nearest one-sixteenth of one percent) of the
offered per annum rates which one or more leading banks in The City of New York
selected by the
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Indenture Trustee after consultation with the Sponsor are quoting as of 11:00
A.M., New York City time, on such date to leading European banks for United
States dollar deposits for one month; provided, however, that if such banks are
not quoting as described above, LIBOR will be the LIBOR applicable to the
immediately preceding Payment Date.]
[On each Payment Date the [A-2 Note] Interest Rate will equal _____%;
provided, however, that it the [A-2 Note] Interest Rate for such Payment Date
computed without giving effect to this proviso exceeds the Net Receivables Rate
borne by the Receivables during the related Collection Period, then the [A-2
Note] Interest Rate for such Payment Date will be the [A-2 Note] Alternative
Interest Rate. The "[A-2 Note] Alternative Interest Rate" for any Payment Date
means the Net Receivables Rate borne by the Receivables during the related
Collection Period; provided, however, that in no event shall the [A-2 Note]
Alternative Interest Rate be less than _____% per annum; provided further that
to the extent that the interest paid to the [A-2 Noteholders] is less than
_____% per annum, the difference between the amount of interest paid and
interest at _____% per annum shall be payable on subsequent Payment Dates as
[Class A-2] Noteholders' Interest Carryover Amount.]
Payments of Principal. Principal payments will be made to the [A-2
Noteholders] on and after the latest to occur of (x) the Payment Date on which
the [A-1 Notes] have been paid in full, (y) the _______________, 199__ Payment
Date and (z) the Payment Date on which the lesser of the full amount of the
Maturity Draw or the amount of the Maturity Draw, if any, necessary to increase
the amount on deposit in the Reserve Account to the Specified Reserve Account
Balance is deposited into the Reserve Account, in an amount generally equal to
the [A-2 Noteholders'] Percentage of the difference between the Principal
Distribution Amount and the portion thereof, if any, of the Principal
Distribution Amount paid in respect of the [A-1 Notes] on such Payment Date or
deposited in the Reserve Account in respect of a Maturity Draw. Principal
payments on the [A-2 Notes] will generally be derived from the Total
Distribution Amount remaining after the payment of the Servicing Fee, and the
Noteholders' Interest Distributable Amount, from funds, if any, in the Reserve
Account remaining after the payment of the Noteholders' Interest Distributable
Amount, and from funds, if any, in the [Class A-2] Lockout Account. In
addition, on and after the _______________, 199__ Payment Date, certain amounts
available to be released from the Reserve Account will be distributed to the
[A-2 Noteholders] as a payment of principal after such amounts are applied to
pay the outstanding [Class A-2] Noteholders' Interest Carryover Amount, if any,
in full. See "Description of the Transfer and Servicing Agreements
Distributions" and "--Reserve Account" herein. The outstanding principal
amount, if any, of the [A-2 Notes] will be payable in full on the [A-2] Final
Scheduled Payment Date.
Optional Redemption. The [A-2 Notes] will be redeemed in whole, but not in
part, on any Payment Date after the date on which the [A-1 Notes] have been
paid in full on which the Servicer exercises its option to purchase the
Receivables when the aggregate principal amount of the Receivables shall be
less than ___% of the initial Pool Balance. The [A-2] Redemption Price is equal
to the unpaid principal amount of the [A-2 Notes], plus accrued but unpaid
interest thereon. The [A-1 Notes] are not redeemable prior to maturity.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the terms of the Trust
Agreement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the Certificates and the Trust Agreement. The following summary
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Certificates of any given series and
the related Trust Agreement set forth in the Prospectus, to which description
reference is hereby made.
Distributions of principal of, and interest on, the Certificates will be
made by the [Owner] Trustee in accordance with the procedures set forth in the
Trust Agreement directly to holders of Certificates in whose names the
Certificates were registered at the close of business on the Certificate Record
Date.
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Such distributions will be made by check mailed to the address of such holder
as it appears on the register maintained by the [Owner] Trustee or by wire
transfer. The final payment on any Certificate, however, will be made only upon
presentation and surrender of such Certificate at the office or agency
specified in the notice of final distribution to Certificateholders.
Certificates will be transferable and exchangeable at the offices of the
[Owner] Trustee or a certificate registrar named in a notice delivered to
holders of Certificates. No service charge will be imposed for any registration
of transfer or exchange, but the [Owner] Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
Purchasers (including nominees of beneficial owners) of Certificates and
their assignees must represent that the beneficial owners are individuals or
entities that are U.S. persons (generally, citizens or residents of the U.S.
and corporations or partnerships organized under U.S. law), and each must
provide a certification of non-foreign status under penalties of perjury.
The Certificates
Distributions of Interest Income. Certificateholders will be entitled to
distributions in an amount equal to the amount of interest that would accrue on
the Certificate Balance at the Pass-Through Rate. [The Pass-Through Rate for
any Payment Date means [___%] [a rate per annum equal to _____% plus an amount
equal to the product of _____ multiplied by LIBOR for such Payment Date;]
provided, however that on and after the _______________, 199__ Payment Date, if
the aggregate amount of Realized Losses during the period from the Cut-off Date
through the end of the fiscal month ending in _______________, 199__ is ar
amount that is (x) _____% or less (but greater than _____%) of the Pool Balance
as of the Cut-off Date the Pass-Through Rate (as determined in the clause
preceding this proviso) for any Payment Date shall be increased by _____% per
annum or (y) _____% or less of the Pool Balance as of the Cut-off Date, the
Pass-Through Rate (as determined in the clause preceding this proviso) for any
Payment Date shall be increased by _____% per annum; provided further that,
notwithstanding the preceding proviso, if the Net Receivables Rate borne by the
Receivables during the prior Collection Period is less than the Pass Through
Rate thus calculated for such Payment Date, then the Pass-Through Rate payable
on the Certificates will equal such Net Receivables Rate. [In addition,
Certificateholders will receive on each Payment Date, if on such Payment Date
the amount on deposit in the Reserve Account, after giving effect to all
withdrawals for payments on the Notes and the Certificates and all deposits
required to be made on such Payment Date, exceeds the Specified Reserve Account
Balance, an amount equal to the lesser of (1) such excess and (2) [one-twelfth]
of the product of (a) ___% of the excess, if any, of (i) the amount of the
positive spread, if any, between the Base Rate in effect on the date that LIBOR
for such Payment Date is established and LIBOR for such Payment Date over (ii)
_____% times (b) _____% of the Certificate Balance on the preceding Payment
Date.] Interest will be calculated on the basis on a year of 360 days, in each
case for the actual number of days occurring in the period for which interest
is payable. Such amounts will be distributable every [month] on each Payment
Date commencing _______________, 199__. Interest for each Payment Date will
accrue from and including "the Closing Date or from the most recent Payment
Date but excluding the current Payment Date. Interest distributions due for any
Payment Date but not distributed on such Payment Date will be due on the next
Payment Date increased by an amount equal to interest on such amount at the
Pass-Through Rate. Interest distributions with respect to the Certificates will
be funded from the portion of the Total Distribution Amount and the funds in
the Reserve Account remaining after the distribution of the Servicing Fee and
the Noteholders' Distributable Amount. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Reserve Account" herein.
Distributions of Principal Payments. Certificateholders will be entitled
to distributions on each Payment Date in an amount generally equal to the
Certificateholders' Percentage of (or, following the payment in full of the
Notes, all of) the Principal Distribution Amount. Distributions with respect to
principal payments will be funded from the portion of the Total Distribution
Amount remaining after the distribution of the Servicing Fee, the Noteholders'
Distributable Amount and the Certificateholders' Interest Distributable Amount,
and from funds, if any, in the Reserve Account remaining after the payment of
the Noteholders' Distributable Amount and the Certificateholders' Interest
Distributable Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. Until the Payment
Date following the latest to occur of (i) the Payment Date after the Payment
Date on
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which the principal balance of the [A-1 Notes] is reduced to zero, (ii) the
_______________, 199__ Payment Date and (iii) the Payment Date after the
Payment Date on which the lesser of the full amount of the Maturity Draw or the
amount of the Maturity Draw, if any, necessary to increase the amount on
deposit in the Reserve Account to the Specified Reserve Account Balance is
deposited into the Reserve Account, the Certificateholders' Percentage will be
zero. Thereafter, the Certificateholders' Percentage will be _____%. However,
if the amount on deposit in the Reserve Account is less than the lower of
_____% of the initial Pool Balance and the sum of the aggregate outstanding
principal amount of the Notes and the Certificate Balance on any Payment Date,
then, with respect to each Payment Date thereafter, the Certificateholders will
not receive any distributions of principal until the Notes have been paid in
full.
Optional Purchase. If the Servicer exercises its option to purchase the
Receivables when the aggregate principal amount of the Receivables is less than
_____% of the initial Pool Balance, the Certificateholders will receive an
amount in respect of the Certificates equal to the Certificate Balance together
with accrued interest at the Pass-Through Rate and the Certificates will be
retired.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Pooling and Servicing
Agreement pursuant to which the Trust is receiving and the Servicer is
undertaking to service, the Receivables, the Receivables Acquisition Agreement
pursuant to which the Sponsor is acquiring the Receivables, and the Trust
Agreement pursuant to which the Trust will be created and the Certificates will
be issued (collectively, the "Transfer and Servicing Agreements"). A copy of
the Transfer and Servicing Agreements will be filed with the Commission
following the issuance of the Securities. This summary does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
provisions of the Transfer and Servicing Agreements. The following summary
supplements, and to the extent inconsistent therewith replaces, the description
set forth under the heading "Description of the Transfer and Servicing
Agreements" in the Prospectus to which description reference is hereby made.
Transfer and Assignment of Receivables
Certain information with respect to the conveyance on the Closing Date of
the Receivables from the Originator to the Sponsor pursuant to the Receivables
Acquisition Agreement and from the Sponsor to the Trust pursuant to the Pooling
and Servicing Agreement is set forth under "Description of the Transfer and
Servicing Agreements--Assignment of the Receivables Pursuant to Receivables
Acquisition Agreement" in the Prospectus.
Accounts
In addition to the Accounts referred to in the Prospectus under
"Description of Transfer and Servicing Agreements--Trust Agreements--Accounts",
the Servicer will also establish and maintain at the office of the Indenture
Trustee (i) the Reserve Account, in the name of the Indenture Trustee on behalf
of the Noteholders and the Certificateholders, (ii) the [Class A-1] Maturity
Account, and (iii) the [Class A-2] Lockout Account.
Servicing Compensation
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to _____% per annum of the Pool Balance as
of the first day of such Collection Period. The Servicing Fee (together with
any portion of the Servicing Fee that remains unpaid from prior Payment Dates)
will be paid solely to the extent of the Interest Distribution Amount. However,
the Servicing Fee will be paid prior to the distribution of any portion of the
Interest Distribution Amount to the Noteholders or the Certificateholders. See
"Description of the Transfer and Servicing Agreements--Servicing Compensation"
in the Prospectus.
Distributions
Deposits to Collection Account. By the [____] business day prior to a
Payment Date (each a "Determination Date"), the Servicer will provide the
Indenture Trustee with certain information with respect
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<PAGE>
to the related Collection Period, including the amount of aggregate collections
on the Receivables and the aggregate Discounted Contract Balance of Receivables
to be acquired by the Sponsor or to be purchased by the Servicer.
On or before each Payment Date, the Servicer will cause the Total
Distribution Amount to be deposited into the Collection Account. The "Total
Distribution Amount" for a Payment Date shall be the aggregate collections
(including any Liquidation Proceeds) in respect of the Receivables during the
related Collection Period plus Investment Earnings during such Collection
Period. The Total Distribution Amount on any Payment Date shall exclude all
payments and proceeds (including Liquidation Proceeds) of (i) any Receivables
the Discounted Contract Balance of which has been included in the Total
Distribution Amount in a prior Collection Period and (ii) any Liquidated
Receivable after the reassignment of such Liquidated Receivable by the Trust to
the Sponsor.
"Liquidated Receivables" means defaulted Receivables in respect of which
the Vehicles has been sold or otherwise disposed of and "Liquidation Proceeds"
means all proceeds of the Liquidated Receivables, net of expenses incurred by
the Servicer in connection with such liquidation and any amounts required by
law to be remitted to the Obligor on such Liquidated Receivables.
The "Interest Distribution Amount" for a Payment Date shall be the excess,
if any, of the Total Distribution Amount over the Principal Distribution Amount
for such Payment Date.
The "Principal Distribution Amount" for a Payment Date shall mean either
(i) in all cases when clause (ii) does not apply, the Note Value Decline for
the fiscal month ending immediately prior to such Payment Date or (ii) if the
Base Rate at the beginning of the fiscal month ending immediately prior to such
Payment Date is not equal to the Base Rate at the beginning of the next fiscal
month, the Alternate Principal Distribution Amount for such fiscal month.
Deposits to the Distribution Accounts. On the [_____] business day prior
to each Payment Date, the Servicer shall instruct the Indenture Trustee to make
deposits and distributions for receipt by the Servicer or for deposit in the
applicable Trust Account or Certificate Distribution Account on the following
Payment Date.
Distributions of the Total Distribution Amount shall be made in the
following order of priority:
[(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i), the
Noteholders' Interest Distributable Amount;
(iii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) and
(ii), the [A-1 Noteholders'] Principal Distributable Amount; provided,
however, that if funds were withdrawn from the Reserve Account in order to
pay the [A-1 Noteholders'] Monthly Principal Distributable Amount on the
_______________, 199__ Payment Date (the "Maturity Draw"), the Reserve
Account will be reimbursed up to the lesser of the amount of such draw and
the amount of the Maturity Draw, if any, necessary to increase the amount
on deposit in the Reserve Account to the Specified Reserve Account Balance
out of the amount of the Total Distribution Amount that would have been
distributable to the holders of the [A-1 Notes] as principal had the
outstanding principal balance of the [A-1 Notes] on the _______________,
19__ Payment Date remained outstanding and had no withdrawal from the
Reserve Account been made;
(iv) on each Payment Date prior to the _______________, 19__
Payment Date, to the [Class A-2] Lockout Account, and thereafter, to the
Note Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i), (ii) and (iii), the [A-2
Noteholders'] Principal Distributable Amount;
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(v) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(iv), the Certificateholders' Interest Distributable Amount;
(vi) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(v), the Certificateholders' Principal Distributable Amount;
(vii) to the Reserve Account, from the Total Distribution Amount
remaining after the application of clauses (i) through (vi) the amount, if
any, necessary to increase the amount on deposit in the Reserve Account to
the Specified Reserve Account Balance;
(viii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(vii), the [Class A-2 Noteholders'] Interest Carryover Amount; and
(ix) to the Reserve Account, the Total Distribution Amount
remaining after the application of clauses (i) through (viii).]
The "Note Value" of the Receivables represents the principal amount of
Notes and Certificates that, based on the assumptions stated below, can be
supported by the scheduled payments on the Receivables.
"Note Value" of the Receivables means, with respect to any day, the
present value of the scheduled and unpaid payments on the Receivables,
discounted to such day monthly at an annual rate equal to the Receivables Rate
on such day. [For purposes of calculating Note Value, in the event of a
defaulted Receivable, (a) prior to repossession of the Vehicles securing such
defaulted Receivable, the scheduled payments on such Receivable will be
computed based on the amounts that would have been the scheduled payments had
such default not occurred, (b) after the time at which the Vehicles securing
such defaulted Receivable has been repossessed, but prior to liquidation of
such defaulted Receivable, the principal balance of such defaulted Receivable
shall be added to such Note Value, but there shall be deemed to be no scheduled
payments due on such defaulted Receivable and (c) after liquidation of such
defaulted Receivable there shall be deemed to be no scheduled payments due on
such Receivable. As a result of the calculations described in the preceding
sentence, as of the end of any Collection Period, the Note Value of the
Receivables, to the extent it relates to a defaulted Receivable, will be
reduced only after liquidation of any defaulted Receivable.]
"Note Value Decline", with respect to any fiscal month, means the amount
(not less than zero) equal to (i) the Note Value as of the beginning of such
fiscal month less (ii) the Note Value as of the beginning of the next fiscal
month.
"Alternate Principal Distribution Amount" for a fiscal month means (a) the
sum of (i) the collections in respect of the Receivables (including Liquidation
Proceeds) during such fiscal month and (ii) Realized Losses in respect of
Receivables that become Liquidated Receivables in such fiscal month less (b)
[one-twelfth] of the product of (x) the Note Value at the beginning of the
preceding fiscal month and (y) the Receivables Rate at the beginning of such
preceding fiscal month.
"Realized Losses" means the excess of the principal balance of the
Liquidated Receivables over Liquidation Proceeds to the extent allocable to
principal.
"Noteholders' Distributable Amount" means, with respect to any Payment
Date, the sum of the [A-1 Noteholders'] Principal Distributable Amount, the
[A-2 Noteholders'] Principal Distributable Amount and the Noteholders' Interest
Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Noteholders' Monthly Interest Distributable Amount
for such Payment Date and the Noteholders Interest Carryover Shortfall for
such Payment Date.
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"Noteholders' Monthly Interest Distributable Amount" means, with respect
to any Payment Date an amount equal to the sum of (i) the interest accrued from
and including the immediately preceding Payment Date (or, in the case of the
first Payment Date, the Closing Date) to, but excluding such Payment Date at a
rate equal to the [A-1 Note] Interest Rate on the outstanding principal balance
of the [A-1 Notes] on the immediately preceding Payment Date (or, in the case
of the first Payment Date, the Closing Date) after giving effect to all
distributions of principal to [A-1 Noteholders] on such Payment Date and (ii)
the interest accrued from and including the immediately preceding Payment Date
(or, in the case of the first Payment Date, the Closing Date) to but excluding
such Payment Date at a rate equal to the [A-2 Note] Interest Rate on the
outstanding principal balance of the [A-2 Notes] on the immediately preceding
Payment Date (or, in the case of the first Payment Date, on the Closing Date)
after giving effect to all distributions of principal to the [A-2 Noteholders]
on such Payment Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Payment Date, the excess of the Noteholders' Monthly Interest Distributable
Amount for the preceding Payment Date and any outstanding Noteholders' Interest
Carryover Shortfall on such preceding Payment Date, over the amount in respect
of interest that is actually deposited in the Note Distribution Account on such
preceding Payment Date, plus interest on the amount of interest due but not
paid to Noteholders on the preceding Payment Date, to the extent permitted by
law, at the weighted average interest rate borne by the [A-1 Notes] and the
[A-2 Notes] from such preceding Payment Date through the current Payment Date.
"[A-1 Noteholders'] Principal Distributable Amount" means, with respect to
any Payment Date, the sum of the [A-1 Noteholders'] Monthly Principal
Distributable Amount for such Payment Date and the [A-1 Noteholders'] Principal
Carryover Shortfall as of the close of the preceding Payment Date; provided,
however, that the [A-1 Noteholders'] Principal Distributable Amount shall not
exceed the outstanding principal balance of the [A-1 Notes]. In addition, on
the [A-1] Final Scheduled Payment Date, the principal required to be deposited
in the Note Distribution Account will include the amount necessary (i) after
giving effect to the other amounts to be deposited in the Note Distribution
Account on such Payment Date and allocable to principal) to reduce the
outstanding principal balance of the [A-1 Notes] to zero.
"[A-2 Noteholders'] Principal Distributable Amount" means, with respect to
any Payment Date the sum of the [A-2 Noteholders'] Monthly Principal
Distributable Amount for such Payment Date and the [A-2 Noteholders'] Principal
Carryover Shortfall as of the close of the preceding Payment Date; provided,
however, that, until an amount sufficient to reduce the outstanding principal
balance of the [A-1 Notes] to zero has been deposited in the Note Distribution
Account, the [A-2 Noteholders'] Principal Distribution Amount shall be zero;
provided further that the [A-2 Noteholders'] Principal Distribution Amount
shall not exceed the outstanding principal balance of the [A-2 Notes]. In
addition, on the [A-2] Final Scheduled Payment Date, the principal required to
be deposited in the Note Distribution Account will include the amount necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Payment Date and allocable to principal) to reduce
the outstanding principal balance of the [A-2 Notes] to zero.
"[A-1 Noteholders'] [Monthly] Principal Distributable Amount" means, with
respect to any Payment Date until the later of (i) the Payment Date on which
the outstanding principal balance of the [A-1 Notes] has been reduced to zero
and (ii) the Payment Date on which the lesser of the full amount of the
Maturity Draw or the amount of the Maturity Draw, if any, necessary to increase
the amount on deposit in the Reserve Account to the Specified Reserve Account
Balance is deposited into the Reserve Account, ___% of the Principal
Distribution Amount, but not in excess of the outstanding principal balance of
the [A-1 Notes] or the amount of the Maturity Draw required to be deposited in
the Reserve Account on such Payment Date but not previously deposited in the
Reserve Account, as the case may be.
"[A-2 Noteholders'] [Monthly] Principal Distributable Amount" means, with
respect to any Payment Date on or after the later to occur of (i) the Payment
Date on which an amount sufficient to reduce the outstanding principal balance
of the [A-1 Notes] to zero has been deposited in the Note Distribution Account
and (ii) the Payment Date on which the lesser of the full amount of the
Maturity Draw and the amount of the Maturity Draw, if any, necessary to
increase the amount on deposit in the Reserve Account to the Specified Reserve
Account Balance is deposited into the Reserve Account, the [A-2 Noteholders']
Percentage of the difference between the Principal Distribution Amount and the
portion thereof, if any, applied to reduce the principal balance of the [A-1
Notes] to zero or the portion thereof deposited into the
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Reserve Account in respect of a Maturity Draw, as the case may be; provided,
however, that if the amount on deposit in the Reserve Account is less than the
lesser of _______% of the initial Pool Balance and the sum of the outstanding
principal amount of the Notes and the Certificate Balance on any Payment Date,
then, with respect to each Payment Date thereafter, the [A-2 Noteholders']
Monthly Principal Distributable Amount means 100% of the Principal Distribution
Amount less the portion thereof, if any, necessary on such Payment Date to be
deposited in the Note Distribution Account to reduce the outstanding principal
balance of the [A-1 Notes] to zero. In addition, on or after the
___________________, 199__ Payment Date, certain amounts from the Reserve
Account may be paid as accelerated principal on the [A-2 Notes] as described
under "Reserve Account" below.
"[A-2 Noteholders'] Percentage" means (i) for each Payment Date to and
including the latest to occur of (x) the Payment Date on which the principal
balance of the Class [A-1 Notes] is reduced to zero, (y) the
___________________, 199__ Payment Date and (z) the Payment Date on which the
lesser of the full amount of the Maturity Draw or the amount of the Maturity
Draw, if any, necessary to increase the amount on deposit in the Reserve
Account to the Specified Reserve Account Balance is deposited into the Reserve
Account, _____% and (ii) thereafter, ____%; provided, however, that if, on or
after the latest occur of (x) the Payment Date on which the principal balance
of the [A-1 Notes] is reduced to zero, (y) the ______________, 19__ Payment
Date and (z) the Payment Date on which the lesser of the full amount of the
Maturity Draw or the amount of the Maturity Draw, if any, necessary to increase
the amount on deposit in the Reserve Account to the Specified Reserve Account
Balance is deposited into the Reserve Account, the amount on deposit in the
Reserve Account is less than the lesser of ____% of the initial Pool Balance
and the sum of the outstanding principal amount of the Notes and the
Certificate Balance, then, with respect to each Payment Date thereafter, the
[A-2 Noteholders'] Percentage shall be _____%.
"[A-1 Noteholders'] Principal Carryover Shortfall" means, as of the close
of any Payment Date, the excess of the [A-1 Noteholders'] [Monthly] Principal
Distributable Amount and any outstanding [A-1 Noteholders'] Principal Carryover
Shortfall from the preceding Payment Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account in
respect of the [A-1 Notes.]
"[A-2 Noteholders'] Principal Carryover Shortfall" means, as of the close
of any Payment Date, the excess of the [A-2 Noteholders'] [Monthly] Principal
Distributable Amount and any outstanding [A-2 Noteholders'] Principal Carryover
Shortfall from the preceding Payment Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account in
respect of the [A-2 Notes].
"[Class A-2 Noteholders]' Interest Carryover Amount" means, if on any
Payment Date the [A-2 Notes] bear interest at the [A-2 Note] Alternative
Interest Rate, the excess of (a) the amount of interest on the [A-2 Notes] that
would have accrued in respect of such Payment Date had such interest been
calculated at _______% per annum over (b) the amount of interest on the [A-2
Notes] actually accrued in respect of such Payment Date based on the [A-2 Note]
Alternative Interest Rate, together with the unpaid portion of any such excess
from prior Payment Dates and interest accrued thereon, to the extent permitted
by law, calculated at the [A-2 Note] Interest Rate without taking into account
the [A-2 Note] Alternative Interest Rate.
"Certificateholders' Distributable Amount" means, with respect to any
Payment Date, the sum of the Certificateholders' Principal Distributable Amount
and the Certificateholders' Interest Distributable Amount.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Payment Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Payment Date and the Certificateholders' Interest
Carryover Shortfall for such Payment Date.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Payment Date, the sum of (i) interest accrued from and including
the preceding Payment Date to, but not including, such current Payment Date
(or, in the case of the first Payment Date, interest accrued from and including
the Closing Date to, but excluding, such current Payment Date) at the
Pass-Through Rate on the Certificate Balance on the last day of the preceding
Collection Period (or, in the case of the first Payment Date, on the Closing
Date) [plus (ii) if on such Payment Date the amount on deposit in the Reserve
Account, after giving effect to all withdrawals for payment on the Notes and
the Certificates (other than
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pursuant to this clause (ii)) and all deposits required to be made on such
Payment Date, exceeds the Specified Reserve Account Balance, an amount equal to
the lesser of (1) such excess and (2) [one-twelfth] of the product of (a) ___%
of the excess, if any, of (x) the amount of the positive spread, if any,
between the Base Rate in effect on the date that LIBOR is established for such
Payment Date and LIBOR for such Payment Date over (y) _____% times (b) ___% of
the Certificate Balance on the preceding Payment Date.]
"Pass-Through Rate" means, with respect to the Certificates, on any
Payment Date a rate per annum equal to _______% [plus an amount equal to the
product of 0.___ multiplied by LIBOR for such Payment Date;] provided, however,
that on and after the ______________, 199_ Payment Date, if the aggregate
amount of Realized Losses during the period from the Cut-off Date through the
fiscal month ending in ______________, 199__, is an amount, expressed as a
percentage, that is (x) 0.___% or less (but greater than 0.___%) of the Pool
Balance as of the Cut-off Date, the Pass-Through Rate (as determined in the
clause preceding this proviso) for any Payment Date shall be increased by
0.___% per annum or (y) 0.___% or less of the Pool Balance as of the Cut-off
Date, the Pass-Through Rate (as determined in the clause preceding this
proviso) for any Payment Date shall be increased by 0.___% per annum; provided
further that, notwithstanding the preceding proviso, if the Net Receivables
Rate borne by the Receivables during the prior Collection Period is less than
the Pass-Through Rate thus calculated for such Payment Date, then the
Pass-Through Rate for such Payment Date shall equal such Net Receivables Rate.
"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Payment Date, the excess of the Certificateholders' [Monthly] Interest
Distributable Amount for the preceding Payment Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Payment
Date, over the amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Payment Date, plus interest
on such excess, to the extent permitted by law, at the Pass-Through Rate from
such preceding Payment Date through the current Payment Date.
"Certificateholders' Principal Distributable Amount" means, with respect
to any Payment Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Payment Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Payment Date;
provided, however, that the Certificateholders' Principal Distributable Amount
shall not exceed the Certificate Balance. In addition, on _______________,
199__, the principal required to be distributed to Certificateholders will
include the amount necessary (after giving effect to the other amounts to be
deposited in the Certificate Distribution Account on such Payment Date and
allocable to principal) to reduce the Certificate Balance to zero.
"Certificateholders' [Monthly] Principal Distributable Amount" means, with
respect to any Payment Date on or after the latest to occur of (i) the Payment
Date following the Payment Date on which the principal balance of the [A-1
Notes] is reduced to zero, (ii) the _______________, 199__ Payment Date and
(iii) the Payment Date following the Payment Date on which the lesser of the
full amount of the Maturity Date or the amount of the Maturity Draw, of any,
necessary to increase the amount on deposit in the Reserve Account to the
Specified Reserve Account Balance is deposited into the Reserve Account, the
Certificateholders' Percentage of the Principal Distribution Amount (less the
portion thereof, if any, applied on such Payment Date to reduce the principal
balance of the [A-1 Notes] to zero or deposited in the Reserve Account in
respect of a Maturity Draw) and, with respect to any Payment Date on or after
the Payment Date on which the outstanding principal balance of the [A-2 Notes]
is reduced to zero, ____% of the Principal Distribution Amount (less the
portion thereof required on the first such Payment Date to reduce the
outstanding principal balance of the A-2 Notes to zero, which shall be
deposited into the Note Distribution Account); provided, however, that if as
described in the definition of "[A-2 Noteholders'] [Monthly] Principal
Distributable Amount", ____% of the Principal Distribution Amount is required
to be deposited in the Note Distribution Account, then no portion of the
Principal Distribution Amount will be deposited in the Certificate Distribution
Account until the Notes have been paid in full.
"Certificateholders' Percentage" means 100% minus the [A-2 Noteholders']
Percentage.
"Certificateholders' Principal Carryover Shortfall" means, as of the close
of any Payment Date, the sum of (i) the excess of the Certificateholders'
[Monthly] Principal Distributable Amount and any outstanding
Certificateholders' Principal Carryover Shortfall from the preceding Payment
Date, over the
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amount in respect of principal that is actually deposited in the Certificate
Distribution Account and (ii) the unreimbursed portion of the amount by which
the Certificate Balance has been reduced as described in the second sentence of
the definition of "Certificate Balance" immediately following.
"Certificate Balance" equals, initially, $____________________ and,
thereafter, equals the initial Certificate Balance, reduced by all amounts
allocable to principal previously distributed to Certificateholders. The
Certificate Balance shall also be reduced on any Payment Date by the excess, if
any, of the sum of the Certificate Balance and the outstanding principal
balance of the Notes (after giving effect to amounts allocable to principal to
be deposited in the Certificate Distribution Account and the Note Distribution
Account on such Payment Date) over the sum of the Note Value as of the close of
business on the last day of the preceding Collection Period and the amount on
deposit in the Reserve Account after giving effect to any distributions
therefrom on such Payment Date. Thereafter, the Certificate Balance shall be
increased to the extent that any portion of the Total Distribution Amount is
available to pay the existing Certificateholders' Principal Carryover
Shortfall, but not by more than the aggregate reductions in the Certificate
Balance.
On each Payment Date, all amounts on deposit in the Note Distribution
Account (other than investment earnings, if any) will be distributed to the
Noteholders.
On each Payment Date, all amounts on deposit in the Certificate
Distribution Account (other than investment earnings, if any) will be
distributed to the Certificateholders.
[Class A-1] Maturity Account
If, on any Payment Date prior to the _______________, 199__ Payment Date,
the aggregate amount on deposit in the [Class A-1] Maturity Account exceeds the
aggregate principal balance of the [A-1 Notes] outstanding on such Payment
Date, the amount of such excess shall be deposited in the Reserve Account for
distribution on such Payment Date to the Sponsor and the amount of such excess
shall be distributed to the Sponsor on such Business Day regardless of whether
the amount on deposit in the Reserve Account is less than, equal to or greater
than the Specified Reserve Account Balance; provided, however, that prior to
paying the amount of such excess to the Sponsor, such excess shall be deposited
into the Note Distribution Account to the extent necessary to pay any
outstanding [Class A-2 Noteholders'] Interest Carryover Amount. On the second
Business Day prior to the _______________, 199__ Payment Date, the Servicer
shall instruct the Indenture Trustee to withdraw all funds on deposit in the
[Class A-1] Maturity Account and to deposit such funds in the Note Distribution
Account for distribution as principal to the [A-1 Noteholders] in an amount
such that the outstanding principal balance of the [A-1 Notes] (after taking
into account any deposits to the Note Distribution Account on such Payment Date
in respect of principal) is reduced to zero. Any amount remaining in the [Class
A-1] Maturity Account after such withdrawal shall be deposited in the Reserve
Account for distribution on such Payment Date to the Sponsor and the amount of
such excess shall be distributed to the Sponsor on such Business Day regardless
of whether the amount on deposit in the Reserve Account is less than, equal to
or greater than the Specified Reserve Account Balance; provided, however, that
prior to paying the amount of such excess to the Sponsor, such excess shall be
deposited into the Note Distribution Account to the extent necessary to pay any
outstanding [Class A-2 Noteholders'] Interest Carryover Amount.
[Class A-2] Lockout Account
On the second Business Day prior to the _______________, 199__ Payment
Date, the Servicer shall instruct the Indenture Trustee to withdraw all funds
on deposit in the [Class A-2] Lockout Account and to deposit such funds in the
Note Distribution Account for distribution as principal to the [A-2
Noteholders.]
Reserve Account
The Servicer shall be required, not later than each Payment Date, to
deposit into the Collection Account the Delinquency Interest Advances. The
Servicer will be permitted to fund its payment of Delinquency Interest Advances
on any Payment Date from collections on any Receivable deposited to the
Collection Account subsequent to the related Collection Period and will be
required to deposit into the
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collection with respect thereto (i) collections from the Obligor whose
delinquency gave rise to the shortfall which resulted in such Delinquency
Interest Advance and (ii) Net Liquidation Proceeds recovered on account of the
related Receivable to the extent of the amount of aggregate Delinquency
Interest Advance related thereto.
A Receivable is "delinquent" if any payment due thereon is not made by the
close of business on the day such payment is scheduled to be due.
CERTAIN FEDERAL AND STATE INCOME TAX CONSIDERATIONS
In the opinion of Dewey Ballantine, special tax counsel to the Trust, the
Sponsor and the Underwriters ("Tax Counsel"), the following discussion
accurately reflects certain material federal income tax considerations relevant
to the purchase, ownership and disposition of the Notes and the Certificates.
The discussion herein does not purport to deal with all aspects of federal
income taxation that may be relevant to holders of the Notes or holders of the
Certificates in light of their specific investment circumstances, nor to
certain types of holders subject to special treatment under the federal income
tax laws (for example, banks, life insurance companies and tax-exempt
organizations). This discussion is based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
regulations (proposed, temporary and final) promulgated thereunder, judicial
decisions and Internal Revenue Service ("IRS") rulings, all of which are
subject to change, which change may be retroactively applied in a manner that
could adversely affect a holder of one or more of the Notes or the
Certificates. The information below is directed to investors that will hold the
Notes or the Certificates, as the case may be, as capital assets (generally,
property held for investment) within the meaning of Section 1221 of the Code.
Prospective investors are advised to consult their own tax advisors with
regard to the federal income tax consequences of purchasing, holding and
disposing of the Notes and the Certificates, as well as the tax consequences
arising under the laws of any state, foreign country or other jurisdiction. The
Trust will be provided with an opinion of Tax Counsel regarding certain federal
income tax matters discussed below. An opinion of counsel, however, is not
binding on the IRS or the courts. The Trust has not sought, nor does it intend
to seek, a ruling from the IRS that its position as reflected in the discussion
below will be accepted by the IRS. [Moreover, there are no cases or IRS rulings
on similar transactions involving both debt and equity interests issued by a
trust similar to those of the Notes and the Certificates and, as a result,
there can be no assurance that the IRS will agree with the conclusions and
discussion below.]
[The discussion below of original issue discount is based in part on
regulations proposed, but not yet effective (the "Proposed OID Regulations"),
under the Code. While the Proposed OID Regulations are proposed to be effective
for debt instruments issued sixty or more days after final regulations are
issued, the Proposed OID Regulations are a current indication of the views of
the IRS with respect to the federal income tax treatment of debt instruments
under the original issue discount rules. Because of their proposed effective
date, however, their application in the case of the Notes is not clear and,
further, subsequent versions of the Proposed OID Regulations or final
regulations may be adopted that have different rules that change the treatment
of the Notes under the original issue discount rules from the treatment
described below.]
Tax Classification of the Trust
Tax Counsel will advise the Trust that, based upon the terms of the Trust
Agreement and related documents and transactions as described in the Prospectus
and herein (and assuming ongoing compliance with such agreement and documents),
the Trust will not be classified as an association (or as a publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
advice is based upon conclusions by Tax Counsel that (1) the Trust will not
have certain characteristics necessary for a business trust to be classified as
an association taxable as a corporation, and (2) the nature of the income of
the Trust will exempt it from the rule that certain publicly traded
partnerships are taxable as corporations.
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[Prospective investors should be aware, however, that the proper
characterization of the arrangement involving the Trust, the Certificates, the
Notes, the Sponsor and the Servicer is not entirely clear because there is no
authority on transactions closely comparable to that contemplated herein.] If,
contrary to the opinion of Tax Counsel, the IRS successfully argued that the
Trust should be classified (and thus taxable) as a corporation, the Trust,
including the income from the Receivables (reduced by deductions, including
interest expense on the Notes if the Notes were treated as debt of the Trust
and not otherwise recharacterized), would be subject to federal income tax at
corporate rates. Such a tax could substantially reduce the amounts available to
make payments on the Notes and distributions on the Certificates (and holders
of Certificates could be liable for any such tax that is unpaid by the Trust).
Tax Considerations for Noteholders
Treatment of Notes as Indebtedness. Tax Counsel will advise the Trust
that, based upon the terms of the Notes and the documents and transactions
relating thereto as described in the Prospectus and herein, the Notes will be
classified as debt for federal income tax purposes. If, contrary to the opinion
of Tax Counsel, the IRS successfully asserted that one or more of the Notes did
not represent debt for federal income tax purposes, the Notes might be treated
as equity interests in the Trust. If so treated, the Trust might be taxable as
a corporation with the adverse consequences noted above (and the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity). Alternatively, and more
likely in the view of Tax Counsel, the Trust might be a publicly traded
partnership that would not be taxable as a corporation because it would meet
certain qualifying income tests. Nonetheless, treatment of the Notes as equity
interests in such a publicly traded partnership could have adverse tax
consequences to certain holders. For example, income to certain tax-exempt
entities (including pension funds) would be "unrelated business taxable
income", income to foreign holders generally would be subject to U.S. tax and
U.S. tax return filing and withholding requirements, and individual holders
might be subject to certain limitations on their ability to deduct their share
of Trust expenses. The remainder of this discussion assumes, in accordance with
the opinion of Tax Counsel, the Notes would be treated as debt for federal
income tax purposes.
Interest Income on the Notes. Subject to the discussion below, stated
interest on the Notes will be taxable to a Noteholder as ordinary income when
received or accrued in accordance with such Noteholder's method of tax
accounting. If, as expected, the [A-1 Notes] and the [A-2 Notes] have scheduled
maturity dates that are more than one year from their date of original issue,
then neither class of Notes should be subject to the special rules for
short-term obligations under Code Sections 1281 to 1283. It is further expected
that, except as described below, the Notes will not be issued with original
issue discount because the Notes will be sold to the public at a first price of
par or at a first price representing a de minimis discount from par. Under the
[Proposed OID Regulations], a holder of a Note issued with a de minimis amount
of original issue discount must include such discount in income, on a pro rata
basis, as principal payments are made on the Note.
[Based upon the Proposed OID Regulations, the Trust intends to take the
position that stated interest on the Notes does not represent original issue
discount. Prospective holders are advised, however, that the Proposed OID
Regulations are ambiguous in certain respects and there are certain features in
interest rate provisions of the Notes that, while unlikely, might be
interpreted to require a contrary result under these regulations. Further, it
is possible that a portion of the stated interest on the [A-2 Notes,] to the
extent stated interest is payable at an amount in excess of the minimum rate,
would be treated as contingent interest and taxable when the amount becomes
fixed and unconditionally payable. This treatment should not significantly
affect the tax consequences to [A-2 Noteholders], although this treatment might
require holders to report such interest payable on a Payment Date as interest
income as of the end of the related Collection Period or on the related
Determination Date and thus somewhat in advance of the receipt of the cash
attributable to such income.]
If the Notes were treated as having original issue discount, a Noteholder
(including a cash basis holder) generally would be required to include the
interest on the Notes in income for federal income tax purposes on the accrual
method on a constant yield basis, resulting in the inclusion of interest in
income somewhat in advance of the receipt of cash attributable to that income.
Under Section 1272(a)(6) of the Code, special provisions apply to debt
instruments on which payments may be accelerated due to prepayments of other
obligations securing those debt instruments. However, no regulations have been
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issued interpreting those provisions and the manner in which those provisions
would apply to the Notes is unclear.
Market Discount and Premium. A holder who purchases a Note at a market
discount (generally, at a cost less than its remaining principal amount) that
exceeds a statutorily defined de minimis amount will be subject to the "market
discount" rules of the Code. These rules provide, in part, that gain on the
sale or other disposition of a debt instrument with a term of more than one
year and partial principal payments on such a debt instrument are treated as
ordinary income to the extent of accrued market discount. The market discount
rules also provide for deferral of interest deductions with respect ta debt
incurred to purchase or carry a Note that has market discount. A holder who
purchases a Note at a premium may elect to be subject to the premium
amortization rules of the Code.
Sale or Other Disposition. If a Noteholder sells a Note, such 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 or original issue discount
previously included by such Noteholder in income with respect to the Note and
decreased by the amount of bond premium (if any) previously amortized and by
the amount of principal payments previously received by such Noteholder with
respect to such Note. Any such gain or loss will be capital gain or loss if the
Note was held as a capital asset, except for gain attributable to accrued
interest or accrued market discount not previously included in income. Capital
losses generally may be used only to offset capital gains.
Foreign Holders. If interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") is not effectively connected with the conduct of a trade or
business within the United States by the foreign person, the interest generally
will be considered "portfolio interest", and generally will not be subject to
United States federal income tax and withholding tax provided the foreign
person (i) is not actually or constructively a "10 percent shareholder" of the
Trust (including a holder of 10 percent of the outstanding Certificates) or the
Originator or a "controlled foreign corporation" with respect to which the
Trust or the Originator is a "related person" within the meaning of the Code
and (ii) provides the person otherwise required to withhold U.S. tax an
appropriate statement, signed under penalties of perjury, certifying that the
beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. The statement may be made on a Form W-8 or
substantially similar substitute form and, if the information provided in the
statement changes, the foreign person must so inform the person otherwise
required to withhold U.S. tax within 30 days of such change. The statement
generally must be provided in the year a payment occurs or in either of the two
preceding years. If a Note is held through a securities clearing organization
or certain other financial institutions, the organization or institution may
provide a signed statement to the withholding agent. However, in that case, the
signed statement must be accompanied by a Form W-8 or substitute form provided
by the foreign person that owns the Note. If interest on a Note 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.
The Revenue Reconciliation Act of 1993, enacted into law in August 1993,
repealed the portfolio interest exemption for certain contingent interest
income received by foreign persons. As noted in the discussion above regarding
interest income on the Notes, a portion of the stated interest on the [A-2
Notes], to the extent stated interest is payable in an amount that exceeds the
minimum interest rate, may represent contingent interest. However, the
contingent interest feature on the [A-2 Notes] is not the type of contingency
contemplated by this newly enacted rule that denies portfolio interest
treatment for certain contingent interest and further such contingent interest
on the Notes should fall within statutory exception to the new rule. Thus the
entire amount of stated interest on the [A-2 Notes] should be eligible for
treatment as portfolio interest as described above if the other requirements
for such treatment have been satisfied.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
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Information Reporting and Backup Withholding. The Trust will be required
to report to the IRS, and to each Noteholder of record, the amount of interest
paid on the Notes (and the amount of interest withheld for federal income
taxes, if any) for each calendar year, except as to exempt holders (generally,
holders that are corporations, tax-exempt organizations, qualified pension and
profit-sharing trusts, individual retirement accounts, or nonresident aliens
who provide certification as to their status as nonresidents). Accordingly,
each holder (other than exempt holders who are not subject to this reporting
requirements) 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% of the amount of
interest otherwise payable to the holder, and remit the withheld amount to the
IRS as a credit against the holder's federal income tax liability. Legislation
has been proposed in Congress that would increase the rate of back-up
withholding to 36%.]
Tax Considerations for Certificateholders
Partnership Treatment of the Trust. The Sponsor and the Servicer will
express their intent in the Trust Agreement and related documents and will
agree, and the other 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 taxes 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 Sponsor in its capacity as recipient of distributions from the Reserve
Account), and the Notes representing indebtedness of the partnership. The
Sponsor and the other Certificateholders will further agree in such documents
to take no action inconsistent with the treatment of Certificates for such
purposes as partnership interests in the Trust.
[In view of the lack of cases or rulings on similar transactions, a
variety of alternative characterizations are possible in addition to the
position to be taken by Certificateholders that the Certificates represent
equity interests in a partnership with the Sponsor.] For example, because the
Certificates have certain features characteristic of debt, the Certificates
might be considered for tax purposes as debt of the Sponsor or of the Trust. It
is also possible that the Trust might be treated for tax purposes as holding
debt of the Sponsor rather than the Receivables. Any such characterization
should not result in materially adverse tax consequences to Certificateholders
as compared to the consequences from treatment of the Certificates as equity in
a partnership, as described below, although there could be some timing
differences for income inclusion by Certificateholders. Accordingly, the
following discussion assumes that the Certificates represent equity interests
in a partnership that owns the Receivables for federal income tax purposes.
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 distributive share of income, gains,
losses, deductions and credits of the Trust and to report such items on his
personal income tax return for the taxable year with or within which ends the
Trust's taxable year. (As explained below, the Trust's taxable year ends
_________________.) The income of the Trust will consist primarily of interest
and finance charges earned on the Receivables (including appropriate
adjustments for market discount, original issue discount, and premium) and any
income or gain upon collection or disposition of Receivables. The expenses of
the Trust will consist primarily of interest accruing on 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 (here, the
Trust Agreement and related documents). The Trust Agreement will provide, in
general, that the Certificateholders will be allocated taxable income of the
Trust for each fiscal month equal to the sum of (i) the Certificateholders'
[Monthly] Interest Distributable Amount for the Payment Date following such
fiscal month; (ii) an amount equivalent to interest that accrues on amounts
previously due on Certificates but not yet distributed; and (iii) subject to
the discussion below on discount and premium, any Trust income attributable to
discount (of less any offset attributable to allowable premium) on the
Receivables that corresponds to any difference of the principal amount of the
Certificates and their initial issue price. All remaining taxable income of the
Trust will be allocated to the Sponsor. [Based upon the economic arrangement of
the parties this approach for allocating Trust income should be permissible,
but because of the absence of authority directly on point, no assurance can be
given that
S-43
<PAGE>
the IRS would not require a greater amount of income to be allocated to
Certificateholders.] Moreover, even under the foregoing method of allocation,
holders of Certificates may be allocated income equal to the entire
Pass-Through Rate plus the other Items described above even though the Trust
might not have sufficient cash to make current cash distributions of such
amount. Thus, cash basis holders will in effect be required to report income
from the Certificates on the accrual basis and Certificateholders may become
liable for taxes on Trust income even if such holders have not received cash
from the Trust to pay such taxes. In addition, under such allocation a
Certificateholders' taxable income could exceed the amount of net income
allocated to him because of limitations on deductions for expenses or losses of
the Trust allocated to such holder. Alternatively, it is possible that the IRS
would treat Certificateholders as receiving guaranteed payments from the Trust,
in which case the payments on Certificates would be treated as ordinary income
but not as interest income. In addition, because tax allocations and tax
reporting will be done on a uniform basis for all Certificateholders but
Certificateholders may be purchasing Certificates at different times and at
different prices, Certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the Trust. Under the Trust Agreement, the Sponsor is authorized to adjust
the allocations described above if necessary to reflect the economic income,
gain or loss to the Certificateholders (including the Sponsor) or as otherwise
required by the Code.
All of the taxable income allocated for taxable years of the Trust
beginning on or before December 31, 1994 to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax exempt entity
(including an individual retirement account) will constitute "unrelated
business taxable income" generally taxable to such a holder under the Code. For
Trust taxable years beginning after December 31, 1994, a portion of the taxable
income allocated to such a Certificateholder will be treated as income from
"debt financed property", which generally will be taxable as unrelated business
taxable income.
An individual taxpayer's share of expenses of the Trust (including fees
for the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or
in part because of the two percent limitation on miscellaneous itemized
deductions and might result in such holder being taxed on an amount of income
that exceeds the amount of cash actually distributed to such holder over the
life of the Trust.
The Trust intends to make all tax calculations relating to Trust income
and allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is not expected that
there will be any significant adverse tax effect on Certificateholders.
Discount and Premium. As a result of their interest rate and payment
features, it is likely that state interest on some of the Receivables would be
treated as original issue discount under the [Proposed OID Regulations] that is
includible in income by holders as such discount accrues. Since the Trust will
elect the accrual method of tax accounting, it is not expected that such
treatment would, as a general rule, have any materially adverse tax effect on
holders of Certificates. Certificateholders should be aware, however, that
interest accruing on some Receivables for a payment period could exceed
payments due thereunder for such period, in which case the likelihood might
increase that holders of Certificates would recognize Trust income prior to the
receipt of cash from the Trust that is attributable to such income.
The cost of acquisition by the Trust for the Receivables (exclusive of
amounts paid for accrued interest thereon) may be greater or less than the
remaining principal balance of the Receivables at the time of acquisition. If
so, the Receivables will have been acquired at a premium or discount, as the
case may be, exclusive of Receivables treated as contributed by the Sponsor as
a partner to the Trust (as indicated above, the Trust will make this
calculation of discount or premium on an aggregate basis, but might be required
to recompute it on a Receivable by Receivable basis.)
If the Trust acquires the Receivables at a premium or at a market
discount, the Trust will elect to include such discount in income as it accrues
over the life of the Receivables or (to the extent allowable) may offset such
premium against interest income or original issue discount on the Receivables.
If the aggregate initial principal amount of Certificates differs from their
aggregate issue price, market discount income or allowable premium deductions
attributable to such difference will be allocated to
S-44
<PAGE>
Certificateholders. Because some Receivables have indefinite maturities, the
method and timing for including market discount or offsetting premium against
income thereon is not clear under present law and the offset for premium might
be deferred until maturity; one reasonable approach, however, would be on the
basis of principal payments when made.
Constructive Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, there will be a closing of the
partnership's taxable year for all partners and the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. (Furthermore, the Trust might not be able to
comply due to lack of data.) Moreover, if the tax year of the Trust is not a
calendar year the closing of a tax year of the Trust may cause a
Certificateholder reporting on a calendar year to report more than 12 months'
taxable income of the Trust.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate generally will equal his
cost increased by his share of Trust income (includible in his income) and
decreased by any distributions received with respect to such Certificate. In
addition, both tax basis in a Certificate and the amount realized on a sale of
such Certificate would include the holder's share of the outstanding balance of
the Notes and other liabilities of the Trust. A holder acquiring Certificates
at different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a pro rata 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, if any, on the Receivables would
generally be treated as ordinary income to the holder and might 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 the Receivables are acquired at a
market discount.
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 generally will 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 each fiscal month and the tax
items for a particular fiscal month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates owned
by them as of the close of the last day of the corresponding calendar month,
which is the Certificate Record Date for the next Payment Date. As a result of
this monthly allocation, a holder purchasing Certificates may be allocated tax
items (which will affect its tax liability and tax basis) attributable to
periods before the actual transfer.
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 Sponsor is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
No Section 754 Election. In the event that a Certificateholder sells its
Certificates at a gain (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than that of the selling
Certificateholder. The tax basis of the Trust's assets will not be adjusted to
reflect that higher (or lower)
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<PAGE>
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 [Owner] Trustee is required to keep or cause
to be kept complete and accurate books of the Trust. Code Section 706 requires
that a partnership adopt the taxable year of its majority interest partners,
or, if none, its principal partners, and the Sponsor has a taxable year that
ends ___________________. Accordingly, such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal and
taxable year of the Trust will be the 12-month period ending _____________ (or,
in the case of _______________, 199__, the period from the Closing Date to
_______________, 199__). The [Owner] Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report to holders and the IRS each Certificateholder s allocable
share of items of Trust income and expense on Schedule K-1. The Trust will
provide the Schedule K-1 information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Code Section 6031, any person that holds Certificates as a nominee
at any time during the Trust taxable year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. The information referred to below or any
taxable year must be furnished to the Trust on or before the last day of the
first month following the close of the Trust's taxable year, i.e.,
_________________. Such information includes (i) the name, address and taxpayer
identification number of the nominee and (ii) as to each beneficial owner (x)
the name, address and taxpayer identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly-owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, acquired or transferred on behalf of such person
throughout the year. In addition, brokers and financial institutions that hold
Certificates through a nominee are required to furnish directly to the Trust
Information as to themselves and their ownership of Certificates. A clearing
agency registered under Section 17A of the Exchange Act that holds an interest
in a partnership as a nominee is not required to furnish any such information
statement to the Trust. Nominees, brokers and financial institutions that fail
to provide the Trust with the information described above may be subject to
penalties.
The Sponsor, as the tax matters partner, will be responsible for
representing the Certificateholders in any dispute with the IRS. The Code
provides for administrative examination of a partnership as if the partnership
were a separate and distinct taxpayer. Generally, the statute of limitations
for partnership items does not expire before three years since the later of the
filing or the last date for filing of the partnership information return. 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.
Foreign Persons. Ownership of Certificates by nonresident aliens and
foreign corporations and other foreign persons raises tax issues unique to such
persons, may have substantially adverse tax consequences to them, and will
subject the Trust to U.S. tax withholding and reporting requirements. For this
reason, purchasers (including nominees of beneficial owners) of Certificates
and their assignees must represent that the beneficial owners of Certificates
are individuals or entities that are U.S. persons (generally, citizens or
residents of the U.S. and corporations or partnerships organized under U.S.
law), and each purchaser must provide a certification of non-foreign status
signed under penalties of perjury.
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% (proposed to be increased to 36%) if, in
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<PAGE>
general, the Certificateholder fails to comply with certain identification
procedures, unless the holder is an exempt recipient under applicable
provisions of the Code.
[Proposed Tax Legislation. Legislation pending before Congress would apply
special rules to "large partnerships", generally defined as partnerships with
at least 250 partners during a taxable year (counting towards such total each
owner during the year of a partnership interest that is transferred during the
year). Under the legislation, certain computations are made at the partnership
level rather than the partner level. In particular, taxable income is
calculated at the partnership level, and is calculated generally in the same
manner as for an individual, except that 70% of miscellaneous itemized
deductions (such as expenses for the production of nonbusiness income) are
disallowed. As a result, all partners (including corporations) might have a
portion of their share of partnership deductions (other than interest expense)
disallowed. Moreover, large partnerships would become subject to new audit
procedures; among other things, an adjustment to taxable income of the
partnership for a prior year would flow through to current partners in the year
the audit was settled, and the partnership itself (rather than the partners)
would be subject to any applicable interest or penalties. As proposed, these
rules would apply to partnership taxable years ending on or after December 31,
1993.
The proposed tax legislation dealing with large partnerships discussed
above was not adopted in the Revenue Reconciliation Act of 1993, which was
enacted into law in August 1993. No prediction can be made whether that
proposal or similar legislation might be enacted in the future, or the ultimate
effective date of such legislation or whether the number of Certificateholders
would cause the Trust to be considered a "large partnership".]
State, Local and Other Taxes
Investors should consult their own tax advisors regarding whether the
purchase of the Offered Notes, either alone or in conjunction with an
investor's other activities, may subject an investor to any state or local
taxes based on an assertion that the investor is either "doing business" in, or
deriving income from a source located in, any state or local jurisdiction.
Additionally, potential investors should consider the state, local and other
tax consequences of purchasing, owning or disposing of an Offered Note. State
and local tax laws may differ substantially from the corresponding federal tax
law, and the foregoing discussion does not purport to describe any aspect of
the tax laws of any state or other jurisdiction. Accordingly, potential
investors should consult their own tax advisors with regard to such matters.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR A CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES
AND THE CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Notes
The Notes may be purchased by an employee benefit plan or an individual
retirement account (a "Plan") subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code. A
fiduciary of a Plan must determine that the purchase of a Note is consistent
with its fiduciary duties under ERISA and does not result in a nonexempt
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of
the Code. Employee benefit plans which 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 the fiduciary responsibility or prohibited
transaction provisions of ERISA or the Code. For additional information
regarding treatment of the Notes under ERISA, see "ERISA Considerations" in the
Prospectus.
S-47
<PAGE>
If the Notes constitute equity interests, there can be no assurance that
any of the exceptions set forth in the Regulations will apply to the purchase
of Notes offered hereby. Under the terms of the Regulations, if the Issuer were
deemed to hold Plan assets by reason of a Plan's investment in Notes, such Plan
assets would include an undivided interest in the Receivables, and any other
assets held by the Issuer. In such an event, the Originator, the Sponsor, the
Issuer, the Indenture Trustee and other persons providing services with respect
to the Receivables, may be subject to the fiduciary responsibility provisions
of Title Originator of ERISA and be subject to the prohibited transaction
provisions of Section 4975 of the Code with respect to transactions involving
the Receivables unless such transactions are subject to a statutory or
administrative exemption. Additionally, if the Issuer were deemed to hold Plan
assets, each Noteholder may be subject to the fiduciary responsibility
provisions of Title Originator of ERISA with respect to its right to consent or
withhold consent to amendments to the Indenture and with respect to its right
to vote on action to be taken or not taken if an Indenture Event of Default
occurs.
In addition, certain affiliates of the Originator, the Sponsor, the Issuer
and the Indenture Trustee may be considered to be parties in interest or
fiduciaries with respect to many Plans. An investment by such a Plan in Notes
may be a prohibited transaction under ERISA and the Code unless such investment
is subject to a statutory or administrative exemption.
Any Plan fiduciary that proposes to cause a Plan to purchase Notes should
consider whether such purchase would be appropriate under the general fiduciary
standards of prudence and diversification, taking into account the overall
investment policy of the Plan and its existing portfolio and should consult
with its counsel with respect to the potential applicability of ERISA and the
Code.
The Certificates
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By its acceptance of a
Certificate, each Certificateholder will be deemed to have represented and
warranted that it is not a Benefit Plan.
RATINGS
As a condition to the issuance of the Notes, the [A-1 Notes] must be rated
at least "____" by the Rating Agency, the [A-2 Notes] must be rated at least
"____" by the Rating Agency and the Certificates must be rated at least "____"
by the Rating Agency. A security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or withdrawal at any time. The
rating of ________________________ assigned to the Notes and Certificates
addresses the likelihood of the receipt by [A-1] Noteholders, [A-2] Noteholders
and Certificateholders of all distributions to which such [A-1] Noteholders,
[A-2] Noteholders and Certificateholders are entitled. The ratings assigned to
the [A-1 Notes], [A-2 Notes] and Certificates do not represent any assessment
of the likelihood that principal prepayments might differ from those originally
anticipated or address the possibility that [A-1] Noteholders, [A-2]
Noteholders or Certificateholders might suffer a lower than anticipated yield.
The ratings of the Securities are also based on the rating of the security
insurer. Upon a security insurer default, the rating on the Securities may be
lowered or withdrawn entirely. In the event that any rating initially assigned
to the Securities were subsequently lowered or withdrawn for any reason,
including by reason of a downgrading of the security insurer's claims-paying
ability, no person or entity will be obligated to provide any additional credit
enhancement with respect to the Securities. Any reduction or withdrawal of a
rating will have an adverse effect on the liquidity and market price of the
Securities.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Note Underwriting Agreement"), the Sponsor has agreed to cause the Trust
to sell to [each of] the underwriter(s) named below (the "Note
Underwriter(s)"), and each of the Note Underwriter(s) has severally, and not
jointly, agreed to purchase, the principal amount of Notes set forth opposite
its name below.
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<PAGE>
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of
Underwriter(s) [A-1 Notes] [A-2 Notes]
- -------------- ---------------- --------------
<S> <C> <C>
__________________ ............................... $ $
---------------- --------------
- ------------------- ...............................
---------------- --------------
---------------- --------------
TOTAL ............................... $ $
================ ==============
</TABLE>
In the Note Underwriting Agreement, the Note Underwriter(s) have agreed,
subject to the terms and conditions therein, to purchase all the Notes offered
hereby if any of such Notes are purchased. The Sponsor has been advised by the
Note Underwriter(s) that they propose initially to offer the [A-1 Notes] and
the [A-2 Notes] to the public at the respective prices set forth herein, and to
certain dealers at such prices less a concession not in excess of _____% per
[A-1 Note] and 0.__% per [A-2 Note]. The Note Underwriter(s) may allow and such
dealers may reallow a concession not in excess of 0.__% per [A-1 Note] and
0.___% per [A-2 Note] to certain other dealers. After the initial public
offering, such prices and such concessions may be changed.
The Note Underwriting Agreement provides that the Sponsor and the
Originator will indemnify the Note Underwriter(s) against certain civil
liabilities, including liabilities under the Securities Act, or contribute to
payments the Note Underwriter(s) may be required to make in respect thereof.
The Indenture Trustee (on behalf of the Trust) may, from time to time,
invest the funds in the Trust Accounts in Eligible Investments acquired from
the Note Underwriter(s).
The closing of the sale of the Notes is conditioned on the closing of the
sale of the Certificates.
Subject to the terms and conditions set forth in a certificate
underwriting agreement the "Certificate Underwriting Agreement"), the Sponsor
has agreed to cause the Trust to sell to ___________________________ (the
"Certificate Underwriter(s)"; and, together with the Note Underwriter(s), the
"Underwriter(s)"), and the Certificate Underwriter(s) [has][have] agreed to
purchase, Certificates in an aggregate principal amount of
$____________________. The Sponsor will purchase Certificates in an aggregate
principal amount of $____________________ from the Certificate Underwriters and
will purchase Certificates in an aggregate principal amount of $_______________
from the Trust.
The Sponsor has been advised by the Certificate Underwriter(s) that they
propose initially to offer the Certificates to the public at the prices set
forth herein, and to certain dealers at such price less the initial concession
not in excess of ____% per Certificate. The Certificate Underwriter(s) may
allow and such dealers may reallow a concession not in excess of ____% per
Certificate to certain other dealers. After the initial public offering of the
Certificates, the public offering price and such concessions may be changed.
The Certificate Underwriting Agreement provides that the Sponsor and the
Originator will indemnify the Certificate Underwriters against certain civil
liabilities, including liabilities under the Securities Act, or contribute to
payments the Certificate Underwriter(s) may be required to make in respect
thereof.
The Indenture Trustee (on behalf of the Trust) may, from time to time,
invest the funds in the Trust Accounts in Eligible Investments acquired from
the Certificate Underwriter(s).
The closing of the sale of the Certificates is conditioned on the closing
of the sale of the Notes.
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<PAGE>
LEGAL MATTERS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the issuance of the Notes and the Certificates,
including federal and state income tax consequences with respect thereto, as
well as other matters, will be passed upon for the Trust, the Sponsor and the
Underwriter(s) by Dewey Ballantine, New York, New York.
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<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and the pages on which the definitions of such terms may be found
herein.
<TABLE>
<CAPTION>
Page
----
<S> <C>
A-1 Noteholders.................................................................................................... 6
A-1 Notes.......................................................................................................... 1, 4
A-2 Noteholders.................................................................................................... 6
A-2 Notes.......................................................................................................... 1, 4
Alternate Principal Distribution Amount............................................................................ 33
Advanta............................................................................................................ 4
APR................................................................................................................ 16
Backup............................................................................................................. 44
Benefit Plan....................................................................................................... 46
Business Day....................................................................................................... 27, 28
Cede............................................................................................................... 3
Certificate Balance................................................................................................ 36
Certificate Record Date............................................................................................ 8
Certificate Underwriter(s)......................................................................................... 47
Certificate Underwriting Agreement................................................................................. 47
Certificateholders................................................................................................. 8
Certificateholders' Distributable Amount........................................................................... 35
Certificateholders' Interest Carryover Shortfall................................................................... 36
Certificateholders' Interest Distributable Amount.................................................................. 35
Certificateholders' Monthly Interest Distributable Amount.......................................................... 35
Certificateholders' Percentage..................................................................................... 36
Certificateholders' Principal Carryover Shortfall.................................................................. 36
Certificateholders' Principal Distributable Amount................................................................. 36
Certificateholders' [Monthly] Principal Distributable Amount....................................................... 36
Certificates....................................................................................................... 1,5
Closing Date....................................................................................................... 4
Code............................................................................................................... 38
Collection Account................................................................................................. 10
Collection Period.................................................................................................. 7
Commission......................................................................................................... 3
Contract Payments.................................................................................................. 5
Contracts.......................................................................................................... 1
Controlled foreign corporation..................................................................................... 40
Cut-off Date....................................................................................................... 4
Debt financed property............................................................................................. 42
Defaulted Contract................................................................................................. 10
Definitive Certificates............................................................................................ 5
Delinquency Amounts................................................................................................ 10
Delinquent Contract................................................................................................ 10
Determination Date................................................................................................. 31
DTC................................................................................................................ 3
ERISA.............................................................................................................. 12,45
Exchange Act....................................................................................................... 3
Foreign person..................................................................................................... 40
Indenture.......................................................................................................... 1,4
Indenture Trustee.................................................................................................. 4
Insurance Policies................................................................................................. 26
Interest Distribution Amount....................................................................................... 32
Investment Earnings................................................................................................ 10
IRS................................................................................................................ 38
Issuer............................................................................................................. 1,4
Large partnership.................................................................................................. 45
Large partnerships................................................................................................. 44
LIBO............................................................................................................... 27,28
LIBOR.............................................................................................................. 7,26,28
S-51
<PAGE>
Page
----
LIBOR Business Day................................................................................................. 27, 28
Liquidated Receivables............................................................................................. 31
Liquidation Proceeds............................................................................................... 31
Maturity Draw...................................................................................................... 7,32
Net Receivables Rate............................................................................................... 15
Nonrecoverable Advances............................................................................................ 11
Note Record Date................................................................................................... 7
Note Underwriter(s)................................................................................................ 46
Note Underwriting Agreement........................................................................................ 46
Note Value......................................................................................................... 7,33
Note Value Decline................................................................................................. 33
Noteholders........................................................................................................ 6
Noteholders' Distributable Amount.................................................................................. 33
Noteholders' Interest Carryover Shortfall.......................................................................... 33
Noteholders' Interest Distributable Amount......................................................................... 33
Noteholders' Monthly Interest Distributable Amount................................................................. 33
Notes.............................................................................................................. 1,4
Obligor............................................................................................................ 5
Originator......................................................................................................... 1,4
Owner Trustee...................................................................................................... 4
Pass-Through Rate.................................................................................................. 35
Payment Date....................................................................................................... 2,6,26
Plan............................................................................................................... 12,45
Pool Balance....................................................................................................... 6
Pooling and Servicing Agreement.................................................................................... 5
Portfolio interest................................................................................................. 40
Predecessor Receivable............................................................................................. 18
Principal Distribution Amount...................................................................................... 32
Principal Payments................................................................................................. 7
Proposed OID Regulations........................................................................................... 38
Prospectus......................................................................................................... 3
Rating Agencies.................................................................................................... 14
Realized Losses.................................................................................................... 33
Receivables........................................................................................................ 1
Receivables Acquisition Agreement.................................................................................. 5
Related person..................................................................................................... 40
Reserve Account.................................................................................................... 9
Reuters Screen LIBO Page........................................................................................... 27,28
Risk Factors....................................................................................................... 2
Rule of 78s........................................................................................................ 16
Securities......................................................................................................... 1
Securityholders.................................................................................................... 8
Servicer........................................................................................................... 4
Servicer Advance................................................................................................... 10
Servicing Charges.................................................................................................. 10
Servicing Fee...................................................................................................... 10
Servicing Fee Rate................................................................................................. 10
Specified Reserve Account Balance.................................................................................. 7
Sponsor............................................................................................................ 1,4
Substitute Receivable.............................................................................................. 18
Tax Counsel........................................................................................................ 37
Total Distribution Amount.......................................................................................... 31
Transfer and Servicing Agreements.................................................................................. 31
Trust.............................................................................................................. 1,4
Trust Agreement.................................................................................................... 5
Underwriter(s)..................................................................................................... 47
Underwriter[s]..................................................................................................... 1
Unrelated business taxable income.................................................................................. 39,42
S-52
<PAGE>
Page
----
Vehicles........................................................................................................... 1
Vendor Agreement Rights............................................................................................ 26
VSI Insurance Policy............................................................................................... 22
[A-1 Noteholders'] Principal Carryover Shortfall................................................................... 35
[A-1 Noteholders'] Principal Distributable Amount.................................................................. 34
[A-1 Noteholders'] [Monthly] Principal Distributable Amount........................................................ 34
[A-1 Note] Alternative Interest Rate............................................................................... 27
[A-1 Note] [A-2 Note] Interest Rate................................................................................ 7
[A-1] Final Scheduled Payment Date................................................................................. 8
[A-2 Noteholders'] Percentage...................................................................................... 34
[A-2 Noteholders'] Principal Carryover Shortfall................................................................... 35
[A-2 Noteholders'] Principal Distributable Amount.................................................................. 34
[A-2 Noteholders'] [Monthly] Principal Distributable Amount........................................................ 34
[A-2 Note] Alternative Interest Rate............................................................................... 28
[A-2] Final Scheduled Payment Date................................................................................. 8
[A-2] Redemption Price............................................................................................. 8
[Class A-1] Maturity Account....................................................................................... 11
[Class A-2 Noteholders]' Interest Carryover Amount................................................................. 35
[Class A-2] Lockout Account........................................................................................ 11
[Monthly] Servicer Report.......................................................................................... 24
</TABLE>
S-53
<PAGE>
EXHIBIT 99.2
<PAGE>
SUBJECT TO COMPLETION DATED __________, 1996
[Exhibit 99.2 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Notes will be filed with the Commission
under the Securities Act of 1933, as amended, pursuant to Rule 424(b)
promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED __________, 1996)
- ------------------------------------------------------------------------------
ADVANTA AUTO RECEIVABLES FINANCE CORPORATION,
199_-_
$_________ Auto Receivables Backed Notes, [Class A]
$_________ Auto Receivables Backed Notes, [Class B]
ADVANTA AUTO FINANCE CORPORATION, Sponsor
ADVANTA AUTO FINANCE CORPORATION, Servicer
_____________________, Originator
- ------------------------------------------------------------------------------
The Auto Receivables Backed Notes (the "Notes") offered hereby represent
the right to receive repayment of the initial principal amount ($________) of
the Notes and monthly interest on the unpaid portion of such principal amount.
The Notes will be issued by Advanta Auto Receivables Finance Corporation 199_-_
(the "Issuer"), a limited purpose corporation organized under the laws of the
State of Nevada. The Notes will initially be issued in two classes: [Class A]
Notes (the "[Class A] Notes") with an interest rate of ___% per annum and
representing the right to receive __% (the "[Class A] Percentage") of the
Initial Aggregate Balance and [Class B] Notes (the "[Class B] Notes") with an
interest rate of ___% per annum and representing the right to receive __% (the
"[Class B] Percentage") of the Initial Aggregate Balance. The Indenture provides
that the Issuer may, from time to time, subject to certain conditions set forth
therein, enter into Supplements directing the issuance of a third class of Notes
(the "[Class C] Notes") which will be subordinate to the [Class A] Notes and to
the [Class B] Notes. If any such [Class C] Notes are issued, the [Class C]
Noteholders shall have the right to receive a specified percentage of the
Initial Aggregate Balance (the "[Class C] Percentage") which shall not exceed
___%. Only the [Class A] Notes and the [Class B] Notes are hereby being offered
(together, the "Offered Notes"). The Series 199__-__ Collateral (the
"Collateral") will consist of any combination of retail installment sales
contracts between manufacturers, dealers or certain other originators and retail
purchasers secured by new and used automobiles and light duty trucks financed
thereby or participation interests therein,] together with all monies received
relating thereto (the "Contracts") [the underlying new and used automobiles and
light duty trucks (the "Vehicles," together with the Contracts], the
"Receivables"), and the proceeds thereof received by the Issuer from the
Originator on or prior to the date of the issuance of the Notes. [The Collateral
also will include a perfected security interest in the Vehicles, certain of the
Originator's rights under certain
(cover continued on next page)
--------------------
THE NOTES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE ORIGINATOR, THE SERVICER, ANY SUCCESSOR
SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE NOTES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY THE ISSUER, THE ORIGINATOR OR THE SERVICER.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS"
HEREIN AND IN THE PROSPECTUS.
- --------------------------------------------------------------------------------
Initial Public Underwriting Proceeds to the
Offering Price Discount(1) Issuer
- --------------------------------------------------------------------------------
[Per Class A Note]...........
- -----------------------------
[Per Class B Note]...........
- -----------------------------
Total........................
- --------------------------------------------------------------------------------
- ----------
(1) The Issuer has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $____________ payable by the
Issuer.
--------------------
[The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriter(s) and subject to the approval of certain legal matters by Dewey
Ballantine, counsel for the Underwriter(s). It is expected that delivery of the
Notes will be made only in book-entry form through the Same Day Funds Settlement
System of The Depository Trust Company on or about ____________, 199__.]
<PAGE>
[Name(s) of the Underwriter(s)]
S-2
<PAGE>
(continued from cover)
Insurance Policies relating to the Receivables, any amounts deposited from time
to time in the Collection Account or the Reserve Account and any amounts on
deposit in the Pre-Funding Account.]
The Notes will be issued by the Issuer pursuant to that certain indenture
(the "Indenture") entered into between the Issuer and ____________________, as
Trustee. Pursuant to the Indenture, the Collateral will be pledged to secure the
repayment of the Notes.
The Originator will transfer all of its right, title and interest in and
to the Receivables to the Issuer pursuant to the Receivables Acquisition
Agreement to be entered into between the Originator and the Issuer (the
"Receivables Acquisition Agreement"). [The Vehicles are principally
___________.]
[Form of Credit Enhancement]
[e.g., Bond Insurer]
[On or before the issuance of the Notes, the Issuer will obtain from
______________ (the "Bond Insurer") certificate guaranty insurance policies,
each relating to a class of Notes (the "Bond Insurance Policies"), in favor of
____________, as Trustee for the holders of the Notes. The Bond Insurance
Policies will provide for 100% coverage of the amounts due on the related
Notes.]
Principal and interest with respect to the Notes is payable on the
[twenty-fifth] day (each, a "Payment Date") of each month (or, if such day is
not a Business Day, the next succeeding Business Day), commencing _____________
[25,] 199_. Distributions of interest and principal on the [Class B] Notes will
be subordinated in priority of payment to interest and principal due on the
[Class A] Notes to the extent described herein in the event of defaults and
delinquencies on the Receivables. Distributions of interest and principal on the
[Class C] Notes will be subordinated in priority of payment to interest and
principal due on the Offered Notes to the extent described herein. The maturity
date of the Notes will be _______, 19__ (the "Stated Maturity Date").
---------------------------
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES. ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS AND
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS IN FULL. SALES OF THE NOTES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
---------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER(S) MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------------
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes are issued, periodic and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Issuer only to Cede & Co.
("Cede"), as nominee of The Depository Trust Company ("DTC") and registered
holders of the Notes. See "Description of the Securities--Book-Entry
Registration" and "--Reports to Securityholders" in the accompanying Prospectus
(the "Prospectus"). Such reports will not constitute financial statements
prepared in accordance with generally accepted accounting principles. The Issuer
will file with the Securities and Exchange Commission (the "Commission") such
periodic reports as are required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder and as
are otherwise agreed to by the Commission. Copies of such periodic reports may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
S-3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus on the
pages indicated in the "Index of Terms" or, to the extent not defined herein,
have the meanings assigned to such terms in the Prospectus
Issuer.................... Advanta Auto Receivables Finance Corporation 199_-_,
a [limited purpose] corporation organized under the
laws of the State of Nevada. The principal executive
offices of the Issuer are located at 500 Office
Center Drive, Fort Washington, Pennsylvania 19034,
and its telephone number is (215) 283-4200.
Servicer.................. Advanta Auto Finance Corporation (the "Servicer"), a
Nevada corporation. The principal executive offices
of the Servicer are located at 500 Office Center
Drive, Fort Washington, Pennsylvania 19034, and its
telephone number is (215) 283-4200.
Originator................ Advanta Auto Finance Corporation (the "Originator"),
a Nevada corporation. The principal executive offices
of the Originator are located at 500 Office Center
Drive, Fort Washington, Pennsylvania 19034, and its
telephone number is (215) 283-4200.
Trustee................... ________________________________ (the "Trustee"), a
[national banking association]. The principal
executive offices of the Trustee are located at ___
____________________________________, and its
telephone number is ______________. The Servicer will
be responsible for payment of the fees of the
Trustee.
Cut-Off Date.............. ________ __, 199__.
Closing Date.............. ________ __, 199__.
Offered Securities........ The "Securities" consist of Auto Receivables Backed
Notes which will initially be issued in two classes
entitled ____% Auto Receivables Backed Notes, [Class
A] and ____% Auto Receivables Backed Notes, [Class
B]. The Indenture provides that the Issuer may, from
time to time, subject to certain conditions set forth
therein, enter into supplements to the Indenture
(each a "Supplement") directing the issuance of
[Class C] Notes which will be subordinate to the
[Class A] Notes and to the [Class B] Notes. Only the
[Class A] Notes and the [Class B] Notes are being
offered hereby. Each Note will be secured by a
fractional undivided security interest in the
Collateral. Payments of principal and interest on the
Notes will be full recourse obligations of the
Issuer.
The [Class A] Notes will be issued in minimum
denominations of $[1,000] and the [Class B] Notes
will be sold in minimum denominations of $[1,000] and
integral multiples thereof.
S-4
<PAGE>
Series 199_-_ Collateral.. The Collateral will consist of any combination of
retail installment sales contracts between
manufacturers, dealers or certain other originators
and retail purchasers secured by new and used
automobiles and light duty trucks financed thereby or
[participation interests] therein, all monies
relating thereto (the "Contracts"), [the underlying
new and used automobiles and light duty trucks ([the
"Vehicles," together with the Contracts], the
"Receivables") and the proceeds thereof. [The
Collateral also will include a perfected security
interest in the Vehicles, certain of the Originator's
rights under certain insurance policies relating to
the Receivables, any amounts deposited from time to
time in the Collection Account or the Reserve Account
and any amounts on deposit in the Pre-Funding
Account.]
[The Originator will transfer all of its right, title
and interest in and to the Receivables to the Issuer
pursuant to the Receivables Acquisition Agreement to
be entered into between the Originator and the
Issuer. In the Receivables Acquisition Agreement, the
Originator will make certain representations and
warranties to the Issuer with respect to, among other
things, the Receivables, which representations and
warranties will be assigned to the Trustee under the
Indenture.]
[The maximum collateral value of any Contract will
not exceed $_____ (_% of the Initial Aggregate
Balance). The excess, if any, of the Discounted
Contract Balance (as hereinafter defined) of any
Contract over $_____ (the "Excess Contract Balance")
will act as additional credit support, and all
Contract Payments under each Contract will be paid
through to the Issuer, as collected, and as
available.]
The Receivables........... The Receivables consist of noncancelable retail
installment sales contracts between manufacturers,
dealers or certain other originators and retail
purchasers secured by new and used automobiles and
light duty trucks financed thereby or participation
interests therein]. Each Obligor's obligation under
its Contract is a full recourse obligation. The
Contracts also contain provisions which
unconditionally obligate the Obligor to make all
Contract Payments.
[All of the Contracts were purchased by the Sponsor
from the Originator in the ordinary course of
business and the Contracts constitute substantially
all of the automobile and light duty truck retail
installment sale contracts included in the
Originator's portfolio meeting the selection criteria
described herein. Such selection criteria included
that: (i) each Contract is secured by a new or used
automobile or light duty truck; (ii) each Contract
was originated in the United States; (iii) each
Contract provides for level monthly payments that
fully amortize the amount financed over its original
term except that the payment in the first or last
month in the life of the Contract may be minimally
different from the level payment, and a minimal
number of the Contracts provide for monthly payments
for a period of time not exceeding one year after
origination in an amount less than such level
payment, provided that as of the Cutoff Date the
monthly payment currently due under each such
Contract is equal to such level payment; (iv) each
Contract was originated on or prior to ____________,
199_; (v) each Contract has an original term of
__ to __ months and, as of the Cutoff Date, had a
remaining term to maturity of not less
S-5
<PAGE>
than three months nor more than __ month; (vi) each
Contract provides for the payment of a finance charge
at an APR ranging from __% to __%; (vii) each Contract
shall not have a Scheduled Payment that is more than
30 days past due as of the Cutoff Date; (viii) no
Contract shall be due, to the best knowledge of the
Originator, from any Obligor who is presently the
subject of a bankruptcy proceeding or is bankrupt or
insolvent; (ix) no Vehicle has been repossessed
without reinstatement as of the Cutoff Date; and (x)
as of the Cutoff Date, physical damage insurance
relating to each Vehicle is not being force-placed by
the Servicer.]
[As of the Cutoff Date, approximately __% and
approximately __% of the Aggregate Discounted
Contract Balance are expected to represent Contracts
secured by automobiles and light duty trucks,
respectively. Based on the Aggregate Discounted
Contract Balance, approximately __% and approximately
__% of the Contracts are expected to represent
financing of new vehicles and used vehicles,
respectively, and no more than __% of the Contracts
are expected to be due from employees of the
Originator or any of its respective affiliates. As of
the Cutoff Date, the average Principal Balance of
Contracts secured by automobiles and light duty
trucks is expected to be approximately $___ and
approximately $___, respectively. The majority of the
Vehicles are expected to be foreign and domestic
automobiles and light duty trucks. Except in the case
of any breach of representations and warranties by
the Originator, it is expected that none of the
Contracts provide for recourse to the Originator who
originated the related Contract.]
[Pre-Funding Account...... On the Closing Date, the Trustee will deposit into an
account established and maintained by the Trustee
(the "Pre-Funding Account") an amount (the
"Pre-Funded Amount") equal to the difference between
the Initial Aggregate Balance and the Aggregate
Discounted Contract Balance of all Contracts actually
acquired on the Closing Date (as defined below).
During the period (the "Funding Period") beginning on
the Closing Date and until the earliest of the date
on which (a) the amount on deposit in the Pre-Funding
Account is less than $____ (b) an Indenture Event of
Default occurs, or (c) the close of business on
__________ __, 199_, the Pre-Funded Amount will be
maintained in the Pre-Funding Account, subject to
withdrawals on each Additional Receivable Transfer
Date (as defined below). During the Funding Period,
on each date on which additional Receivables (the
"Additional Receivables") are acquired by the Issuer
from the Originator (each an "Additional Receivable
Transfer Date"), the Trustee will release to the
Originator an amount equal to the Discounted Contract
Balance of such Additional Receivables. Any amounts
on deposit in the Pre-Funding Account after the final
Additional Receivable Transfer Date will be applied
as a prepayment of the Notes to the Noteholders on
the next succeeding Payment Date in accordance with
their respective Class Percentages.
S-6
<PAGE>
[Capitalized
Interest Account.......... On the Closing Date, the Trustee will be required to
deposit $__________ of the proceeds of the sale of
the Notes in an account (the "Capitalized Interest
Account") in the name of the Trustee on behalf of the
Issuer. The amount deposited therein will be used by
the Trustee on each Payment Date through the Final
Additional Closing Date to fund the negative
arbitrage on the Pre-Funding Account. Any amounts
remaining in the Capitalized Interest Account after
the Payment Date following the Final Additional
Closing Date are required to be paid to the Issuer on
such Payment Date.]
Interest.................. Interest on the Notes will be paid on each Payment
Date, commencing _____________ [___], 199_, to
holders of record of the Notes (the "Noteholders") on
the last business day of the [month] preceding the
[month] in which such Payment Date occurs (or in the
case of the initial Payment Date, the Closing Date)
(the "Record Date"). Interest on the [Class A] Notes
is required to be paid to holders of record of the
[Class A] Notes (the "[Class A] Noteholders") in an
amount equal to the sum of the (A) product of (i) one
twelfth, (ii) ____% per annum (the "[Class A] Note
Rate") and (iii) the outstanding [Class A] Note
Balance on the preceding Payment Date (or, in the
case of the first Payment Date, on the Closing Date)
after giving effect to any payments of principal made
on that Payment Date, (B) plus [Class A] Overdue
Interest (the "[Class A] [Monthly] Interest"). The
"[Class A] Note Balance" shall equal, initially,
$_____ and thereafter shall equal the initial [Class
A] Note Balance reduced by all principal payments on
the [Class A] Notes. The "[Class A] Overdue Interest"
to be paid on any Payment Date will mean the excess,
if any, of (a) the aggregate amount of [Class A]
[Monthly] Interest due on all prior Payment Dates
over (b) the aggregate amount of [Class A] [Monthly]
Interest (from whatever source) actually paid to
[Class A] Noteholders on all prior Payment Dates.
[Class A] Overdue Interest, if any, not previously
paid to Noteholders will accumulate and be paid on
the immediately succeeding Payment Date.
Interest on the [Class B] Notes is required to be
paid to holders of record of the [Class B] Notes (the
"[Class B] Noteholders") in an amount equal to the
sum of (A) the product of (i) one twelfth, (ii) ____%
per annum (the "[Class B] Note Rate") and (iii) the
outstanding [Class B] Note Balance on the preceding
Payment Date (or, in the case of the first Payment
Date, on the Closing Date) after giving effect to any
payments of principal made on that Payment Date, (B)
plus [Class B] Overdue Interest (the "[Class B]
[Monthly] Interest"). The "[Class B] Note Balance"
shall equal, initially, $____ and thereafter shall
equal the initial [Class B] Note Balance reduced by
all principal payments on the [Class B] Notes. The
"[Class B] Overdue Interest" to be paid on any
Payment Date will mean the excess, if any, of (a) the
aggregate amount of [Class B] [Monthly] Interest due
on all prior Payment Dates over (b) the aggregate
amount of [Class B] [Monthly] Interest (from whatever
source) actually paid to [Class B] Noteholders on all
prior Payment Dates. [Class B] Overdue Interest, if
any, not previously paid to [Class B] Noteholders
will accumulate and be paid on the immediately
succeeding Payment Date.
S-7
<PAGE>
Interest on the [Class C] Notes (if any are issued)
is required to be paid to holders of record of the
[Class C] Notes (the "[Class C] Noteholders") in an
amount equal to the sum of (A) the product of (i) one
twelfth, (ii) the [Class C] Note Rate to be
established in connection with the original issuance
of the [Class C] Notes (the "[Class C] Note Rate")
and (iii) the outstanding [Class C] Note Balance on
the preceding Payment Date (or, in the case of the
first Payment Date, on the Closing Date) after giving
effect to any payments of principal made on that
Payment Date, (B) plus [Class C] Overdue Interest
(the "[Class C] [Monthly] Interest"). If any [Class
C] Notes are issued, they shall be issued in an
initial principal amount equal to the product of (A)
$_______ minus all principal theretofore paid by the
Trustee to the [Class A] Noteholders, and the [Class
B] Noteholders and (B) the [Class C] Percentage (such
initial principal amount, being the "Initial [Class
C] Note Balance"). The "[Class C] Note Balance" shall
equal the Initial [Class C] Note Balance reduced by
all principal payments on the [Class C] Notes. The
"[Class C] Overdue Interest" to be paid on any
Payment Date will mean the excess, if any, of (a) the
aggregate amount of [Class C] [Monthly] Interest due
on all prior Payment Dates over (b) the aggregate
amount of [Class C] [Monthly] Interest (from whatever
source) actually paid to [Class C] Noteholders on all
prior Payment Dates. [Class C] Overdue Interest, if
any, not previously paid to [Class C] Noteholders
will accumulate and be paid on the immediately
succeeding Payment Date.
Principal................. Principal payments on the Notes are required to be
made on each Payment Date to Noteholders on the
related Record Date. Principal on the [Class A] Notes
is required to be paid in an amount equal to the sum
of (i) the [Class A] [Monthly] Principal and (ii) the
[Class A] Overdue Principal. The "[Class A] [Monthly]
Principal" to be paid to [Class A] Noteholders on
each Payment Date will mean, with respect to all of
the Receivables for any Payment Date, the product of
(x) the sum of (i) the Contract Payments due during
the related Collection Period minus the aggregate of
the [Monthly] Yield for all Contracts, (ii) for each
Contract that is a Defaulted Contract, the Discounted
Contract Balance and (iii) for each Contract that is
the subject of a prepayment (provided that such
Prepayment Amount has actually been deposited in the
Collection Account), an amount equal to the
Discounted Contract Balance immediately prior to
prepayment and (y) the [Class A] Percentage. To the
extent that an amount is included in any of clauses
(i) through (iii) above, such amount shall not be
included in any other such clause for purposes of
calculating the [Class A] [Monthly] Principal.
The "[Class A] Overdue Principal" to be paid to
[Class A] Noteholders will mean, with respect to any
Payment Date, the excess, if any, of (a) the
aggregate amount of [Class A] [Monthly] Principal due
on all prior Payment Dates over (b) the aggregate
amount of [Class A] [Monthly] Principal (from
whatever source) actually paid to [Class A]
Noteholders on all prior Payment Dates.
Principal on the [Class B] Notes is required to be
paid in an amount equal to the sum of (i) the [Class
B] [Monthly] Principal and (ii) the [Class B] Overdue
Principal. The "[Class B] [Monthly] Principal" to be
paid to [Class B] Noteholders on each Payment Date
will mean, with respect to
S-8
<PAGE>
all of the Receivables for any Payment Date, the
product of (x) the sum of (i) the Contract Payments
due during the related Collection Period minus the
aggregate of the [Monthly] Yield for all Contracts,
(ii) for each Contract that is a Defaulted Contract,
the Discounted Contract Balance and (iii) for each
Contract that is the subject of a prepayment
(provided that such Prepayment Amount has actually
been deposited in the Collection Account), an amount
equal to the Discounted Contract Balance immediately
prior to prepayment and (y) the [Class B] Percentage.
To the extent that an amount is included in any of
clauses (i) through (iii) above, such amount shall
not be included in any other such clause for purposes
of calculating the [Class B] [Monthly] Principal.
The "[Class B] Overdue Principal" to be paid to
[Class B] Noteholders will mean, with respect to any
Payment Date, the excess, if any, of (a) the
aggregate amount of [Class B] [Monthly] Principal due
on all prior Payment Dates over (b) the aggregate
amount of [Class B] [Monthly] Principal (from
whatever source) actually paid to [Class B]
Noteholders on all prior Payment Dates.
Principal on the [Class C] Notes (if any are issued)
is required to be paid in an amount equal to the sum
of (i) the [Class C] [Monthly] Principal and (ii) the
[Class C] Overdue Principal. The "[Class C] [Monthly]
Principal" to be paid to [Class C] Noteholders on
each Payment Date will mean, with respect to all of
the Receivables due for any Payment Date, the product
of (x) the sum of (i) the Contract Payments due
during the related Collection Period minus the
aggregate of the [Monthly] Yield for all Contracts,
(ii) for each Contract that is a Defaulted Contract,
the Discounted Contract Balance and (iii) for each
Contract that is the subject of a prepayment
(provided that such Prepayment Amount has actually
been deposited in the Collection Account), an amount
equal to the Discounted Contract Balance immediately
prior to prepayment and (y) the [Class C] Percentage.
To the extent that an amount is included in any of
clauses (i) through (iii) above, such amount shall
not be included in any other such clause for purposes
of calculating the [Class C] [Monthly] Principal.
The "[Class C] Overdue Principal" to be paid to
[Class C] Noteholders will mean, with respect to any
Payment Date, the excess, if any, of (a) the
aggregate amount of [Class C] [Monthly] Principal due
on all prior Payment Dates over (b) the aggregate
amount of [Class C] [Monthly] Principal (from
whatever source) actually paid to [Class C]
Noteholders on all prior Payment Dates.
The "[Monthly] Yield" with respect to each Contract,
on any Payment Date, will mean one-twelfth of the
product of the Discount Rate and the Aggregate
Discounted Contract Balance on the immediately
preceding Payment Date (or the Cut-Off Date in the
case of the initial Payment Date). The "Discounted
Contract Balance" of any Contract as of the CutOff
Date will mean the present value of all Contract
Payments due thereon after the Cut-Off Date,
discounted monthly at the product of (i) one-twelfth
and (ii) ____% (the "Discount Rate"). The Discount
Rate is the sum of (a) the weighted average of the
[Class A] Note Rate, the [Class B] Note Rate and the
[Class C] Note Rate, calculated as of the
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Closing Date (the "Weighted Average Note Rate") and
(b) the Servicing Fee Rate (as hereinafter defined).
(For purposes of calculating the Weighted Average Note
Rate, the [Class C] Note Rate shall be equal to the
[Class B] Note Rate and the balance applicable thereto
shall equal _% of the Initial Aggregate Balance.)
Thereafter, the Discounted Contract Balance on the
first day of any calendar month (a "Calculation Date")
is the present value of each remaining Contract
Payment to become due under a Contract, discounted
monthly from the date such payment is to become due at
a rate equal to one-twelfth of the Discount Rate. On
the date that a Contract becomes a Defaulted Contract,
the Discounted Contract Balance for such Contract will
be reduced to zero. The "Aggregate Discounted Contract
Balance" for any Calculation Date is the sum of the
Discounted Contract Balances of all Contracts.
Subordination............. [Payments of interest and principal on the [Class B]
Notes will be subordinated in priority of payment to
interest and principal due on the [Class A] Notes to
the extent described herein in the event of defaults
and delinquencies with respect to the Receivables.
The [Class B] Notes will not receive any payments of
interest and principal with respect to a Collection
Period until the full amount of interest and
principal on the [Class A] Notes relating to such
Collection Period has been deposited in the [Class A]
Distribution Account. Distributions of interest and
principal on the [Class C] Notes will be subordinated
in priority of payment to interest and principal due
on the Offered Notes.]
[Reserve Account.......... Pursuant to the Indenture, the [Class A] Noteholders
and [Class B] Noteholders will have the benefit of an
account (the "Reserve Account") established and
maintained by the Trustee. Not later than the
business day prior to each Payment Date, the Trustee
is required to draw on the Reserve Account for
payment, to the extent that the collections from the
immediately preceding Collection Period (the
"Available Funds") on deposit in an account
established and maintained by the Trustee (the
"Collection Account") are not sufficient to pay
[Class A] [Monthly] Interest, [Class A] Overdue
Interest, [Class A] [Monthly] Principal, [Class A]
Overdue Principal, [Class B] [Monthly] Interest,
[Class B] Overdue Interest, [Class B] [Monthly]
Principal, [Class B] Overdue Principal and the
Servicing Fee (the "Required Payments") on any
Payment Date (such shortfall, the "Reserve Account
Payment"), and the proceeds thereof will be deposited
in the Collection Account.
On the Closing Date, the Trustee will deposit in the
Reserve Account an amount equal to _% of the Initial
Aggregate Balance from proceeds of the sale of the
Offered Notes. On the initial Payment Date and on
each Payment Date thereafter, if necessary, monies on
deposit in the Collection Account after payments to
the Servicer, [Class A] Noteholders and [Class B]
Noteholders (the "Excess Collections") shall be
deposited in the Reserve Account to the extent
necessary to bring the balance in the Reserve Account
to the Maximum Reserve Amount (as defined below).
If, on any Payment Date, a Restricting Event shall
exist, amounts otherwise distributable to the [Class
C] Noteholders, if any, and to the Issuer shall be
deposited into the Reserve Account pursuant to the
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Indenture. A "Restricting Event" exists as of any
Payment Date or as of the related Determination Date,
when a Delinquency Condition (as defined below) exists
on (i) such Payment Date, (ii) such related
Determination Date or (iii) any of the ________
previous Payment Dates. A "Delinquency Condition"
shall be deemed to exist on and as of any Payment Date
or on and as of the related Determination Date if (x)
the aggregate of the Contract Payments due during the
related Collection Period under all Contracts with
respect to which any Contract Payment or portion
thereof was overdue as of each of the two immediately
preceding Payment Dates (after excluding any such
Contract Payment which was paid in full prior to the
related Determination Date) exceeds (y) __ percent of
the aggregate of the Contract Payments due during the
related Collection Period under all Contracts. If a
Delinquency Condition exists on any Payment Date, such
Delinquency Condition shall be deemed to continue to
and include the day immediately preceding the next
Payment Date.
On each Payment Date, funds on deposit in the Reserve
Account (after withdrawal of any Reserve Account
Payment) in excess of the Maximum Reserve Amount will
be distributed to the [Class C] Distribution Account
to the extent of the amount equal to the aggregate of
[Class C] Overdue Interest, [Class C] [Monthly]
Interest, [Class C] Overdue Principal and [Class C]
[Monthly] Principal (such aggregate amount (the
"[Class C] Distributions") and any remainder shall be
distributed to the Issuer in accordance with the
Indenture; provided, however, that if a Restricting
Event exists on such Payment Date, all funds on
deposit in the Reserve Account (after withdrawal of
any Reserve Account Payment) shall remain in the
Reserve Account, subject to use as otherwise provided
in the Indenture. The "Maximum Reserve Amount" shall,
on any Payment Date, be equal to the lesser of (i) _%
of the Initial Aggregate Balance or (ii) the sum of
(x) the Outstanding [Class A] Note Balance and (y)
the Outstanding [Class B] Note Balance less (z) the
Outstanding [Class C] Note Balance. If the amount on
deposit in the Reserve Account is insufficient to pay
the Required Payments, no other assets beyond the
credit enhancement specified in the prospectus will
be available on the related Payment Date for the
payment of the deficiency.]
[Bond Insurer............. __________________, a __________ corporation (the
"Bond Insurer").]
[Bond Insurance Policies.. The Issuer will obtain the bond insurance policies
(the "Bond Insurance Policies"), which are
noncancelable, in favor of the Trustee on behalf of
the Noteholders which provide for the funding of an
amount equal to 100% coverage of the amounts due on
the Notes on each Payment Date. On each Payment Date,
the Bond Insurer will be required to make Insured
Payments to the Trustee, as paying agent. Payment of
Insured Payments together with all other
distributions by the Issuer are intended to provide
the Trustee with sufficient funds to make
distributions of the full amount due to Noteholders
on such Payment Date. The Bond Insurance Policies do
not guarantee the Receivables and do not protect
against any adverse consequences caused by any
specified rate of prepayments. See "Credit
Enhancement" and "The Bond Insurance Policies and the
Bond Insurer" herein and "Description of the Trust
Agreements - Credit and Cash Flow Enhancements" in
the Prospectus.]
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Servicing................. The Servicer will be responsible for servicing,
making collections on and otherwise enforcing the
Contracts. The Servicer will be required to exercise
the degree of skill and care in performing these
functions that it customarily exercises with respect
to similar contracts owned by the Servicer. The
Servicer will be entitled to receive a monthly fee
(the "Servicing Fee") of the product of (i)
one-twelfth, (ii) ___% (the "Servicing Fee Rate") and
(iii) the Aggregate Discounted Contract Balance as of
the beginning of the previous Collection Period,
payable out of the Collection Account, plus late
payment fees and certain other fees paid by the
Obligors ("Servicing Charges") and investment
earnings on amounts held in the Collection Account
("Investment Earnings"), as compensation for acting
as Servicer.
[Except as hereinafter provided, on the day prior to
any Payment Date, the Servicer will be required to
make an advance (a "Servicer Advance") to the Trustee
in an amount sufficient to cover all amounts due and
unpaid on any Delinquent Contract as of the previous
Determination Date ("Delinquency Amounts"). A
"Delinquent Contract" will mean, as of any
Determination Date, any Contract (other than a
Contract which became a Defaulted Contract prior to
such Determination Date) with respect to which the
Obligor has not paid all Contract Payments then due.
With respect to any Delinquent Contract, whenever the
Servicer shall have determined that it will be unable
to recover a Delinquency Amount or portion thereof on
such Delinquent Contract, the Servicer shall not be
required to make a Servicer Advance on such
unrecoverable Delinquency Amount or portion thereof,
but will be required to enforce its remedies
(including acceleration) under such Contract.
Furthermore, if at any time the Originator is no
longer the Servicer, no Servicer Advances will be
required. In the event that the Servicer determines
that any Servicer Advances previously made are
Nonrecoverable Advances, or any Delinquent Contracts
for which the Originator has made advances of
Delinquency Amounts in respect thereof become
Defaulted Contracts, then the Trustee shall have the
right to draw on the Collection Account and the
Reserve Account to repay such Servicer Advances.]
Under the Receivables Acquisition Agreement, a
Contract will constitute a "Defaulted Contract" at
the earlier of the date on which (i) [______]
Contract Payments are due and unpaid as of any
Calculation Date or (ii) the Servicer has declined to
make a Servicer Advance in accordance with Section
_______ of the Receivables Acquisition Agreement on
the grounds that such advance would be a
Nonrecoverable Advance or (iii) such Contract has
been rejected by or on behalf of the Obligor in a
bankruptcy proceeding.
Under certain limited circumstances, the Servicer may
resign or be removed, in which event the Trustee will
be appointed as successor Servicer.
The Servicer will be required to cause amounts
collected on the Receivables on behalf of the Issuer
to be deposited in a lockbox account (the "Lockbox
Account") maintained by the Trustee. Funds in the
Lockbox Account will be distributed to the Collection
Account maintained
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with the Trustee no later than the [______] Business
Day following receipt of such amounts.
[Receivable Substitution.. The Originator shall have the right (but not the
obligation) to substitute a Receivable for any
Receivable which defaults or prepays. Substitute
Receivables must be at least equal in Discounted
Contract Balance and comparable in terms of residual
value, credit quality, and monthly payment, provided,
that in no event shall the maturity date of any
Substitute Receivable be later than the last maturity
date of any Initial Receivable or Additional
Receivable.]
[Optional Redemption...... The Issuer will have the option, subject to certain
conditions set forth in the Indenture, to prepay all
of the Offered Notes on any Payment Date on which the
Outstanding [Class A] Note Balance is less than
[____%] of the Initial [Class A] Note Balance and the
Outstanding [Class B] Note Balance is less than
[___%] of the Initial [Class B] Note Balance (after
giving effect to payments of principal on such
Payment Date) (an "Optional Redemption"). In the
event such option is exercised, the entire
outstanding principal balance of the Offered Notes,
together with accrued interest thereon at the [Class
A] Note Rate or [Class B] Note Rate, as applicable,
will be required to be paid to the [Class A]
Noteholders and the [Class B] Noteholders on such
Payment Date.]
Limited Repurchase
Obligation................ In the Receivables Acquisition Agreement, the
Originator will make certain representations and
warranties with respect to, among other things, the
Receivables. The Originator will be obligated to
repurchase a Receivable if the interest of the
Trustee or the Noteholders is materially adversely
affected by a breach of such a representation or
warranty with respect to such Receivable and if such
breach has not been cured as of the [_______] Record
Date following the Originator's discovery or receipt
of notice of such breach.
Certain Legal Aspects of
the Receivables........... The Issuer will be required to take such action as is
required to perfect the Trustee's security interest
in the Contracts, the Contract Payments [and the
Vehicles] as of the Closing Date, or in any event,
within [________ (__)] days from the date thereof.
The Issuer will warrant that the Trustee will have a
first priority perfected security interest in the
Contracts, the Contract Payments owned by the Issuer,
[and a perfected security interest in the Vehicles
owned by Obligors,] except for certain liens which by
operation of law have priority over previously
perfected security interests, and, with certain
exceptions, in the proceeds thereof. The Trustee will
act as custodian of the Receivables on behalf of the
Noteholders.
Certain Federal and State
Income Tax Considerations Subject to the discussion below, under the Internal
Revenue Code of 1986, as amended, and existing
regulations, administrative rules and judicial
decisions, counsel to the Issuer is of the opinion
that the Offered Notes will be characterized as
indebtedness for federal income tax purposes. As a
result, a portion of each payment on the Notes will
be treated as interest. Holders of the Offered Notes
will be required to include interest paid or accrued
on the Offered Notes in gross income.
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<PAGE>
Principal payments on the Offered Notes should, to
the extent of the Noteholder's basis in the Offered
Notes allocable thereto, be treated as a return of
capital. See "Certain Federal Income Tax
Considerations" regarding the foregoing and
additional information concerning the application of
federal income tax laws.
ERISA Considerations...... The acquisition of Notes by an employee benefit plan
subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or the provisions
of Section 4975 of the Code (a "Plan"), could result
in a prohibited transaction under "ERISA" or Section
4975 of the Code, unless such acquisition is subject
to a statutory or administrative exemption, if, by
virtue of such acquisition, assets held by the Issuer
and pledged to the Trustee were deemed to be assets
of the Plan. In addition, the Issuer or other parties
may be considered to be a fiduciary with respect to
any Plan. Therefore, the acquisition and transfer of
the Notes are subject to certain restrictions. See
"ERISA Considerations."
Ratings................... It is a condition of the original issuance of the
Offered Notes that the Offered Notes receive ratings
of ___ by ___________ ("____"), and __ by
____________ ("_________"). A security rating is not
a recommendation to buy, sell or hold securities, and
may be subject to revision or withdrawal at any time
by the assigning entity. See "Projected Prepayments
and Yields for Notes" and "Rating of the Notes"
herein and "Yield Considerations" in the Prospectus.
Risk Factors.............. For a discussion of certain factors that should be
considered by prospective investors in the Offered
Notes, see "Risk Factors" herein and in the
Prospectus.
Certain Legal Matters..... Certain legal matters relating to the validity of the
issuance of the Offered Notes will be passed upon for
the Issuer and the Underwriter by Dewey Ballantine,
New York, NY.
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<PAGE>
RISK FACTORS
Prospective Noteholders should consider, among other things, the following
factors in connection with the purchase of the Offered Notes:
Risk of Losses on Investment Associated with Limited Obligations of the
Trust. Distributions of interest and principal on the Notes will be subordinated
in priority of payment to interest and principal due on the Notes. The
Noteholders will not receive any distributions with respect to a Payment Date
until the full amount of interest on and principal of the Notes on such Payment
Date has been deposited in the Note Distribution Account. The Trust does not
have, nor is it permitted or expected to have, any significant assets or sources
of funds other than the Receivables and the Trust Accounts. The Securities
represent solely obligations of, or interests in, the Trust and the Securities
will not be insured or guaranteed by the Sponsor, the Originator, the Servicer,
the [Owner] Trustee or any other person or entity. Consequently, holders of the
Securities must rely for repayment upon payments on the Receivables and, if and
to the extent available, amounts on deposit in the Reserve Account. Amounts to
be deposited in the Reserve Account are limited in amount, and the amount
required to be on deposit in the Reserve Account will be reduced as the Pool
Balance is reduced. In addition, funds in the Reserve Account will be available
on each Payment Date to cover shortfalls in distributions of interest and
principal on the Notes prior to the application thereof to cover shortfalls on
the Notes. If the Reserve Account is exhausted, the Trust will depend solely on
current payments on the Receivables to make payments on the Securities. Although
the Trust will covenant to sell the Receivables if directed to do so by the
Indenture Trustee in accordance with the Indenture following an acceleration of
the Notes upon an Event of Default, there is no assurance that the market value
of the Receivables will at any time be equal to or greater than the aggregate
principal amount of outstanding Notes. Therefore, upon an Event of Default with
respect to the Notes there can be no assurance that sufficient funds will be
available to repay Noteholders in full and consequently the Noteholders run the
risk of loss on their investment. In addition, the amount of principal required
to be distributed to Noteholders under the Indenture is generally limited to
amounts available therefor in the Note Distribution Account. Therefore, the
failure to pay principal on the Notes may not result in the occurrence of an
Event of Default until the Final Scheduled Payment Date.
Risk of Limited Liquidity and Lower Market Price Associated with a
Reduction or Withdrawal of Ratings of the Securities. It is a condition to the
issuance of the Notes and the Notes that the [Class A Notes] be rated in the
[_____] rating category, the [Class B Notes] be rated in the [____] rating
category and the Notes be rated at least [___] or its equivalent, in each case
by at least two nationally recognized rating agencies (the "Rating Agencies"). A
rating is not a recommendation to purchase, hold or sell Securities, inasmuch as
such rating does not comment as to market price or suitability for a particular
investor. The rating of the Securities addresses the likelihood of the timely
payment of interest on and the ultimate repayment of principal of the Securities
pursuant to their terms. There is no assurance that a rating will remain for any
given period of time or that a rating will not be lowered or withdrawn entirely
by a Rating Agency if in its judgment circumstances in the future so warrant.
The rating of the Notes is based primarily on the creditworthiness of the
Receivables, the subordination provided by the Notes and the availability of
funds in the Reserve Account. The rating of the Notes is based primarily on the
creditworthiness of the Receivables and the availability of funds in the Reserve
Account. The ratings of the Securities are also based on the rating of the
security insurer. Upon a security insurer default, the rating on the Securities
may be lowered or withdrawn entirely. In the event that any rating initially
assigned to the Securities were subsequently lowered or withdrawn for any
reason, including by reason of a downgrading of the security insurer's
claims-paying ability, no person or entity will be obligated to provide any
additional credit enhancement with respect to the Securities. Any reduction or
withdrawal of a rating will have an adverse effect on the liquidity and market
price of the Securities. See "Ratings."
[Risk of Reduced Rate of Return Associated with Relationship Between Base
Rate and LIBOR. Allocations of payments on the variable rate Receivables to
principal and interest depend upon the applicable Base Rate. Interest on the
[Class A] Notes, [Class B] Notes and the [Class C] Notes accrues at a rate
generally based upon LIBOR. These two rates can and will vary with respect to
each other. Historically, they have increased or decreased roughly in tandem
and, during the last ten years, LIBOR
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always has remained below the Base Rate. However, no assurance can be given that
these historical trends will continue. There is a risk that if LIBOR were to
more above the Base Rate, the spread used to pay interest to the Securityholders
would disappear and the rate of return to investors would be reduced.]
[The variable rate Receivables bear interest at the Base Rate plus a Base
Rate Additive ranging from _____% to _____%. Each of the [Class A] Interest
Rate, the [Class B] Interest Rate and the [Class C] Interest Rate is based upon
LIBOR. If, in respect of any Payment Date, there does not exist a positive
spread between the weighted average of the Receivables Rate [Class A Interest
Rate] [the Class B Interest Rate] less the Servicing Fee Rate (such difference
between the Receivables Rate and the Servicing Fee Rate being the "Net
Receivables Rate") for the Collection Period preceding such Payment Date, on the
one hand, and the [Class A Interest Rate], [the Class B Interest Rate], [the
Class C Interest Rate]for such Payment Date (calculated before giving effect to
this sentence), on the other hand, then the Interest Rate for such Payment Date
shall not exceed the Net Receivables Rate.]
[Risk of Reduced Rate of Return Associated with Yield Considerations. The
Noteholders will bear the risk associated with the possible narrowing of the
spread between the [Class A Interest Rate] [the Class B Interest Rate] [Class C
Interest Rate], on the one hand, and the Net Receivables Rate, on the other
hand. If this spread disappears (i.e., if the [Class A] Note Rate, the [Class B]
Note Rate [Class C] Note Rate exceeds or equals the Net Receivables Rate), the
interest payable on the [Class A Notes] [Class B Notes] [Class C Notes] for the
related Payment Date will not exceed such Net Receivables Rate. A substantial
change in LIBOR at a time when the Net Receivables Rate does not experience a
similar change could result in limiting the [Class A Interest Rate] [Class B
Interest Rate] [Class C Interest Rate] and consequently could reduce the rate of
return to investors as described above.]
Risk of Lower Yield Associated with Prepayment Considerations. If
purchased at other than par, the yield to maturity on the Securities will be
affected by the rate of the payment of principal of the Contracts. If the actual
rate of payments on the Contracts is slower than the rate anticipated by an
investor who purchases the Securities at a discount, the actual yield to such
investor will be lower than such investor's anticipate yield. If the actual rate
of payments on the Contracts is faster than the rate anticipated by an investor
who purchases the Securities at a premium, the actual yield to such investor
will be lower than such investor's anticipated yield.
[All of the Contracts are fixed-rate contracts. The rate of prepayments
with respect to conventional fixed contracts has fluctuated significantly in
recent years. In general, if prevailing interest rates fall significantly below
the interest rates on fixed rate contracts, such contracts are likely to be
subject to higher prepayment rates than if prevailing rates remain at or above
the interest rate on such contracts. However, the monthly payment on contracts
similar to the Contracts is often smaller than the monthly payment on other
types of consumer debt, for example, a typical mortgage loan. Consequently, a
decrease in the interest rate payable as a result of a refinancing would result
in a relatively small reduction in the amount of the contracts monthly payment,
as a result of the relatively small loan balance. Conversely, if prevailing
interest rates rise appreciably above the interest rates on fixed rate
contracts, such contracts are likely to experience a lower prepayment rate than
if prevailing rates remain at or below the interest rates on such contracts. As
of the Cut-off Date, ____% of the aggregate principal balance of the Contracts
had prepayment penalties.]
[All of the Contracts are adjustable rate contracts. As is the case with
conventional fixed rate contracts, adjustable rate contracts may be subject to a
greater rate of principal prepayments in a declining interest rate environment.
For example, if prevailing interest rates fall significantly, adjustable rate
contracts could be subject to higher prepayment rates than if prevailing
interest rates remain constant because the availability of fixed-rate contracts
at competitive interest rates may encourage obligors to refinance their
adjustable rate contracts to "lock in" a lower fixed interest rate. However, no
assurance
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can be given as to the level of prepayments that the contracts will experience.
As of the Cut-off Date, ____% of the aggregate principal balance of the
Contracts had prepayment penalties.]
THE RECEIVABLES
Contracts
[Description of collateral is transaction dependent - an example of disclosure
language is set forth below].
[All of the Contracts were purchased by the Sponsor from the Originator in
the ordinary course of business and the Contracts constitute substantially all
of the automobile and light duty truck retail installment sale contracts
included in the Originator's portfolio meeting the selection criteria described
herein. Such selection criteria included that: (i) each Contract is secured by a
new or used automobile or light duty truck; (ii) each Contract was originated in
the United States; (iii) each Contract provides for level monthly payments that
fully amortize the amount financed over its original term except that the
payment in the first or last month in the life of the Contract may be minimally
different from the level payment, and a minimal number of the Contracts provide
for monthly payments for a period of time not exceeding one year after
origination in an amount less than such level payment, provided that as of the
Cutoff Date the monthly payment currently due under each such Contract is equal
to such level payment; (iv) each Contract was originated on or prior to
____________, 199_; (v) each Contract has an original term of __ to __ months
and, as of the Cutoff Date, had a remaining term to maturity of not less than
three months nor more than month; (vi) each Contract provides for the payment of
a finance charge at an APR ranging from % to %; (vii) each Contract shall not
have a Scheduled Payment that is more than 30 days past due as of the Cutoff
Date; (viii) no Contract shall be due, to the best knowledge of the Originator,
from any Obligor who is presently the subject of a bankruptcy proceeding or is
bankrupt or insolvent; (ix) no Vehicle has been repossessed without
reinstatement as of the Cutoff Date; and (x) as of the Cutoff Date, physical
damage insurance relating to each Vehicle is not being force-placed by the
Servicer.
Certain information with respect to the Receivables expected to be sold by
the Originator to the Sponsor pursuant to the Receivables Acquisition Agreement
and in turn sold by the Sponsor to the Trust pursuant to the Trust Agreement is
set forth below. The description of the Receivables presented in this Prospectus
Supplement is based upon the pool of Receivables as it is expected to be
constituted on the Cutoff Date. While information as of the Closing Date for the
Receivables that actually will be sold to the Trust may differ somewhat from the
information presented herein, the Sponsor does not expect that the
characteristics of the Receivables that are sold to the Trust will vary
materially from the information presented in this Prospectus Supplement
concerning the Receivables.
As of the Cutoff Date, approximately __% and approximately __% of the
Aggregate Discounted Contract Balance are expected to represent Contracts
secured by automobiles and light duty trucks, respectively. Based on the
Aggregate Discounted Contract Balance, approximately __% and approximately __%
of the Contracts are expected to represent financing of new vehicles and used
vehicles, respectively, and no more than __% of the Contracts are expected to be
due from employees of the Originator or any of its respective affiliates. As of
the Cutoff Date, the average Principal Balance of Contracts secured by
automobiles and light duty trucks is expected to be approximately $______ and
approximately $______, respectively. The majority of the Vehicles are expected
to be foreign and domestic automobiles and light duty trucks. Except in the case
of any breach of representations and warranties by the Originator, it is
expected that none of the Contracts provide for recourse to the Originator who
originated the related Contract.
Each Contract provides for fixed level monthly payments which will
amortize the full amount of the Contract over its term. The Contracts provide
for allocation of payments according to the "sum of periodic
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balances" or "sum of monthly payments" method (the "Rule of 78s"). Each Contract
provides for the payment by the Obligor of a specified total amount of payments,
payable in monthly installments on the related due date, which total represents
the principal amount financed and finance charges in an amount calculated on the
basis of a stated annual percentage rate ("APR") for the term of such Contract.
The rate at which such amount of finance charges is earned and, correspondingly,
the amount of each fixed monthly payment allocated to reduction of the
outstanding principal balance of the related Contract are calculated in
accordance with the Rule of 78s. Under the Rule of 78s, the portion of each
payment allocable to interest is higher during the early months of the term of a
Contract and lower during later months than that under a constant yield method
for allocating payments between interest and principal. Notwithstanding the
foregoing, all payments received by the Servicer on or in respect of the
Contract will be allocated pursuant to the Indenture on an actuarial basis.
If an Obligor elects to prepay a Contract in full, it is entitled to a
rebate of the portion of the outstanding balance then due and payable
attributable to unearned finance charges, calculated in accordance with the Rule
of 78s. The amount of a rebate under a Contract calculated in this manner will
always be less than had such rebate been calculated on an actuarial basis.
Distributions to Noteholders will not be affected by Rule of 78s rebates under
the Contract because pursuant to the Indenture such distributions will be
determined using the actuarial method.]
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The expected composition, distribution by APR and geographical
distribution of the Contracts are as set forth in the following tables.
Expected Composition of the Contracts
Aggregate Discounted Contract Balance ............. $
Number of Contracts ............................... ____
Average Original Principal Balance ................ $
Range of Original Principal Balances ............ $___ to $___
Weighted Average APR(1)............................ ___%
Range of APRs ................................... ___% to ___%
Weighted Average Original Maturity(1) ............. ____ months
Range of Original Maturities .................... __ months to __ months
Weighted Average Remaining Maturity(1) ............ __ months
Range of Remaining Maturities ................... __ months to __ months
- ----------
(1) Weighted by Aggregate Discounted Contract Balance as of the Cutoff Date.
Expected Distribution of the Contracts by APR
Percentage of
Percentage of Aggregate Aggregate
Aggregate Discounted Discounted
Number of Number Contract Contract
Range of APRs Contracts of Contracts Balance Balance
- ------------- --------- ------------- ---------- -------------
% to % .... % $ %
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
Total ...... % $ %
========== ======= ============ =========
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<PAGE>
Expected Distribution of the Contracts by State
Percentage of Aggregate Percentage of
Aggregate Discounted Aggregate
Number of Number Contract Discounted
State(1) Contracts of Contracts Balance Contract Balance
- -------- --------- ------------- ---------- ----------------
% $ %
Total ...... % $ %
========== ======= ============ =========
- ----------
(1) Based on the addresses of the Obligors.
Substitution
Pursuant to the Receivables Acquisition Agreement, the Servicer will have
the right (but not the obligation) at any time to substitute one or more
Eligible Receivables (each a "Substitute Receivable") for a Receivable
("Predecessor Receivable") if:
(i) the Predecessor Receivable is then in default and, as of the
most recent Determination Date, has been in default for at least
[____(__)] consecutive days or a bankruptcy petition has been filed by or
against the Obligor;
[(ii) the Vehicles comprising part of the Substitute Receivable or
Receivables has a current estimated fair market value and a projected
residual value, respectively, equal to or greater than the current fair
market value and projected residual value of the Vehicles comprising part
of the Predecessor Receivable;] and
(iii) the Substitute Receivable or Receivables require the obligor
or obligors thereunder to make Contract Payments during each month ending
on or prior to the Stated Maturity Date of the Notes in an amount which is
at least as great as the Contract Payment required under the Predecessor
Receivable during each such month.
[provided, however, that the Aggregate Discounted Contract Balance of all
Contracts substituted shall not exceed [10%] of the Aggregate Discounted
Contract Balance of the Initial Receivables and the Additional Receivables.]
[Upon repossession and disposition of any Vehicles subject to a Defaulted
Contract, any deficiency remaining will be pursued to the extent deemed
practicable by the Servicer. The Servicer on behalf of the Issuer is directed to
maximize the Net Residual Value of the Vehicles relating to any Defaulted
Contract, and, in such regard, the Servicer may sell such Vehicles at the best
available price, refurbish such Vehicles and re-lease such Vehicles to third
parties, or take any other commercially reasonable steps to maximize such
Vehicles's Net Residual Value. Liquidation proceeds with respect to any such
Defaulted Contract, including any future payments received with respect to such
Defaulted Contracts, shall be paid
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to the Collection Account. If the Servicer reasonably believes that the Net
Residual Value of any Vehicles is zero or de minimis, it will dispose of such
Vehicles in accordance with its standard procedures.
[The original counterpart of each Contract constituting chattel paper and
the Contract Files will be held by _________________, as Trustee on behalf of
the Noteholders. The Trustee will be required to indicate that the Contracts
have been transferred by the Originator to the Issuer.]
[The Additional Receivables
Subject to the conditions set forth below, in consideration of the
Trustee's delivery on the related Additional Receivable Transfer Date upon the
order of the Issuer of all or a portion of the balance of funds in the
Pre-Funding Account, the Originator shall on any Additional Receivable Transfer
Date sell, transfer, assign, set over and otherwise convey without recourse, to
the Issuer, all right, title and interest of the Originator in and to each
Additional Receivable listed on the schedule delivered by the Originator to the
Issuer and the Trustee (including all Contract Payments due thereunder);
provided, however, that the Originator reserves and retains all of its right,
title and interest in and to all Contract Payments collected and interest
accruing on each such Additional Receivable prior to the related Additional
Receivable Transfer Date.
The amount released from the Pre-Funding Account shall be ___________
percent (_____%) of the Discounted Contract Balances of each Additional
Receivable so transferred.
The Originator shall transfer to the Issuer the Additional Receivables and
the other property and rights related thereto only upon the satisfaction of each
of the following conditions on or prior to the related Additional Receivable
Transfer Date:
a. the Originator shall have provided the Trustee with a timely
Addition Notice and shall have provided any information reasonably
requested by the Issuer or the Trustee with respect to the Additional
Receivables;
b. the Originator shall have delivered to the Issuer and the Trustee
a duly executed written assignment (including an acceptance by the
Trustee) (the "Additional Receivable Transfer Agreement"), which shall
include schedules listing the Additional Receivables and any other
exhibits listed thereon;
c. the Originator shall have deposited in the Collection Account all
collections in respect of the Additional Receivables received on or after
the related Additional Receivable Transfer Date;
d. as of each Additional Receivable Transfer Date, the Originator
was not insolvent, will not be made insolvent by such transfer nor is it
aware of any pending insolvency;
e. such addition will not result in a material adverse tax
consequence to the Issuer or the Noteholders;
f. the Originator shall have delivered to the Trustee an Officers'
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph and in the related Additional Receivable
Transfer Agreement;
g. the obligation of the Issuer to purchase an Additional Receivable
on any Additional Receivable Transfer Date is subject to the requirement
that such Additional Receivable comply in all material respects with the
representations and warranties made by the Originator on the Initial
Receivables in the Receivables Acquisition Agreement.]
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<PAGE>
THE ORIGINATOR AND THE SERVICER
General
The Originator is principally a company engaged in the business of
originating and acquiring retail installment sale contract financing to retail
customers of automotive dealers. The Originator provides full-service financing,
primarily through installment sales contracts, to retail purchasers of new and
used automobiles and light duty trucks through dealer programs.
[The Originator has financed over $___ million of vehicles, representing
over _______ vehicles. The Originator currently services over ___ customers
through its direct servicing activities and an additional ______ customers in
connection with its subsidiaries' activities. As of ____________________, the
Originator had __ employees.]
Delinquency and Default Experience
There can be no assurance that the levels of delinquency and loss
experience reflected in Table 1 and Table 2, below, are indicative of the
performance of the Receivables included in the Collateral for the Notes.
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TABLE 1
DELINQUENCY EXPERIENCE
================================================================================
Year Ended December 31,
---------------------------------------------------------------
1991 1992 1993
===============================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
------ ---------- ------ ---------- ------ ----------
Total Originator
Portfolio
at Year End
Delinquencies:
31-60 Days
61 + Days
Total
Delinquencies
Total
Delinquencies
as a % of Total
Portfolio
TABLE 2
LOSS EXPERIENCE
================================================================================
Year Ended December 31,
---------------------------------------------------------------
1991 1992 1993
===============================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
------ ---------- ------ ---------- ------ ----------
Total
Acquisitions (1)
Gross Defaults
Gross Recoveries
Net Losses
================================================================================
(1) Total Acquisition = total cost (aggregate purchase price of the Vehicles)
to the Originator since inception in ____ thru and including the year end
set forth above.
Litigation
Originator is not involved in any legal proceedings, and is not aware of
any pending or threatened legal proceedings that would have a material adverse
effect upon its financial condition or results of operations.
Underwriting
[Description of the underwriting guidelines of the Originator is
transaction dependent - an example of disclosure language is set forth below.]
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<PAGE>
[The Originator's underwriting standards are intended to evaluate a
prospective buyer's credit standing and repayment ability and the adequacy of
the related financed vehicle as collateral. Generally, a prospective buyer is
required by the Originator to complete a credit application on a form prepared
or approved by the Originator. As part of the description of the applicant's
financial condition, the applicant is required to provide current information
enumerating, among other things, employment history, bank account information,
debts and credit references. Upon receipt, all application data is entered into
a centralized computer network that automatically obtains an independent credit
bureau report and then "scores" the application with the use of a scorecard. The
scorecard enables the Originator to review an application and establish the
probability that the proposed retail installment sale contract will be paid in
accordance with its terms. The credit scores are expressed as a numerical
estimate of the "odds of repayment" on a scheduled basis. For example, a score
of 15 means that, based on the Originator's past retail automobile and light
duty truck installment sale contract experience, the odds are 15 to 1 that over
the life of the contract that the related account will not (i) be delinquent for
in excess of 30 days more than twice, (ii) be delinquent in excess of 60 days
more than once, (iii) ever be delinquent for more than 90 days or (iv) require
the related financed vehicle to be repossessed.
This numerical credit scoring system was developed by __________ (the
"Credit Score Analysts"), an automobile lending and leasing consulting firm,
specifically for the Originator, based upon an analysis of the historical
performance of the retail automobile and light duty truck installment sale and
lease contract portfolios of the Originator. To determine the appropriate
characteristics for credit scoring, the Credit Score Analysts reviewed a random
sample of 10,000 retail installment sale contracts and 10,000 lease contracts
from the portfolio of the Originator. The Credit Score Analysts then compiled a
list of ten to twelve characteristics that cumulatively carried the most weight
in predicting historical performance and assigned point values and weighting to
each of these characteristics. Each scorecard assigns at least a 50% weighting
to the credit bureau report. This weighting system is particularly significant
because the credit bureau report is beyond the control of the Originator and
cannot be manipulated. The Credit Score Analysts determined that the most
accurate determinative of the performance of an installment sale or lease
contract was the credit bureau report. Based on such historical performance, the
Credit Score Analysts prepared two retail credit scorecards (which differ
according to type of contract and the geographical location of the applicant)
and two lease scorecards.
The Credit Score Analysts' scorecard system was implemented in __________
and has been used for all retail installment sale contracts originated
subsequent thereto. Prior to this time, the Originator used a scoring model
which, while not developed specifically for it, is used extensively in the
automobile lending industry. This scoring model evaluated an applicant's
creditworthiness based on specific characteristics gathered from the credit
investigation process and the amount of the contract requested. Based on the
applicant's score, each applicant was identified as falling into one of four
credit risk categories ranging from A to D. Applicants with a risk category of A
or B were normally approved by the credit supervisor at the branch. Those in a
risk category below B went to local office management for review and final
approval, qualification or rejection.
Both the alphabetical and numerical scoring models are intended to provide
a means of analysis to assist in decision making, but the final decision rests
with the Originator's credit specialists. Notwithstanding the foregoing, the
ability of a credit specialist to override the scorecard analysis is limited to
no more than 10% of all applications, and both the number of overrides granted
by each credit specialist and the aggregate number of overrides granted by all
credit specialists are tracked by the Originator daily in order to insure the
statistical validity of the scoring models. Detailed reporting on all aspects of
the numerical scoring model is utilized to track performance of the Originator's
retail automobile and light duty truck installment sale contract portfolio and
to enable the Originator, with the assistance of the Credit Score Analysts, to
fine tune the scoring model according to statistical indications in order to
continually assure the statistical validity of the scoring models. Approximately
__% and approximately __% of the Contracts, based on Aggregate Discounted
Contract Balance, are expected to have been underwritten
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<PAGE>
using the Credit Score Analysts' numerical scorecard and using the alphabetical
scoring model, respectively. The remaining Contracts were not underwritten using
either scoring model.
For the period ______ through ________, the Originator booked
approximately __% of all credit applications.
The amount of a retail installment sale contract generally will not exceed
(i) when secured by a new vehicle, the price paid by the dealer for such vehicle
or (ii) when secured by a used vehicle, the average wholesale value of such
vehicle stated in the most recent edition of the National Auto Dealers
Association Used Car Guide, plus in each case various taxes and fees in
connection with the sale. The Originator regularly reviews the quality of the
contracts which it purchases and periodically conducts quality audits to ensure
compliance with its established policies and procedures.]
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<PAGE>
Insurance
[The Originator requires each obligor under an automobile or light duty
truck retail installment sale contract to obtain comprehensive and collision
insurance with respect to the related financed vehicle and verifies the
existence of such insurance before it will purchase such contract. Following
such purchase, the Originator monitors the maintenance of such physical damage
insurance but does not force-place physical damage insurance if the related
obligor does not maintain such insurance. Instead, each such financed vehicle is
covered by a policy of vendor's single interest physical damage insurance in
favor of the Originator issued by ______________ (the "VSI Insurance Policy"),
which provides limited coverage (subject to deductibles) for, among other
things, (i) physical loss or damage from any external cause to such financed
vehicle and (ii) inability to locate such financed vehicle or the related
obligor. The VSI Insurance Policy is in effect from the date a contract is
purchased from the related Dealer and the premium for such VSI Insurance Policy
is paid for by the Originator. The Originator will represent and warrant in the
Receivables Acquisition Agreement, and the Sponsor will represent and warrant in
the Indenture, as to each Contract, that the related Vehicle is insured under
the VSI Insurance Policy, the premiums for which have been paid in full, and
that such VSI Insurance Policy is in full force and effect.
The Originator does not require obligors to maintain credit disability or
life or credit or health insurance or other similar insurance coverage which
provides for payments to be made on the automobile and light duty truck retail
installment sale contracts which it purchases on behalf of such obligors in the
event of disability or death. To the extent that any such insurance coverage is
obtained on behalf of an Obligor, payments received in respect of such coverage
may be applied to payments on the related Contract to the extent that the
Obligor's beneficiary chooses to do so.]
Servicing
The Receivables will be serviced by the Originator, as Servicer, pursuant
to the Receivables Acquisition Agreement.
The Receivables Acquisition Agreement requires that servicing of the
Receivables by Originator shall be carried out in the same manner in which it
services contracts and vehicles held for its own account and consistent with
customary practices of servicers in the retail automobile industry, but in
performing its duties hereunder, Originator will act on behalf and for the
benefit of the Issuer, the Trustee and the holders of the Notes, subject at all
times to the provisions of the Indenture, without regard to any relationship
which Originator or any Affiliate of Originator may otherwise have with an
Obligor. Except as permitted by the terms of any Contract following a default
thereunder, Originator shall not take any action which would result in the
interference with the Obligor's right to quiet enjoyment of the Vehicles subject
to the Contract during the term thereof.
Following each Determination Date, Originator shall advance and remit to
the Trustee, in such manner as will ensure that the Trustee will have
immediately available funds on account thereof by 11:00 a.m. New York time on
the [_______] Business Day prior to the next succeeding Payment Date, a Servicer
Advance equal to the Contract Payment due during the preceding Collection Period
with respect to each Contract (other than a Contract which became a Defaulted
Contract on or prior to such Determination Date) under which the Obligor has not
made such payment by such Determination Date; provided, however, that Originator
will not be obligated to make a Servicer Advance with respect to any Contract if
Originator, in its good faith judgment, believes that such Servicer Advance
would be a Nonrecoverable Advance. If Originator determines that any Contract
Payment it has made, or is contemplating making, would be a Nonrecoverable
Advance, Originator shall deliver to the Trustee an Officers' Certificate
stating the basis for such determination.
S-26
<PAGE>
Servicing Compensation and Payment of Expenses
For its servicing of the Receivables, Originator will be entitled to
receive a monthly Servicing Fee equal to the product of (i) one-twelfth, (ii)
___% and (iii) the Aggregate Discounted Contract Balance of all Contracts as of
the preceding Determination Date, payable out of the Collection Account, plus
Servicing Charges and Investment Earnings.
All costs of servicing each Receivable in the manner required by the
Receivables Acquisition Agreement shall be borne by Originator, but Originator
shall be entitled to retain, out of any amounts actually recovered with respect
to any Defaulted Contract [or the Vehicles subject thereto,] Originator's actual
out-of-pocket expenses reasonably incurred with respect to such Defaulted
Contract [or Vehicles]. In addition, Originator shall be entitled to receive on
each Payment Date any unreimbursed Nonrecoverable Advances or Servicer Advances
with respect to any Defaulted Contract and the Servicing Fee.
Evidence as to Compliance
The Receivables Acquisition Agreement requires that with each set of
financial statements delivered pursuant to the Receivables Acquisition
Agreement, Originator will deliver an Officers' Certificate stating (i) that the
officers signing such Certificate have reviewed the relevant terms of the
Receivables Acquisition Agreement and have made, or caused to be made under such
officers' supervision, a review of the activities of Originator during the
period covered by the statements then being furnished, (ii) that the review has
not disclosed the existence of any Servicer Event of Default or, if a Servicer
Event of Default exists, describing its nature and what action Originator has
taken and is taking with respect thereto, and (iii) that on the basis of such
review the officers signing such certificate are of the opinion that during such
period Originator has serviced the Receivables in compliance with the required
procedures except as described in such certificate.
Originator shall cause a firm of independent certified public accountants
(who may also render other services to Originator) to deliver to the Trustee,
with a copy to the Rating Agency and each holder of the Notes, within [90] days
following the end of each fiscal year of Originator, beginning with Originator's
fiscal year ending ____________, 199__, a written statement to the effect that
such firm has examined in accordance with generally accepted practices samples
of the accounts, records, and computer systems of Originator for the fiscal year
ended on the previous ________ relating to the Receivables (which accounts,
records, and computer systems shall be described in one or more schedules to
such statement), that such firm has compared the information contained in
Originator's reports delivered in the relevant period with information contained
in the accounts, records, and computer systems for such period, and that, on the
basis of such examination and comparison, such firm is of the opinion that
Originator has, during the relevant period, serviced the Receivables in
compliance with such servicing procedures, manuals, and guides and in the same
manner as it services comparable contracts for itself or others, that such
accounts, records, and computer systems have been maintained, and that such
certificates, accounts, records, and computer systems have been properly
prepared and maintained in all material respects, except in each case for (a)
such exceptions as such firm shall believe to be immaterial and (b) such other
exceptions as shall be set forth in such statement.
Other Servicing Procedures
At least [___] days prior to each Payment Date, Originator shall deliver a
report in writing (the "[Monthly] Servicer Report") to each holder of the Notes,
the Trustee and the Rating Agency.
If an Obligor has [___] Contract Payments which are due and unpaid as of
any Determination Date, such Obligor's Contract shall become a Defaulted
Contract. Where no satisfactory arrangements can be made for collection of
delinquent payments within [__] days of a Contract becoming a Defaulted
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<PAGE>
Contract, Originator shall foreclose or otherwise liquidate any such Defaulted
Contract [(together with the related Vehicles)] within [60] days of such
Contract becoming a Defaulted Contract. In connection with any foreclosure or
other liquidation, Originator will take such action as is appropriate,
consistent with Originator's administration of contracts in its own portfolio,
including such action as may be necessary to cause, or attempt to cause, the
Obligor thereunder to cure such default (if the same may be cured) or to
terminate or attempt to terminate such Contract and to recover, or attempt to
recover, all damages resulting from such default.
[Originator will use its best efforts (i) to sell or re-lease any Vehicles
subject to a Defaulted Contract in a timely manner and upon reasonable terms and
conditions so as to reduce as expeditiously as is consistent with sound
commercial practice any unreimbursed amounts drawn by the Trustee on the Reserve
Account and (ii) to sell or re-lease any Vehicles remaining subject to the lien
of the Indenture upon the expiration of the Contract to which such Vehicles is
subject, in a timely manner and in a manner consistent with that utilized by
Originator with respect to vehicles owned by it so as to realize, to the extent
possible under then prevailing market conditions, the Net Residual Value of such
Vehicles.]
[All Residual Payments realized by Originator in the performance of its
duties with respect to any item of Vehicles remaining subject to the Lien of the
Indenture (net of Originator's actual out-of-pocket expenses reasonably incurred
in such realization) shall be held in trust by Originator, as agent for the
Trustee, and turned over to the Trustee within [___] Business Days for
application in accordance with the provisions of the Indenture, provided that,
to the extent that (i) Originator has made any advances with respect to any
Contract which thereafter became a Defaulted Contract and (ii) Originator has
not otherwise been fully reimbursed for such advances, Originator shall
reimburse itself for such advances from any Residual Payments recovered with
respect to such Defaulted Contract before remitting to the Trustee any such
amounts for deposit in the Collection Account.]
Removal of the Servicer
The Receivables Acquisition Agreement will provide that Originator may not
resign from its obligations and duties as Servicer thereunder, except upon a
determination that Originator's performance of such duties is no longer
permissible under applicable law. Originator can only be removed pursuant to a
Servicer Event of Default. If a Servicer Event of Default shall have occurred
and be continuing, the Trustee shall give written notice to Originator of the
termination of all of the rights and obligations of Originator (but none of the
Originator's obligations thereunder, which shall survive any such termination)
under the Receivables Acquisition Agreement. On and after the time Originator
receives a notice of termination, the Trustee shall be the successor in all
respects to Originator in its capacity as servicer under the Receivables
Acquisition Agreement of the Receivables. The Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act, give notice of such
fact to each holder of the Notes and (i) appoint an established institution,
satisfactory to the holders of Notes evidencing not less than [_______] of the
Voting Rights, as the successor to Originator to assume all of the rights and
obligations of Originator, including, without limitation, Originator's right to
receive the Servicing Fee (but not the obligations of the Originator contained
in the Receivables Acquisition Agreement) or, (ii) if no such institution is so
appointed, petition a court of competent jurisdiction to appoint an institution
meeting such criteria as Originator.
THE TRUSTEE
The Trustee, ____________, has an office at ________________________.
The Trustee may resign, subject to the conditions set forth below, at any
time upon written notice to the Issuer, and the Servicer, in which event the
Issuer, will be obligated to appoint a successor Trustee. If no successor
Trustee shall have been so appointed and have accepted such appointment within
[30] days after the giving of such notice of resignation, the resigning Trustee
or any Noteholder may petition
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<PAGE>
a court of competent jurisdiction for the appointment of a successor Trustee.
Any successor Trustee shall meet the financial and other standards for
qualifying as a successor Trustee under the Indenture. The Noteholders
evidencing more than [__%] of the Voting Rights of the Trust may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Indenture and fails to resign after written request therefor, or is legally
unable to act, or if the Trustee is adjudicated to be insolvent. Any resignation
or removal of the Trustee and appointment of a successor Trustee will not become
effective until acceptance of the appointment by the successor Trustee.
DESCRIPTION OF THE NOTES AND INDENTURE
The Notes will be issued pursuant to the Indenture entered into by and
between the Issuer and the Trustee. The Trustee will provide a copy of the
Indenture, together with copies of the Receivables Acquisition Agreement and the
Note Agreement (collectively, the "Agreements") to Noteholders, without charge,
upon written request addressed to its Corporate Trust Office.
The following summary which describes certain provisions of the Indenture,
together with certain provisions of the Receivables Acquisition Agreement as
they relate to the Notes, does not purport to be complete, and is subject to and
qualified in its entirety by reference to such Agreements. Wherever provisions
of such Agreements are referred to, such provisions are hereby incorporated
herein by reference.
The obligations evidenced by the Notes are recourse obligations of the
Issuer only and are not recourse to the Originator, the Servicer, the Trustee or
any other Person. The Issuer will agree in the Indenture and in the Notes to pay
to the Noteholders (i) an amount of principal equal to the product of (x) the
Initial Aggregate Balance and (y) the applicable Class Percentage and (ii)
interest at the applicable Note Rate from the sources and on the terms and
conditions set forth in the Indenture, the Receivables Acquisition Agreement and
in the Notes.
Interest accrues on the Notes from Payment Date to Payment Date, and is
payable, along with required principal, on the [____] day of each month (or, if
such day is not a Business Day, the immediately following Business Day).
The Notes will be issued in fully registered form only, as authenticated
by the Trustee. Each [Class A] Note will evidence $___________ or more of the
Initial Aggregate Balance and each [Class B] Note will evidence $___________ or
more of the Initial Aggregate Balance. The Initial Aggregate Balance shall be
____% of the Initial Aggregate Discounted Contract Balance and the Original
Pre-Funded Amount. The Notes are transferable and exchangeable through the
Trustee at its Corporate Trust Office. No service charge will be made for any
registration of transfer or exchange of Notes, but a sum sufficient to cover any
tax or other governmental charge may be required to be paid by the Noteholder.
Payments on the Notes are required to be made by the Trustee on each
Payment Date, to persons in whose names Notes are registered as of the Record
Date.
The first Payment Date for the Notes will be _______ [__, 199_]. Payments
are required to be made by the Trustee by wire transfer of immediately available
funds, to Noteholders entitled thereto at the account for such Noteholder
appearing in the Note Register on the Record Date or, if no such account is so
specified, then by check mailed to the address for such Noteholder appearing in
the Note Register on such Record Date.
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<PAGE>
THE BOND INSURANCE POLICY
AND THE BOND INSURER
The following information has been furnished by the Bond Insurer for use
in this Prospectus Supplement.
The Bond Insurer, in consideration of the payment of the premium and
subject to the terms of the Bond Insurance Policy, thereby unconditionally and
irrevocably guarantees to any Noteholder (as described below) that an amount
equal to the full and complete Insured Payments (as described below) will be
received by the Trustee, on behalf of the Noteholders, for distribution to each
Noteholder of each Noteholder's proportionate share of the Insured Payment.
"Insured Payment" means (A) with respect to any Payment Date, the Insufficiency
Amount, if any, remaining after making all required transfers to the Collection
Account from the Reserve Account pursuant to the Trust Agreement, and (B) the
reimbursement of any portion of any interest or principal payment previously
paid which is subsequently recovered from the Trustee or any Noteholder pursuant
to a final nonappealable judgment by a court of competent jurisdiction to the
effect that such payment constitutes a voidable preference to such Noteholder or
the Trustee within the meaning of any applicable bankruptcy law. Insured
Payments shall be made only at the time set forth in the Bond Insurance Policy
and no accelerated Insured Payments shall be made regardless of any acceleration
of the Notes, unless such acceleration is at the sole option of the Bond
Insurer.
The Bond Insurer will pay any amount payable under the Bond Insurance
Policy pursuant to clause (A) above no later than [12:00 noon New York City]
time on the later of the Payment Date on which the related Insufficiency Amount
is due or the Business Day following receipt on a Business Day by ____________,
as Fiscal Agent for the Bond Insurer, or any successor fiscal agent appointed by
the Bond Insurer (the "Fiscal Agent") of a Notice of Nonpayment; provided that
if such Notice of Nonpayment is received after [12:00 noon New York City] time
on such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice of Nonpayment received by the Fiscal Agent is not in
proper form or is otherwise insufficient for the purpose of making claim under
the Bond Insurance Policy it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Bond Insurer or the Fiscal
Agent, as the case may be, shall promptly so advise the Trustee and the Trustee
may submit an amended Notice of Nonpayment.
The Bond Insurer will pay any amount payable under the Bond Insurance
Policy pursuant to clause (B) above voided as a preference under any applicable
bankruptcy law on the Business Day following receipt on a Business Day by the
Fiscal Agent of (i) a certified copy of the final order of the court which
exercised jurisdiction to the effect that the Trustee or the Certificateholder
is required to return principal or interest paid on the Notes because such
payments were voidable preferences under applicable bankruptcy law, (ii) an
opinion of counsel satisfactory to the Bond Insurer that such order is final and
not subject to appeal, (iii) an assignment in such form as is reasonably
required by the Bond Insurer, irrevocably assigning to the Bond Insurer all
rights and claims of the Noteholder relating to or arising under the Notes
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Certificate Insurer as agent for such Noteholder in any legal
proceeding related to payment of principal or interest distributed thereunder,
such instruments being in a form satisfactory to the Bond Insurer, provided that
if such documents are received after [12:00 noon New York City] time on such
Business Day, they will be deemed to be received on the following Business Day.
Such payments shall be disbursed to the receiver or trustee in bankruptcy named
in the final order of the court exercising jurisdiction on behalf of the
Noteholder and not to any Noteholder directly unless such Noteholder has
returned principal or interest paid on the Notes to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Noteholder.
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Insured Payments due under the Note Insurance Policy unless otherwise
stated therein will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Noteholders by wire transfer of immediately available funds in the amount of
the Insured Payment less, in respect of Insured Payments described in (B) of the
definition thereof, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor. The Bond Insurer's obligations
under the Bond Insurance Policy shall be discharged to the extent funds are
transferred to the Trustee for distribution to such Noteholders as provided
therein whether or not such funds are properly applied by the Trustee.
The Fiscal Agent is the agent of the Note Insurer only and the Fiscal
Agent shall in no event be liable to Noteholders for any acts of the Fiscal
Agent or any failure of the Note Insurer to deposit or cause to be deposited,
sufficient funds to make payments due under the Note Insurance Policy.
Subject to the prior right of the Noteholders to the receipt of the Note
Interest, the Overdue Interest, the Principal Distribution Amount and the
Overdue Principal on each Payment Date, the Note Insurer shall be entitled to
reimbursement of amounts previously paid by the Note Insurer under the Bond
Insurance Policy plus interest thereon.
As used in this section of the Prospectus Supplement, the following terms
shall have the following meanings:
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee under the Trust Agreement is located are
authorized or obligated by law or executive order to close.
"Insufficiency Amount" is the amount by which the Required Payments in
respect of the Notes for the applicable Payment Date exceeds the Available Funds
for distribution to Noteholders on the Business Day preceding such Payment Date.
"Notice of Nonpayment" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the form attached to
the Bond Insurance Policy, the original of which is subsequently delivered by
registered or certified mail, from the Trustee specifying the Insufficiency
Amount which shall be due and owing on the Payment Date.
"Noteholder" means any Noteholder as defined in the Indenture (other than
the Originator, the Servicer or any affiliate thereof) who, on the applicable
Payment Date, is entitled under the terms of the Notes to payment thereunder.
Capitalized terms used in the Bond Insurance Policy and not otherwise
defined therein shall have the respective meanings set forth in the Indenture as
of the date of execution of the Bond Insurance Policy, without giving effect to
any subsequent amendment or modification to the Indenture.
Any notice under the Bond Insurance Policy or service of process on the
Fiscal Agent of the Bond Insurer maybe made at the address listed below for the
Fiscal Agent of the Bond Insurer or such other address as the Bond Insurer shall
specify in writing to the Trustee.
The notice address of the Fiscal Agent is ________________________,
Attention: ____________ or such other address as the Fiscal Agent shall specify
to the Trustee in writing.
The Bond Insurance Policy is being issued under and pursuant to, and shall
be construed under, the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
The insurance provided by the Bond Insurance Policy is not covered by the
Property/Casualty Insurance Security specified in Article 76 of the New York
Insurance Law.
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The Bond Insurance Policy is noncancellable for any reason. The premium on
the Bond Insurance Policy is not refundable for any reason including payment, or
provision being made for payment, prior to maturity of the Certificates.
The Bond Insurer does not accept any responsibility for the accuracy or
completeness of this Prospectus Supplement or any information or disclosure
contained herein, or omitted herefrom, other than with respect to the accuracy
of the information regarding the Bond Insurance Policy and Bond Insurer set
forth under this heading "The Bond Insurance Policy and the Bond Insurer".
RECEIVABLES ACQUISITION AGREEMENT
Conveyance of Collateral
On the Closing Date, the Originator will transfer to the Issuer, without
recourse, all of its right, title and interest in and to the Collateral (other
than the Additional Receivables. On behalf of the Issuer, the Trustee will cause
the Issuer to issue the Notes offered hereby to the initial investors.
The Receivables are described on the list of Receivables (the "List of
Receivables") heretofore delivered to the Trustee with respect to the
Receivables. The List of Receivables will include for each Contract, a number
identifying the Contract, the Discounted Contract Balance, the Obligor's name
and address, the original term of each Contract, the remaining term of each
Contract, the Discounted Contract Balance as of the Cut-Off Date and the
original balance of each Contract. The List of Receivables will be available for
inspection by any Noteholder at the principal executive office of the Servicer.
The Originator has heretofore delivered the Contract Files to the Trustee
as required by the Receivables Acquisition Agreement. The Trustee will retain
possession of the Contracts and the Contract Files, and the Servicer will retain
copies of any other documents which relate to the Contracts, any related
evidence of insurance and payment, delinquency and related reports maintained by
the Servicer in the ordinary course of business with respect to each Contract.
The Servicer has caused its electronic ledger to be marked to show that such
Contracts have been transferred by the Originator to the Issuer.
Representations and Warranties of the Originator
The Originator will make certain warranties in the Receivables Acquisition
Agreement for the benefit of the Trustee, the Noteholders and the Issuer, among
other things: that (i) the information provided with respect to the related
Receivables is correct in all material respects; (ii) the Obligor on each
related Receivable is required to maintain physical damage insurance covering
the Vehicles in accordance with Originator's normal requirements; (iii) at the
applicable Closing Date, the related Receivables are free and clear of all
security interests, liens, charges and encumbrances and no offsets, defenses, or
counterclaims have been asserted or threatened; (iv) at the applicable Closing
Date, each of the related Contracts is secured by a [first perfected] security
interest in the Vehicles in favor of Originator; and (v) each Receivable, at the
time it was originated, complied and, at the applicable Closing Date, complies
in all material respects with applicable federal and state laws.
Indemnification
The Receivables Acquisition Agreement provides that Originator will defend
and indemnify any servicer, the Trustee, the Issuer and the Noteholders against
any and all losses, claims, damages and liabilities to the extent that the same
have been suffered by any such party by virtue of a breach by the Originator of
its obligations under the Receivables Acquisition Agreement.
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Pursuant to the Receivables Acquisition Agreement, neither the Servicer
nor any of the directors, officers, employees or agents of the Servicer shall
incur any liability to the Issuer, the Trustee or the holders of the Notes, for
any action taken or not taken in good faith pursuant to the terms of the
Receivables Acquisition Agreement with respect to any Contract (including any
Defaulted Contract) [or the Vehicles subject thereto;] provided, however, that
this provision shall not protect the Servicer or any such person against any
breach of warranties or representations made by it in the Receivables
Acquisition Agreement or in any certificate delivered in conjunction with the
purchase of the Notes pursuant to the Note Agreement or for any liability which
would otherwise be imposed for any action or inaction resulting from willful
misconduct or bad faith or resulting from gross negligence in the performance of
its duties thereunder.
Indenture Accounts; Investment of Funds
The Trustee, pursuant to the Indenture, is required to establish and
maintain at all times the Collection Account, the [Class A] Distribution
Account, the [Class B] Distribution Account, the [Class C] Distribution Account,
[the Pre-Funding Account, the Capitalized Interest Account and the Lockbox
Account,] each in the name of the Trustee and for the benefit of the Originator,
the Noteholders and the Servicer, as their interests may appear. Each such
account will be one or more segregated trust accounts held by the Trustee. The
Indenture permits the Issuer to direct the investment of amounts in the
Collection Account, [the Pre-Funding Account, the Capitalized Interest Account
and the Reserve Account.]
[Pre-Funding Account and Capitalized Interest Account
On the Closing Date, the Trustee will deposit into the Pre-Funding Account
an amount equal to the difference between the Initial Aggregate Balance and the
Aggregate Discounted Contract Balance of all Contracts actually acquired on the
Closing Date. On each Additional Receivable Transfer Date until the Final
Additional Closing Date, the Trustee will distribute from the Pre-Funding
Account to the Originator an amount equal to the Discounted Contract Balance of
the Additional Receivables sold to the Issuer on such Additional Receivable
Transfer Date upon an Issuer Order detailing satisfaction of the conditions set
forth in the Receivables Acquisition Agreement with respect to such transfer.
If the Pre-Funding Account has not been reduced to zero on the Final
Additional Closing Date, the Servicer will instruct the Trustee to withdraw from
the Pre-Funding Account on such Final Additional Closing Date the remaining
Pre-Funded Amount and such amount shall be applied as a prepayment on the Notes
to Noteholders in accordance with their respective Class Percentages.
On the Closing Date, the Trustee shall deposit in the Capitalized Interest
Account an amount equal to $_________ (the "Original Capitalized Interest
Amount") from the proceeds of the sale of the Offered Notes. On each Payment
Date through and including the Payment Date immediately following the Final
Additional Closing Date (or, if the Final Additional Closing Date is also a
Payment Date, then on the Final Additional Closing Date), the Trustee shall
transfer from the Capitalized Interest Account to the Collection Account the
Capitalized Interest Requirement for such Payment Date.
On each Payment Date prior to the Final Additional Closing Date, the
Trustee, upon an Issuer Order, shall withdraw from the Capitalized Interest
Account and pay on such Payment Date to the Issuer the Overfunded Interest
Amount for such Payment Date. On the Payment Date following the Final Additional
Closing Date (or, if the Final Additional Closing Date is also a Payment Date,
then on the Final Additional Closing Date), any amounts remaining in the
Capitalized Interest Account, after taking into account the transfers on such
Payment Date described above, shall be paid to the Issuer on such Payment Date
and the Capitalized Interest Account shall be closed.]
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Reserve Account
On the Closing Date, the Issuer shall direct the Trustee to deposit in the
Reserve Account an amount equal to ___% of the Initial Aggregate Balance from
proceeds of the sale of the Offered Notes.
If by 12:00 noon, New York time, on the Business Day preceding any Payment
Date, Available Funds are insufficient to permit, on such Payment Date, the
distribution of all Required Payments under the Indenture, then the Trustee
shall transfer, not later than the end of such Business Day, from the Reserve
Account to the Collection Account such amount as shall be necessary to make all
Required Payments on such Payment Date.
On each Payment Date, funds on deposit in the Reserve Account (after
withdrawal of any Reserve Account Payment) in excess of the Maximum Reserve
Amount will be distributed to the [Class C] Distribution Account to the extent
of [Class C] Distributions and any remainder shall be distributed to the Issuer
in accordance with the Indenture; provided, however, that if a Restricting Event
exists on such Payment Date, all funds on deposit in the Reserve Account (after
withdrawal of any Reserve Account Payment) shall remain in the Reserve Account,
subject to use as otherwise provided in the Indenture. The Maximum Reserve
Amount shall, on any Payment Date, be equal to the lesser of (i) ___% of the
Initial Aggregate Balance or (ii) the sum of (x) the Outstanding [Class A] Note
Balance and (y) the Outstanding [Class B] Note Balance less (z) the Outstanding
[Class C] Note Balance. If the amount on deposit in the Reserve Account is
insufficient to pay the Required Payments, no other assets will be available on
the related Payment Date for the payment of the deficiency. Upon discharge of
the Indenture, after all obligations to the Noteholders have been fully and
irrevocably satisfied, any balance remaining in the Reserve Account shall be
paid to the Issuer.
Flow of Funds
On or before the Closing Date, the Servicer shall establish, in the name
of the Servicer, a post office box (the "Lockbox Facility") for the receipt
directly from Obligors of all Contract Payments, on or in respect of each
Receivable. No Person other than the Servicer shall be permitted to have access
to such Lockbox Facility. On [each] Business Day, the Servicer shall cause all
items received in the Lockbox Facility since the [preceding] Business Day to be
deposited into the Lockbox Account maintained with the Servicer in the name of
(and under the sole control of) the Servicer. All Contract Payments and other
payments relating to a Contract received in the Lockbox Facility and so
deposited in the Lockbox Account shall constitute part of the Collateral.
The Servicer shall, on ___ Business Day pursuant to Section _____ of the
Receivables Acquisition Agreement (each such day, a "Required Deposit Date")
withdraw from the Lockbox Account and deposit in the Collection Account the
Transaction Payment Amount.
The Trustee shall deposit the following into the Collection Account:
[(i) each Contract Payment received by the Trustee in the Lockbox
Facility or otherwise received by the Trustee, including all Contract
Payments deposited with the Trustee by the Originator on the Closing Date
pursuant to Section _____ of the Note Agreement;
(ii) the amount of each Delinquency Payment or portion thereof
received by the Trustee (whether from the Servicer as a Servicer Advance
pursuant to Section ______ of the Receivables Acquisition Agreement, from
transfers from the Reserve Account, or from a combination thereof);
(iii) the amount of each Default Payment or portion thereof received
by the Trustee (whether from transfers from the Reserve Account or
otherwise); and the proceeds of any
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repurchase of Contract [and Vehicles] pursuant to Section ____ of the
Receivables Acquisition Agreement;
(iv) any Insurance Proceeds received in the Lockbox Facility or
otherwise received by the Trustee;
(v) the Pre-Funding Earnings, if any, on each Payment Date; and
(vi) the Capitalized Interest Requirement, if any, on each Payment
Date from amounts on deposit in the Capitalized Interest Account.]
Unless the Notes have been declared due and payable pursuant to Section
______ of the Indenture and moneys collected by the Trustee are being applied in
accordance with Section ______ of the Indenture, the Trustee shall on each
Payment Date withdraw and pay or cause to be paid all Available Funds and any
Reserve Account Payment deposited in the Collection Account (including any
investment income with respect to monies on deposit in the Collection Account)
the amounts required, for application in the following order of priority:
[(i) To the Servicer, the Servicing Fee due to the Servicer on such
Payment Date and any unreimbursed Nonrecoverable Advances or Servicer
Advances, with respect to Defaulted Receivables;
(ii) To the [Class A] Distribution Account, in the following order
of priority, the sum of:
(a) the [Class A] Overdue Interest, if any;
(b) the [Class A] Monthly Interest;
(c) if such Payment Date follows the Final Additional
Closing Date, the product of (x) the amount, if any,
remaining in the Pre-Funding Account on such Payment
Date and (y) the [Class A] Percentage;
(d) the [Class A] Overdue Principal, if any; and
(e) the [Class A] Monthly Principal.
(iii) To the [Class B] Distribution Account, in the following order
of priority, the sum of:
(a) the [Class B] Overdue Interest, if any;
(b) the [Class B] Monthly Interest;
(c) if such Payment Date follows the Final Additional
Closing Date, the product of (x) the amount, if any,
remaining in the Pre-Funding Account on such Payment
Date and (y) the [Class B] Percentage;
(d) the [Class B] Overdue Principal, if any; and
(e) the [Class B] Monthly Principal.
(iv) To the Reserve Account, an amount equal to the excess, if any,
of the Maximum Reserve Amount for the next succeeding Payment Date over
the amount on deposit in the
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Reserve Account (after giving effect to any withdrawals from the Reserve
Account on such Payment Date);
(v) To the [Class C] Distribution Account, in the following order of
priority, the sum of:
(a) the [Class C] Overdue Interest, if any;
(b) the [Class C] Monthly Interest;
(c) if such Payment Date follows the Final Additional
Closing Date, the product of (x) the amount remaining,
if any, in the Pre-Funding Account on such Payment Date
and (y) the [Class C] Percentage;
(d) the [Class C] Overdue Principal, if any; and
(e) the [Class C] Monthly Principal;]
[provided, however, that if a Restricting Event shall have occurred and be
continuing on such Payment Date, any such amounts otherwise payable under
this clause (v) shall be deposited in the Reserve Account.
(vi) To the [Class A] Noteholders, pro rata, the amount then on
deposit in the [Class A] Distribution Account;
(vii) To the [Class B] Noteholders, pro rata, the amount then on
deposit in the [Class B] Distribution Account;
(viii) To the [Class C] Noteholders, pro rata, the amount then on
deposit in the [Class C] Distribution Account; and
(ix) All remaining amounts in the Collection Account shall be paid
to the Issuer; provided, however, that if a Restricting Event shall have
occurred and be continuing on such Payment Date, any such amounts
otherwise payable under this clause (ix) shall be deposited in the Reserve
Account.]
Reports to Noteholders
Concurrently with each payment to the Noteholders, the Trustee shall mail
to the Issuer, the Originator, the Servicer and each Noteholder the following
information: (i) the Monthly Servicer Report furnished to the Trustee by the
Servicer following such Payment Date pursuant to Section ____ of the Receivables
Acquisition Agreement or, if such report has not been received, a written
statement to such effect; and (ii) the amount on deposit as of such Payment Date
in the Collection Account, the Reserve Account, the Pre-Funding Account and the
Capitalized Interest Account, in each case after giving effect to all of the
withdrawals and applications or transfers required on such Payment Date pursuant
to the Indenture.
Optional Redemption
The Indenture provides that the Notes may be redeemed by the Issuer, in
whole but not in part, as to the then Outstanding Offered Notes, at any time
after (i) the [Class A] Note Balance is less than [___%] of the Initial [Class
A] Note Balance and (ii) the [Class B] Note Balance is less than [___%] of the
Initial [Class B] Note Balance, at the Redemption Price.
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The Issuer, by an Authorized Officer, shall set the redemption date and
the redemption record date and give notice thereof to the Trustee.
Installments of interest and principal due on or prior to a redemption
date shall continue to be payable to the Holders of Offered Notes called for
redemption as of the relevant Record Dates according to their terms and the
provisions of the Indenture. The election of the Issuer to redeem any Offered
Notes as described in this Section shall be evidenced in writing by an
Authorized Officer directing the Trustee to make the payment of the Redemption
Price on all of the Offered Notes to be redeemed from monies deposited with the
Trustee pursuant to the Indenture.
Indenture Events of Default and Acceleration
"Indenture Event of Default" wherever used herein means any one of the
following events:
(i) default in the payment of any principal of or interest and
premium, if any, upon any Outstanding Note when it becomes due and
payable;
(ii) default in the performance, or breach, of any covenant set
forth in the Indenture;
(iii) default in the performance, or breach, of any covenant of the
Issuer in the Indenture, the Underwriting Agreement or the Receivables
Acquisition Agreement and continuance of such default or breach for a
period of [___] days after receipt of the written notice thereof;
(iv) if any representation or warranty of the Issuer or the
Originator made in the Indenture, the Note Agreement or the Receivables
Acquisition Agreement shall prove to be incorrect in any material respect
as of the time when the same shall have been made;
(v) voluntary bankruptcy;
(vi) involuntary bankruptcy;
(vii) the rendering against the Issuer of a final judgment, decree
or order for the payment of money in excess of [$________] and the
continuance of such judgment, decree or order unsatisfied for any period
of [___] consecutive days without a stay of execution.
If an Indenture Event of Default occurs and is continuing, then and in
every such case the Trustee or the holders of Notes evidencing not less than
[______%] of Voting Rights may declare the unpaid principal amount of all the
Notes to be due and payable immediately, by a notice in writing to the Issuer
(and to the Trustee if given by such Noteholders), and upon any such declaration
such principal amount shall become immediately due and payable together with all
accrued and unpaid interest thereon, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Issuer.
Remedies
If an Indenture Event of Default occurs and is continuing of which an
Authorized Officer has actual knowledge, the Trustee shall give notice to each
Noteholder as set forth in Section _______ of the Indenture and shall solicit
the Noteholders for advice. The Trustee shall then take such action, if any, as
may be directed by the holders of Notes evidencing not less than [______%] of
Voting Rights. Following any acceleration of the Notes, the Trustee shall have
all of the rights, powers and remedies with respect to the Collateral as are
available to secured parties under the Uniform Commercial Code or other
applicable law. Such rights, powers and remedies may be exercised by the Trustee
in its own name as trustee of an express trust.
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Servicer Events of Default
Any of the following acts or occurrences shall constitute a Servicer Event
of Default by the Servicer under the Receivables Acquisition Agreement:
(i) failure on the part of the Servicer to remit any payment to the
Trustee within the time period required by the Receivables Acquisition
Agreement or to make any Servicer Advance;
(ii) failure on the part of either the Servicer or (so long as the
Originator is the Servicer) the Originator to observe or perform in any
material respect any other of their respective covenants or agreements in
the Receivables Acquisition Agreement which failure continues unremedied
for a period of [___] days;
(iii) if any representation or warranty of the Originator or the
Servicer made in the Receivables Acquisition Agreement or in any
certificate or other writing delivered pursuant thereto or the Note
Agreement or made by the Trustee or any other successor to the Servicer
(the "Successor Servicer") in connection with such Successor Servicer's
assumption of the duties of the Servicer shall prove to be incorrect in
any material respect as of the time when the same shall have been made;
(iv) voluntary bankruptcy;
(v) involuntary bankruptcy;
(vi) the failure of the Servicer to make one or more payments due
with respect to recourse debt or other recourse obligations, which debt or
obligations in the aggregate exceed [$__________] or the occurrence of any
event or the existence of any condition, the effect of which event or
condition is to cause (or permit one or more Persons to cause) more than
[$_________] of aggregate recourse debt or other recourse obligations of
the Servicer to become due before its (or their) stated maturity or before
its (or their) regularly scheduled dates of payment so long as such
failure, event or condition shall be continuing and shall not have been
waived by the Person or Persons entitled to performance; and
(vii) the rendering against the Servicer of a final judgment, decree
or order for the payment of money in excess of [$_________] and the
continuance of such judgment, decree or order unsatisfied and in effect
for any period of [___] consecutive days without a stay of execution.
Rights Upon an Event of Servicing Termination
If a Servicer Event of Default shall have occurred and be continuing, the
Trustee shall, upon the request of the holders of Notes evidencing more than
[___%] of the Voting Rights, give written notice to the Servicer of the
termination of all of the rights and obligations of the Servicer (but none of
the Originator's obligations thereunder, which shall survive any such
termination) under the Receivables Acquisition Agreement. On the receipt by the
Servicer of such written notice, all rights and obligations of the Servicer
under the Receivables Acquisition Agreement, including without limitation the
Servicer's right thereunder to receive unaccrued Servicing Fees, but none of the
Originator's obligations thereunder, shall cease and the same shall pass to and
be vested in, and assumed by, the Trustee pursuant to and under the Receivables
Acquisition Agreement and the Indenture; and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and assignment of any Contract [and the related
Vehicles] or such passing, vesting or assumption or to cause Obligors to remit
all future Contract Payments and other amounts due under any Contract to such
account as shall be specified by the Trustee.
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On and after the time the Servicer receives a notice of termination, the
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under the Receivables Acquisition Agreement of the Receivables and,
to such extent, shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof (but not the obligations of the Originator contained therein which shall
survive any such termination as above provided) and shall be entitled to receive
from the Issuer the Servicing Fee provided for in the Receivables Acquisition
Agreement; provided that the Trustee shall in no way be responsible or liable
for any action or actions of the Servicer before the time the Servicer receives
such a notice of termination.
Amendment of Agreements
Indenture
With the consent of the holders of Notes evidencing not less than
[_______%] of Voting Rights, by act of said Noteholders delivered to the Issuer
and the Trustee, and with the consent of the Issuer, by an Issuer Order, the
Trustee may enter into an amendment to the Indenture or an indenture or
indentures supplemental thereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Noteholders under the Indenture.
Without the consent of Noteholders, amendments may be made by the Issuer and the
Trustee to cure any ambiguity, to correct or supplement any provision that is
inconsistent with another provision or to add or amend any provision with
respect to matters or questions arising under the Indenture; provided, however,
that no amendment to the Indenture or supplemental indenture may modify the
amount of, or the timing of payment of, any amount due any Noteholder without
the consent of such Noteholder, or any other rights of the holders of a class of
Notes, without the consent of [_______%] of the Outstanding Note Balance of the
Notes of such class; and provided further that no supplemental indenture may (i)
modify any provision of the Indenture requiring the consent of all Noteholders
or (ii) release any of the Collateral from the lien of the Indenture or modify
Sections ______ or ______ of the Indenture without the consent of all
Noteholders.
Receivables Acquisition Agreement
The terms of the Receivables Acquisition Agreement shall not be waived,
modified or amended without the written consent of the party against whom such
waiver, modification or amendment is claimed and, in any case, the Trustee
(acting upon the instructions of the holders of Notes evidencing not less than
[_______%] of Voting Rights), provided however, that amendments may be made by
the Issuer and the Trustee to cure any ambiguity, to correct or supplement any
provision that is inconsistent with another provision or to add or amend any
provision with respect to matters or questions arising under the Receivables
Acquisition Agreement, without the consent of such Noteholders.
Duties and Immunities of the Trustee
The Trustee will make no representations as to the validity or sufficiency
of the Indenture, the Notes (other than the authentication thereof) or of any
Receivable or related document. The Trustee will be required to perform only
those duties specifically required of it under the Indenture. However, upon
receipt of the various resolutions, certificates, statement, opinions, reports,
documents, orders or other instruments required to be furnished to it, the
Trustee will be required to examine them to determine whether they conform as to
form to the requirements of the Indenture.
No recourse is available based on any provision of the Indenture, the
Notes or any Receivable or assignment thereof against the Trustee, and the
Trustee has no personal obligation, liability or duty whatsoever to any
Noteholder or any other person with respect to any such claim and such claim
shall be asserted solely against the Collateral or any indemnitor, except for
such liability as is determined to have resulted from the Trustee's own gross
negligence or willful misconduct.
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The Issuer agrees to pay to the Trustee from time to time such
compensation for all services rendered by it under the Indenture as the Issuer
and the Trustee have agreed in writing prior to the Closing Date (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), such payment to be made
independent of the other payment obligations of the Issuer thereunder; and,
except as otherwise expressly provided in the Indenture, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements, and
advances incurred or made by the Trustee in accordance with any provision of the
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement,
or advance as may be attributable to its negligence or bad faith.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes will be directly related to
the scheduled rate of principal payments on the underlying Contracts. If
purchased at a price of other than par, the yield to maturity will also be
affected by the rate of principal payments. The principal payments on such
Contracts may be in the form of scheduled principal payments or liquidations due
to default, casualty and the like. Any such payments will result in
distributions to Noteholders of amounts which would otherwise have been
distributed over the remaining term of the Contracts. In general, the rate of
such payments may be influenced by a number of other factors, including general
economic conditions. The rate of payment of principal may also be affected by
any removal of the Contracts from the pool and the deposit of the related
Prepayment Amount or Repurchase Amount into the Collection Account.
The Contracts [generally] do not provide for the right of the Obligor to
prepay. Under the Receivables Acquisition Agreement, the Servicer will be
permitted to allow such Prepayments in full or in part, provided that no
Prepayment of a Contract will be allowed in an amount less than the Prepayment
Amount.
The effective yield to Noteholders will depend upon, among other things,
the price at which the Notes are purchased, the amount of and rate at which
principal, including both scheduled and nonscheduled payments thereof, is paid
to the Noteholders. The yield to Noteholders will be affected by lags between
the time interest accrues to Noteholders and the time the related interest
income is received by the Noteholders.
CERTAIN FEDERAL AND STATE INCOME TAX CONSIDERATIONS
The following summary is a general discussion of certain federal income
tax consequences under the Internal Revenue Code of 1986 (the "Code") of the
purchase, ownership and disposition of the Offered Notes offered hereunder. It
is based upon the provisions of the Code, the Treasury regulations thereunder,
and published rulings and court decisions in effect as of the date hereof, all
of which authorities are subject to change or differing interpretations, which
could apply retroactively. The discussion below does not purport to deal with
federal income tax consequences applicable to all categories of investors and is
directed solely to [Class A] Noteholders and [Class B] Noteholders that hold the
Offered Notes as capital assets within the meaning of section 1221 of the Code,
and acquire such Offered Notes for investment and not as a dealer or for resale.
Further, this discussion does not address every aspect of the federal income tax
laws that may be relevant to a [Class A] Noteholder or a [Class B] Noteholder in
light of its particular investment circumstances or to certain types of [Class
A] Noteholders or [Class B] Noteholders subject to special treatment under the
federal income tax laws (for example, banks, insurance companies and foreign
investors).
[Class A] Noteholders and [Class B] Noteholders and preparers of tax
returns should be aware that under applicable Treasury regulations a provider of
advice on specific issues of law is not considered
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an income tax return preparer unless the advice is (i) given with respect to
events that have occurred at the time the advice is rendered and is not given
with respect to the consequences of contemplated actions, and (ii) is directly
relevant to the determination of an entry on a tax return. Accordingly, [Class
A] Noteholders and [Class B] Noteholders should consult their own tax advisors
and tax return preparers regarding the preparation of any item on a tax return,
even where the anticipated tax treatment has been discussed herein.
The Servicer and the Issuer make no representations regarding the tax
consequences of purchase, ownership or disposition of the Offered Notes under
the tax laws of any state, locality or foreign jurisdiction. Investors
considering an investment in the Offered Notes should consult their own tax
advisors regarding such tax consequences. All investors also should consult
their own tax advisors in determining the federal, state, local and foreign and
any other tax consequences to them of an investment in the Offered Notes and the
purchase, ownership and disposition thereof.
Characterization of the Offered Notes as Indebtedness
Dewey Ballantine, special tax counsel to the Issuer, has advised the
Issuer that in its opinion, assuming compliance with the provisions of the
Indenture in all material respects, and based on the application of existing
law, the provisions of the Indenture, the Receivables Acquisition Agreement and
other relevant documents, the facts set forth above in this Prospectus and
additional information (including [valuation assumptions relating to the
Vehicles] and financial calculations relating to the Contracts provided by the
Originator), the Offered Notes will be treated as indebtedness for federal
income tax purposes.
Taxation of [Class A] Noteholders and [Class B] Noteholders
Assuming that the Offered Notes are characterized as indebtedness,
generally, interest on the Offered Notes will be taxable as ordinary income for
federal income tax purposes when received by a [Class A] Noteholder or [Class B]
Noteholder using the cash method of accounting and when accrued by a [Class A]
Noteholder or [Class B] Noteholder using the accrual method of accounting.
If a portion of the purchase price of an Offered Note paid by a [Class A]
Noteholder or [Class B] Noteholder reflects interest that accrued on such Note
prior to the Closing Date ("pre-issuance accrued interest"), the interest
payable on the first Payment Date will include such pre-issuance accrued
interest. If applicable, for purposes of information returns to the [Class A]
Noteholders and [Class B] Noteholders and the Internal Revenue Service (the
"IRS"), the Servicer currently intends to treat the applicable portion of the
stated interest payable on the first Payment Date as a return of such
pre-issuance accrued interest (as a separate asset), rather than as an amount
payable on the Offered Note. This position is based upon the rules governing
original issue discount that are set forth in proposed Treasury regulations (the
"[Proposed OID Regulations"]) issued under sections [1271-1273 and 1275 of the
Code.] However, the [Proposed OID Regulations] suggest that such pre-issuance
accrued interest also may be treated as included in the issue price of the Note
and that, under such alternative treatment, the portion of the interest paid on
the first Payment Date in excess of interest accrued for a number of days
corresponding to the number of days from the Closing Date to the first Payment
Date should be included in the stated redemption price of the Note for purposes
of the original issue discount rules under the [Proposed OID Regulations.] It is
unclear whether a [Class A] Noteholder or [Class B] Noteholder could adopt such
alternative treatment unilaterally. Accordingly, [Class A] Noteholders and
[Class B] Noteholders should consult their own tax advisors to determine the
issue price and stated redemption price at maturity of an Offered Note and the
consequences thereof under the original issue discount rules. The [Proposed OID
Regulations] are subject to change and are not binding authority before their
adoption as final or temporary regulations. [The Proposed OID Regulations are
proposed to be effective sixty days after the date their publication as final
regulations, and prior proposed regulations already have been withdrawn.]
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<PAGE>
Original Issue Discount. [While it is not anticipated that the Offered
Notes will be issued with original issue discount within the meaning of section
1273 of the Code ("OID"),] if the Offered Notes are in fact issued at a
discount, the following rules will apply. The excess of the principal amount of
the Offered Notes over their initial issue price (in this case, with respect to
each Offered Note the price paid by the first buyer of such Offered Note) will
constitute OID. [Class A] Noteholders and [Class B] Noteholders must include OID
(unless the amount of such OID is treated as de minimis) in income as interest
over the term of the Offered Note under a constant yield method. In general, OID
must be included in income in advance of the receipt of cash representing that
income. Any de minimis OID on the Offered Notes will be required to be allocated
among the principal payments to be made on such Offered Notes, and the portion
of such discount allocated to each principal payment will be required to be
reported as income as each principal payment is made.
In the case of a debt instrument as to which the repayment of principal
may be accelerated as a result of the prepayment of other obligations securing
the debt instrument, under section 1272(a)(6) of the Code the periodic accrual
of OID is determined by taking into account (i) a reasonable prepayment
assumption in accruing OID (generally, the assumption used to price the debt
offering) and (ii) adjustments in the accrual of OID when prepayments do not
conform to the prepayment assumption, and regulations could be adopted applying
those provisions to the Offered Notes. It is unclear whether those provisions
would be applicable to the Offered Notes in the absence of such regulations or
whether use of a reasonable prepayment assumption may be required or permitted
without reliance on these rules. If this provision applies to the Offered Notes,
the amount of OID that will accrue in any given "accrual period" may either
increase or decrease depending upon the actual prepayment rate. In the absence
of such regulations, the Servicer currently intends that any information reports
or returns to the IRS and the [Class A] Noteholders and [Class B] Noteholders
regarding OID, if any, will be based on the assumption that there will be no
prepayments under the Contracts. However, neither the Issuer, the Trustee, the
Underwriter(s) nor the Originator will make any representation regarding the
prepayment rate of the Contracts. See "Prepayment and Yield Considerations."
Accordingly, [Class A] Noteholders and [Class B] Noteholders are advised to
consult their own tax advisors regarding the impact of any prepayments under the
Contracts (and the OID rules) if the Offered Notes are issued with OID.
If any Prepayment Premium is payable on any Payment Date as a result of
certain prepayments under the Offered Notes, as described above (see "Summary of
Memorandum -- Prepayment Premium" and "Prepayment and Yield Considerations"), it
is unclear when such amounts will be taxable to a [Class A] Noteholder or [Class
B] Noteholder. It is possible that such holder of an Offered Note would not be
required to include any such amounts in income unless and until such Prepayment
Premium becomes payable to such holder, depending upon the holder's method of
accounting. However, the IRS could require such amounts to be accrued as income
in earlier periods based on anticipated prepayments or other factors. In the
absence of further guidance, the Servicer currently intends to treat such
amounts as not includible by the [Class A] Noteholders and [Class B] Noteholders
prior to the Payment Date immediately following any actual prepayment under a
Contract (or the Payment Date on which any other prepayment of the Offered Notes
occurs) that creates the entitlement of such [Class A] Noteholders and [Class B]
Noteholders to a redemption premium. Holders of the Offered Notes should consult
their own tax advisors concerning the tax treatment of such Prepayment Premium.
It appears that such income would be ordinary income rather than capital gain.
However, this is not entirely clear and [Class A] Noteholders and [Class B]
Noteholders also should consult their own tax advisors concerning such aspect of
the tax treatment of such Prepayment Premiums.
The foregoing discussion is based in part on the [Proposed OID
Regulations], which do not address certain issues relevant to, or are not
applicable to, prepayable securities such as the Offered Notes in the event that
the OID rules apply to the Offered Notes. [Moreover, final regulations may
differ from such proposed regulations, and may have retroactive effect.] [Class
A] Noteholders and [Class B] Noteholders should consult their own tax advisors
regarding the proper method of reporting taxable income from the Offered Notes.
Furthermore, if the Offered Notes are issued with OID the Servicer will
calculate
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the yield of each Offered Note based on the initial issue price of the Offered
Notes and will report such amount annually to the IRS and each holder of an
Offered Note. The amount of OID, if any, reported to [Class A] Noteholders and
[Class B] Noteholders by the Servicer for a calendar year may not be the proper
amount of OID required to be reported by any holder who did not purchase its
Offered Note at such initial issue price, or by any holders of Offered Notes who
are not original purchasers. Accordingly, [Class A] Noteholders and [Class B]
Noteholders should consult their own tax advisors to determine the amount of OID
includible in income during a calendar year. See "Information Reporting" below.
Market Discount. A subsequent holder who purchases an Offered Note at a
discount may be subject to the "market discount" rules of the Code. These rules
provide, in part, for the treatment of gain attributable to accrued market
discount as ordinary income upon the receipt of partial principal payments or on
the sale or other disposition of the Offered Note, and for the deferral of
interest deductions with respect to debt incurred to acquire or carry the market
discount Offered Note. In particular, under section 1276 of the Code, a holder
who purchases an Offered Note at a discount that exceeds de minimis market
discount generally will be required to allocate a portion of each such partial
principal payment or proceeds of disposition to accrued market discount not
previously included in income, and to recognize ordinary income to that extent.
If the provisions of section 1272(a)(6) of the Code apply to the Offered Notes,
as described above with respect to the use of a reasonable prepayment assumption
(and adjustments resulting from actual prepayments), such provisions also would
affect accrual of any market discount. Accordingly, [Class A] Noteholders and
[Class B] Noteholders are advised to consult their own tax advisors regarding
the impact of such requirement if the Offered Notes are purchased at a discount.
A [Class A] Noteholder or [Class B] Noteholder may elect to include such
market discount in income currently as it accrues rather than including it on a
deferred basis in accordance with the foregoing. If made, such election will
apply to all market-discount bonds acquired by such [Class A] Noteholder or
[Class B] Noteholder on or after the first day of the first taxable year to
which such election applied. If such election is made, the interest deferral
rule described above will not apply. If an Offered Note is purchased at a de
minimis market discount, the actual discount will be required to be allocated
among the principal payments to be made on such Offered Note, and the portion of
such discount allocated to each principal payment will be required to be
reported as income as each principal payment is made, in the same manner as
discussed above regarding de minimis OID.
Premium. In the event that an Offered Note is purchased at a premium
(i.e., the purchase price exceeds the sum of principal payments to be made
thereon), such premium will be amortizable by a [Class A] Noteholder or [Class
B] Noteholder as an offset to interest income (with a corresponding reduction in
the [Class A] Noteholder's or [Class B] Noteholder's basis) under a constant
yield method over the term of the Offered Note if such holder makes (or has in
effect) an election under section 171 of the Code.
Sales of Offered Notes. Except as described above with respect to the
market discount rules and as provided under section 582(c) of the Code in the
case of banks and other financial institutions, any gain or loss, equal to the
difference between the amount realized on the sale and the adjusted basis of
such Offered Note, recognized on the sale or exchange of an Offered Note by an
investor who holds such Offered Note as a capital asset will be capital gain or
loss. However, a portion of any gain from the sale of an Offered Note that might
otherwise be capital gain may be treated as ordinary income to the extent such
Offered Note is held as part of a "conversion transaction" within the meaning of
new section 1258 of the Code, recently enacted pursuant to the Omnibus Budget
Reconciliation Act of 1993. A conversion transaction generally is one in which
the taxpayer has taken two or more positions in Offered Notes or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such conversion transaction. The amount of gain so realized in a
conversion transaction that is recharacterized as ordinary income in general
will not exceed the amount of interest that would have accrued on the taxpayer's
net investment in such conversion transaction at 120% of the appropriate
"applicable Federal rate" (which rate is computed and published monthly by the
IRS) at the time the taxpayer enters into the conversion transaction, subject to
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appropriate reduction (to the extent provided in regulations to be issued) to
reflect prior inclusion of interest or other ordinary income items from the
transaction.
The adjusted basis of an Offered Note generally will equal its cost,
increased by any income previously reported (including any OID and market
discount income) by the selling [Class A] Noteholder or [Class B] Noteholder and
reduced (but not below zero) by any deduction previously allowed for losses and
any amortized premium and by any payments previously received with respect to
such Offered Note. Principal payments on the Offered Note will be treated as
amounts received upon a sale or exchange of the Offered Note under the foregoing
rules.
Information Reporting
The Servicer is required to furnish or cause to be furnished to each
[Class A] Noteholder or [Class B] Noteholder with each payment a statement
setting forth the amount of such payment allocable to principal on the Offered
Note and to interest thereon at the applicable interest rate. In addition, the
Servicer is required to furnish or cause to be furnished, within a reasonable
time after the end of each calendar year, to each [Class A] Noteholder or [Class
B] Noteholder who was such a holder at any time during such year, a report
indicating such other customary factual information as the Servicer deems
necessary to enable holders of Offered Notes to prepare their tax returns. If
the [Class A] Notes or the [Class B] Notes are issued with OID, the Servicer
will provide or cause to be provided to the IRS and, as applicable, to the
[Class A] Noteholders or [Class B] Noteholders information statements with
respect to OID as required by the Code or as such holders of the Offered Notes
may reasonably request from time to time. For the reasons described under
"Taxation of [Class A] Noteholders and [Class B] Noteholders -- Original Issue
Discount," above, if Offered Notes are issued with OID, the amount of OID
reported for a calendar year may not be the proper amount of OID required to be
reported by any holder thereof who did not purchase its Offered Note for the
initial issue price at which such Offered Notes were first sold, or by holders
of such Offered Notes who are not original purchasers. Accordingly, [Class A]
Noteholders and [Class B] Noteholders should consult their own tax advisors to
determine the amount of any OID and market discount includible in income during
a calendar year.
Foreign Investors
A [Class A] Noteholder or [Class B] Noteholder that is not a "United
States person" (as defined below) and is not subject to federal income tax as a
result of any direct or indirect connection to the United States in addition to
its ownership of an Offered Note generally will not be subject to United States
federal income or withholding tax in respect of interest (including accrued OID,
if any) paid on an Offered Note, provided that the [Class A] Noteholder or
[Class B] Noteholder complies to the extent necessary with certain
identification requirements (including delivery of a statement (IRS Form W-8),
signed by the [Class A] Noteholder or [Class B] Noteholder under penalties of
perjury, certifying that such [Class A] Noteholder or [Class B] Noteholder is
not a United States person and providing the name and address of such [Class A]
Noteholder or [Class B] Noteholder). The foregoing exemption does not apply to
payments of interest (including payments in respect of accrued OID, if any),
received by a [Class A] Noteholder or [Class B] Noteholder that either (i) owns
directly or indirectly a 10% or greater interest in the Issuer, (ii) is a bank
that purchased its Note in the ordinary course of its trade or business, (iii)
is a person within a foreign country which the IRS has included in a list of
countries that do not provide adequate exchange of information with the United
States to prevent tax evasion by United States persons, or (iv) is a "controlled
foreign corporation" (within the meaning of section 957 of the Code) with
respect to which the Issuer is a "related person" (within the meaning of section
881(c)(3)(C) of the Code). If the [Class A] Noteholder or [Class B] Noteholder
does not qualify for the foregoing exemption from withholding, payments of
interest (including payments in respect of any accrued OID) to such [Class A]
Noteholder or [Class B] Noteholder may be subject to withholding tax at a tax
rate of 30%, subject to reduction (including exemption) under any applicable tax
treaty, provided the [Class A] Noteholder or [Class B] Noteholder supplies (at
the time
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of its initial purchase, and at such subsequent times as are required under the
Treasury regulations) a completed IRS Form 1001 to report its eligibility for
such reduced rate or exemption.
Amounts allocable to interest (including accrued OID,if any), received by
a [Class A] Noteholder or [Class B] Noteholder that is not a United States
person, which constitute income that is effectively connected with a United
States trade or business carried on by the [Class A] Noteholder or [Class B]
Noteholder, will not be subject to withholding tax, but rather will be subject
to United States income tax at the graduated rates applicable to United States
persons, provided the [Class A] Noteholder or [Class B] Noteholder supplies (at
the time of its initial purchase, and at such subsequent times as are required
under the Treasury regulations) a completed IRS Form 4224 to report its
exemption from withholding.
For these purposes, "United States person" means a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in, or under the laws of, the United States or any political
subdivision thereof or an estate or trust the income of which from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States. [Class A] Noteholders and [Class B]
Noteholders who are not United States persons should consult their own tax
advisors regarding the tax consequences of purchasing, owning or disposing of an
Offered Note.
Backup Withholding
Payments of interest and principal, as well as payments of proceeds from
the sale of Offered Notes, may be subject to the "backup withholding tax" under
section 3406 of the Code at a rate of 31% if recipients of such payments fail to
furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from such
tax. 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.
Furthermore, certain penalties may be imposed by the IRS on a recipient of
payments that is required to supply information but that does not do so in the
proper manner. Information returns will be sent annually to the IRS and each
[Class A] Noteholder and [Class B] Noteholder setting forth the amount of
interest paid on the Offered Notes and the amount of any tax withheld thereon.
State, Local and Other Taxes
Investors should consult their own tax advisors regarding whether the
purchase of the Offered Notes, either alone or in conjunction with an investor's
other activities, may subject an investor to any state or local taxes based on
an assertion that the investor is either "doing business" in, or deriving income
from a source located in, any state or local jurisdiction. Additionally,
potential investors should consider the state, local and other tax consequences
of purchasing, owning or disposing of an Offered Note. State and local tax laws
may differ substantially from the corresponding federal tax law, and the
foregoing discussion does not purport to describe any aspect of the tax laws of
any state or other jurisdiction. Accordingly, potential investors should consult
their own tax advisors with regard to such matters.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
FEDERAL OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
The Notes may be purchased by an employee benefit plan or an individual
retirement account (a "Plan") subject to the Employees Retirement Income
Security Act of 1974, as amended ("ERISA"), or section 4975 of the Code. A
fiduciary of a Plan must determine that the purchase of a Note is consistent
with its fiduciary duties under ERISA and does not result in a nonexempt
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the
Code. Employee benefit plans which 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 the fiduciary responsibility or prohibited transaction
provisions of ERISA or the Code. For additional information regarding treatment
of the Notes under ERISA, see "ERISA Considerations" in the Prospectus.
If the Notes constitute equity interests, there can be no assurance that
any of the exceptions set forth in the Regulations will apply to the purchase of
Notes offered hereby. Under the terms of the Regulations, if the Issuer were
deemed to hold Plan assets by reason of a Plan's investment in Notes, such Plan
assets would include an undivided interest in the Receivables, and any other
assets held by the Issuer. In such an event, the Originator, the Issuer, the
Trustee and other persons providing services with respect to the Receivables,
may be subject to the fiduciary responsibility provisions of Title Originator of
ERISA and be subject to the prohibited transaction provisions of Section 4975 of
the Code with respect to transactions involving the Receivables unless such
transactions are subject to a statutory or administrative exemption.
Additionally, if the Issuer were deemed to hold Plan assets, each Noteholder may
be subject to the fiduciary responsibility provisions of Title Originator of
ERISA with respect to its right to consent or withhold consent to amendments to
the Indenture and with respect to its right to vote on action to be taken or not
taken if an Indenture Event of Default occurs.
In addition, certain affiliates of the Originator, the Issuer and the
Trustee may be considered to be parties in interest or fiduciaries with respect
to many Plans. An investment by such a Plan in Notes may be a prohibited
transaction under ERISA and the Code unless such investment is subject to a
statutory or administrative exemption.
Any Plan fiduciary that proposes to cause a Plan to purchase Notes should
consider whether such purchase would be appropriate under the general fiduciary
standards of prudence and diversification, taking into account the overall
investment policy of the Plan and its existing portfolio and should consult with
its counsel with respect to the potential applicability of ERISA and the Code.
RATINGS
As a condition to the issuance of the Offered Notes, the [Class A] Notes
must be rated at least "____" by the Rating Agency and the [Class B] Notes must
be rated at least "____" by the Rating Agency. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time. The rating of ________________________ assigned to the
Offered Notes addresses the likelihood of the receipt by [Class A] Noteholders
and [Class B] Noteholders of all distributions to which such Noteholders are
entitled. The ratings assigned to the Offered Notes do not represent any
assessment of the likelihood that principal prepayments might differ from those
originally anticipated or address the possibility that [Class A] Noteholders and
[Class B] Noteholders might suffer a lower than anticipated yield.
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UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Issuer has agreed to sell to each of the
Underwriter(s) named below (the "Underwriter(s)"), and each of the
Underwriter(s) has severally agreed to purchase, the principal amount of Notes
set forth opposite its name below.
Principal Principal
Amount Amount
Underwriter(s) of A Notes of B Notes
- -------------- ---------- ----------
$ $
___________ ____________
Total $___________ ____________
In the Underwriting Agreement, the Underwriter(s) have agreed, subject to
the terms and conditions therein, to purchase all the Notes offered hereby if
any of such Notes are purchased. The Issuer has been advised by the
Underwriter(s) that they propose initially to offer the Class A Notes and the
Class B Notes to the public at the price set forth herein, and to certain
dealers at such price less a concession not in excess of ___% per Class A Note
and __% per Class B Note. The Underwriter(s) may allow and such dealers may
reallow a concession not in excess of __% per Class A Note and ___% per Class B
Note to certain other dealers. After the initial public offering, such prices
and such concessions may be changed.
The Underwriting Agreement provides that the Issuer and Originator will
indemnify the Underwriter(s) against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the [several]
Underwriter(s) may be required to make in respect thereof.
The Trustee may, from time to time, invest the funds in certain accounts
in Eligible Investments acquired from the Underwriter(s).
REPORT OF EXPERTS
The financial statements of the Certificate Insurer, _____________, for
each of the two years in the periods ending December 31, 199_ and 199_,
appearing in Appendix A of this Prospectus Supplement have been audited by
_____________, independent accountants, as indicated in their report thereon
appearing elsewhere herein and in the Registration Statement, and are included
in reliance upon such report and upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the issuance of the Notes, including federal and state
income tax consequences with respect thereto, as well as other matters, will be
passed upon for the Issuer and the Underwriter(s) by Dewey Ballantine, New York,
New York.
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INDEX OF DEFINED TERMS
Page
----
Additional Receivable Transfer Agreement....................................19
Additional Receivable Transfer Date..........................................5
Additional Receivables.......................................................5
Aggregate Discounted Contract Balance........................................8
Agreements ................................................................27
Applicable Federal Rate.....................................................40
APR.........................................................................16
Available Funds..............................................................9
Backup Withholding Tax......................................................42
Bond Insurance Policies..................................................2, 10
Bond Insurer.............................................................2, 10
Business Day................................................................28
Calculation Date.............................................................8
Capitalized Interest Account.................................................5
Cede.........................................................................2
Class A Monthly Interest.....................................................6
Class A Monthly Principal....................................................7
Class A Note Balance.........................................................6
Class A Note Rate............................................................6
Class A Noteholders..........................................................6
Class A Notes................................................................1
Class A Overdue Interest.....................................................6
Class A Overdue Principal....................................................7
Class A Percentage...........................................................1
Class B Monthly Interest.....................................................6
Class B Monthly Principal....................................................7
Class B Note Balance.........................................................6
Class B Note Rate............................................................6
Class B Noteholders..........................................................6
Class B Notes................................................................1
Class B Overdue Interest.....................................................6
Class B Overdue Principal....................................................7
Class B Percentage...........................................................1
Class C Distributions.......................................................10
Class C Monthly Interest.....................................................6
Class C Monthly Principal....................................................8
Class C Note Balance.........................................................6
Class C Note Rate............................................................6
Class C Noteholders..........................................................7
Class C Notes................................................................1
Class C Overdue Interest.....................................................7
Class C Overdue Principal....................................................8
Code........................................................................37
Collateral...................................................................1
Collection Account...........................................................9
Commission...................................................................2
Contracts....................................................................1
Contribution and Servicing Agreement.........................................2
Contributor..................................................................3
S-48
<PAGE>
Page
----
Credit Score Analysts.......................................................22
Defaulted Contract..........................................................11
Delinquency Amounts.........................................................11
Delinquency Condition........................................................9
Delinquent Contract.........................................................11
Discount Rate................................................................8
Discounted Contract Balance..................................................8
ERISA.......................................................................12
Excess Collections...........................................................9
Excess Contract Balance......................................................4
Funding Period...............................................................5
Indenture....................................................................2
Investment Earnings.........................................................10
IRS.........................................................................38
Issuer.......................................................................1
List of Receivables.........................................................29
Lockbox Account.............................................................11
Lockbox Facility............................................................31
Maximum Reserve Amount......................................................10
Monthly Yield................................................................8
Noteholders..................................................................5
Notes........................................................................1
Offered Notes................................................................1
Optional Redemption.........................................................11
Original Capitalized Interest Amount........................................31
Payment Date.................................................................2
Pre-Funded Amount............................................................5
Pre-Funding Account..........................................................5
Predecessor Receivable......................................................18
Receivables..................................................................1
Record Date..................................................................6
Required Deposit Date.......................................................32
Required Payments............................................................9
Reserve Account..............................................................9
Reserve Account Payment......................................................9
Restricting Event............................................................9
Rule of 78s.................................................................16
Servicer.....................................................................3
Servicer Advance............................................................10
Servicing Charges...........................................................10
Servicing Fee...............................................................10
Servicing Fee Rate..........................................................10
Stated Maturity Date.........................................................2
Successor Servicer..........................................................35
Supplement...................................................................3
Trustee......................................................................3
VSI Insurance Policy........................................................24
Weighted-Average Note Rate...................................................8
[Class C] Percentage.........................................................1
S-49
<PAGE>
EXHIBIT 99.3
<PAGE>
SUBJECT TO COMPLETION DATED ___________, 1996
[Exhibit 99.3 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Certificates will be filed with the
Commission under the Securities Act of 1933, as amended, pursuant to Rule 424(b)
promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED _________, 1996)
- --------------------------------------------------------------------------------
ADVANTA AUTO RECEIVABLES FINANCE CORPORATION 199__-__
$_______________
_____% Auto Receivables Certificates, Class __
ADVANTA AUTO FINANCE CORPORATION
Sponsor
_____________
Servicer
_____________
Originator
- --------------------------------------------------------------------------------
The Class ___ Auto Receivables Backed Certificates (the "Certificates")
hereby offered by Advanta Auto Finance Corporation represent the right to
receive repayment of the Initial Certificate Principal Amount ($____________) of
the Certificates and monthly interest at a rate of _____% per annum on the
unpaid portion of such principal amount. The rights to receive such payments are
based solely upon the interests represented by the Certificates in the [Advanta]
Receivables Trust 199__-__ (the "Trust") formed pursuant to a Pooling and
Servicing Agreement (the "Pooling Agreement"), dated as of ____________, 199__,
among , as originator, (the "Originator") Advanta Auto Finance Corporation as
servicer of the receivables (the "Servicer") Advanta Auto Finance Corporation
(the "Sponsor") and ____________, as trustee (the "Trustee"). The assets of the
Trust will consist of any combination of retail installment sales contracts
between manufacturers, dealers or certain other originators and retail
purchasers secured by new and used automobiles and light duty trucks financed
thereby or participation interests therein,] all monies relating thereto (the
"Contracts"), [the underlying new and used automobiles and light duty trucks
(the "Vehicles," together with the Contracts], the "Receivables") and the
proceeds thereof received by the Trust from the Sponsor on or prior to the date
of the issuance of the Certificates. [The assets of the Trust also will include
a certificate guaranty insurance policy issued with respect to the Certificates
(the "Certificate Insurance Policy") by _____________ (the "Certificate
Insurer"), and during the Funding Period, amounts on deposit in the Pre-funding
Account and the Capitalized Interest Account. The Trustee will also have access
to the Reserve Account to be established for the benefit of the holders of the
Certificates (the "Certificateholders") and the Certificate Insurer.
[FORM OF CREDIT ENHANCEMENT]
------------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF THE ORIGINATOR, THE SPONSOR, THE
SERVICER, ANY SUCCESSOR SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER
THE SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE GUARANTEED OR INSURED BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY THE ORIGINATOR OR THE SPONSOR.
SEE ALSO "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATIONS TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS"
HEREIN AND IN THE PROSPECTUS.
- -------------------------------------------------------------------------------
Price to Underwriting Proceeds to the
Public(1) Discount(2) Sponsor(1)(3)
-------------- -------------- -----------------
- -------------------------------------------------------------------------------
Per Certificate............. % % %
Total....................... $ $____________ $______________
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from ____________, 199__.
(2) The Sponsor has agreed to indemnify the Underwriter(s) against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting estimated expenses of $____________ payable by the
Sponsor.
[The Certificates are offered subject to prior sale, when, as, and if
accepted by the Underwriter(s) and subject to the approval of certain legal
matters by Dewey Ballantine, counsel for the Underwriter(s). It is expected that
delivery of the Certificates will be made only in book-entry form through the
Same Day Funds Settlement System of The Depository Trust Company on or about
_____________, 19__]
[Name(s) of the Underwriter(s)]
<PAGE>
The Contracts are contracts for the sale of the Vehicles, entitling the
originator thereunder to payments of principal and interest (hereinafter,
"Contract Principal" and "Contract Interest," respectively).
Principal and interest will be paid to the Certificateholders [monthly] on
the _____ day (or the next succeeding business day thereafter) of each [month],
commencing (except as provided below) in ____________ 199__. The final payment
of principal and interest on the Certificates will not be later than the
____________ Payment Date. The Pooling Agreement and the Receivables Acquisition
Agreement will provide that, to the extent additional, qualifying Receivables
satisfactory to the Certificate Insurer are available from the Originator during
the period prior to the ____________ 199__ Payment Date, or, if a Required
Amortization Event (as defined herein) occurs with respect to a Payment Date
prior to the ____________ 199__ Payment Date, such earlier Payment Date (the
____________ 199__ or such earlier Payment Date being the "Initial Amortization
Date"), the Pre-Funded Amount and all Contract Principal received by the Trust
will be disbursed to the Sponsor in consideration of the conveyance of such
additional, qualifying Receivables (the "Additional Receivables").
On the Funding Distribution Date, the amount, if any, remaining on deposit
in the Pre-Funding Account will be transferred to the Remittance Account for
distribution to the Certificateholders as a prepayment of principal. Beginning
with the Initial Amortization Date, the Certificateholders will generally be
entitled to receive the Applicable Percentage of all Contract Principal (other
than Contract Principal resulting from certain Prepayments) received by the
Trust during the prior calendar month together with, as a payment of principal,
___% of the lesser of (x) all Contract Interest received by the Trust during the
preceding calendar month in excess of the amount of interest then due on the
Certificates, subject to certain adjustments (the "Excess Contract Interest")
and (y) the amount then remaining in the Remittance Account. On and after the
Initial Amortization Date (unless a Required Amortization Event has occurred)
the Sponsor will have the option on each Payment Date to convey Additional
Receivables to the Trust, having an aggregate Discounted Contract Balance not in
excess of the aggregate amount of Prepayments deposited to the Remittance
Account with respect to the prior Remittance Period. The Trust shall disburse to
the Sponsor an amount equal to the aggregate Discounted Contract Balance of such
Additional Receivables.
The Certificate Insurer will be unconditionally obligated, to the extent
that Available Funds on any Payment Date are insufficient, to pay the full
amount of the required payments of principal and interest then due and payable
under the Certificates. "Available Funds" shall mean all amounts held by the
Trust received with respect to the Receivables, all amounts in the Capitalized
Interest Account and the Reserve Account established by the Sponsor for the
benefit of the Certificateholders, other than payments under the Certificate
Insurance Policy or payments received by the Servicer which relate to subsequent
collection periods.
------------------------------------------
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
------------------------------------------
S-2
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------------------------
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, periodic and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Company
("Cede"), as nominee of The Depository Trust Company ("DTC") and registered
holders of the Certificates. See "Description of the Securities -- Reports to
Securityholders" in the accompanying Prospectus (the "Prospectus"). Such reports
will not constitute financial statements prepared in accordance with generally
accepted accounting principles. The Trust will file with the Securities and
Exchange Commission (the "Commission") such periodic reports as are required
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations thereunder and as are otherwise agreed to by the
Commission. Copies of such periodic reports may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
S-3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
Issuer............... ADVANTA AUTO RECEIVABLES TRUST 199_-_ (the "Trust" or the
"Issuer").
Sponsor.............. Advanta Auto Finance Corporation (the "Sponsor"), a
Nevada corporation. The Sponsor will acquire the
Receivables from the Originator and will simultaneously
transfer the Receivables (including from time to time the
Additional Receivables) to the Trust. The principal
executive offices of the Sponsor are located at 500
Office Center Drive, Fort Washington, Pennsylvania 19034,
and its telephone number is (215) 283-4200.
Servicer............. Advanta Auto Finance Corporation a Nevada corporation
(the "Servicer"). The principal executive offices of the
Servicer are located at 500 Office Center Drive, Fort
Washington, Pennsylvania 19034, and its telephone number
is (215) 283-4200.
Originator........... ____________________, a ___________ corporation (the
"Originator"). The principal executive offices of the
Originator are located at ____________________________,
and its telephone number is ________________.
Trustee.............. ________________________ (the "Trustee"), a ___________
association. The corporate trust offices of the Trustee
are located at ______________________ and its telephone
number is (___) ______.
Certificate
Insurer.............. ________________________, a ____________ corporation (the
"Certificate Insurer"). The principal executive offices
of the Certificate Insurer are located at
________________________ and its telephone number is
(___) ____________.
Cut-Off Date......... ____________, 199_.
Closing Date......... ____________, 199__.
The Certificates..... The Certificates will represent the right to receive a
specified principal amount and [monthly] interest at a
rate of _____% per annum on the unpaid portion of that
principal amount (the "Required Payments"). The rights to
such payments are based solely on the interest in the
Trust represented by the Certificates. The Certificates
will be issued in a principal amount of $____________,
which is not greater than the sum of (i) ___% of the
aggregate Contract Principal Balance of the Contracts as
of the close of business on ____________, 199__ (the
"Cut-Off Date") (the "Initial Contract Principal
Balance") and (ii) the Original Pre-
S-4
<PAGE>
Funded Amount. As of any date of determination, the
aggregate outstanding Discounted Contract Balance of all
Contracts (including all Additional Receivables) then
owned by the Trust and not represented by the
Certificates is the "Transferor's Balance." The
Discounted Contract Balance was derived using a discount
rate of ___%. As discussed below, the Sponsor's Balance
as evidenced by the Sponsor's Certificate represents a
subordinate interest in the Trust because all amounts
received with respect to the Sponsor's Balance (as well
as all Residual Receipts and all Excess Contract
Interest) are available to service any shortfall in the
amounts available to meet Required Payments under the
Certificates.
The interest in the Trust to be evidenced by a
Certificate will represent at least [$1,000,000] of the
Initial Certificate Principal Amount.
As described below under "Trust Assets" and below under
"Flow of Funds," from time to time the Sponsor may convey
Additional Receivables to the Trust. The Pooling
Agreement provides that, unless a Required Amortization
Event occurs prior to the ____________ 199__ Payment
Date, all Contract Principal which would otherwise be
paid to the Certificateholders or distributed to the
Sponsor will be disbursed to the Sponsor in consideration
of the conveyance of Additional Receivables, with the
result that the Certificateholders will receive payments
of interest only, and no payments of principal, on each
Payment Date prior to the ____________ 199__ Payment Date
except for a possible prepayment of principal resulting
from the distribution of amounts remaining on deposit in
the Pre-Funding Account on the Funding Distribution Date.
See "Description of the Certificates" and "Prepayment and
Yield Considerations" in the Prospectus.
The Trust............ The Trust will be a trust established under the laws of
the State of ____________. The activities of the Trust
are limited by the terms of the Trust Agreement to
purchasing, owning and managing the Receivables, issuing
and making payments on the Certificates and other
activities related thereto. The Trust Property includes
(i) the Receivables, (ii) all monies (including accrued
interest) due thereunder on or after the Cut-off Date,
(iii) such amounts as from time to time may be held in
one or more accounts established and maintained by the
Servicer pursuant to the Pooling Agreement, as described
below, [(iv) the security interests in the Vehicles, (v)
the rights to proceeds from claims on physical damage,
credit life and disability insurance policies, if any,
covering Vehicles or Obligors, as the case may be, (vi)
any proceeds of repossessed Vehicles,] (vii) the rights
of the Sponsor under the Receivables Acquisition
Agreement and (viii) interest earned on short-term
investments made by the Trust.
In the Receivables Acquisition Agreement, the Originator
will make certain representations and warranties to the
Sponsor with respect to, among other things, the Vehicles
and the Contracts, which representations and warranties
will be assigned to the Trustee under the Pooling
Agreement.
S-5
<PAGE>
The Receivables...... The Receivables consist of noncancelable [retail
installment sales contracts between manufacturers,
dealers or certain other originators and retail
purchasers serviced by new and used automobiles and light
duty trucks financed thereby or participation interest
therein.] Each Obligor's obligation under its Contract is
a full recourse obligation. The "Obligor" is the obligor
under each Contract including any guarantor. The
Receivables contain provisions which unconditionally
obligate the Obligor to make all Contract Payments.
[All of the Contracts were purchased by the Sponsor from
the Originator in the ordinary course of business and the
Contracts constitute substantially all of the automobile
and light duty truck retail installment sale contracts
included in the Originator's portfolio meeting the
selection criteria described herein. Such selection
criteria included that: (i) each Contract is secured by a
new or used automobile or light duty truck; (ii) each
Contract was originated in the United States; (iii) each
Contract provides for level monthly payments that fully
amortize the amount financed over its original term
except that the payment in the first or last month in the
life of the Contract may be minimally different from the
level payment, and a minimal number of the Contracts
provide for monthly payments for a period of time not
exceeding one year after origination in an amount less
than such level payment, provided that as of the Cutoff
Date the monthly payment currently due under each such
Contract is equal to such level payment; (iv) each
Contract was originated on or prior to _______, 199_ ;
(v) each Contract has an original term of __ to __ months
and, as of the Cutoff Date, had a remaining term to
maturity of not less than three months nor more than __
month; (vi) each Contract provides for the payment of a
finance charge at an APR ranging from __% to __%; (vii)
each Contract shall not have a Scheduled Payment that is
more than 30 days past due as of the Cutoff Date; (viii)
no Contract shall be due, to the best knowledge of the
Originator, from any Obligor who is presently the subject
of a bankruptcy proceeding or is bankrupt or insolvent;
(ix) no Vehicle has been repossessed without
reinstatement as of the Cutoff Date; and (x) as of the
Cutoff Date, physical damage insurance relating to each
Vehicle is not being force-placed by the Servicer.]
[As of the Cutoff Date, approximately __% and
approximately __% of the Aggregate Discounted Contract
Balance are expected to represent Contracts secured by
automobiles and light duty trucks, respectively. Based on
the Aggregate Discounted Contract Balance, approximately
___% and approximately ___% of the Contracts are expected
to represent financing of new vehicles and used
vehicles, respectively, and no more than ___% of the
Contracts are expected to be due from employees of the
Originator or any of its respective affiliates. As of the
Cutoff Date, the average Principal Balance of Contracts
secured by automobiles and light duty trucks is expected
to be approximately $________ and approximately
$________, respectively. The majority of the Vehicles are
expected to be foreign and domestic automobiles and light
duty trucks. Except in the case of any breach of
representations and warranties by the Originator, it is
expected that
S-6
<PAGE>
none of the Contracts provide for recourse to the
Originator who originated the related Contract.]
Flow of Funds........ The Pooling Agreement will require that the Trustee
establish an account (the "Remittance Account") and that
the Servicer deposit to the Remittance Account all
collections received by the Servicer on the Contracts on
the next business day following receipt of such amounts.
The Pooling Agreement will also require that the Trustee
establish an account (the "Pre-Funding Account") and that
the Sponsor deposit to the Pre-Funding Account on the
Closing Date cash in the amount of $____________ (the
"Original Pre-Funded Amount"). On the Funding
Distribution Date, the Trustee will transfer the amount,
if any, then on deposit in the Pre-Funding Account to the
Remittance Account for distribution to the
Certificateholders as a prepayment of principal.
On each Payment Date the Trustee will be required to make
the following payments from the Available Funds then on
deposit in the Remittance Account, in the following order
of priority:
(i) to the Servicer, the Servicing Fee then due,
together with certain miscellaneous amounts;
(ii) on the Payment Date which is also the Funding
Distribution Date, to the Certificateholders, the
Pre-Funded Amount, if any;
(iii) to the Certificateholders, the Certificate
Interest and Overdue Interest for the related
Remittance Period;
(iv) on and after the Payment Date which is also the
Initial Amortization Date and until the Certificate
Principal Balance has been reduced to zero, to the
Certificateholders, the Base Principal Distribution
Amount and any Overdue Principal for the related
Remittance Period;
(v) to the Certificate Insurer, the premiums then
due with respect to the Certificate Insurance Policy
(the cost of which will be debited against the
Sponsor's Interest);
(vi) to the Certificate Insurer, any amounts
previously paid by it under the Certificate
Insurance Policy and not theretofore repaid,
together with interest thereon;
(vii) to the Reserve Account, the amount of any
insufficiency therein;
(viii) on and after the Payment Date which is also
the Initial Amortization Date and until the
Certificate Principal Balance has been reduced to
zero, to the Certificateholders, the Excess
Principal Amount as of such Payment Date;
S-7
<PAGE>
(ix) to the Servicer, certain remaining amounts as
reimbursement for certain expenses; and
(x) to the holder of the Sponsor's Certificate, any
remaining amounts.
See "Description of the Certificates - Flow of Funds" for
the definitions of certain defined terms used above.
Credit Enhancement... The credit enhancement available for the benefit of the
Certificateholders takes the following forms: the
Transferor's Interest, the Capitalized Interest Account,
the Reserve Account and the Certificate Insurance Policy.
A. Sponsor's Interest The "Sponsor's Interest", as evidenced by the Sponsor's
Certificate, is the right of the holder of the Sponsor's
Certificate to receive the Sponsor's Balance plus other
remaining Available Funds as described in clause (x) of
"Flow of Funds" above.
The Sponsor's Balance as of any date of determination is
equal to the excess of (x) the aggregate outstanding
Discounted Contract Balance of all Contracts as of such
date (computed as stated above) over (y) the outstanding
Certificate Principal Balance minus the Pre-Funded
Amount, if any, as of such date. As of the Cut-Off Date
the Sponsor's Balance was equal to ___% of the sum of the
Initial Aggregate Discounted Contract Balance.
The Pooling Agreement provides that 100% of any losses on
Defaulted Contracts be allocated to the Sponsor's Balance
until the Sponsor's Balance is reduced to zero. If losses
on Defaulted Contracts occur when the Sponsor's Balance
is zero, then the Applicable Percentage of the
outstanding Discounted Contract Balance of such Defaulted
Contracts will be due to the Certificateholders on the
next Payment Date, such amount to be paid from any
Available Funds on deposit in the Remittance Account on
such Payment Date, amounts transferred from the Reserve
Account on such Payment Date and, if the foregoing
sources are insufficient, Insured Payments made by the
Certificate Insurer.
In addition to the repayment of the Sponsor's Balance,
the holder of the Sponsor's Certificate as owner of the
Sponsor's Interest will be entitled to receive on each
Payment Date any Available Funds not required to be used
for repayments to the Certificate Insurer, the making of
any required deposits to the Reserve Account or other
required purposes.
If, prior to the Initial Amortization Date, the Sponsor's
Balance is reduced below ___%, then the Sponsor will be
required on the next Payment Date to transfer to the
Trust Additional Receivables having an aggregate
Discounted Contract Balance necessary to increase the
Sponsor's Balance to the ___% level. The Trust will
disburse to the
S-8
<PAGE>
Sponsor Excess Contract Interest and other excess cash
with respect to such transfers, and the obligation of the
Sponsor to transfer such Additional Receivables is
limited by the amount of the Excess Contract Interest and
other excess cash available.
B. Capitalized Interest
Account........ The Pooling Agreement will require that the Trustee
establish an account (the "Capitalized Interest Account")
and that the Sponsor deposit to the Capitalized Interest
Account on the Closing Date cash in the amount of
$_________ (the "Initial Capitalized Interest Amount").
On each Payment Date during the Funding Period, amounts
on deposit in the Capitalized Interest Account will be
required to be transferred to the Remittance Account to
the extent the aggregate amount of Contract Interest for
the related Remittance Period is insufficient to fund the
full amount of the Certificate Interest and Servicer Fee
payable on such Payment Date. On each such Payment Date,
the Sponsor will have the right to instruct the Trustee
to transfer to the Sponsor from the Capitalized Interest
Account the Overfunded Interest Amount. The amount, if
any, on deposit in the Capitalized Interest Account on
the Funding Distribution Date will be disbursed to the
Sponsor.
C. Reserve Account.. Pursuant to the terms of the Insurance Agreement, dated
as of ____________, 199__, among the Originator, the
Servicer, the Sponsor, the Collateral Agent, the Trustee
and the Certificate Insurer (the "Insurance Agreement"),
and the Pooling Agreement, the Trustee will hold a
reserve account (the "Reserve Account") for the benefit
of the Certificateholders, the Certificate Insurer and
the Transferor, as their interests may appear, which will
be funded with cash on the Closing Date in the initial
amount of $____________.
In connection with each payment to the Sponsor from the
Pre-Funding Account, the Trustee will transfer from the
Pre-Funding Account to the Reserve Account an amount
equal to __% of the aggregate Contract Principal Balances
of the Additional Contracts conveyed to the Trust on the
date of such payment. The amount on deposit in the
Reserve Account on the Funding Termination Date will be
required to be maintained until the date two years after
the Closing Date (the "Determination Date"). On each
Payment Date thereafter, the amount on deposit in the
Reserve Account will be required to be maintained in an
amount equal to the greater of (i) the product of (x) a
fraction, the numerator of which is the amount on deposit
in the Reserve Account on the Determination Date and the
denominator of which is the aggregate Contract Principal
Balances as of the Calculation Date immediately preceding
the Determination Date and (y) the aggregate Contract
Principal Balances as of the related Calculation Date and
(ii) $________. On each Payment Date, amounts on deposit
in the Reserve Account are required to be transferred to
the Remittance Account to the extent that Available Funds
are insufficient to fund the full amount of Required
Payments on such Payment Date.
S-9
<PAGE>
D. Certificate
Insurance
Policy......... In the event that Available Funds plus any amounts
available to be withdrawn from the Reserve Account and
the Capitalized Interest Account are insufficient to fund
the full amount of the Required Payments due on any
Payment Date, the Trustee will be required to make a
claim under the Certificate Insurance Policy.
"Required Payments" means, with respect to any Payment
Date, the amounts described in clauses (ii), (iii) and
(iv) under "Flow of Funds" above on such Payment Date.
Servicing............ The Servicer will be responsible for servicing, managing,
arranging, making collections on and otherwise enforcing
the Contracts. The Servicer will be required to exercise
the degree of skill and care in performing these
functions that it customarily exercises with respect to
similar contracts owned by the Servicer. The Servicer
will be entitled to receive a monthly fee (the "Servicing
Fee") of the product of (i) one-twelfth, (ii) ___% (the
"Servicing Fee Rate") and (iii) the Aggregate Discounted
Contract Balance as of the beginning of the previous
Remittance Period, payable out of the Collection Account,
plus late payment fees and certain other fees paid by the
Obligors ("Servicing Charges") and investment earnings on
amounts held in the Remittance Account ("Investment
Earnings"), as compensation for acting as Servicer.
Except as hereinafter provided, on the day prior to any
Payment Date, the Servicer will be required to make an
advance (a "Servicer Advance") to the Trustee in an
amount sufficient to cover all amounts due and unpaid on
any Delinquent Contract as of the previous Determination
Date ("Delinquency Amounts"). A "Delinquent Contract"
will mean, as of any Determination Date, any Contract
(other than a Contract which became a Defaulted Contract
prior to such Determination Date) with respect to which
the Obligor has not paid all Contract Payments then due.
With respect to any Delinquent Contract, whenever the
Servicer shall have determined that it will be unable to
recover a Delinquency Amount or portion thereof on such
Delinquent Contract, the Servicer shall not be required
to make a Servicer Advance on such unrecoverable
Delinquency Amount or portion thereof, but will be
required to enforce its remedies (including acceleration)
under such Contract. Furthermore, if at any time the
Originator is no longer the Servicer, no Servicer
Advances will be required. In the event that the Servicer
determines that any Servicer Advances previously made are
Nonrecoverable Advances, or any Delinquent Contracts for
which the Originator has made advances of Delinquency
Amounts in respect thereof become Defaulted Contracts,
then the Trustee shall have the right to draw on the
Collection Account and the Reserve Account to repay such
Servicer Advances.
Optional Termination The Sponsor will have the option, subject to certain
conditions set forth in the Pooling Agreement, including
the deposit of the sum specified in the Pooling
Agreement, to remove all, but not less than all, of the
S-10
<PAGE>
property in the Trust, and thereby cause early retirement
of the Certificates and the Sponsor's Certificate as of
any Payment Date on which the Certificate Principal
Balance is less than ____% of the Initial Certificate
Principal Amount (after giving effect to payment of
principal on such Payment Date). In the event of such a
removal, the entire outstanding Certificate Principal
Balance, together with accrued interest thereon at the
Certificate Rate, will be required to be paid to the
Certificateholders on such Payment Date, and the
Sponsor's Balance, if any, will be required to be paid to
the holder of the Sponsor's Certificate on such Payment
Date.
Certain Legal
Aspects of the
Receivables.......... With respect to the transfer of the Receivables, the
Original Pre-Funded Amount and the Initial Capitalized
Interest Amount to the Trust, the Sponsor will warrant in
the Pooling Agreement that the transfer by it to the
Trust is either a valid transfer and assignment of the
Receivables, the Original Pre-Funded Amount and the
Initial Capitalized Interest Amount to the Trust or the
grant of a security interest in the Receivables, the
Original Pre-Funded Amount and the Initial Capitalized
Interest Amount. The Sponsor will be required to take
such action as is required to perfect the Trust's
security interest in the Receivables, the Original
Pre-Funded Amount and the Initial Capitalized Interest
Amount. The Sponsor will warrant that if the transfer by
it to the Trust is deemed to be a grant to the Trust of a
security interest in the Receivables, the Original
Pre-Funded Amount and the Initial Capitalized Interest
Amount, then the Trust will have a first priority
perfected security interest therein, except for certain
liens which have priority over previously perfected
security interests by operation of law, and, with certain
exceptions, in the proceeds thereof. If the Sponsor, the
Servicer, or the Trustee, while in possession of an item
of Receivables, sells or pledges and delivers such
Receivables to another party, in violation of the Pooling
Agreement, there is a risk that the purchaser could
acquire an interest in such an item of Receivables having
priority over the Trust's interest.
[Because of the administrative burden and expense that
would be entailed in so doing, neither the Originator nor
the Sponsor has filed or will be required to file UCC (as
herein defined) financing statements in favor of the
Trustee identifying the Vehicles as collateral pledged to
the Trustee on behalf of the Trust. In the absence of
such filings any security interest in the Vehicles will
not be perfected in favor of the Trustee. Upon request,
the Originator and/or the Sponsor will be required to
make such filings with respect to Defaulted Contracts.
See "Risk Factors -- Certain Legal Aspects" and "Certain
Legal Aspects -- UCC and Bankruptcy Considerations."]
Certain Federal Tax
Considerations....... The Certificates will be characterized as indebtedness
for federal income tax purposes. Under the Pooling
Agreement, the Sponsor and the Certificateholders and
other parties will agree to treat the Certificates as
debt for federal and state income tax purposes. See
S-11
<PAGE>
"Certain Federal and State Income Tax Considerations" for
additional information concerning the application of
federal and state income tax laws.
ERISA
Considerations....... The acquisition of a Certificate by an employee benefit
plan subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and the provisions of
Section 4975 of the Code (a "Plan"), could result in a
prohibited transaction under ERISA and Section 4975 of
the Code, unless such acquisition is subject to a
statutory or administrative exemption, if, by virtue of
such acquisition, assets held by the Trust and pledged to
the Trustee were deemed to be assets of the Plan. In
addition, the Originator or other parties may be
considered to be a fiduciary with respect to any Plan.
Therefore, the acquisition and transfer of the
Certificates are subject to certain restrictions. See
"ERISA Considerations."
Ratings.............. It is a condition of the original issuance of the
Certificates that the Certificates receive ratings of ___
by ________________ ("____"), and ___ by
____________________ ("_________"). A security rating is
not a recommendation to buy, sell or hold securities, and
may be subject to revision or withdrawal at any time by
the assigning entity. See "Ratings."
Risk Factors......... For a discussion of certain factors that should be
considered by prospective investors in the Certificates,
see "Risk Factors" herein and in the Prospectus.
Certain Legal Matters Certain legal matters relating to the validity of the
issuance of the Certificates will be passed upon for the
Issuer and the Underwriter by Dewey Ballantine, New York,
NY.
S-12
<PAGE>
RISK FACTORS
Prospective Certificateholders should consider, among other things, the
following factors in connection with the purchase of the Certificates:
Risk of Losses on Investment Associated with Limited Obligations of the
Trust. Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the
Certificates. The Certificateholders will not receive any distributions with
respect to a Payment Date until the full amount of interest on and principal of
the Certificates on such Payment Date has been deposited in the Certificate
Distribution Account. The Trust does not have, nor is it permitted or expected
to have, any significant assets or sources of funds other than the Receivables
and the Trust Accounts. The Securities represent solely obligations of, or
interests in, the Trust and the Securities will not be insured or guaranteed by
the Sponsor, the Originator, the Servicer, the [Owner] Trustee or any other
person or entity. Consequently, holders of the Securities must rely for
repayment upon payments on the Receivables and, if and to the extent available,
amounts on deposit in the Reserve Account. Amounts to be deposited in the
Reserve Account are limited in amount, and the amount required to be on deposit
in the Reserve Account will be reduced as the Pool Balance is reduced. In
addition, funds in the Reserve Account will be available on each Payment Date to
cover shortfalls in distributions of interest and principal on the Certificates
prior to the application thereof to cover shortfalls on the Certificates. If the
Reserve Account is exhausted, the Trust will depend solely on current payments
on the Receivables to make payments on the Securities. Although the Trust will
covenant to sell the Receivables if directed to do so by the Indenture Trustee
in accordance with the Indenture following an acceleration of the Certificates
upon an Event of Default, there is no assurance that the market value of the
Receivables will at any time be equal to or greater than the aggregate principal
amount of outstanding Certificates. Therefore, upon an Event of Default with
respect to the Certificates there can be no assurance that sufficient funds will
be available to repay Certificateholders in full and consequently the
Certificateholders run the risk of loss on their investment. In addition, the
amount of principal required to be distributed to Certificateholders under the
Indenture is generally limited to amounts available therefor in the Certificate
Distribution Account. Therefore, the failure to pay principal on the
Certificates may not result in the occurrence of an Event of Default until the
Final Scheduled Payment Date.
Risk of Limited Liquidity and Lower Market Price Associated with a
Reduction or Withdrawal of Ratings of the Securities. It is a condition to the
issuance of the Certificates and the Certificates that the Certificates be rated
in the [_____] rating category or its equivalent, by at least two nationally
recognized rating agencies (the "Rating Agencies"). A rating is not a
recommendation to purchase, hold or sell Securities, inasmuch as such rating
does not comment as to market price or suitability for a particular investor.
The rating of the Securities addresses the likelihood of the timely payment of
interest on and the ultimate repayment of principal of the Securities pursuant
to their terms. There is no assurance that a rating will remain for any given
period of time or that a rating will not be lowered or withdrawn entirely by a
Rating Agency if in its judgment circumstances in the future so warrant. The
rating of the Certificates is based primarily on the creditworthiness of the
Receivables, the subordination provided by the Certificates and the availability
of funds in the Reserve Account. The rating of the Certificates is based
primarily on the creditworthiness of the Receivables and the availability of
funds in the Reserve Account. The ratings of the Securities are also based on
the rating of the security insurer. Upon a security insurer default, the rating
on the Securities may be lowered or withdrawn entirely. In the event that any
rating initially assigned to the Securities were subsequently lowered or
withdrawn for any reason, including by reason of a downgrading of the security
insurer's claims-paying ability, no person or entity will be obligated to
provide any additional credit enhancement with respect to the Securities. Any
reduction or withdrawal of a rating will have an adverse effect on the liquidity
and market price of the Securities. See "Ratings."
[Risk of Reduced Rate of Return Associated with Relationship Between Base
Rate and LIBOR. Allocations of payments on the variable rate Receivables to
principal and interest depend upon the applicable Base Rate. Interest on the
Certificates accrues at a rate generally based upon LIBOR. These
S-13
<PAGE>
two rates can and will vary with respect to each other. Historically, they have
increased or decreased roughly in tandem and, during the last ten years, LIBOR
always has remained below the Base Rate. However, no assurance can be given that
these historical trends will continue. There is a risk that if LIBOR were to
more above the Base Rate, the spread used to pay interest to the Securityholders
would disappear and the rate of return to investors would be reduced.]
[The variable rate Receivables bear interest at the Base Rate plus a Base
Rate Additive ranging from _____% to _____%. The Certificate Interest is based
upon LIBOR. If, in respect of any Payment Date, there does not exist a positive
spread between the weighted average of the Receivables Rate, Certificate
Interest Rate less the Servicing Fee Rate (such difference between the
Receivables Rate and the Servicing Fee Rate being the "Net Receivables Rate")
for the Collection Period preceding such Payment Date, on the one hand, and the
Certificate Interest Rate for such Payment Date (calculated before giving effect
to this sentence), on the other hand, then the [Pass-Through Rate] for such
Payment Date shall not exceed the Net Receivables Rate.]
[Risk of Reduced Rate of Return Associated with Yield Considerations. The
Certificateholders will bear the risk associated with the possible narrowing of
the spread between the Certificate Interest Rate, on the one hand, and the Net
Receivables Rate, on the other hand. If this spread disappears (i.e., if the
Certificate Interest Rate exceeds or equals the Net Receivables Rate), the
interest payable on the Certificates for the related Payment Date will not
exceed such Net Receivables Rate. A substantial change in LIBOR at a time when
the Net Receivables Rate does not experience a similar change could result in
limiting the Certificate Interest Rate and consequently could reduce the rate of
return to investors as described above.]
Risk of Lower Yield Associated with Prepayment Considerations. If
purchased at other than par, the yield to maturity on the Securities will be
affected by the rate of the payment of principal of the Contracts. If the actual
rate of payments on the Contracts is slower than the rate anticipated by an
investor who purchases the Securities at a discount, the actual yield to such
investor will be lower than such investor's anticipate yield. If the actual rate
of payments on the Contracts is faster than the rate anticipated by an investor
who purchases the Securities at a premium, the actual yield to such investor
will be lower than such investor's anticipated yield.
[All of the Contracts are fixed-rate contracts. The rate of prepayments
with respect to conventional fixed contracts has fluctuated significantly in
recent years. In general, if prevailing interest rates fall significantly below
the interest rates on fixed rate contracts, such contracts are likely to be
subject to higher prepayment rates than if prevailing rates remain at or above
the interest rate on such contracts. However, the monthly payment on contracts
similar to the Contracts is often smaller than the monthly payment on other
types of consumer debt, for example, a typical mortgage loan. Consequently, a
decrease in the interest rate payable as a result of a refinancing would result
in a relatively small reduction in the amount of the contracts monthly payment,
as a result of the relatively small loan balance. Conversely, if prevailing
interest rates rise appreciably above the interest rates on fixed rate
contracts, such contracts are likely to experience a lower prepayment rate than
if prevailing rates remain at or below the interest rates on such contracts. As
of the Cut-off Date, ____% of the aggregate principal balance of the Contracts
had prepayment penalties.]
[All of the Contracts are adjustable rate contracts. As is the case with
conventional fixed rate contracts, adjustable rate contracts may be subject to a
greater rate of principal prepayments in a declining interest rate environment.
For example, if prevailing interest rates fall significantly, adjustable rate
contracts could be subject to higher prepayment rates than if prevailing
interest rates remain constant because the availability of fixed-rate contracts
at competitive interest rates may encourage obligors to refinance their
adjustable rate contracts to "lock in" a lower fixed interest rate. However, no
assurance can be given as to the level of prepayments that the contracts will
experience. As of the Cut-off Date, ____% of the aggregate principal balance of
the Contracts had prepayment penalties.]
S-14
<PAGE>
THE RECEIVABLES
Contracts
[Description of collateral is transaction dependent - an example of
disclosure language is set forth below.]
[All of the Contracts were purchased by the Sponsor from the Originator in
the ordinary course of business and the Contracts constitute substantially all
of the automobile and light duty truck retail installment sale contracts
included in the Originator's portfolio meeting the selection criteria described
herein. Such selection criteria included that: (i) each Contract is secured by a
new or used automobile or light duty truck; (ii) each Contract was originated in
the United States; (iii) each Contract provides for level monthly payments that
fully amortize the amount financed over its original term except that the
payment in the first or last month in the life of the Contract may be minimally
different from the level payment, and a minimal number of the Contracts provide
for monthly payments for a period of time not exceeding one year after
origination in an amount less than such level payment, provided that as of the
Cutoff Date the monthly payment currently due under each such Contract is equal
to such level payment; (iv) each Contract was originated on or prior to
__________, 199_; (v) each Contract has an original term of __ to __ months and,
as of the Cutoff Date, had a remaining term to maturity of not less than three
months nor more __ than month; (vi) each Contract provides for the payment of a
finance charge at an APR ranging from __% to __%; (vii) each Contract shall not
have a Scheduled Payment that is more than 30 days past due as of the Cutoff
Date; (viii) no Contract shall be due, to the best knowledge of the Originator,
from any Obligor who is presently the subject of a bankruptcy proceeding or is
bankrupt or insolvent; (ix) no Vehicle has been repossessed without
reinstatement as of the Cutoff Date; and (x) as of the Cutoff Date, physical
damage insurance relating to each Vehicle is not being force-placed by the
Servicer.
Certain information with respect to the Receivables expected to be sold by
the Originator to the Sponsor pursuant to the Receivables Acquisition Agreement
and in turn sold by the Sponsor to the Trust pursuant to the Pooling Agreement
is set forth below. The description of the Receivables presented in this
Prospectus Supplement is based upon the pool of Receivables as it is expected to
be constituted on the Cutoff Date. While information as of the Closing Date for
the Receivables that actually will be sold to the Trust may differ somewhat from
the information presented herein, the Sponsor does not expect that the
characteristics of the Receivables that are sold to the Trust will vary
materially from the information presented in this Prospectus Supplement
concerning the Receivables.
As of the Cutoff Date, approximately __% and approximately __% of the
Aggregate Discounted Contract Balance are expected to represent Contracts
secured by automobiles and light duty trucks, respectively. Based on the
Aggregate Discounted Contract Balance, approximately __% and approximately __%
of the Contracts are expected to represent financing of new vehicles and used
vehicles, respectively, and no more than __% of the Contracts are expected to be
due from employees of the Originator or any of its respective affiliates. As of
the Cutoff Date, the average Principal Balance of Contracts secured by
automobiles and light duty trucks is expected to be approximately $______ and
approximately $_____, respectively. The majority of the Vehicles are expected to
be foreign and domestic automobiles and light duty trucks. Except in the case of
any breach of representations and warranties by the Originator, it is expected
that none of the Contracts provide for recourse to the Originator who originated
the related Contract.
Each Contract provides for fixed level monthly payments which will
amortize the full amount of the Contract over its term. The Contracts provide
for allocation of payments according to the "sum of periodic balances" or "sum
of monthly payments" method (the "Rule of 78s"). Each Contract provides for the
payment by the Obligor of a specified total amount of payments, payable in
monthly installments on the related due date, which total represents the
principal amount financed and finance
S-15
<PAGE>
charges in an amount calculated on the basis of a stated annual percentage rate
("APR") for the term of such Contract. The rate at which such amount of finance
charges is earned and, correspondingly, the amount of each fixed monthly payment
allocated to reduction of the outstanding principal balance of the related
Contract are calculated in accordance with the Rule of 78s. Under the Rule of
78s, the portion of each payment allocable to interest is higher during the
early months of the term of a Contract and lower during later months than that
under a constant yield method for allocating payments between interest and
principal. Notwithstanding the foregoing, all payments received by the Servicer
on or in respect of the Contract will be allocated pursuant to the Pooling
Agreement on an actuarial basis.
If an Obligor elects to prepay a Contract in full, it is entitled to a
rebate of the portion of the outstanding balance then due and payable
attributable to unearned finance charges, calculated in accordance with the Rule
of 78s. The amount of a rebate under a Contract calculated in this manner will
always be less than had such rebate been calculated on an actuarial basis.
Distributions to Certificateholders will not be affected by Rule of 78s rebates
under the Contract because pursuant to the Pooling Agreement such distributions
will be determined using the actuarial method.]
S-16
<PAGE>
The expected composition, distribution by APR and geographical
distribution of the Contracts are as set forth in the following tables.
Expected Composition of the Contracts
Initial Aggregate Discounted Contract Balance ..... $
Number of Contracts ............................... _______
Average Original Principal Balance ................ $
Range of Original Principal Balances ............ $_____ to $_____
Weighted Average APR(1)............................ ____%
Range of APRs ................................... ____% to ____%
Weighted Average Original Maturity(1) ............. ____ months
Range of Original Maturities .................... __ months to __ months
Weighted Average Remaining Maturity(1) ............ __ months
Range of Remaining Maturities ................... __ months to __ months
- ----------
(1) Weighted by Aggregate Discounted Contract Balance as of the Cutoff Date.
Expected Distribution of the Contracts by APR
Aggregate Percentage of
Percentage of Discounted Aggregate
Aggregate Contract Discounted
Number of Number Principal Contract
Range of APRs Contracts of Contracts Balance Balance
- ------------- --------- -------------- ---------- -------------
% to % .... % $ %
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
Total ......... % $ %
======== ===== ======= ==========
S-17
<PAGE>
Expected Distribution of the Contracts by State
Percentage of
Percentage of Aggregate Aggregate
Aggregate Discounted Discounted
Number of Number Contract Contract
State(1) Contracts of Contracts Balance Balance
- -------- ---------- ---------------- --------------- -------------
% $ %
Total........ % $ %
===== ======== ======== =======
- ----------
(1) Based on the addresses of the Obligors.
Substitution
Pursuant to the Receivables Acquisition Agreement, the Servicer will have
the right (but not the obligation) at any time to substitute one or more
Eligible Receivables (each a "Substitute Receivable") for a Receivable
("Predecessor Receivable") if:
(i) the Predecessor Receivable is then in default and, as of the
most recent Cut-Off Date, has been in default for at least [(60)]
consecutive days or a bankruptcy petition has been filed by or against the
Obligor;
[(ii) the Vehicles comprising part of the Substitute Receivable or
Receivables has a current estimated fair market value and a projected
residual value, respectively, equal to or greater than the current fair
market value and projected residual value of the Vehicles comprising part
of the Predecessor Receivable;] and
(iii) the Substitute Receivable or Receivables require the obligor
or obligors thereunder to make Contract Payments during each month ending
on or prior to the final payment date of the Certificate in an amount
which is at least as great as the Contract Payment required under the
Predecessor Receivable during each such month.
[provided, however, that the Aggregate Discounted Contract Balance of all
Contracts substituted shall not exceed [10%] of the Aggregate Discounted
Contract Balance of the Initial Receivables and the Additional Receivables.]
[Upon repossession and disposition of any Vehicles subject to a Defaulted
Contract, any deficiency remaining will be pursued to the extent deemed
practicable by the Servicer. The Servicer on behalf of the Issuer is directed to
maximize the Net Residual Value of the Vehicles relating to any Defaulted
Contract, and, in such regard, the Servicer may sell such Vehicles at the best
available price, refurbish such Vehicles and re-lease such Vehicles to third
parties, or take any other commercially reasonable steps to maximize such
Vehicles' Net Residual Value. Liquidation proceeds with respect to any such
Defaulted Contract, including any future payments received with respect to such
Defaulted Contracts, shall be paid to the Collection Account. If the Servicer
reasonably believes that the Net Residual Value of any Vehicles is zero or de
minimis, it will dispose of such Vehicles in accordance with its standard
procedures.
S-18
<PAGE>
[The original counterpart of each Contract constituting chattel paper and
the Contract Files will be held by _________________, as Trustee on behalf of
the Certificateholders. The Trustee will be required to indicate that the
Contracts have been transferred by the Originator to the Trust.]
The Additional Receivables
Subject to the conditions set forth below, in consideration of the
Trustee's delivery on the related Additional Receivable Transfer Date upon the
order of the Sponsor of all or a portion of the balance of funds in the
Pre-Funding Account, the Originator shall on any Additional Receivable Transfer
Date sell, transfer, assign, set over and otherwise convey without recourse, to
the Sponsor, all right, title and interest of the Originator in and to each
Additional Receivable listed on the schedule delivered by the Originator to the
Sponsor and the Trustee (including all Contract Payments due thereunder);
provided, however, that the Originator reserves and retains all of its right,
title and interest in and to all Contract Payments collected and interest
accruing on each such Additional Receivable prior to the related Additional
Receivable Transfer Date.
The amount released from the Pre-Funding Account shall be __________
percent (___%) of the Discounted Contract Balances of each Additional
Receivables so transferred.
The Originator shall transfer to the Issuer the Additional Receivable and
the other property and rights related thereto only upon the satisfaction of each
of the following conditions on or prior to the related Additional Receivable
Transfer Date:
(i) the Originator shall have provided the Trustee with a timely
Addition Notice and shall have provided any information reasonably
requested by the Sponsor or the Trustee with respect to the Additional
Receivables;
(ii) the Originator shall have delivered to the Sponsor and the
Trustee a duly executed written assignment (including an acceptance by the
Trustee) (the "Additional Receivable Transfer Agreement"), which shall
include schedules listing the Additional Receivables and any other
exhibits listed thereon;
(iii) the Originator shall have deposited in the Remittance Account
all collections in respect of the Additional Receivables received on or
after the related Additional Receivable Transfer Date;
(iv) as of each Additional Receivable Transfer Date, the Originator
was not insolvent nor will it be made insolvent by such transfer nor is it
aware of any pending insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Sponsor or the Certificateholders;
(vii) the Originator shall have delivered to the Trustee an
Officers' Certificate confirming the satisfaction of each condition
precedent specified in this paragraph and in the related Additional
Receivable Transfer Agreement;
(viii) the obligation of the Sponsor to purchase an Additional
Receivable on any Additional Receivable Transfer Date is subject to the
requirement that such Additional Receivable comply in all material
respects with the representations and warranties made by the Originator on
the Initial Receivables in the Pooling Agreement.
S-19
<PAGE>
THE ORIGINATOR AND THE SERVICER
General
The Originator is principally a company engaged in the business of
originating and acquiring retail installment sales contract financing to retail
customers of automotive dealers. The Originator provides full-service financing,
primarily through installment sales contracts, to servicing of new and used
automobiles and light duty trucks through dealer programs.
[The Originator has financed over [$___ million of vehicles, representing
over _________ vehicles. The Originator currently services over ___ customers
through its direct servicing activities and an additional ____ customers in
connection with its subsidiaries' activities.] As of [____________, the
Originator had ________ employees.
Delinquency and Default Experience
There can be no assurance that the levels of delinquency and loss
experience reflected in Table 1 and Table 2, below, are indicative of the
performance of the Receivables included in the Collateral for the Certificates.
TABLE 1
DELINQUENCY EXPERIENCE
================================================================================
Year Ended December 31,
-------------------------------------------------------------
1991 1992 1993
=============================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
Total Originator
Portfolio
at Year End $ $ $
Delinquencies:
31-60 Days $ % $ % $ %
61 + Days % % %
----- - ----- - ----- -
Total Delinquencies $ $ $
Total Delinquencies
as a % of Total
Portfolio % % %
S-20
<PAGE>
TABLE 2
LOSS EXPERIENCE
================================================================================
Year Ended December 31,
-------------------------------------------------------------
1991 1992 1993
=============================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
Total Acquisitions (1) $ $ $
Gross Defaults % % %
Gross Recoveries % % %
Net Losses % % %
================================================================================
(1) Total Acquisition = total cost (aggregate purchase price of the Vehicles)
to the Originator since inception in ____ through and including the year end
set forth above.
Litigation
The Originator is not involved in any legal proceedings, and is not aware
of any pending or threatened legal proceedings that would have a material
adverse effect upon its financial condition or results of operations.
Underwriting
[Description of the underwriting guidelines of the Originator is
transaction dependent - an example of disclosure language is set forth below.]
[The Originator's underwriting standards are intended to evaluate a
prospective buyer's credit standing and repayment ability and the adequacy of
the related financed vehicle as collateral. Generally, a prospective buyer is
required by the Originator to complete a credit application on a form prepared
or approved by the Originator. As part of the description of the applicant's
financial condition, the applicant is required to provide current information
enumerating, among other things, employment history, bank account information,
debts and credit references. Upon receipt, all application data is entered into
a centralized computer network that automatically obtains an independent credit
bureau report and then "scores" the application with the use of a scorecard. The
scorecard enables the Originator to review an application and establish the
probability that the proposed retail installment sale contract will be paid in
accordance with its terms. The credit scores are expressed as a numerical
estimate of the "odds of repayment" on a scheduled basis. For example, a score
of 15 means that, based on the Originator's past retail automobile and light
duty truck installment sale contract experience, the odds are 15 to 1 that over
the life of the contract that the related account will not (i) be delinquent for
in excess of 30 days more than twice, (ii) be delinquent in excess of 60 days
more than once, (iii) ever be delinquent for more than 90 days or (iv) require
the related financed vehicle to be repossessed.
This numerical credit scoring system was developed by ________ (the
"Credit Score Analysts"), an automobile lending and leasing consulting firm,
specifically for the Originator, based upon an analysis of the historical
performance of the retail automobile and light duty truck installment sale and
lease contract portfolios of the Originator. To determine the appropriate
characteristics for credit scoring, the Credit Score Analysts reviewed a random
sample of 10,000 retail installment sale contracts and 10,000 lease contracts
from the portfolio of the Originator. The Credit Score Analysts then compiled a
list of ten to twelve characteristics that cumulatively carried the most weight
in predicting historical performance and assigned point values and weighting to
each of these characteristics. Each scorecard assigns at least a 50% weighting
to the credit bureau report. This weighting system is particularly significant
because the credit bureau report is beyond the control of the Originator and
cannot be manipulated. The Credit Score
S-21
<PAGE>
Analysts determined that the most accurate determinative of the performance of
an installment sale or lease contract was the credit bureau report. Based on
such historical performance, the Credit Score Analysts prepared two retail
credit scorecards (which differ according to type of contract and the
geographical location of the applicant) and two lease scorecards.
The Credit Score Analysts' scorecard system was implemented in ___________
and has been used for all retail installment sale contracts originated
subsequent thereto. Prior to this time, the Originator used a scoring model
which, while not developed specifically for it, is used extensively in the
automobile lending industry. This scoring model evaluated an applicant's
creditworthiness based on specific characteristics gathered from the credit
investigation process and the amount of the contract requested. Based on the
applicant's score, each applicant was identified as falling into one of four
credit risk categories ranging from A to D. Applicants with a risk category of A
or B were normally approved by the credit supervisor at the branch. Those in a
risk category below B went to local office management for review and final
approval, qualification or rejection.
Both the alphabetical and numerical scoring models are intended to provide
a means of analysis to assist in decision making, but the final decision rests
with the Originator's credit specialists. Notwithstanding the foregoing, the
ability of a credit specialist to override the scorecard analysis is limited to
no more than 10% of all applications, and both the number of overrides granted
by each credit specialist and the aggregate number of overrides granted by all
credit specialists are tracked by the Originator daily in order to insure the
statistical validity of the scoring models. Detailed reporting on all aspects of
the numerical scoring model is utilized to track performance of the Originator's
retail automobile and light duty truck installment sale contract portfolio and
to enable the Originator, with the assistance of the Credit Score Analysts, to
fine tune the scoring model according to statistical indications in order to
continually assure the statistical validity of the scoring models. Approximately
__% and approximately __% of the Contracts, based on Initial Contract Principal
Balance, are expected to have been underwritten using the Credit Score Analysts'
numerical scorecard and using the alphabetical scoring model, respectively. The
remaining Contracts were not underwritten using either scoring model.
For the period _______________ through _____________, the Originator
booked approximately _______% of all credit applications.
The amount of a retail installment sale contract generally will not exceed
(i) when secured by a new vehicle, the price paid by the dealer for such vehicle
or (ii) when secured by a used vehicle, the average wholesale value of such
vehicle stated in the most recent edition of the National Auto Dealers
Association Used Car Guide, plus in each case various taxes and fees in
connection with the sale. The Originator regularly reviews the quality of the
contracts which it purchases and periodically conducts quality audits to ensure
compliance with its established policies and procedures.]
Insurance
[The Originator requires each obligor under an automobile or light duty
truck retail installment sale contract to obtain comprehensive and collision
insurance with respect to the related financed vehicle and verifies the
existence of such insurance before it will purchase such contract. Following
such purchase, the Originator monitors the maintenance of such physical damage
insurance but does not force-place physical damage insurance if the related
obligor does not maintain such insurance. Instead, each such financed vehicle is
covered by a policy of vendor's single interest physical damage insurance in
favor of the Originator issued by ______________ (the "VSI Insurance Policy"),
which provides limited coverage (subject to deductibles) for, among other
things, (i) physical loss or damage from any external cause to such financed
vehicle and (ii) inability to locate such financed vehicle or the related
obligor. The VSI Insurance Policy is in effect from the date a contract is
purchased from the related Dealer and the premium for such VSI Insurance Policy
is paid for by the Originator. The Originator will represent and warrant in the
Receivables Acquisition Agreement, and the Sponsor will represent and
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warrant in the Pooling Agreement, as to each Contract, that the related Vehicle
is insured under the VSI Insurance Policy, the premiums for which have been paid
in full, and that such VSI Insurance Policy is in full force and effect.
The Originator does not require obligors to maintain credit disability or
life or credit or health insurance or other similar insurance coverage which
provides for payments to be made on the automobile and light duty truck retail
installment sale contracts which it purchases on behalf of such obligors in the
event of disability or death. To the extent that any such insurance coverage is
obtained on behalf of an Obligor, payments received in respect of such coverage
may be applied to payments on the related Contract to the extent that the
Obligor's beneficiary chooses to do so.]
Servicing
The Receivables will be serviced by the Originator, as Servicer, pursuant
to the Pooling Agreement.
The Pooling Agreement requires that servicing of the Receivables by the
Originator shall be carried out in the same manner in which it services
contracts and vehicles held for its own account and consistent with customary
practices of servicers in the retail automobile industry, but in performing its
duties hereunder, the Originator will act on behalf and for the benefit of the
Sponsor, the Trustee and the holders of the Certificates, subject at all times
to the provisions of the Pooling Agreement, without regard to any relationship
which the Originator or any Affiliate of the Originator may otherwise have with
a Obligor. Except as permitted by the terms of any Contract following a default
thereunder, the Originator shall not take any action which would result in the
interference with the Obligor's right to quiet enjoyment of the Vehicles subject
to the Contract during the term thereof.
Following each Determination Date, the Originator shall advance and remit
to the Trustee, in such manner as will ensure that the Trustee will have
immediately available funds on account thereof by 11:00 a.m. New York time on
the [______] Business Day prior to the next succeeding Payment Date, a Servicer
Advance equal to the Contract Payment due during the preceding Contract Payment
Period with respect to each Contract (other than a Contract which became a
Defaulted Contract on or prior to such Determination Date) under which the
Obligor has not made such payment by such Determination Date; provided, however,
that the Originator will not be obligated to make a Servicer Advance with
respect to any Contract if the Originator, in its good faith judgment, believes
that such Servicer Advance would be a Nonrecoverable Advance. If the Originator
determines that any Contract Payment it has made, or is contemplating making,
would be a Nonrecoverable Advance, the Originator shall deliver to the Trustee
an Officers' Certificate stating the basis for such determination.
Servicing Compensation and Payment of Expenses
For its servicing of the Receivables, the Originator will be entitled to
receive a Servicing Fee equal to the product of (i) one-twelfth, (ii) ___% and
(iii) the Aggregate Discounted Contract Balance of all Contracts as of the
preceding Determination Date, payable out of the Remittance Account, plus
Servicing Charges and Investment Earnings.
All costs of servicing each Contract in the manner required by the Pooling
Agreement shall be borne by the Originator, but the Originator shall be entitled
to retain, out of any amounts actually recovered with respect to any Defaulted
Contract [or the Vehicles subject thereto,] the Originator's actual
out-of-pocket expenses reasonably incurred with respect to such Defaulted
Contract [or Vehicles]. In addition, the Originator shall be entitled to receive
on each Payment Date any unreimbursed Nonrecoverable Advances or Servicer
Advances with respect to any Defaulted Contract and the Servicing Fee.
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Evidence as to Compliance
The Pooling Agreement requires that with each set of financial statements
delivered pursuant to the Pooling Agreement, the Originator will deliver an
Officers' Certificate stating (i) that the officers signing such Certificate
have reviewed the relevant terms of the Pooling Agreement and have made, or
caused to be made under such officers' supervision, a review of the activities
of the Originator during the period covered by the statements then being
furnished, (ii) that the review has not disclosed the existence of any Servicer
Event of Default or, if a Servicer Event of Default exists, describing its
nature and what action the Originator has taken and is taking with respect
thereto, and (iii) that on the basis of such review the officers signing such
certificate are of the opinion that during such period the Originator has
serviced the Receivables in compliance with the required procedures except as
described in such certificate.
The Originator shall cause a firm of independent certified public
accountants (who may also render other services to the Originator) to deliver to
the Trustee, with a copy to the Rating Agency and each holder of the
Certificates, within [90] days following the end of each fiscal year of the
Originator, beginning with the Originator's fiscal year ending ____________,
199__, a written statement to the effect that such firm has examined in
accordance with generally accepted practices samples of the accounts, records,
and computer systems of the Originator for the fiscal year ended on the previous
__________ relating to the Receivables (which accounts, records, and computer
systems shall be described in one or more schedules to such statement), that
such firm has compared the information contained in the Originator's reports
delivered in the relevant period with information contained in the accounts,
records, and computer systems for such period, and that, on the basis of such
examination and comparison, such firm is of the opinion that the Originator has,
during the relevant period, serviced the Receivables in compliance with such
servicing procedures, manuals, and guides and in the same manner as it services
comparable contracts for itself or others, that such accounts, records, and
computer systems have been maintained, and that such certificates, accounts,
records, and computer systems have been properly prepared and maintained in all
material respects, except in each case for (a) such exceptions as such firm
shall believe to be immaterial and (b) such other exceptions as shall be set
forth in such statement.
Other Servicing Procedures
At least [___] days prior to each Payment Date, the Originator shall
deliver a report in writing (the "[Monthly] Servicer Report") to each holder of
the Certificates, the Trustee and the Rating Agency.
If an Obligor has [____] Contract Payments which are due and unpaid as of
any Determination Date, such Obligor's Contract shall become a Defaulted
Contract. Where no satisfactory arrangements can be made for collection of
delinquent payments within [___] days of a Contract becoming a Defaulted
Contract, the Originator shall foreclose or otherwise liquidate any such
Defaulted Contract [(together with the related Vehicles)] within [60] days of
such Contract becoming a Defaulted Contract. In connection with any foreclosure
or other liquidation, the Originator will take such action as is appropriate,
consistent with the Originator's administration of contracts in its own
portfolio, including such action as may be necessary to cause, or attempt to
cause, the Obligor thereunder to cure such default (if the same may be cured) or
to terminate or attempt to terminate such Contract and to recover, or attempt to
recover, all damages resulting from such default.
[The Originator will use its best efforts (i) to sell or re-lease any
Vehicles subject to a Defaulted Contract in a timely manner and upon reasonable
terms and conditions so as to reduce as expeditiously as is consistent with
sound commercial practice any unreimbursed amounts drawn by the Trustee on the
Reserve Account and (ii) to sell or re-lease any Vehicles remaining subject to
the lien of the Trustee upon the expiration of the Contract to which such
Vehicles is subject, in a timely manner and in a manner consistent with that
utilized by the Originator with respect to vehicles owned by it so as to
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realize, to the extent possible under then prevailing market conditions, the Net
Residual Value of such Vehicles.]
[All Residual Payments realized by the Originator in the performance of
its duties with respect to any item of Vehicles remaining subject to the Lien of
the Trustee (net of the Originator's actual out-of-pocket expenses reasonably
incurred in such realization) shall be held in trust by the Originator, as agent
for the Trustee, and turned over to the Trustee within [___] Business Days for
application in accordance with the provisions of the Pooling Agreement, provided
that, to the extent that (i) the Originator has made any advances with respect
to any Contract which thereafter became a Defaulted Contract and (ii) the
Originator has not otherwise been fully reimbursed for such advances, the
Originator shall reimburse itself for such advances from any Residual Payments
recovered with respect to such Defaulted Contract before remitting to the
Trustee any such amounts for deposit in the Remittance Account.]
Removal of the Servicer
The Pooling Agreement will provide that the Originator may not resign from
its obligations and duties as Servicer thereunder, except upon a determination
that the Originator's performance of such duties is no longer permissible under
applicable law. The Originator can only be removed pursuant to a Servicer Event
of Default. If a Servicer Event of Default shall have occurred and be
continuing, the Trustee shall give written notice to the Originator of the
termination of all of the rights and obligations of the Originator (but none of
the Originator's obligations thereunder, which shall survive any such
termination) under the Pooling Agreement. On and after the time the Originator
receives a notice of termination, the Trustee shall be the successor in all
respects to the Originator in its capacity as servicer under the Pooling
Agreement of the Receivables. The Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act, give notice of such fact to each
holder of the Certificates and (i) appoint an established institution,
satisfactory to the holders of Certificates evidencing not less than [66-2/3%]
of the Voting Rights, as the successor to the Originator to assume all of the
rights and obligations of the Originator, including, without limitation, the
Originator's right to receive the Servicing Fee (but not the obligations of the
Originator contained in the Pooling Agreement) or, (ii) if no such institution
is so appointed, petition a court of competent jurisdiction to appoint an
institution meeting such criteria as the Originator.
THE TRUSTEE
The Trustee, ____________, has an office at _____________________.
The Trustee may resign, subject to the conditions set forth below, at any
time upon written notice to the Sponsor, the Servicer and the Certificate
Insurer, in which event the Servicer, with the consent of the Certificate
Insurer, will be obligated to appoint a successor Trustee. If no successor
Trustee shall have been so appointed and have accepted such appointment within
[30] days after the giving of such notice of resignation, the resigning Trustee
may petition a court of competent jurisdiction for the appointment of a
successor Trustee. Any successor Trustee shall meet the financial and other
standards for qualifying as a successor Trustee under the Pooling Agreement. The
Servicer, the Certificate Insurer or Certificateholders evidencing more than
[___%] of the Percentage Interests of the Trust may also remove the Trustee if
the Trustee ceases to be eligible to continue as such under the Pooling
Agreement and fails to resign after written request therefor, or is legally
unable to act, or if the Trustee is adjudicated to be insolvent. In such
circumstances, the Servicer, the Certificate Insurer or such Certificateholders
will also be obligated to appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee will not become
effective until acceptance of the appointment by the successor Trustee.
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THE TRUST
The Trust will be formed in accordance with the laws of the State of
Nevada, pursuant to the Pooling Agreement, solely for the purpose of
effectuating the transactions described herein. Prior to formation, the Trust
will have had no assets or obligations and no operating history. Upon formation,
the Trust will not engage in any business activity other than acquiring and
holding the Receivables and, during the Funding Period, the Pre-Funded Amount,
issuing the Certificates and distributing payments thereon. As described under
"Description of the Certificates - Servicing Compensation and Payment of
Expenses," a portion of the monthly collections with respect to the Contracts
will be paid to the Servicer as servicing compensation. All other expenses of
the Trust will be paid on behalf of the Sponsor by the Servicer or by the
Originator, as provided in the Pooling Agreement.
The Trust Fund will consist of the [Vehicles], the Contracts and any
Scheduled Contract Payments to be made by Obligors (but not including any
payments due on or prior to the Cut-Off Date or, with respect to an Additional
Receivable, the day prior to the Payment Date on which the Trust acquires such
Additional Receivable; any guaranties of an Obligor's obligations under a
Contract; any documents in the Contract Files; the insurance policies maintained
by the Obligors with respect to the Vehicles (the "Insurance Policies") and the
proceeds of such Insurance Policies; any rights of the Sponsor under the
Receivables Acquisition Agreement (including the right to instruct the
Originator to exercise any unassignable rights of enforcement under the
Contracts and any guaranties thereof, the Originator's rights ("Vendor Agreement
Rights") under agreements with any vendors from which the Contracts were
acquired, and the Insurance Policies); a security interest in the Reserve
Account and amounts on deposit therein; funds from time to time deposited in the
Pre-Funding Account, the Capitalized Interest Account, the Remittance Account,
the Advance Payment Account and the Additional Receivables Funding Account; the
Certificate Insurance Policy; and any and all income and proceeds of foregoing.
The Pooling Agreement does not permit the Trust to acquire any additional assets
other than Additional Receivables. Because the Trust does not have any operating
history and will not engage in any business activity other than owning the Trust
Fund, issuing the Certificates and making distributions thereon, there has not
been included any historical or pro forma ratio of earnings to fixed charges
with respect to the Trust.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling Agreement to be
entered into by the Servicer, the Sponsor, and the Trustee. The Trustee will
provide a copy of the Pooling Agreement to subsequent Certificateholders without
charge on written request addressed to its Corporate Trust Department at
________________________.
The following summary describes certain terms of the Pooling Agreement,
does not purport to be complete and is subject to and qualified in its entirety
by reference to the Pooling Agreement. Wherever provisions of the Pooling
Agreement are referred to, such provisions are hereby incorporated herein by
reference.
General
The obligations evidenced by the Certificates are recourse to the assets
of the Trust only and are not recourse to the Sponsor, the Originator, the
Servicer, the Trustee, or any other Person. The Trustee will agree in the
Pooling Agreement and in the Certificates to pay to the Certificateholders (i)
an amount of principal equal to the Initial Certificate Principal Amount and
(ii) Certificate Interest, in each case at the times, from the sources and on
the terms and conditions set forth in the Pooling Agreement and in the
Certificates.
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The Certificates will be issued in fully registered form only, as
authenticated by the Trustee. Each Certificate will evidence [$1,000,000] or
more of the Initial Certificate Principal Amount.
The "Percentage Interest" owned by a Certificateholder will be expressed,
for voting and certain other purposes under the Pooling Agreement, as the
percentage obtained by dividing the denomination representing the Percentage
Interest of the related Certificate by the Initial Certificate Principal Amount.
The Certificates are transferable and exchangeable through the Trustee at its
Corporate Trust Department in ____________. No service charge will be made for
any registration of transfer or exchange of Certificates, but a sum sufficient
to cover any tax or other governmental charge may be required to be paid by the
Certificateholder.
Payments on the Certificates are required to be made by the Trustee on
each Payment Date, to persons in whose names Certificates are registered as of
the last day of the immediately preceding calendar month (the "Record Date").
The first Payment Date for distributions to the Certificateholders will be
__________, 199__. Payments are required to be made by the Trustee, by check
mailed or, if requested by the Certificateholder, by wire transfer of
immediately available funds, to Certificateholders entitled thereto at the
address appearing on the Certificate register on the Record Date.
Conveyance of Receivables
On the date of issuance of the Certificates (the "Closing Date"), the
Sponsor will transfer, assign, set over and otherwise convey to the Trust,
without recourse (except as expressly set forth in the Pooling Agreement), all
of its right, title and interest in and to [(a) the Initial Vehicles,] (b) the
Initial Contracts, (c) any guaranties of an Obligor's obligations under a
Contract, (d) any documents in the Contract files, (e) Insurance Policies with
respect to the Initial Vehicles and insurance proceeds thereof, (f) the Vendor
Agreement Rights with respect to the Initial Vehicles, (g) the rights of the
Sponsor pursuant to the Receivables Acquisition Agreement, (h) a security
interest in the Reserve Account and amounts on deposit therein and (i) all
income and proceeds of the foregoing (collectively, the "Initial Receivables")
and cash in an amount equal to the Original Pre-Funded Amount. On the
instructions of the Sponsor, the Trustee will cause the Trust to issue the
Certificates offered hereby to the initial investors.
During the Funding Period, the Sponsor may transfer to the Trust
Additional Receivables relating to and including Contracts having an aggregate
Discounted Contract Balance not less than $____________. In consideration of the
conveyance of such Additional Receivables, the Trust shall disburse to the
Sponsor and the Reserve Account from the Pre-Funding Account an amount not
exceeding ____% and ___%, respectively, of the aggregate Discounted Contract
Balances of such Additional Receivables. Any amounts remaining on deposit in the
Pre-Funding Account on the Funding Distribution Date shall be transferred to the
Remittance Account for distribution to the Certificateholders as a prepayment of
principal.
During the Interest-Only Period, and provided that (a) the amount on
deposit in the Pre-Funding Account has been reduced to zero and (b) no Required
Amortization Event has occurred, all Contract Principal deposited to the
Remittance Account with respect to each Remittance Period (including the
principal portions of Servicer Advances and of Reconveyance Amounts deposited on
the related Notice Date) shall be disbursed on the next Payment Date to the
Sponsor in consideration of the conveyance of Additional Receivables. The
Contracts relating to such Additional Receivables shall have an aggregate
Discounted Contract Balance as nearly as possible equal to, but in no event less
than, the Contract Principal deposited to the Remittance Account with respect to
the prior Remittance Period (including the principal portions of Servicer
Advances and of Reconveyance Amounts deposited on the related Notice Date).
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On and after the Initial Amortization Date (unless a Required Amortization
Event has occurred) the Sponsor will have the option to transfer to the Trust
Additional Receivables relating to and including Contracts having an aggregate
Discounted Contract Balance not in excess of the aggregate amount of Contract
Principal Payments received by the Servicer during the prior Remittance Period.
In consideration of the conveyance of such Additional Receivables, the Trust
shall disburse to the Sponsor an amount equal to the aggregate Discounted
Contract Balances of such Additional Receivables. This option of the Sponsor is
limited to $____________ aggregate Discounted Contract Balance of such
Additional Receivables.
In connection with each such additional transfer, the Sponsor will be
required to send to the Trustee, by facsimile, on the Notice Date preceding each
such Payment Date and the Funding Distribution Date, in the event of a transfer
on such date, a list of Additional Receivables listing all Contracts to be
transferred to the Trust on such date, together with (i) an Additional
Receivables Agreement in the form required by the Pooling Agreement, properly
completed by an appropriate officer of the Sponsor (an "Additional Pooling
Agreement") and, (ii) an opinion of counsel in the form required by the Pooling
Agreement.
If a Required Amortization Event occurs, then no further conveyances of
Additional Receivables shall occur, and all amounts that would otherwise have
been paid in consideration of such conveyances shall be retained in the
Remittance Account or, during the Funding Period, the Pre-Funding Account and
shall be distributed, in the case of amounts on deposit in the Remittance
Account, on each Payment Date or, in the case of amounts on deposit in the
Pre-Funding Account, on the Funding Distribution Date.
The Sponsor will be required to deliver the Contract files to the Servicer
as required by the Pooling Agreement. The Servicer will retain possession of the
Contracts and the Contract files, and the Servicer will retain copies of any
other documents which relate to the Receivables, any related evidence of
insurance and payment, delinquency and related reports maintained by the
Servicer in the ordinary course of business with respect to each Receivable.
Prior to transfer of the Receivables to the Trust, the Servicer will cause its
electronic ledger to be marked to show that such Receivables have been
transferred to the Sponsor and then to the Trust, and the Sponsor will file UCC
financing statements reflecting the transfer and assignment of the Receivables
with the Secretary of State of the State of ___________ and the County Clerk of
____________ County, _____________. See "Certain Legal Aspects of the
Receivables."
Indemnification
The Pooling Agreement will provide that the Originator will defend and
indemnify the Servicer, the Certificate Insurer, the Sponsor, the Trustee, the
Trust and the Certificateholders against any and all losses, claims, damages and
liabilities to the extent, but only to the extent, that the same have been
suffered by any such party by virtue of a breach by the Originator of its
obligations (other than breach of the Originator's representations and
warranties, with respect to which the sole remedy is expressly limited to the
removal of the affected Receivables and the remittance of the Reconveyance
Amount by the Originator as discussed above) under the Pooling Agreement.
The Pooling Agreement will also provide that the Servicer will defend and
indemnify the Sponsor, the Certificate Insurer, the Trustee, the Trust and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation, reasonably incurred, arising out of or resulting from [(i) the
use, repossession or operation by the Servicer or any affiliate thereof of any
Vehicles] and (ii) the failure of the Servicer to perform its duties under the
Pooling Agreement. The Originator's obligations, as Servicer, to indemnify the
Trust and the Certificateholders for acts or omissions of the Originator as
Servicer will survive the removal of the Servicer but will not apply to any acts
or omissions of a successor Servicer.
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The Trustee is required to establish and maintain in accordance with the
Pooling Agreement the Pre-Funding Account, the Capitalized Interest Account, the
Remittance Account, the Advance Payment Account and the Additional Receivables
Funding Account, each in the name of the Trust and for the benefit of
Certificateholders. Each such Account will be one or more segregated trust
accounts.
On the Closing Date, the Sponsor shall deposit in the Pre-Funding Account
and the Capitalized Interest Account the Original Pre-Funded Amount and the
Initial Capitalized Interest Account, respectively, from the proceeds of the
sale of the Certificates.
During the Funding Period, it is anticipated that amounts on deposit in
the Pre-Funding Account will generate Investment Earnings in an amount less than
the interest payable on the Certificates issued in respect of the Original
Pre-Funded Amount. The Capitalized Interest Account will hold amounts that may
be required to be disbursed to the Certificateholders on each Payment Date
during the Funding Period in the event the aggregate Contract Interest deposited
in the Remittance Account for the related Remittance Period is insufficient to
fund the payment of Certificate Interest payable to the Certificateholders on
such Payment Date. On each Payment Date during the Funding Period, the Sponsor
will have the right to direct the Trustee to transfer to the Sponsor from the
Capitalized Interest Account the Overfunded Interest Amount. The Overfunded
Interest Amount arises as a result of the Sponsor's conveyance of Additional
Receivables to the Trust in exchange for cash on deposit in the Pre-Funding
Account. It is expected that the Contract Interest with respect to the Contracts
included in such Additional Receivables will exceed the Investment Earnings on
the amount of cash disbursed to the Sponsor from the Pre-Funding Account in
exchange for such Additional Receivables by the Overfunded Interest Amount. On
the funding Distribution Date, the amount, if any, on deposit in the Capitalized
Interest Account shall be disbursed to the Sponsor.
Section _____ of the Pooling Agreement outlines the amounts to be
deposited in the Remittance Account. In particular, (A) the Servicer is required
to deposit, within [___] business days following receipt, Actual Payments; (B)
the Servicer is required to deposit Servicer Advances not later than the Notice
Date for a Remittance Period; (C) the Trustee will deposit, not later than the
Notice Date, that portion of any Advance Payments that constitute Scheduled
Payments due during the immediately preceding Remittance Period; (D) the
Originator or the Servicer will deposit, not later than the Notice Date, any
Reconveyance Amount then due and payable by it and the Certificate Insurer will
deposit prior to the Payment Date the repurchase price for any Defaulted
Contracts it elects to purchase; (E) the Trustee will deposit, on the Funding
Distribution Date, the amount, if any, on deposit in the Pre-Funding Account;
(F) the Trustee will deposit from the Capitalized Interest Account, on each
Payment Date during the Funding Period, the Capitalized Interest Requirement, if
any; (G) the Trustee will deposit from the Reserve Account, on the Claim Date,
any Insufficiency Amount; and (H) the Certificate Insurer is required to
deposit, not later than 12:00 noon New York City time on the later of the
Business Day immediately following receipt by the Fiscal Agent of a Notice of
Nonpayment or the Payment Date, any Insured Payment required to be paid for such
Payment Date.
The Servicer is required to deposit all Advance Payments to the Advance
Payment Account. "Advance Payments" are amounts paid by a user during a
Remittance Period with respect to amounts due from such user in subsequent
Remittance Periods.
The Additional Receivables Funding Account will hold amounts required to
be disbursed to the Sponsor pending the transfer of Additional Receivables to
the Trust. From and after the Payment Date two months after the Funding
Distribution Date, the amount on deposit in the Additional Receivables Funding
Account may not exceed $____________. The purpose of the Additional Receivables
Funding Account is to prevent a temporary shortfall in the supply of Additional
Receivables from becoming a Required Amortization Event.
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The Pooling Agreement permits the Servicer to direct the investment of
amounts in the Pre-Funding Account, the Capitalized Interest Account, the
Remittance Account, the Advance Payment Account and the Additional Receivables
Funding Account in Eligible Investments that mature not later than the business
day prior to the next succeeding Payment Date, on which Payment Date such
amounts shall be distributed as described below, and such amounts shall be held
to maturity. Generally, the holder of the Sponsor's Certificate shall be
entitled to any income from such investments.
"Eligible Investments" for amounts on deposit in the Pre-Funding Account,
the Remittance Account, the Advance Payment Account and the Additional
Receivables Funding Account are described in [Article I] of the Pooling
Agreement.
The Servicer may deduct from amounts otherwise payable to the Remittance
Account with respect to a Remittance Period an amount equal to amounts
previously deposited by the Servicer into the Remittance Account but (i)
subsequently uncollectible as a result of dishonor of the instrument of payment
for or on behalf of the Obligor or (ii) later determined to have resulted from
mistaken deposits.
Servicer Advances
In the event that any Obligor fails to remit its full Scheduled Payment by
the Calculation Date, the Servicer is required to make an advance from its own
funds of an amount equal to such unpaid Scheduled Payment (a "Servicer Advance")
if the Servicer, in its sole discretion, determines that eventual repayment of
such Servicer Advance is likely from collections from or on behalf of the
related Obligor. The Pooling Agreement provides for the reimbursement of the
Servicer for such Servicer Advances from funds available for distribution in the
Remittance Account on each Payment Date after the Required Payments to
Certificateholders have been made as set forth below in "Distributions on
Certificates".
Reserve Account
Pursuant to the Insurance Agreement, the Sponsor will establish the
Reserve Account with the Collateral Agent and a security interest in the Reserve
Account will be granted to the Trust. On each Payment Date, as described below
under "Flow of Funds," certain amounts are required to be deposited into the
Reserve Account. No later than each Claim Date, amounts on deposit in the
Reserve Account will be deposited in the Remittance Account to the extent that
Required Payments for the following Payment Date exceed Available Funds in the
Remittance Account. Amounts on deposit in the Reserve Account that are in excess
of the specified Reserve Account Requirement set forth in the Insurance
Agreement will be paid to the Sponsor on each Payment Date.
Amounts on deposit in the Reserve Account will be invested in Eligible
Investments.
Flow of Funds
On the [_________] calendar day of each month, or if such day is not a
Business Day, on the immediately preceding business day (the "Notice Date"), the
Servicer is required to deliver to the Trustee, the Rating Agencies and the
Certificate Insurer a certificate (the "Servicer's Certificate") setting forth
the information needed to make payments on the upcoming Payment Date.
If, in preparing the Servicer's Certificate the Servicer determines that
the Required Payments exceed the Available Funds, the Servicer shall calculate
the Insufficiency Amount and notify the Trustee and the Certificate Insurer
thereof. Pursuant to the Pooling Agreement and the Insurance Agreement, the
Trustee will deposit an amount equal to such Insufficiency Amount in the
Remittance Account from the amounts, if necessary, the Reserve Account. Unless
the Certificate Insurer has otherwise caused the remaining Insufficiency Amount
(after any deposits from the Reserve Account) to be deposited into the
Remittance Account not later than [12:00 p.m New York City] time on the Claim
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Date preceding any Payment Date, the Trustee shall deliver on such Claim Date a
completed Notice of Nonpayment to the Certificate Insurer and the Fiscal Agent
(with the amount of the Insufficiency Amount as of such Claim Date and any other
data appropriately completed). The Certificate Insurer will then pay the
remaining balance of the Insufficiency Amount as of such Claim Date as provided
under the terms of the Certificate Insurance Policy.
On each Payment Date, the Trustee is required to pay the entire amount of
money then on deposit in the Remittance Account in the following order of
priority:
[(a) Amounts inadvertently deposited in the Remittance Account, to
the Person entitled thereto;
(b) To the Servicer by wire transfer to the account designated in
writing by the Servicer of immediately available funds, the
aggregate amount of the following:
(1) The Servicer Fee;
(2) An amount necessary to reimburse the Servicer for any
unreimbursed Servicer Advances; and
(3) Any Servicing Charges inadvertently deposited in the
Remittance Account;
(c) To the Certificateholders, the Certificate Interest and
Overdue Interest for the related Remittance Period;
(d) On the Payment Date which is also the Funding Distribution
Date, to the Certificateholders, the Pre-Funded Amount, if
any, deposited into the Remittance Account on such Payment
Date;
(e) On and after the Payment Date which is also the Initial
Amortization Date, to the Certificateholders, until the
Certificate Principal Balance has been reduced to zero, the
Base Principal Distribution Amount and any Overdue Principal
for the related Remittance Period;
(f) To the Certificate Insurer, an amount equal to any Premium
owed for such Payment Date;
(g) To the Certificate Insurer, by wire transfer of immediately
available funds to the account designated in writing by the
Certificate Insurer, the Reimbursement Amount, if any, then
owed to the Certificate Insurer;
(h) To the Reserve Account, for disposition in accordance with the
terms of the Insurance Agreement, by wire transfer of
immediately available funds, the lesser of (1) the difference,
if any, between (x) the Specified Reserve Account Requirement
as of such Payment Date and (y) the amount then on deposit in
the Reserve Account and (2) the aggregate amount remaining in
the Remittance Account;
(i) On and after the Payment Date which is also the Initial
Amortization Date, to the Certificateholders, until the
Certificate Principal Balance has been reduced to zero, the
Excess Principal Amount as of such Payment Date;
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(j) To the Servicer, any other amounts due the Servicer as
expressly provided in the Pooling Agreement; and
(k) To the holder of the Sponsor's Certificate, any remaining
amounts.]
As used in this Prospectus Supplement, the following terms have the following
meanings:
Actual Payment: With respect to a Remittance Period and a Contract, all
Scheduled Payments, Prepayments and Residual Receipts received by the Servicer
from or on behalf of an Obligor with respect to such Contract during such
Remittance Period. Actual Payments do not include Initial Unpaid Amounts,
Reconveyance Amounts, Advance Payments and Servicer Advances.
Adjusted Certificate Rate: The sum of (i) the Certificate Rate, (ii) the
Servicing Fee Rate and (iii) the Certificate Insurance Premium Rate, i.e.,
_____% per annum.
Administrative Amount: For any Remittance Period, the product of (x)
one-twelfth of the sum of (i) the Servicing Fee Rate and (ii) the Certificate
Insurance Premium Rate and (y) the aggregate Discounted Contract Balances of all
Contracts outstanding as of the immediately preceding Calculation Date (or as of
the Cut-Off Date in the case of the initial Remittance Period).
Advance Payment: With respect to a Receivables and a Remittance Period,
any Scheduled Payment or portion thereof made by or on behalf of an Obligor and
received by the Servicer during such Remittance Period, which Scheduled Payment
or portion thereof does not become due until a subsequent Remittance Period.
Applicable Percentage: As of any Payment Date the greater of (x) _____%
and (y) the Certificate Percentage with respect to such Payment Date.
Available Funds: With respect to a Payment Date, shall mean for the
related Notice Date any and all amounts held in the Remittance Account on such
Notice Date and shall mean for the related Claim Date, any and all amounts held
in the Remittance Account on such Claim Date, but in each case shall not include
any (i) moneys to be disbursed to the Sponsor in connection with its conveyance
of Additional Receivables to the Trust on such Payment Date, (ii) moneys to be
applied as described in clauses (a) and (b) under Flow of Funds above, (iii)
payments under the Certificate Insurance Policy or (iv) any Actual Payments
received by the Servicer after the immediately preceding Calculation Date.
Base Interest Amount: With respect to any Remittance Period, the product
(x) [one-twelfth] of the Certificate Rate and (y) the aggregate Discounted
Contract Balances of all Contracts outstanding as of the immediately preceding
Calculation Date (or as of the Cut-Off Date in the case of the initial
Remittance Period).
Base Principal Distribution Amount: With respect to any Payment Date
occurring prior to the Initial Amortization Date, zero. With respect to any
Payment Date occurring on or after the Initial Amortization Date, an amount
equal to the product of (x) the Applicable Percentage with respect to such
Payment Date and (y) the sum, without duplication, of (i) all Scheduled
Discounted Contract due during the related Remittance Period with respect to
each Contract that has not become a Defaulted Contract, (ii) for each Contract
that was the subject of a Prepayment in full during the related Remittance
Period, the Discounted Contract Balance of such Contract as of the date of such
Prepayment, but only to the extent of the amount actually deposited in the
Remittance Account with respect to such Prepayment, (iii) for each Contract that
was the subject of a partial Prepayment during the related Remittance Period, an
amount equal to the difference between (a) the Discounted Contract Balance of
such Contract immediately prior to such partial Prepayment and (b) the
Discounted Contract Balance immediately after such partial Prepayment, but only
to the extent of the amount actually deposited in the Remittance Account with
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respect to such partial Prepayment, (iv) for each Receivable which is removed
from the Trust pursuant to the Pooling Agreement during the related Remittance
Period, the Discounted Contract Balance of such Receivable to the extent
actually deposited in the Remittance Account pursuant to the Pooling Agreement,
(v) the principal portion of all Insurance Proceeds received during the prior
Remittance Period, and (vi) the amount, if any, by which (A) the Certificate
Principal Balance as of such Payment Date, after giving effect to all other
distributions to be made on such Payment Date, exceeds (B) the aggregate
Discounted Contract Balance of all Receivables as of the last day of the related
Remittance Period plus the aggregate Discounted Contract Balances of all
Additional Receivables conveyed by the Sponsor on such Payment Date; provided,
however, that with respect to the Remittance Period during which the Required
Amortization Event occurs, if ever, the phrase "during the related Remittance
Period" shall refer only to the portion of such Remittance Period occurring on
and after the Required Amortization Event; and provided, further that the
amounts described in clauses (y)(ii) and (y)(iii) shall be reduced on any
Payment Date by the amount, if any, of such Prepayments disbursed to the Sponsor
in consideration of Additional Receivables on such Payment Date.
Calculation Date: The last day of a Remittance Period. Amounts calculated
from Calculation Date balances shall be calculated from such balances as of the
close of business on the Calculation Date.
Capitalized Interest Rate: _____%.
Capitalized Interest Requirement: With respect to each Payment Date prior
to the Funding Termination Date, the excess if any, of (x) the Class A
Certificate Interest for the related Remittance Period over (y) the product of
(i) the aggregate Discounted Contract Balances of all Receivables as of the
related Calculation Date and (ii) one-twelfth of the Capitalized Interest Rate.
Certificate Insurance Premium Rate: _____% per annum, except that such
rate is zero for the first year.
Certificate Interest: With respect to any Payment Date, the product of (x)
[one-twelfth] of the Certificate Rate and (y) the aggregate Certificate
Principal Balance outstanding immediately prior to such Payment Date.
Certificate Percentage: With respect to the Certificates and as of any
Payment Date, the fraction equal to (x)(A) the Certificate Principal Balance as
of such Payment Date (following distributions on such Payment Date) minus (B)
the Pre-Funded Amount divided by (y) the aggregate sum of (i) outstanding
Discounted Contract Balances of all Receivables as of the Calculation Date
immediately preceding such Payment Date, (ii) the aggregate Discounted Contract
Balances as of the day preceding such Payment Date of all Additional Contracts
to be transferred to the Trust on such Payment Date and (iii) the amount on
deposit in the Additional Receivables Funding Account on such Payment Date.
Certificate Principal Balance: At any time, the Initial Certificate
Principal Amount minus all payments theretofore received by the
Certificateholders on account of principal.
Certificate Rate: _____% per annum.
Claim Date: With respect to a Payment Date, the second business day
immediately preceding such Payment Date.
Contract Principal: With respect to any Remittance Period, the sum,
without duplication, of all amounts actually deposited in the Remittance Account
during such Remittance Period with respect to Scheduled Contract Principal, full
and partial Prepayments to the extent of the principal portion of such
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Prepayments and the principal portion of all Servicer Advances, Insurance
Proceeds and Reconveyance Amounts. Residual Receipts are not part of "Contract
Principal."
Contract Rate: _____%.
Cut-Off Date: With respect to the Initial Receivables, the close of
business on ____________, 199__. With respect to any Additional Receivable
transferred to the Trust on any Transfer Date, the close of business on the day
preceding such Transfer Date.
Defaulted Contract: A Delinquent Contract (a)(i) with respect to which a
Obligor is contractually delinquent for four consecutive months (without regard
to any Servicer Advances or the application of any Security Deposit) or (ii) as
to which the Servicer has determined in accordance with its customary servicing
practices, for purposes of this Agreement, that eventual payment of the
Scheduled Payments is unlikely and (b) as to which the Servicer has accelerated
the remaining Scheduled Payments to become due thereunder, and as permitted in
the Contract.
Delinquent Contract: A Contract (a) as to which the Scheduled Payment was
not received when due by the Servicer as of the close of business on the last
day of the month in which such payment was due and (b) which is not a Defaulted
Contract.
Sponsor's Certificate Principal Balance: As of any Payment Date, the
difference, if any, between (i) the sum of (x) the aggregate Discounted Contract
Balances of all Contracts as of the immediately preceding Calculation Date, (y)
the aggregate Discounted Contract Balances as of the day prior to such Payment
Date of all Additional Receivables to be conveyed to the Trust on such Payment
Date and (z) the amount on deposit in the Additional Receivables Funding Account
as of such Payment Date (and after taking into account any deposits or
withdrawals therein on such payment Date) and (ii) the outstanding Certificate
Principal Balance as of such Payment Date, after taking into account any
distribution of the Base Principal Distribution Amount and of the Excess
Principal Amount on such Payment Date, minus the Pre-Funded Amount, if any.
Sponsor's Certificates: The certificates evidencing the Sponsor's
Interest.
Discounted Contract Balance: On any date of calculation with respect to a
Contract which does not include a Defaulted Contract, the present value of the
Scheduled Payments to become due with respect to such Receivable on and after
such date of calculation, discounted monthly to the Calculation Date immediately
following such date of calculation (or to such date of calculation if such date
of calculation is a Calculation Date) at one-twelfth of the Receivable Rate;
with respect to any Contract which has a Defaulted Contract, zero.
Excess Contract Interest: With respect to any Payment Date, the product of
(x) the difference between (i) [one-twelfth] of the Contract Rate and (ii)
one-twelfth of the Adjusted Certificate Rate and (y) the aggregate Discounted
Contract Balances of all Contracts outstanding as of the beginning of the
immediately preceding Remittance Period.
Excess Principal Amount: With respect to any Payment Date, the product of
(i) _____% and (ii) the lesser of (x) the amount, if any, remaining in the
Remittance Account after the making of the distributions described in clauses
(a) through (h) (inclusive) under "Flow of Funds" above on such Payment Date and
(y) the Excess Contract Interest with respect to such Payment Date.
Funding Distribution Date: The earlier to occur of (x) the Payment Date in
_______ 199__ and (y) the Payment Date which immediately follows the Required
Amortization Event.
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Funding Termination Date: The earlier of (x) the date on which the
Required Amortization Event has occurred and (y) ____________, 199__.
Initial Certificate Principal Amount: $____________.
Initial Unpaid Amount: With respect to a Contract, the excess of the
aggregate amount of all Scheduled Payments due prior to the related Cut-Off
Date, over the aggregate of all Scheduled Payments made prior to the related
Cut-Off Date with respect to such Contract.
Insufficiency Amount: With respect to a Notice Date or a Claim Date, as
applicable, the excess, if any, of (a) Required Payments over (b) Available
Funds.
Interest-Only Period. The period from the Closing Date to, but excluding,
the Initial Amortization Date.
Overdue Interest: With respect to any Payment Date, the difference, if
any, equal to (a) the aggregate amount of Certificate Interest due on all prior
Payment Dates and (b) the aggregate amount of Certificate Interest (from
whatever source) actually paid to Certificateholders on all prior Payment Dates.
Overdue Principal: With respect to any Payment Date, the difference, if
any, equal to (a) the aggregate of the Base Principal Distribution Amounts due
on all prior Payment Dates and (b) the aggregate amount of the Base Principal
Distribution Amounts (from whatever source) actually paid to Certificateholders
on all prior Payment Dates.
Overfunded Interest Amount: With respect to each Transfer Date during the
Funding Period, the excess, if any, of (x) in the case of a Transfer Date
occurring in ____________ 199__, (i) three-months' interest on the aggregate
Discounted Contract Balances of the Additional Receivables conveyed to the Trust
on such Transfer Date, calculated at the Capitalized Interest Rate over (ii)
three-months' interest on the aggregate Discounted Contract Balances of such
Additional Receivables, calculated at the rate at which the Pre-Funded Amount is
invested as of such Transfer Date, (y) in the case of a Transfer Date occurring
in ____________, 199__, (i) two-months' interest on the aggregate Discounted
Contract Balances of the Additional Receivables conveyed to the Trust on such
Transfer Date, calculated at the Capitalized Interest Rate over (ii) two-months'
interest on the aggregate Discounted Contract Balances of such Additional
Receivables, calculated at the rate at which the Pre-Funded Amount is invested
as of such Transfer Date and (z) in the case of a Transfer Date occurring in
____________ 199__ or on the Funding Termination Date, (i) one-months' interest
on the aggregate Discounted Contract Balances of the Additional Receivables
conveyed to the Trust on such Transfer Date, calculated at the Capitalized
Interest Rate over (ii) [one-months'] interest on the aggregate Discounted
Contract Balances of such Additional Receivables, calculated at the rate at
which the Pre-Funded Amount is invested as of such Transfer Date.
Payment Date: The _____ day of each month, or, if such day is not a
business day, the next succeeding business day.
Prepayment: With respect to a Remittance Period and a Receivable (except a
Receivable which includes a Defaulted Contract), the amount received by the
Servicer during such Remittance Period from or on behalf of an Obligor with
respect to such Contract in excess of the sum of (x) the Scheduled Payment due
during such Remittance Period plus (y) the aggregate of any overdue Scheduled
Payments, Initial Unpaid Amounts and unpaid Servicing Charges for such
Receivable, so long as such amount is designated by the Obligor as a Prepayment
and the Servicer has consented to such Prepayment. Residual Receipts are not
"Prepayments."
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Prepayment Amount: With respect to a Payment Date and a Receivable, an
amount, without duplication, equal to the sum of (i) the Discounted Contract
Balance as of the immediately preceding Payment Date (without any deduction for
any Security Deposit paid by an Obligor, unless such Security Deposit has been
deposited in the Remittance Account pursuant to the Pooling Agreement); (ii) the
product of (x) such Contract's Discounted Contract Balance as of the immediately
preceding Payment Date and (y) [one-twelfth] of the Contract Rate and (iii) any
Scheduled Payments not paid by an Obligor.
Reimbursement Amount: With respect to any Payment Date, the aggregate of
unreimbursed Insured Payments as of such Payment Date, plus accrued interest at
the rate specified in the Insurance Agreement.
Reconveyance Amount: The sum, without duplication, of (i) the Discounted
Contract Balance of such Contract (without any deduction for any Security
Deposit paid by a Obligor, unless such Security Deposit has been deposited in
the Remittance Account pursuant to the Pooling Agreement) as of the date of
reconveyance with respect to a Contract that is reconveyed by the Trust or as of
the Closing Date with respect to a Receivable that shall have been prepaid in
full on or after the Cut-Off Date and prior to the Closing Date, (ii) the
product of (x) such Contract's Discounted Contract Balance as of the immediately
preceding Payment Date and (y) [one-twelfth] of the Contract Rate and (iii) any
Scheduled Payments not paid by a Obligor.
Remittance Period: With respect to any Payment Date, the immediately
preceding calendar month.
Required Amortization Event: The earliest to occur of any of the
following: (i) the delivery by the Originator to the Sponsor, the Trustee and
the Certificate Insurer of a notice stating that the Originator, due to a lack
of supply, will be unable thereafter to transfer Additional Receivables to the
Sponsor, (ii) the occurrence of an "Event of Servicing Termination" under the
Pooling Agreement, (iii) the Subordinated Amount is reduced to below _____% of
the aggregate Discounted Contract Balances of all Receivables, (iv) at any time
on or after the second Payment Date following the Funding Distribution Date the
amount on deposit in the Additional Receivables Funding Account exceeds
$____________, (v) the bankruptcy of the Originator or the Sponsor or (vi) as of
any Notice Date, the [three month] average ratio of the aggregate Discounted
Contract Balance of Delinquent Contracts which are [61] days or more delinquent
to the aggregate Discounted Contract Balance of all Receivables, exceeds _____%
and the [three month] average ratio of the aggregate Discounted Contract
Balances of all Defaulted Contracts which became Defaulted Contracts during the
related Remittance Period to the aggregate Discounted Contract Balances of all
Receivables, exceeds _____%.
Required Payments: With respect to any Payment Date, the sum of the
Certificate Interest as of such Payment Date and the Base Principal Distribution
Amount as of such Payment Date, together with any Overdue Interest and any
Overdue Principal and, on the Funding Distribution Date, the Pre-Funded Amount;
provided, however, that for any Payment Date as to which, during the related
Remittance Period, an amount has been withdrawn from the Remittance Account in
respect of withholding taxes, an equal amount shall be deducted from the
Required Payments for such Payment Date.
Reserve Account Advance: Amounts deposited in the Remittance Account from
the Reserve Account.
[Residual Receipts: All amounts collected as judgments against a Obligor
or others related to the failure of such Obligor to pay any required amounts
under the related Contract or to return the Vehicles, in each case as reduced by
(i) any unreimbursed Servicer Advances with respect to such Contract and (ii)
any reasonably incurred out-of-pocket expenses incurred by the Servicer in
enforcing such Contract or in liquidating such Vehicles.]
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Scheduled Contract Principal: With respect to any Remittance Period, the
difference between (x) all Scheduled Payments due in such Remittance Period and
(y) the sum of (i) the Administrative Amount for such Remittance Period, (ii)
the Base Interest Amount for such Remittance Period and (iii) the Excess
Contract Interest for such Remittance Period.
Scheduled Payments: With respect to a Payment Date and a Contract, the
periodic payment (exclusive of any amounts in respect of insurance or taxes and
reflecting any adjustment for any partial Prepayment) set forth in such Contract
due from the Obligor (including any Security Deposit applied with respect
thereto) in the related Remittance Period.
Servicer Fee: The fee payable to the Servicer on the first day of each
month in consideration for the Servicer's performance of its duties pursuant to
the Pooling Agreement, in an amount equal to the product of (x) [one-twelfth] of
the Servicer Fee Rate and (y) the aggregate Discounted Contract Balances as of
the prior Calculation Date.
Servicer Fee Rate: _____% per annum.
Specified Reserve Account Requirement: As of any date, the "Specified
Reserve Account Requirement" applicable to such date, as set forth in the
Insurance Agreement.
Subordinated Amount: As of any date of determination, the sum on such date
of (x) the Sponsor's Certificate Principal Balance and (y) the amount then on
deposit in the Reserve Account.
Withholding
The Trustee is required to comply with all federal income tax withholding
requirements respecting payments to Certificateholders of interest or original
issue discount with respect to the Certificates that the Trustee reasonably
believes are applicable under the Code. The consent of Certificateholders will
not be required for such withholding. In the event that the Trustee does
withhold or causes to be withheld any amount from interest or original issue
discount payments or advances thereof to any Certificateholders pursuant to
federal income tax withholding requirements, the Trustee is required to indicate
the amount withheld in its monthly report to such Certificateholders.
Reports to Certificateholders
On each Payment Date the Trustee will furnish or cause to be furnished
with each payment to Certificateholders, a statement (a "Monthly Report"), based
on information in the Servicer's Certificate, setting forth the following
information (per $1,000 of Initial Certificate Principal Amount as to (a) and
(b) below):
a. The amount of such payment allocable to such Certificateholder's
Percentage Interest of the Base Principal Distribution Amount, Overdue
Principal, the Excess Principal Amount and, if applicable, the Pre-Funded
Amount;
b. The amount of such payment allocable to such Certificateholder's
Percentage Interest of Certificate Interest and Overdue Interest;
c. The aggregate amount of fees and compensation received by the
Servicer for the Remittance Period;
d. The aggregate Certificate Principal Balance, the aggregate
Discounted Contract Balance, the Certificate Percentage, the Certificate
Factor and the Pool Factor, after taking into account all distributions
made on such Payment Date;
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e. The total unreimbursed Servicer Advances and the total Insured
Payment with respect to the related Remittance Period;
f. The Subordinated Amount as of such Payment Date;
g. The amount of Residual Receipts for the related Remittance Period
and the aggregate Discounted Contract Balances for all Contracts that
become Defaulted Contracts during the related Remittance Period; and
h. Information provided by the Servicer concerning losses and
delinquencies with respect to the Contracts.
The "Certificate Factor" is the seven digit decimal that the Servicer will
compute or cause to be computed for each Remittance Period and will make
available on the related Notice Date representing the ratio of (x) Certificate
Principal Balance which will be outstanding on the next Payment Date (after
taking into account all distributions to be made on such Payment Date) to (y)
the Initial Certificate Principal Amount.
The "Pool Factor" is the seven digit decimal that the Servicer will
compute or cause to be computed for each Remittance Period and will make
available on the related Notice Date representing the ratio of (x) the aggregate
Discounted Contract Balance as of the immediately preceding Calculation Date to
(y) the aggregate Discounted Contract Balance as of the Cut-Off Date.
In addition, by [January 31] of each calendar year following any year
during which the Certificates are outstanding, commencing [January 31,] 199__,
the Trustee will furnish to the Certificate Insurer and to each
Certificateholder of record at any time during such preceding calendar year,
information as to the aggregate of amounts reported pursuant to items (a) and
(b) above for such calendar year to enable Certificateholders to prepare their
federal income tax returns.
Optional Removal
The Pooling Agreement will provide that on any Payment Date following the
Record Date on which the Certificate Principal Balance is _____% or less of the
Initial Certificate Principal Amount (after giving effect to the payment of any
principal on such Payment Date), the Sponsor will have the option to acquire all
rights, title and interest in all, but not less than all, Receivables held in
the Trust, by paying into the Trust for retirement of the Certificates and the
Sponsor's Certificates an amount equal to the sum of the aggregate outstanding
Certificate Principal Balance and all other amounts due to the
Certificateholders, the Sponsor's Balance, the premium due to the Certificate
Insurer, all Insured Payments that remain unreimbursed, all other amounts owing
to the Certificate Insurer and all amounts owing to the Trustee.
Remittance and Other Servicing Procedures
The Servicer has agreed to manage, administer and service the Receivables
and to enforce and make collections on the Receivables and any Insurance
Policies, exercising the degree of skill and care consistent with that which the
Servicer customarily exercises with respect to similar property owned by it.
The Servicer may grant to an Obligor any rebate, refund or adjustment that
the Servicer in good faith believes is required, because of Prepayment in full
of a Contract. The Servicer may deduct the amount of any such rebate, refund or
adjustment from the amount otherwise payable by the Servicer into the Remittance
Account; provided, however, that the Servicer will not permit any rescission or
cancellation of any Contract which would materially impair the rights of the
Trust or the Certificateholders or the Certificate Insurer in the Contracts or
the proceeds thereof, nor will the prepayment price after giving
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effect to any such rebate, refund or adjustment (and without any adjustment for
any Security Deposit previously paid by the Obligor) be less than the Prepayment
Amount. The Servicer may waive, modify or vary any term of a Contract if the
Servicer, in its reasonable and prudent judgment, determines that it will not be
materially adverse to the Certificateholders or the Certificate Insurer.
However, the Servicer will covenant in the Pooling Agreement that (i) it will
not forgive any payment of rent, principal or interest (except for certain
offsets for Security Deposits which offsets are only permitted after the
Servicer has deposited in the Remittance Account an amount equal to such
offset), (ii) unless an Obligor is in default, it will not permit any
modification with respect to a Contract which would defer the payment of any
principal or interest or any Scheduled Payment or change the final maturity date
on any Contract; provided, however, that no change in the final maturity date of
any Contract shall be permitted under any circumstances if such new maturity
date is after ____________, and (iii) the Servicer may accept Prepayment in part
or in full; provided, however that (1) in the event of Prepayment in full, the
Servicer may consent to such Prepayment only in an amount not less than the
Prepayment Amount and (2) in the event of a partial Prepayment, the Servicer may
consent to such partial Prepayment only if (x) following such partial Prepayment
there are no delinquent amounts then due from the Obligor and (y) such partial
Prepayment will not reduce the Discounted Contract Balance by more than an
amount equal to (I) the amount of such partial Prepayment, minus (II) unpaid
interest at the Contract Rate, accrued through the Payment Date immediately
following such partial Prepayment on the outstanding Discounted Contract Balance
prior to such partial Prepayment. In the case of a partial Prepayment, the
Servicer is required to accurately recalculate the Discounted Contract Balance,
and the allocation of Scheduled Payments to principal and interest.
Servicing Compensation and Payment of Expenses
For its servicing of the Contracts, the Servicer will receive servicing
compensation including the monthly Servicer Fee for each Remittance Period
(payable on the next succeeding Payment Date) and Servicing Charges.
The servicing compensation will compensate the Servicer for customary
servicing activities to be performed by the Servicer for the Trust, additional
administrative services performed by the Servicer on behalf of the Trust and
expenses paid by the Servicer on behalf of the Trust.
The Servicer, as an independent contractor on behalf of the Trust and for
the benefit of the Certificateholders, the Sponsor and the Certificate Insurer,
will be responsible for the managing, servicing and administering the
Receivables and enforcing and making collections on the Contracts and any
Insurance Policies [and for the enforcing of any security interest in any item
of Vehicles,] all as set forth in the Pooling Agreement. The Servicer's
responsibilities will include collecting and posting of all payments, responding
to inquiries of Obligors, investigating delinquencies, accounting for
collections, furnishing monthly and annual statements to the Trustee and the
Certificate Insurer with respect to distributions, making Servicer Advances,
providing appropriate federal income tax information for use in providing
information to Certificateholders, collecting and remitting sales and property
taxes on behalf of taxing authorities and maintaining the perfected security
interest of the Trust in the Vehicles and the Contracts.
Evidence as to Compliance
The Pooling Agreement requires that the Servicer cause an independent
accountant (who may also render other services to the Servicer) to prepare a
statement to the Trustee, the Rating Agencies and the Certificate Insurer dated
as of ____________, 199__, and annually as of the same month and day thereafter,
to the effect that the independent accountant has examined the servicing
procedures, manuals, guides and records of the Servicer and the accounts and
records of the Servicer relating to the Receivables and the Contract Files
(which procedures, manuals, guides and records shall be described in one or more
schedules to such statement), that such firm has compared the information
contained in
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the Servicer's Certificates delivered in the relevant period with information
contained in the accounts and records for such period and that, on the basis of
such examination and comparison, nothing has come to the independent
accountant's attention to indicate that the Servicer has not, during the
relevant period, serviced the Receivables in compliance with such servicing
procedures, manuals and guides and in the same manner required by the Servicer's
standards and with the same degree of skill and care consistent with that which
the Servicer customarily exercises with respect to similar property owned by it,
that such accounts and records have not been maintained in accordance with the
Pooling Agreement, that the information contained in the Servicer's Certificates
does not reconcile with the information contained in the accounts and records or
that such certificates, accounts and records have not been properly prepared and
maintained in all material respects, except in each case for (a) such exceptions
as the independent accountant shall believe to be immaterial and (b) such other
exceptions as shall be set forth in such statement. On or before ____________ of
each year, commencing on ____________, 199__, the Servicer shall deliver to the
Trustee, the Rating Agencies and the Certificate Insurer a copy of such
statement.
The Pooling Agreement will also provide for annual delivery of a report
(the "Supplementary Report") by the Servicer to the Trustee and the Certificate
Insurer not later than 90 days after the end of each fiscal year, signed by a
Servicing Officer of the Servicer and dated as of the last day of such fiscal
year, stating that (a) a review of the activities of the Servicer and the
Servicer's performance under the Pooling Agreement for the previous 12-month
period has been made under such Servicing Officer's supervision and (b) nothing
has come to such Servicing Officer's attention to indicate that the Servicer
could be terminated as such under the terms of the Pooling Agreement (an "Event
of Servicing Termination"), or, if such Event of Servicing Termination has so
occurred and is continuing, specifying each such event known to the officer, the
nature and status thereof and the steps necessary to remedy such event.
The Servicer is also required to furnish to the Trustee, and the Trustee
is required to furnish to the Certificateholders, copies of the Servicer annual
audited and quarterly unaudited financial statements.
The Pooling Agreement will provide that the Servicer, upon request of the
Trustee, will furnish to the Trustee such underlying data necessary for
administration of the Trust or enforcement actions as can be generated by the
Servicer's existing data processing system.
Certain Matters Relating to the Servicer
The Pooling Agreement will provide that the Servicer may not resign from
its obligations and duties as Servicer thereunder, except upon a determination
that the Servicer's performance of such duties is no longer permissible under
applicable law. The Servicer can only be removed pursuant to an Event of
Servicing Termination as discussed below.
Events of Servicing Termination
An Event of Servicing Termination under the Pooling Agreement will occur
(a) if the Servicer fails to make (i) any Servicing Advance within [two]
business days or (ii) any other payment or deposit required under the Pooling
Agreement within [three] business days; (b) if the Servicer fails to submit a
Servicer's Certificate, within [two] business days following notice of
non-receipt; (c) (i) if the Servicer fails to observe or perform in any material
respect any covenant or agreement in the Pooling Agreement or the Certificates
or (ii) if any representation or warranty of the Servicer in the Pooling
Agreement is incorrect, and such failure or breach materially affects the rights
of the Trustee or the Certificateholders and continues unremedied for [15] days
after the earlier to occur of (x) written notice to the Servicer by the Trustee
or to the Trustee and the Servicer by the Certificate Insurer or any
Certificateholders or (y) any Servicing Officer knows, or reasonably should have
known, of such failure or of such breach; (d) upon the filing of an involuntary
petition in bankruptcy or the decree or order of a court,
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agency or supervisory authority having jurisdiction over the Servicer for the
appointment of a conservator, receiver, trustee in bankruptcy or liquidator in
any bankruptcy, insolvency or similar proceedings, and the continuance of any
such petition, decree or order undismissed or unstayed and in effect for a
period of [60] consecutive days; (e) upon the voluntary filing of such petition
or assignment for the benefit of creditors, the consent by the Servicer to any
such appointment or the admission in writing by the Servicer of its inability to
pay its debts as they become due; (f) in the event that the Servicer assigns or
attempts to assign its rights and duties under the Pooling Agreement except as
specifically permitted therein; (g) the Servicer shall fail to respond within
[60] days to judgments against it of [$250,000] or more or (h) the occurrence
and continuance of a default under recourse debt or other obligations of the
Servicer aggregating more than $____________. (Section 10.01.)
Rights Upon an Event of Servicing Termination
If an Event of Servicing Termination has occurred and is continuing,
either the Trustee, the Certificate Insurer or the Majority Holders (with the
consent of the Certificate Insurer) may terminate all (but not less than all) of
the Servicer's rights and obligations under the Pooling Agreement. Upon such
termination, the Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under the Pooling Agreement; provided, however, that
neither the Trustee nor any successor Servicer (i) will assume any obligation to
reacquire Receivables by reason of misrepresentations or breaches of warranties,
(ii) will be required to make any Servicer Advance if such Servicer Advance
would be prohibited by applicable law or (iii) will be liable for acts,
omissions or breaches of representations or warranties by the Servicer or the
Originator occurring prior to transfer of the servicing functions.
Notwithstanding such termination, the Servicer shall be entitled to payment of
certain amounts payable to it prior to such termination for services rendered
prior to such termination. The Trustee, with the consent of the Certificate
Insurer, also may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor Servicer in accordance with the procedures set forth
in Sections _____ and _____ of the Pooling Agreement.
Termination of the Trust
The Trust and the Pooling Agreement will terminate [123] days after the
payment to Certificateholders and holders of the Sponsor's Certificates of all
amounts required to be paid to them pursuant to the Pooling Agreement, reducing
the Certificate Principal Balance and the Sponsor's Balance to zero; provided,
however, in the event of insolvency of the Certificate Insurer or a default by
the Certificate Insurer under the Certificate Insurance Policy, the Trust shall
in no event continue to exist beyond [123] days after the Payment Date next
succeeding the Remittance Period during which the last Contract not removed by
the Servicer shall have been liquidated and any Residual Receipts shall have
been deposited in the Remittance Account or the Advance Payment Account, as
applicable. Upon termination of the Trust, any remaining Trust Fund shall be
distributed to the Sponsor.
Upon a Sponsor Liquidation with the prior written consent of the
Certificate Insurer, the Trust shall terminate and the assets thereof shall be
sold as and to the extent necessary to fund the payment in cash to the
Certificateholders of the Certificate Principal Balance then outstanding, any
Overdue Principal and all Certificate Interest and Overdue Interest due thereon
and any Reimbursement Amounts due to the Certificate Insurer, and the remaining
assets of the Trust shall be distributed to the Sponsor. If the assets of the
Trust shall be insufficient to pay all amounts due the Certificateholders, the
Certificate Insurer shall be liable for such deficiency.
A "Sponsor Liquidation" shall occur when:
(i) Sponsor shall consent to the appointment of a custodian,
receiver, trustee or liquidator (or other similar official) of itself,
[the Vehicles] or of a substantial part of its property, or shall admit in
writing its inability to pay its debts generally as they come due, or a
court of competent
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jurisdiction shall determine that the Sponsor is generally not paying its
debts as they come due, or the Sponsor shall make a general assignment for
the benefit of creditors;
(ii) Sponsor shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding
under any bankruptcy laws (as now or hereafter in effect) or an answer
admitting the material allegation of a petition filed against the Sponsor
in any such proceeding, or the Sponsor shall, by voluntary petition,
answer or consent, seek relief under the provisions of any now existing or
future bankruptcy or other similar law providing for the reorganization or
winding up of debtors, or providing for an agreement, composition,
extension or adjustment with its creditors;
(iii) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent (express or legally implied) of the Sponsor, a custodian,
receiver, trustee or liquidator (or other similar official) of the
Sponsor, the Vehicles or any substantial part of its property, [or
sequestering the Vehicles or any substantial part of its property,] and
any such order, judgment or decree or appointment or sequestration shall
remain in force undismissed, unstayed or unvacated for a period of 90 days
after the date of entry thereof;
(iv) a petition against the Sponsor in a proceeding under applicable
bankruptcy laws or other insolvency laws, as now or hereafter in effect,
shall be filed and shall not be stayed, withdrawn or dismissed within [90]
days thereafter, or if, under the provisions of any law providing for
reorganization or winding-up of debtors which may apply to the Sponsor,
any court of competent jurisdiction shall assume jurisdiction, custody or
control of the Sponsor, the Vehicles or any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of [90] days.
The respective representations, warranties and indemnities of the
Originator, the Servicer and the Sponsor will survive any termination of the
Trust and the Pooling Agreement.
Amendment
The Pooling Agreement may be amended by agreement of the Trustee, the
Originator, the Sponsor and the Servicer at any time, without consent of the
Certificateholders, to cure any ambiguity, upon receipt of an opinion of counsel
to the Servicer that such amendment will not adversely affect in any respect the
interests of any Certificateholder.
The Pooling Agreement may also be amended from time to time by the
Trustee, the Originator, the Sponsor, and the Servicer with the consent of the
Certificate Insurer and Holders of Certificates evidencing Percentage Interests
of not less than [___%] (such Holders, the "Majority Holders") for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling Agreement or the Certificate Insurance Policy or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (a) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on the Receivables
or distributions which are required to be made on any Certificate without the
consent of the holder of such Certificate, (b) reduce the aforesaid percentage
of Certificateholders required to consent to any amendment, without unanimous
consent of the Certificateholders or (c) adversely affect in any material
respect the interests of any Certificateholder with respect to the Certificate
Insurance Policy.
The Trustee is required under the Pooling Agreement to furnish
Certificateholders, the Certificate Insurer and the Rating Agencies with written
notice of the substance of any such amendment to the Pooling Agreement promptly
upon execution of such amendment.
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Duties and Immunities of the Trustee
The Trustee will make no representations as to the validity or sufficiency
of the Pooling Agreement, the Certificates (other than the authentication
thereof) or of any Receivable or related document and will not be accountable
for the use or application by the Originator or Sponsor of any funds paid to the
Sponsor in consideration of the sale of the Certificate to the Investor. If no
Event of Servicing Termination has occurred, then the Trustee will be required
to perform only those duties specifically required of it under the Pooling
Agreement. However, upon receipt of the various resolutions, certificates,
statement, opinions, reports, documents, orders or other instruments required to
be furnished to it, the Trustee will be required to examine them to determine
whether they conform as to form to the requirements of the Pooling Agreement.
No recourse is available based on any provision of the Pooling Agreement,
the Certificates or any Receivable or assignment thereof against ____________,
in its individual capacity, and ____________ shall not have any personal
obligation, liability or duty whatsoever to any Certificateholder or any other
person with respect to any such claim and such claim shall be asserted solely
against the Trust assets or any indemnitor, except for such liability as is
determined to have resulted from the Trustee's own gross negligence or willful
misconduct.
The Servicer, to the extent provided in the Pooling Agreement, will agree
to pay to the Trustee (a) reasonable compensation for its services, (b)
reimbursement for its reasonable expenses and (c) indemnification for loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of performance of its duties thereunder.
THE CERTIFICATE INSURANCE POLICY
AND THE CERTIFICATE INSURER
The following information has been furnished by the Certificate Insurer
for use in this Prospectus Supplement. Reference is made to Exhibit ___ for a
specimen of the Certificate Insurance Policy.
The Certificate Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Insurance Policy, thereby
unconditionally and irrevocably guarantees to any Certificateholder (as
described below) that an amount equal to the full and complete Insured Payments
(as described below) will be received by the Trustee, on behalf of the
Certificateholders, for distribution to each Certificateholder of each
Certificateholder's proportionate share of the Insured Payment. "Insured
Payment" means (A) with respect to any Payment Date, the Insufficiency Amount,
if any, remaining after making all required transfers to the Remittance Account
from the Reserve Account pursuant to the Pooling Agreement, and (B) the
reimbursement of any portion of any interest or principal payment previously
paid which is subsequently recovered from the Trustee or any Certificateholder
pursuant to a final nonappealable judgment by a court of competent jurisdiction
to the effect that such payment constitutes a voidable preference to such
Certificateholder or the Trustee within the meaning of any applicable bankruptcy
law. Insured Payments shall be made only at the time set forth in the
Certificate Insurance Policy and no accelerated Insured Payments shall be made
regardless of any acceleration of the Certificates, unless such acceleration is
at the sole option of the Certificate Insurer.
The Certificate Insurer will pay any amount payable under the Certificate
Insurance Policy pursuant to clause (A) above no later than [12:00 noon New York
City] time on the later of the Payment Date on which the related Insufficiency
Amount is due or the Business Day following receipt on a Business Day by
____________, as Fiscal Agent for the Certificate Insurer, or any successor
fiscal agent appointed by the Certificate Insurer (the "Fiscal Agent") of a
Notice of Nonpayment; provided that if such Notice of Nonpayment is received
after [12:00 noon New York City] time on such Business Day, it will be deemed
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to be received on the following Business Day. If any such Notice of Nonpayment
received by the Fiscal Agent is not in proper form or is otherwise insufficient
for the purpose of making claim under the Certificate Insurance Policy it shall
be deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Certificate Insurer or the Fiscal Agent, as the case may be,
shall promptly so advise the Trustee and the Trustee may submit an amended
Notice of Nonpayment.
The Certificate Insurer will pay any amount payable under the Certificate
Insurance Policy pursuant to clause (B) above voided as a preference under any
applicable bankruptcy law on the Business Day following receipt on a Business
Day by the Fiscal Agent of (i) a certified copy of the final order of the court
which exercised jurisdiction to the effect that the Trustee or the
Certificateholder is required to return principal or interest paid on the
Certificates because such payments were voidable preferences under applicable
bankruptcy law, (ii) an opinion of counsel satisfactory to the Certificate
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Certificate Insurer, irrevocably
assigning to the Certificate Insurer all rights and claims of the
Certificateholder relating to or arising under the Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment and (iv) appropriate instruments to effect the appointment of
the Certificate Insurer as agent for such Certificateholder in any legal
proceeding related to payment of principal or interest distributed thereunder,
such instruments being in a form satisfactory to the Certificate Insurer,
provided that if such documents are received after [12:00 noon New York City]
time on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Certificateholder and not to any Certificateholder directly unless
such Certificateholder has returned principal or interest paid on the
Certificates to such receiver or trustee in bankruptcy, in which case such
payment shall be disbursed to such Certificateholder.
Insured Payments due under the Certificate Insurance Policy unless
otherwise stated therein will be disbursed by the Fiscal Agent to the Trustee on
behalf of the Certificateholders by wire transfer of immediately available funds
in the amount of the Insured Payment less, in respect of Insured Payments
described in (B) of the definition thereof, any amount held by the Trustee for
the payment of such Insured Payment and legally available therefor. The
Certificate Insurer's obligations under the Certificate Insurance Policy shall
be discharged to the extent funds are transferred to the Trustee for
distribution to such Certificateholders as provided therein whether or not such
funds are properly applied by the Trustee.
The Fiscal Agent is the agent of the Certificate Insurer only and the
Fiscal Agent shall in no event be liable to Certificateholders for any acts of
the Fiscal Agent or any failure of the Certificate Insurer to deposit or cause
to be deposited, sufficient funds to make payments due under the Certificate
Insurance Policy.
Subject to the prior right of the Certificateholders to the receipt of the
Certificate Interest, the Overdue Interest, the Base Principal Distribution
Amount and the Overdue Principal on each Payment Date, the Certificate Insurer
shall be entitled to reimbursement of amounts previously paid by the Certificate
Insurer under the Certificate Insurance Policy plus interest thereon.
As used in this section of the Prospectus Supplement, the following terms
shall have the following meanings:
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee under the Pooling Agreement is located are
authorized or obligated by law or executive order to close.
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"Insufficiency Amount" is the amount by which the Required Payments in
respect of the Certificates for the applicable Payment Date exceeds the
Available Funds for distribution to Certificateholders on the Business Day
preceding such Payment Date.
"Notice of Nonpayment" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the form of Exhibit A
attached to the Certificate Insurance Policy, the original of which is
subsequently delivered by registered or certified mail, from the Trustee
specifying the Insufficiency Amount which shall be due and owing on the Payment
Date.
"Certificateholder" means any Certificateholder as defined in the Pooling
Agreement (other than the Trust Fund, the Sponsor, the Originator, the Servicer
or any affiliate thereof) who, on the applicable Payment Date, is entitled under
the terms of the Certificates to payment thereunder.
"Pooling Agreement" means the Pooling Agreement dated and effective as of
____________, 199__, by and among the Servicer, the Sponsor, and the Trustee
without regard to any amendment or supplement thereto.
Capitalized terms used in the Certificate Insurance Policy and not
otherwise defined therein shall have the respective meanings set forth in the
Pooling Agreement as of the date of execution of the Certificate Insurance
Policy, without giving effect to any subsequent amendment or modification to the
Pooling Agreement.
Any notice under the Certificate Insurance Policy or service of process on
the Fiscal Agent of the Certificate Insurer may be made at the address listed
below for the Fiscal Agent of the Certificate Insurer or such other address as
the Certificate Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is ________________________,
Attention: ____________ or such other address as the Fiscal Agent shall specify
to the Trustee in writing.
The Certificate Insurance Policy is being issued under and pursuant to,
and shall be construed under, the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
The insurance provided by the Certificate Insurance Policy is not covered
by the Property/Casualty Insurance Security specified in Article 76 of the New
York Insurance Law.
The Certificate Insurance Policy is noncancellable for any reason. The
premium on the Certificate Insurance Policy is not refundable for any reason
including payment, or provision being made for payment, prior to maturity of the
Certificates.
The Certificate Insurer does not accept any responsibility for the
accuracy or completeness of this Prospectus Supplement or any information or
disclosure contained herein, or omitted herefrom, other than with respect to the
accuracy of the information regarding the Certificate Insurance Policy and
Certificate Insurer set forth under this heading "The Certificate Insurance
Policy and the Certificate Insurer".
PREPAYMENT AND YIELD CONSIDERATIONS
The Originator will transfer the Receivables to the Sponsor pursuant to
the Receivables Acquisition Agreement, dated as of ____________, 199__, between
the Originator and the Sponsor (the "Receivables Acquisition Agreement"). On
each Payment Date during the Funding Period and, if no Required Amortization has
occurred, on the Funding Termination Date, to the extent Additional
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Receivables satisfactory to the Certificate Insurer are available from the
Originator, the Original Pre-Funded Amount will be disbursed by the Trust to the
Sponsor in consideration of the conveyance of Additional Receivables which
include Contracts having an aggregate Discounted Contract Balance equal as
nearly as practicable to _____% of the Original Pre-Funded Amount. The amount,
if any, remaining on deposit in the Pre-Funding Account on the Funding
Distribution Date will be transferred to the Remittance Account for distribution
to the Certificateholders as a prepayment of principal. Thereafter, on each
Payment Date on and prior to the ____________ 199__ Payment Date, or, if a
Required Amortization Event occurs with respect to a Payment Date prior to the
____________ 199__ Payment Date, on such earlier Payment Date, all Contract
Principal received by the Trust on the Contracts with respect to the related
Remittance Period will be disbursed by the Trust to the Sponsor in consideration
of the conveyance of Additional Receivables having an aggregate Contract
Principal Balance on such Payment Date equal as nearly as practicable to the
amount of such Contract Principal. Beginning with the Initial Amortization Date,
the Certificateholders will generally be entitled to receive the Applicable
Percentage of all Discounted Contract (other than Prepayments) received by the
Trust during the prior calendar month together with, as a payment of principal,
the Applicable Percentage of all Excess Contract Interest received by the Trust
during the prior calendar month. On and after the Initial Amortization Date
(unless a Required Amortization Event has occurred), the Sponsor will have the
option on each Payment Date to transfer to the Trust Additional Receivables
having an aggregate Discounted Contract Balance not in excess of the aggregate
amount of Prepayments received by the Servicer during the prior Remittance
Period and to remove from the Trust cash in an amount not in excess of the
aggregate Discounted Contract Balance of such Additional Receivables. This
option of the Sponsor is limited to $____________ aggregate Discounted Contract
Balance of such Additional Receivables.
Following the Interest-Only Period, the rate of principal payments on the
Certificates will be directly related to the scheduled rate of principal
payments on the underlying Contracts. If purchased at a price of other than par,
the yield to maturity also will be affected by the rate of principal payments.
The principal payments on such Contracts may be in the form of scheduled
principal payments or liquidations due to default, casualty and the like. Any
such payments will result in distributions to Certificateholders of amounts
which would otherwise have been distributed over the remaining term of the
Contracts. In general, the rate of such payments may be influenced by a number
of other factors, including general economic conditions. The rate of payment of
principal may also be affected by any removal of the Receivables from the Trust
and the deposit of the Reconveyance Amount into the Trust. See "Description of
the Certificates -- Representations and Warranties" and "Description of the
Certificates -- Optional Termination." In such event, following the
Interest-Only Period the Certificate Percentage of the Reconveyance Amount is
required to be paid to the Certificateholders as a payment of principal in the
month following the month of such removal.
The effective yield to Certificateholders will depend upon, among other
things, the price at which such Certificates are purchased and the amount of and
rate at which Principal, including both scheduled and nonscheduled payments
thereof, is paid to the Certificateholders. The after-tax yield to
Certificateholders may be affected by lags between the time interest accrues to
Certificateholders and the time the related interest income is received by the
Certificateholders.
CERTAIN FEDERAL AND STATE INCOME TAX CONSIDERATIONS
The following is a general discussion of certain federal income tax
consequences to the original purchasers of the Certificates of the purchase,
ownership and disposition of the Certificates. It does not purport to discuss
all federal income tax consequences that may be applicable to investment in the
Certificates or to particular categories of investors, some of which may be
subject to special rules. In particular, this discussion applies only to
institutional investors that purchase Certificates directly from the Sponsor and
hold the Certificates as capital assets.
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The discussion that follows, and the opinion set forth below of Dewey
Ballantine, special tax counsel to Trust ("Tax Counsel"), are based on the
provisions of the Internal Revenue Code of 1986, as amended (the "Code") and the
Treasury regulations promulgated thereunder as in effect on the date hereof and
on existing judicial and administrative interpretations thereof. These
authorities are subject to change and to differing interpretations, which could
apply retroactively. The opinion of Tax Counsel is not binding on the courts or
the Internal Revenue Service (the "IRS"). Potential investors should consult
their own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of the
Certificates.
Characterization of the Certificates as Indebtedness
In the opinion of Tax Counsel, based on the application of existing law to
the facts as set forth in the Receivables Acquisition Agreement, Pooling
Agreement, Insurance Agreement and other relevant documents and such
investigations as it deemed appropriate, the Certificates will be treated as
indebtedness for federal income tax purposes.
In general, whether instruments such as the Certificates constitute
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not an instrument constitutes indebtedness for federal
income tax purposes. On the basis of a review of such factors as applied to the
facts of the contemplated transaction, Tax Counsel has concluded, as stated
above, that the Certificates constitute indebtedness for federal income tax
purposes.
In Article ____ of the Pooling Agreement, the parties thereto and all
successors and assigns thereof, including, upon acquisition of the Certificates,
the Certificateholders, express their mutual intent that the Certificates shall
constitute indebtedness for all applicable tax purposes and, further, covenant
and agree to treat the Certificates as indebtedness for all applicable tax
purposes in all tax filings, reports and returns and otherwise. Notwithstanding
such agreement, because different criteria are used to determine the non-tax
accounting characterization of the issuance and sale of the Certificates, the
Originator and the Sponsor intend to treat the transaction as a sale by the
Sponsor of interests in the Receivables for financial accounting purposes.
Although the economic substance of a transaction is generally of primary
importance in determining its proper treatment for federal income tax purposes,
nevertheless, a party to a transaction will be held to a high standard of proof
in establishing that the form of the transaction, if at variance with the
economic substance of the transaction, should not be treated as controlling. In
some instances, courts have indicated that a taxpayer should be bound by the
particular form it has chosen for a transaction, even if the substance of the
transaction does not accord with its form. Tax Counsel is nonetheless of the
opinion that the Certificates will be treated as indebtedness for federal income
tax purposes because (i) in many respects the form of the transaction as
reflected in the operative provisions of the documents accords with the
characterization of the Certificates as indebtedness, (ii) the parties have
stated unambiguously their intention to treat the Certificates as indebtedness
for tax purposes and (iii) the characteristics of the Certificates strongly
indicate that in economic substance the Certificates are a form of indebtedness.
Possible Classification of the Transaction as a Partnership or Association
Taxable as a Corporation
Notwithstanding Tax Counsel's opinion, potential investors should
recognize that there is some uncertainty as to the correct characterization of
the Certificates. It is possible that the IRS could assert that, for federal
income tax purposes, the transaction contemplated by this Prospectus Supplement
constitutes the sale of a direct or indirect interest in [the Vehicles and] the
Receivables to the
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Certificateholders and that the proper classification of the legal relationship
between the Servicer, the Sponsor and the Certificateholders resulting from this
transaction is that of a partnership or an association taxable as a corporation.
Since Tax Counsel is of the opinion that the Certificates will be treated as
indebtedness in the hands of the Certificateholders for federal income tax
purposes, the Servicer and the Sponsor will not attempt to comply with the
federal income tax reporting requirements applicable to either partnerships or
corporations.
If the transaction were treated as creating a partnership between the
Certificateholders, the Servicer and the Sponsor, the partnership itself would
not be subject to federal income tax (unless characterized as a publicly traded
partnership taxable as a corporation); rather, the Servicer, the Sponsor and
each Certificateholder would be taxed individually on their respective
distributive shares of the partnership's income, gain, loss, deductions and
credits. The amount, timing and characterization of items of income and
deductions for a Certificateholder would differ if the Certificates were held to
constitute partnership interests, rather than indebtedness.
If it were determined that this transaction created an entity classified
as a corporation (including a publicly traded partnership taxable as a
corporation), the Trust would be subject to federal income tax at corporate
income tax rates on the income it derives from the Receivables, which would
reduce the amounts available for distribution to the Certificateholders. Cash
distributions to the Certificateholders generally would be treated as dividends
for tax purposes to the extent of such corporation's earnings and profits.
Taxation of Interest Income of Certificateholders
Assuming, in accordance with the opinion of Tax Counsel, that the
Certificates will constitute indebtedness for federal income tax purposes,
interest thereon will be includable as ordinary income when received or accrued
by the Certificateholders in accordance with their respective methods of tax
accounting.
Sales of Certificates
Upon the sale or exchange of a Certificate, the Certificateholder will
realize a gain or loss equal to the difference between the amount realized on
the sale and the adjusted basis of such Certificate.
Backup Withholding with Respect to Certificates
Payments of interest and principal, together with payments of proceeds
from the sale of Certificates, may be subject to the "backup withholding tax"
under Section 3406 of the Code at a rate of 31% if recipients of such payments
fail to furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from such
tax. Any amounts deducted and withheld from a payment to a recipient would be
allowed as a credit against such recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
Foreign Investors in Certificates
A Certificateholder that is not a "United States person" may be subject to
United States federal withholding tax in respect of distributions on a
Certificate. Whether withholding of tax would be required, and, if so, the rate
at which such withholding would be imposed, would depend upon a number of
factors, including the characterization of the Certificates and the Trust for
federal income tax purposes, and, under current law, the withholding rate could
be as high as 35 percent. For these purposes, "United States person" means a
citizen or resident of the United States, a corporation, partnership organized
in or under the laws of the United States or any political subdivision thereof
or an estate or trust the income
S-48
<PAGE>
of which from sources without the United States is includable in gross income
for United States federal income tax purposes regardless of its connection with
the conduct of a trade or business within the United States.
[Proposed Tax Legislation
Legislation pending before Congress would apply special rules to "large
partnerships", generally defined as partnerships with at least 250 partners
during a taxable year (counting towards such total each owner during the year of
a partnership interest that is transferred during the year). Under the
legislation, certain computations are made at the partnership level rather than
the partner level. In particular, taxable income is calculated at the
partnership level, and is calculated generally in the same manner as for an
individual, except that 70% of miscellaneous itemized deductions (such as
expenses for the production of nonbusiness income) are disallowed. As a result,
all partners (including corporations) might have a portion of their share of
partnership deductions (other than interest expense) disallowed. Moreover, large
partnerships would become subject to new audit procedures; among other things,
an adjustment to taxable income of the partnership for a prior year would flow
through to current partners in the year the audit was settled, and the
partnership itself (rather than the partners) would be subject to any applicable
interest or penalties. As proposed, these rules would apply to partnership
taxable years ending on or after December 31, 1993.
The proposed tax legislation dealing with large partnerships discussed
above was not adopted in the Revenue Reconciliation Act of 1993, which was
enacted into law in August 1993. No prediction can be made whether that proposal
or similar legislation might be enacted in the future, or the ultimate effective
date of such legislation or whether the number of Certificateholders would cause
the Trust to be considered a "large partnership".]
State, Local and Other Taxes
Investors should consult their own tax advisors regarding whether the
purchase of the Certificates, either alone or in conjunction with an investor's
other activities, may subject an investor to any state or local taxes based on
an assertion that the investor is either "doing business" in, or deriving income
from a source located in, any state or local jurisdiction. Additionally,
potential investors should consider the state, local and other tax consequences
of purchasing, owning or disposing of a Certificate. State and local tax laws
may differ substantially from the corresponding federal tax law, and the
foregoing discussion does not purport to describe any aspect of the tax laws of
any state or other jurisdiction. Accordingly, potential investors should consult
their own tax advisors with regard to such matters.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Certificates may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code.
A fiduciary of a Plan must determine that the purchase of a Certificate is
consistent with its fiduciary duties under ERISA and does not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Code. Employee benefit plans
S-49
<PAGE>
which 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 the
fiduciary responsibility or prohibited transaction provisions of ERISA or the
Code. For additional information regarding treatment of the Certificates under
ERISA, see "ERISA Considerations" in the Prospectus.
If the Certificates constitute equity interests, there can be no assurance
that any of the exceptions set forth in the Regulations will apply to the
purchase of Certificates offered hereby. Under the terms of the Regulations, if
the Trust were deemed to hold Plan assets by reason of a Plan's investment in
Certificates, such Plan assets would include an undivided interest in the
Receivables, and any other assets held by the Trust. In such an event, the
Originator, the Sponsor, the Trust, the Trustee and other persons providing
services with respect to the Receivables, may be subject to the fiduciary
responsibility provisions of Title Originator of ERISA and be subject to the
prohibited transaction provisions of Section 4975 of the Code with respect to
transactions involving the Receivables unless such transactions are subject to a
statutory or administrative exemption. Additionally, if the Trust were deemed to
hold Plan assets, each Certificateholder may be subject to the fiduciary
responsibility provisions of Title Originator of ERISA with respect to its right
to consent or withhold consent to amendments to the Indenture and with respect
to its right to vote on action to be taken or not taken if an Indenture Event of
Default occurs.
In addition, certain affiliates of the Originator, the Sponsor, the Trust
and the Trustee may be considered to be parties in interest or fiduciaries with
respect to many Plans. An investment by such a Plan in Certificates may be a
prohibited transaction under ERISA and the Code unless such investment is
subject to a statutory or administrative exemption.
Any Plan fiduciary that proposes to cause a Plan to purchase Certificates
should consider whether such purchase would be appropriate under the general
fiduciary standards of prudence and diversification, taking into account the
overall investment policy of the Plan and its existing portfolio and should
consult with its counsel with respect to the potential applicability of ERISA
and the Code.
RATINGS
It is a condition to the issuance of the Certificates that they be rated
"_____" by ____________ and "_____" by ____________. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time. The ratings of ____________ and ____________ assigned to
Certificates addresses the likelihood of the receipt by Certificateholders of
all distributions to which such Certificateholders are entitled. The ratings do
not address the timely or ultimate payment of any withholding tax imposed. The
ratings assigned to Certificates do not represent any assessment of the
likelihood that principal Prepayments might differ from those originally
anticipated or address the possibility that Certificateholders might suffer a
lower than anticipated yield.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Sponsor has agreed to cause the Trust to
sell to [each of] the underwriter(s) named below (the "Underwriter(s)"), and
each of the Underwriter(s) has severally, and not jointly, agreed to purchase,
the principal amount of Certificates set forth opposite its name below.
S-50
<PAGE>
Principal
Amount of
Certificates
Underwriter(s)
__________________.......... $__________
__________________..........
__________
__________
TOTAL........... $ ==========
In the Underwriting Agreement, the Underwriter(s) have agreed, subject to
the terms and conditions therein, to purchase all the Certificates offered
hereby if any of such Certificates are purchased. The Sponsor has been advised
by the Underwriter(s) that they propose initially to offer the Certificates to
the public at the respective prices set forth herein, and to certain dealers at
such prices less a concession not in excess of _____% per Certificate. The
Underwriter(s) may allow and such dealers may reallow a concession not in excess
of 0.__% per Certificate to certain other dealers. After the initial public
offering, such prices and such concessions may be changed.
The Underwriting Agreement provides that the Sponsor and the Originator
will indemnify the Underwriter(s) against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the
Underwriter(s) may be required to make in respect thereof.
The Trustee (on behalf of the Trust) may, from time to time, invest the
funds in the Trust Accounts in Eligible Investments acquired from the
Underwriter(s).
LEGAL MATTERS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the issuance of the Certificates, including federal
and state income tax consequences with respect thereto, as well as other
matters, will be passed upon for the Trust, the Sponsor and the Underwriter(s)
by Dewey Ballantine, New York, New York.
S-51
<PAGE>
INDEX OF DEFINED TERMS
Page
----
Actual Payment..............................................................30
Additional Pooling Agreement................................................26
Additional Receivable Transfer Agreement....................................17
Additional Receivables.......................................................2
Adjusted Certificate Rate...................................................30
Administrative Amount.......................................................30
Advance Payment.............................................................30
Advance Payments............................................................27
Applicable Percentage.......................................................30
APR.........................................................................14
Available Funds..........................................................2, 30
Base Interest Amount........................................................30
Base Principal Distribution Amount..........................................30
Business Day................................................................42
Calculation Date............................................................31
Capitalized Interest Account.................................................9
Capitalized Interest Rate...................................................31
Capitalized Interest Requirement............................................31
Certificate Factor..........................................................36
Certificate Insurance Policy.................................................1
Certificate Insurance Premium Rate..........................................31
Certificate Insurer.......................................................1, 4
Certificate Interest........................................................31
Certificate Percentage......................................................31
Certificate Principal Balance...............................................31
Certificate Rate............................................................31
Certificateholder...........................................................43
Certificateholders...........................................................1
Certificates.................................................................1
Claim Date ................................................................31
Closing Date................................................................25
Code........................................................................45
Commission...................................................................3
Contract Interest............................................................2
Contract Principal.......................................................2, 31
Contract Rate...............................................................32
Contracts....................................................................1
Contribution Agreement......................................................43
Credit Score Analysts.......................................................19
Cut-Off Date.............................................................4, 32
Defaulted Contract..........................................................32
Delinquency Amounts.........................................................10
Delinquent Contract.....................................................10, 32
Determination Date...........................................................9
Discounted Contract Balance.................................................32
Distributions on Certificates...............................................28
Eligible Investments........................................................28
ERISA...................................................................12, 47
Event of Servicing Termination..............................................38
S-52
<PAGE>
Page
----
Excess Contract Interest.................................................2, 32
Excess Principal Amount.....................................................32
Exchange Act.................................................................3
Fiscal Agent................................................................41
Funding Distribution Date...................................................32
Funding Termination Date....................................................33
Initial Amortization Date....................................................2
Initial Capitalized Interest Amount..........................................9
Initial Certificate Principal Amount........................................33
Initial Contract Principal Balance...........................................4
Initial Receivables.........................................................25
Initial Unpaid Amount.......................................................33
Insufficiency Amount....................................................33, 43
Insurance Agreement..........................................................9
Insurance Policies..........................................................24
Insured Payment.............................................................41
Interest-Only Period........................................................33
Investment Earnings.........................................................10
IRS.........................................................................45
Issuer.......................................................................4
Large partnership...........................................................47
Majority Holders............................................................40
Monthly Report..............................................................35
Notice Date ................................................................28
Notice of Nonpayment........................................................43
Obligor......................................................................6
Original Pre-Funded Amount...................................................7
Originator...................................................................4
Overdue Interest............................................................33
Overdue Principal...........................................................33
Overfunded Interest Amount..................................................33
Payment Date................................................................33
Plan....................................................................12, 47
Pool Factor.................................................................36
Pooling Agreement........................................................1, 43
Pre-Funding Account..........................................................7
Predecessor Receivable......................................................16
Prepayment..................................................................33
Prepayment Amount...........................................................34
Prospectus...................................................................3
Receivables..................................................................1
Reconveyance Amount.........................................................34
Record Date.................................................................25
Reimbursement Amount........................................................34
Remittance Account...........................................................7
Remittance Period...........................................................34
Required Amortization Even..................................................34
Required Payments....................................................4, 10, 34
Reserve Account..............................................................9
Reserve Account Advance.....................................................34
Residual Receipts...........................................................34
S-53
<PAGE>
Page
----
Rule of 78s.................................................................14
Scheduled Contract Principal................................................35
Scheduled Payments..........................................................35
Servicer.....................................................................1
Servicer Advance........................................................10, 28
Servicer Fee................................................................35
Servicer Fee Rate...........................................................35
Servicer's Certificate......................................................28
Servicing Charges...........................................................10
Servicing Fee...............................................................10
Servicing Fee Rate..........................................................10
Specified Reserve Account Requirement.......................................35
Sponsor...................................................................1, 4
Sponsor Liquidation.........................................................39
Sponsor's Certificate Principal Balance.....................................32
Sponsor's Certificates......................................................34
Subordinated Amount.........................................................37
Substitute Receivable.......................................................16
Supplementary Report........................................................38
Tax Counsel.................................................................45
Transferor's Balance.........................................................5
Trust.....................................................................1, 4
Trustee...................................................................1, 4
Underwriter(s)..............................................................48
Underwriting Agreement......................................................48
United States person........................................................46
Vehicles.....................................................................1
Vendor Agreement Rights.....................................................24
VSI Insurance Policy........................................................20
[Monthly] Servicer Report...................................................22
S-54
<PAGE>
EXHIBIT 99.4
<PAGE>
SUBJECT TO COMPLETION DATED __________, 1996
[Exhibit 99.4 Form of Prospectus Supplement. This form of Prospectus Supplement
is for illustrative purposes only. A Prospectus Supplement in definitive form
reflecting the terms of each Series of Certificates will be filed with the
Commission under the Securities Act of 1933, as amended, pursuant to Rule 424(b)
promulgated thereunder.]
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ___________, 1996)
- --------------------------------------------------------------------------------
[ADVANTA AUTO RECEIVABLES MASTER TRUST 199__-__]
$_______________
_____% Class [A] Auto Receivables Backed Certificates, Series 199__-__
ADVANTA AUTO FINANCE CORPORATION
Sponsor
___________________
Originator/Servicer
- --------------------------------------------------------------------------------
The _____% Class [A] Auto Receivables Backed Certificates, Series 199__-__
(the "[Class A] Certificates") hereby offered by Advanta Auto Finance
Corporation represent the right to receive repayment of the Initial Certificate
Principal Amount ($____________) of the [Class A] Certificates and monthly
interest at a rate of _____% per annum on the unpaid portion of such principal
amount. The rights to receive such payments are based solely upon the interests
represented by the [Class A] Certificates in the [Advanta Auto Receivables
Master Trust 199__-__] (the "Trust") formed pursuant to a Pooling Agreement (the
"Pooling Agreement"), dated as of ____________, 199__, among
______________________, as originator and as servicer of the Receivables (the
"Originator" and the "Servicer," respectively) Advanta Auto Finance Corporation
(the "Sponsor") and ____________, as trustee (the "Trustee"). The assets of the
Trust will consist of any combination of retail installment sales contracts
between manufacturers, dealers or certain other originators and retail
purchasers secured by new and used automobiles and light duty trucks financed
thereby or participation interests therein,] together with all monies received
relating thereto (the "Contracts"), [the underlying new and used automobiles and
light duty trucks (the "Vehicles," together with the Contracts], the
"Receivables") and the proceeds thereof received by the Trust from the Sponsor
on or prior to the date of the issuance of the [Class A] Certificates. The
Trustee will also have access to the Reserve Account to be established for the
benefit of the holders of the [Class A] Certificates (the "[Class A]
Certificateholders") and the Certificate Insurer. Concurrently with issuance of
the [Class A] Certificates, the Trust will issue from the same Series another
Class of Certificates (the "[Class B] Certificates"; collectively with the
[Class A] Certificates, the "Series 199__-1 Certificates") described herein,
which initially will be retained by the Sponsor and will be subordinated to the
[Class A] Certificates in the right to payments of principal and interest. Only
the [Class A] Certificates are offered hereby. In addition, from time to time,
the Sponsor may offer other Series of Certificates that evidence undivided
interests in the Trust which may have terms significantly different from the
[Class A] Certificates.
[FORM OF CREDIT ENHANCEMENT]
------------------
THE [CLASS A] CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE ORIGINATOR, THE SPONSOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE [CLASS A] CERTIFICATES NOR THE
UNDERLYING RECEIVABLES WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY THE ORIGINATOR OR THE SPONSOR. SEE ALSO "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATIONS TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" HEREIN AND IN THE PROSPECTUS.
- -----------------------------------------------------------------------------
Price to Underwriting Proceeds to the
Public(1) Discount(2) Sponsor(1)(3)
- -----------------------------------------------------------------------------
Per [Class A] Certificate... % % %
Total....................... $ $ $
- -----------------------------------------------------------------------------
(1) Plus accrued interest, if any, from ____________, 199__.
(2) The Sponsor has agreed to indemnify the Underwriter(s) against
certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Before deducting estimated expenses of $____________ payable by the
Sponsor.
[The [Class A] Certificates are offered subject to prior sale, when, as,
and if accepted by the Underwriter(s) and subject to the approval of certain
legal matters by Dewey Ballantine, counsel for the Underwriter(s).]
<PAGE>
[Name(s) of the Underwriter(s)]
S-2
<PAGE>
The Contracts are contracts for the sale of the Vehicles, entitling the
originator thereunder to payments of principal and interest (hereinafter,
"Contract Principal" and "Contract Interest," respectively).
Interest will accrue on the [Class A] Certificates at the rate of ___% per
annum (the "Certificate Rate"). Interest and Principal will be distributed on
_________, 19__, and on the __ day of each month thereafter (or, of any such ___
day is not a business day, the next succeeding business day) (each a
"Distribution Date"). Principal is scheduled to be distributed as described
herein under "Series Provisions--Principal," and its distribution may be
accelerated under certain circumstances described under "Series Provisions--Pay
Out Events" herein. If not previously paid, a principal payment equal to the
then outstanding Invested Amount of the [Class A] Certificates will be due on
the __________________ Distribution Date (the "Final Payment Date").
The Trust will have the benefit of funds on deposit in a reserve account
(the "Reserve Account") which will be funded by an initial deposit of
$10,000,000. Amounts available to be withdrawn from the Reserve Account will be
applied as described herein under "Summary of Series Terms--Reserve Account" and
"Series Provisions--Reserve Account."
The [Class A] Certificates initially will be represented by certificates
which will be registered in the name of Cede & Co., the nominee of The
Depository Trust Company. [Class A] Certificateholders will be represented by
book entries on the records of The Depository Trust Company and participating
members thereof. Definitive Certificates will be available to [Class A]
Certificateholders only under the limited circumstances described under
"Description of the Securities--Definitive Notes" in the Prospectus.
There currently is no secondary market for the [Class A] Certificates, and
there is no assurance that one will develop or, if one does develop, that it
will continue until the [Class A] Certificates are paid in full.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE [CLASS A] CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN
THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE [CLASS A] CERTIFICATES MAY
NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE [CLASS
A] CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CERTIFICATEHOLDERS
Periodic and annual unaudited reports containing information concerning
the Receivables will be prepared by the Servicer and sent on behalf of the Trust
to the registered holders of the [Class A] Certificates. See "Description of the
Securities--Reports to Securityholders" in the accompanying Prospectus (the
"Prospectus"). Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Trust will file
with the Securities and Exchange Commission (the "Commission") such periodic
reports as are required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations thereunder and as are
otherwise agreed to by the Commission. Copies of such periodic reports may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.w., Washington, D.C. 20549, at prescribed rates.
S-3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
Issuer:.......................... Advanta Auto Receivables Trust 199__-__ (the
"Trust" or the "Issuer").
Sponsor:......................... Advanta Auto Finance Corporation (the
"Sponsor"), a Nevada corporation. The Sponsor
will acquire the Receivables from the
Originator and will simultaneously transfer
the Receivables (including from time to time
the Additional Receivables) to the Trust. The
principal executive offices of the Sponsor
are located at 500 Office Center Drive, Fort
Washington, Pennsylvania 19034 and its
telephone number is (215) 283-4200.
Servicer......................... Advanta Auto Finance Corporation, a
_____________ corporation (the "Servicer").
The principal executive offices of the
Servicer are located at
_______________________, and its telephone
number is __________________.
Originator....................... _________________, a _____________
corporation (" the "Servicer"). The principal
executive offices of the Servicer are located
at _______________________, and its telephone
number is __________________.
Trustee:......................... ________________________ (the "Trustee"), a
____________ association. The corporate trust
offices of the Trustee are located at
______________________ and its telephone
number is (___) ______.
Cut-Off Date:.................... ____________, 199__.
Closing Date:.................... ____________, 199__.
[Class A] Certificates
Initial [Class A] Invested
Amount....................... $_____________________
Certificate Rate............... _____% per annum.
Distribution Date.............. The ____ day of each month (or, if any such
____ day is not a business day, the next
succeeding business day), commencing
__________, 19__.
S-4
<PAGE>
Record Date.................... The business day preceding the related
Distribution Date (or, if Definitive
Certificates are issued, the last day of the
month preceding the month in which the
related Distribution Date occurs).
Principal Commencement Date.... The __________________, 199__ Distribution
Date.
Final Payment Date............. The _________________________ Distribution
Date.
[Class A] Controlled
Amortization Amount.......... For each Distribution Date with respect to
the Scheduled Amortization Period, the amount
shown for such date on the "Schedule of
[Class A] Controlled Amortization Amounts."
See "Series Provisions--Applications of
Collections--Payments of Principal" in this
Prospectus Supplement.
Scheduled Amortization
Period....................... The Scheduled Amortization Period with
respect to the Series 199__-_ Certificates
will commence on the Series Cut-Off Date and
will end at the close of business on
_____________, 199__, unless terminated
earlier upon the occurrence of a Pay Out
Event. Available Principal Collections will
be distributed to the [Class A]
Certificateholders up to the [Class A]
Controlled Distribution Amount on each
Distribution Date with respect to the
Scheduled Amortization Period.
Full Amortization Period....... At the close of business on the last day of
the Scheduled Amortization Period, the Full
Amortization Period with respect to the
Series 199__-_ Certificates will commence.
The [Class A] Controlled Amortization Amount
will not apply to any distributions to [Class
A] Certificateholders on any Distribution
Date with respect to the Full Amortization
Period. Principal will be distributed to
[Class A] Certificateholders on each
Distribution Date with respect to the Full
Amortization Period in an amount equal to the
lesser of (i) all Available Principal
Collections with respect to the related
Collection Period, (ii) all Principal
Payments allocated to the [Class A]
Certificateholders' Interest and (iii) the
remaining Invested Amount of [Class A]
Certificates on such Distribution Date. The
Full Amortization Period will continue until
the Invested Amount of the Series 199__-_
Certificates is paid in full or the Full
Amortization Pool Balance is zero, whichever
first occurs.
Upon the commencement of the Full
Amortization Period, the Trustee will include
all the Receivables then included in the
Trust's Floating Receivable Pool in the Full
Amortization Pool for the Series 199__-_
S-5
<PAGE>
Certificates. Following commencement of the
Full Amortization Period, the Series 199__-_
Certificateholders will have an interest only
in the Full Amortization Pool and will not
have any interest in Receivables subsequently
transferred to the Trust, in the Floating
Receivable Pool or in Full Amortization Pools
subsequently segregated with respect to other
Series.
The Full Amortization Pool, and Contract
Payments and the Defaulted Amount with
respect to Contracts therein, will be
allocated to the Series 199__-_
Certificateholders' Interest on the basis of
the Fixed Allocation Percentage for the
Series 199__-_ Certificates. The Full
Amortization Pool and such Contract Payments
and Defaulted Amount will be further
allocated to the [Class A] Certificates on
the basis of its Floating Allocation
Percentage. The portion of the Contract
Payments and the Defaulted Amount with
respect to Contracts in the Full Amortization
Pool not allocated to the Series 199__-_
Certificateholders' Interest (the
"Participation Interest") initially will be
included in the Floating Receivable Pool and
subsequently included in the next Full
Amortization Pool created for another Series,
if any.
[Class B] Certificates......... Concurrently with the issuance of the [Class
A] Certificates, the Trust will issue another
Class of Certificates of the same Series, the
[Class B] Certificates, which initially will
be retained by the Sponsor. The [Class A]
Certificates and the [Class B] Certificates
collectively comprise the first Series to be
issued by the Trust. Only the [Class A]
Certificates are offered hereby.
Payments of interest and principal on the
[Class B] Certificates will be subordinated
to payments of interest and certain other
amounts due with respect to the [Class A]
Certificates as described under "Series
Provisions--Application of
Collections--Subordination."
[Reserve Account............... The Reserve Account will be established in
the name of the Trustee for the benefit of
the [Class A] Certificateholders. The Reserve
Account will be funded on the Series Issuance
Date from the proceeds of the [Class A]
Certificates in the amount of
$________________ (the "Initial Reserve
Amount"). On each Distribution Date, the
Available Reserve Amount will be applied to
fund the Required Amount, if any, with
respect to such Distribution Date.
S-6
<PAGE>
On each Distribution Date, Available Finance
Charge Collections and Available Principal
Collections allocated and available for that
purpose (as described under "Series
Provisions--Application of
Collections--Payments of Interest, Fees and
Other Items" and "--Payments of Principal)
will be applied to increase the amount on
deposit in the Reserve Account (to the extent
such amount is less than the Required Reserve
Amount). In addition, if on any Distribution
Date the amount on deposit in the Reserve
Account exceeds the Required Reserve Amount,
such excess will be withdrawn and paid to the
Sponsor (the "Reserve Sponsor"). See "Series
Provisions--Reserve Account."]
Series Servicing Fee
Percentage................... For so long as the Originator is the
Servicer, ___% per annum or, in the event a
successor Servicer has been appointed, a
percentage determined by the Trustee which
shall not exceed ___%. See "Description of
the Trust Agreements--Servicing Compensation"
in the Prospectus.
Registration................... The [Class A] Certificates initially will be
represented by certificates registered in the
name of Cede, as nominee of DTC, and no
purchaser of [Class A] Certificates will be
entitled to receive a definitive certificate
except under certain limited circumstances.
[Class A] Certificateholders may elect to
hold their [Class A] Certificates through DTC
(in the United States) or CEDEL or Euroclear
(in Europe). See "Description of the
Securities--Book-Entry Registration" and
"--Definitive Notes" in the Prospectus.
Optional Repurchase............ On any Distribution Date occurring on or
after the day on which the Series 199__-1
Invested Amount is reduced to 5% or less of
the Series 199__-1 Initial Invested Amount,
the Sponsor will have the option to
repurchase all, but not less than all, the
Series 199__-1 Certificateholders' Interest.
The purchase price will be equal to the sum
of the Series 199__-1 Invested Amount plus
accrued and unpaid interest on the Series
199__-1 Certificates through the day
preceding such Distribution Date. See
"Description of the Trust
Agreements--Termination" in the Prospectus.
ERISA Eligibility.............. [Class A] Certificates may be eligible for
purchase by Benefit Plans. See "ERISA
Considerations" herein.
Ratings........................ It is a condition to the issuance of the
[Class A] Certificates that they be rated in
the highest rating
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category by at least one nationally
recognized rating agency.
[Class B] Certificates
Initial [Class B]
Invested Amount.............. $____________________.
[Class B] Certificateholder.... The [Class B] Certificates initially will be
retained by the Sponsor. The Sponsor must
retain ____% of the [Class B] Certificates,
which are nontransferable, but, subject to
certain conditions and limitations, the
Sponsor may sell up to _____% of the [Class
B] Certificates after the Series Issuance
Date. In connection with such a transfer, the
Trustee and the Sponsor may agree to amend
the Supplement and the Pooling Agreement with
respect to the [Class B] Certificates,
including changing the Series Enhancement
provided for Series 199__-_ Certificates to
add Series Enhancement for the [Class B]
Certificates, so long as no Rating Effect or
Pay Out Event results from such amendment.
The [Class B] Certificates are not offered
hereby.
[Class B] Certificate Rate..... _____% per annum.
[Class B] Controlled
Amortization Amount.......... For each Distribution Date during the
Scheduled Amortization Period, the amount
provided in the Series 199__-_ Supplement.
Subordination of Distributions
to [Class B]
Certificateholders .......... Collections of Principal Payments and
collections of Finance Charge Payments
otherwise allocable to the [Class B]
Certificateholders will be subordinated to
the payment of interest and certain other
amounts due with respect to the [Class A]
Certificates. No principal or interest will
be payable on the [Class B] Certificates with
respect to a Distribution Date until all
interest payments, the Investor Default
Amount and aggregate unreimbursed Investor
Charge-Offs have been covered with respect to
the [Class A] Certificates with respect to
such Distribution Date and the Available
Reserve Amount equals the Required Reserve
Amount on such Distribution Date. The [Class
B] Certificates will receive distributions of
interest on each Distribution Date equal to
the lesser of Available [Class B] Finance
Charge Collections and interest accrued and
unpaid on the [Class B] Invested Amount at
the [Class B] Certificate Rate. The [Class B]
Certificates will receive distributions of
principal on each Distribution Date during
the Scheduled Amortization Period equal to
the
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lesser of the Available [Class B] Principal
Collections and the [Class B] Controlled
Amortization Amount. During the Full
Amortization Period, the [Class B]
Certificates will receive distributions of
principal on each Distribution Date equal to
Available [Class B] Principal Collections.
Payments of principal to the [Class B]
Certificates will reduce the [Class B]
Invested Amount available for subordination.
See "Series Provisions--Application of
Collections--Subordination" herein.
Risk Factors..................... For a discussion of certain factors that
should be considered by prospective investors
in the Certificates, see "Risk Factors"
herein and in the Prospectus.
Certain Legal Matters............ Certain legal matters relating to the
validity of the issuance of the Certificates
will be passed upon for the Issuer and the
Underwriter by Dewey Ballantine, New York,
NY.
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<PAGE>
RISK FACTORS
Prospective Certificateholders should consider, among other things, the
following factors in connection with the purchase of the Certificates:
Risk of Losses on Investment Associated with Limited Obligations of the
Trust. Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the
Certificates. The Certificateholders will not receive any distributions with
respect to a Payment Date until the full amount of interest on and principal of
the Certificates on such Payment Date has been deposited in the Certificate
Distribution Account. The Trust does not have, nor is it permitted or expected
to have, any significant assets or sources of funds other than the Receivables
and the Trust Accounts. The Securities represent solely obligations of, or
interests in, the Trust and the Securities will not be insured or guaranteed by
the Sponsor, the Originator, the Servicer, the [Owner] Trustee or any other
person or entity. Consequently, holders of the Securities must rely for
repayment upon payments on the Receivables and, if and to the extent available,
amounts on deposit in the Reserve Account. Amounts to be deposited in the
Reserve Account are limited in amount, and the amount required to be on deposit
in the Reserve Account will be reduced as the Pool Balance is reduced. In
addition, funds in the Reserve Account will be available on each Payment Date to
cover shortfalls in distributions of interest and principal on the Certificates
prior to the application thereof to cover shortfalls on the Certificates. If the
Reserve Account is exhausted, the Trust will depend solely on current payments
on the Receivables to make payments on the Securities. Although the Trust will
covenant to sell the Receivables if directed to do so by the Indenture Trustee
in accordance with the Indenture following an acceleration of the Certificates
upon an Event of Default, there is no assurance that the market value of the
Receivables will at any time be equal to or greater than the aggregate principal
amount of outstanding Certificates. Therefore, upon an Event of Default with
respect to the Certificates there can be no assurance that sufficient funds will
be available to repay Certificateholders in full and consequently the
Certificateholders run the risk of loss on their investment. In addition, the
amount of principal required to be distributed to Certificateholders under the
Indenture is generally limited to amounts available therefor in the Certificate
Distribution Account. Therefore, the failure to pay principal on the
Certificates may not result in the occurrence of an Event of Default until the
Final Scheduled Payment Date.
Risk of Limited Liquidity and Lower Market Price Associated with a
Reduction or Withdrawal of Ratings of the Securities. It is a condition to the
issuance of the Certificates and the Certificates that the Certificates be rated
in the [_____] rating category or its equivalent, by at least two nationally
recognized rating agencies (the "Rating Agencies"). A rating is not a
recommendation to purchase, hold or sell Securities, inasmuch as such rating
does not comment as to market price or suitability for a particular investor.
The rating of the Securities addresses the likelihood of the timely payment of
interest on and the ultimate repayment of principal of the Securities pursuant
to their terms. There is no assurance that a rating will remain for any given
period of time or that a rating will not be lowered or withdrawn entirely by a
Rating Agency if in its judgment circumstances in the future so warrant. The
rating of the Certificates is based primarily on the creditworthiness of the
Receivables, the subordination provided by the Certificates and the availability
of funds in the Reserve Account. The rating of the Certificates is based
primarily on the creditworthiness of the Receivables and the availability of
funds in the Reserve Account. The ratings of the Securities are also based on
the rating of the security insurer. Upon a security insurer default, the rating
on the Securities may be lowered or withdrawn entirely. In the event that any
rating initially assigned to the Securities were subsequently lowered or
withdrawn for any reason, including by reason of a downgrading of the security
insurer's claims-paying ability, no person or entity will be obligated to
provide any additional credit enhancement with respect to the Securities. Any
reduction or withdrawal of a rating will have an adverse effect on the liquidity
and market price of the Securities. See "Ratings."
[Risk of Reduced Rate of Return Associated with Relationship Between Base
Rate and LIBOR. Allocations of payments on the variable rate Receivables to
principal and interest depend upon the applicable Base Rate. Interest on the
Certificates accrues at a rate generally based upon LIBOR. These two rates can
and will vary with respect to each other. Historically, they have increased or
decreased
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roughly in tandem and, during the last ten years, LIBOR always has remained
below the Base Rate. However, no assurance can be given that these historical
trends will continue. There is a risk that if LIBOR were to more above the Base
Rate, the spread used to pay interest to the Securityholders would disappear and
the rate of return to investors would be reduced.]
[The variable rate Receivables bear interest at the Base Rate plus a Base
Rate Additive ranging from _____% to _____%. The Certificate Interest is based
upon LIBOR. If, in respect of any Payment Date, there does not exist a positive
spread between the weighted average of the Receivables Rate, Certificate
Interest Rate less the Servicing Fee Rate (such difference between the
Receivables Rate and the Servicing Fee Rate being the "Net Receivables Rate")
for the Collection Period preceding such Payment Date, on the one hand, and the
Certificate Interest Rate for such Payment Date (calculated before giving effect
to this sentence), on the other hand, then the [Pass-Through Rate] for such
Payment Date shall not exceed the Net Receivables Rate.]
[Risk of Reduced Rate of Return Associated with Yield Considerations. The
Certificateholders will bear the risk associated with the possible narrowing of
the spread between the Certificate Interest Rate, on the one hand, and the Net
Receivables Rate, on the other hand. If this spread disappears (i.e., if the
Certificate Interest Rate exceeds or equals the Net Receivables Rate), the
interest payable on the Certificates for the related Payment Date will not
exceed such Net Receivables Rate. A substantial change in LIBOR at a time when
the Net Receivables Rate does not experience a similar change could result in
limiting the Certificate Interest Rate and consequently could reduce the rate of
return to investors as described above.]
Risk of Lower Yield Associated with Prepayment Considerations. If
purchased at other than par, the yield to maturity on the Securities will be
affected by the rate of the payment of principal of the Contracts. If the actual
rate of payments on the Contracts is slower than the rate anticipated by an
investor who purchases the Securities at a discount, the actual yield to such
investor will be lower than such investor's anticipate yield. If the actual rate
of payments on the Contracts is faster than the rate anticipated by an investor
who purchases the Securities at a premium, the actual yield to such investor
will be lower than such investor's anticipated yield.
[All of the Contracts are fixed-rate contracts. The rate of prepayments
with respect to conventional fixed contracts has fluctuated significantly in
recent years. In general, if prevailing interest rates fall significantly below
the interest rates on fixed rate contracts, such contracts are likely to be
subject to higher prepayment rates than if prevailing rates remain at or above
the interest rate on such contracts. However, the monthly payment on contracts
similar to the Contracts is often smaller than the monthly payment on other
types of consumer debt, for example, a typical mortgage loan. Consequently, a
decrease in the interest rate payable as a result of a refinancing would result
in a relatively small reduction in the amount of the contracts monthly payment,
as a result of the relatively small loan balance. Conversely, if prevailing
interest rates rise appreciably above the interest rates on fixed rate
contracts, such contracts are likely to experience a lower prepayment rate than
if prevailing rates remain at or below the interest rates on such contracts. As
of the Cut-off Date, ____% of the aggregate principal balance of the Contracts
had prepayment penalties.]
[All of the Contracts are adjustable rate contracts. As is the case with
conventional fixed rate contracts, adjustable rate contracts may be subject to a
greater rate of principal prepayments in a declining interest rate environment.
For example, if prevailing interest rates fall significantly, adjustable rate
contracts could be subject to higher prepayment rates than if prevailing
interest rates remain constant because the availability of fixed-rate contracts
at competitive interest rates may encourage obligors to refinance their
adjustable rate contracts to "lock in" a lower fixed interest rate. However, no
assurance can be given as to the level of prepayments that the contracts will
experience. As of the Cut-off Date, ____% of the aggregate principal balance of
the Contracts had prepayment penalties.]
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<PAGE>
THE RECEIVABLES
Contracts
[Description of collateral is transaction dependent -- an example of disclosure
language is set forth below.]
[All of the Contracts were purchased by the Sponsor from the Originator in
the ordinary course of business and the Contracts constitute substantially all
of the automobile and light duty truck retail installment sale contracts
included in the Originator's portfolio meeting the selection criteria described
herein. Such selection criteria included that: (i) each Contract is secured by a
new or used automobile or light duty truck; (ii) each Contract was originated in
the United States; (iii) each Contract provides for level monthly payments that
fully amortize the amount financed over its original term except that the
payment in the first or last month in the life of the Contract may be minimally
different from the level payment, and a minimal number of the Contracts provide
for monthly payments for a period of time not exceeding one year after
origination in an amount less than such level payment, provided that as of the
Cutoff Date the monthly payment currently due under each such Contract is equal
to such level payment; (iv) each Contract was originated on or prior to ____,
199_; (v) each Contract has an original term of __ to __ months and, as of the
Cutoff Date, had a remaining term to maturity of not less than three months nor
more than __ month; (vi) each Contract provides for the payment of a finance
charge at an APR ranging from __% to __%; (vii) each Contract shall not have a
Scheduled Payment that is more than 30 days past due as of the Cutoff Date;
(viii) no Contract shall be due, to the best knowledge of the Originator, from
any Obligor who is presently the subject of a bankruptcy proceeding or is
bankrupt or insolvent; (ix) no Vehicle has been repossessed without
reinstatement as of the Cutoff Date; and (x) as of the Cutoff Date, physical
damage insurance relating to each Vehicle is not being force-placed by the
Servicer.
Certain information with respect to the Receivables expected to be sold by
the Originator to the Sponsor pursuant to the Receivables Acquisition Agreement
and in turn sold by the Sponsor to the Trust pursuant to the Pooling Agreement
is set forth below. The description of the Receivables presented in this
Prospectus Supplement is based upon the pool of Receivables as it is expected to
be constituted on the Cutoff Date. While information as of the Closing Date for
the Receivables that actually will be sold to the Trust may differ somewhat from
the information presented herein, the Sponsor does not expect that the
characteristics of the Receivables that are sold to the Trust will vary
materially from the information presented in this Prospectus Supplement
concerning the Receivables.
As of the Cutoff Date, approximately __% and approximately __% of the
Aggregate Discounted Contract Balance are expected to represent Contracts
secured by automobiles and light duty trucks, respectively. Based on the
Aggregate Discounted Contract Balance, approximately __% and approximately __%
of the Contracts are expected to represent financing of new vehicles and used
vehicles, respectively, and no more than __% of the Contracts are expected to be
due from employees of the Originator or any of its respective affiliates. As of
the Cutoff Date, the average Principal Balance of Contracts secured by
automobiles and light duty trucks is expected to be approximately $_____ and
approximately $_____, respectively. The majority of the Vehicles are expected to
be foreign and domestic automobiles and light duty trucks. Except in the case of
any breach of representations and warranties by the Originator, it is expected
that none of the Contracts provide for recourse to the Originator who originated
the related Contract.
Each Contract provides for fixed level monthly payments which will
amortize the full amount of the Contract over its term. The Contracts provide
for allocation of payments according to the "sum of periodic balances" or "sum
of monthly payments" method (the "Rule of 78s"). Each Contract provides for the
payment by the Obligor of a specified total amount of payments, payable in
monthly installments on the related due date, which total represents the
principal amount financed and finance charges in an amount calculated on the
basis of a stated annual percentage rate ("APR") for the term of such Contract.
The rate at which such amount of finance charges is earned and, correspondingly,
the amount of each fixed
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monthly payment allocated to reduction of the outstanding principal balance of
the related Contract are calculated in accordance with the Rule of 78s. Under
the Rule of 78s, the portion of each payment allocable to interest is higher
during the early months of the term of a Contract and lower during later months
than that under a constant yield method for allocating payments between interest
and principal. Notwithstanding the foregoing, all payments received by the
Servicer on or in respect of the Contract will be allocated pursuant to the
Pooling Agreement on an actuarial basis.
If an Obligor elects to prepay a Contract in full, it is entitled to a
rebate of the portion of the outstanding balance then due and payable
attributable to unearned finance charges, calculated in accordance with the Rule
of 78s. The amount of a rebate under a Contract calculated in this manner will
always be less than had such rebate been calculated on an actuarial basis.
Distributions to Certificateholders will not be affected by Rule of 78s rebates
under the Contract because pursuant to the Pooling Agreement such distributions
will be determined using the actuarial method.]
The expected composition, distribution by APR and geographical
distribution of the Contracts are as set forth in the following tables.
Expected Composition of the Contracts
Aggregate Discounted Contract Balance ............. $_____
Number of Contracts ...............................
Average Original Principal Balance ................ $_____
Range of Original Principal Balances ............ $_____ to $_____
Weighted Average APR(1)............................ ___ %
Range of APRs ................................... ___ % to ___ %
Weighted Average Original Maturity(1) ............. __ months
Range of Original Maturities .................... __ months to __ months
Weighted Average Remaining Maturity(1) ............ __ months
Range of Remaining Maturities ................... __ months to __ months
- ----------
(1) Weighted by Aggregate Discounted Contract Balance as of the Cutoff Date.
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<PAGE>
Expected Distribution of the Contracts by APR
Percentage of Aggregate Percentage of
Aggregate Discounted Aggregate
Number of Number Contract Discounted
Range of APRs Contracts of Contracts Balance Contract Balance
- ------------- --------- -------------- --------- ----------------
% to % .... % $ %
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
% to % ....
Total ......... % $ %
======== ===== ======= ==========
Expected Distribution of the Contracts by State
Percentage of
Percentage of Aggregate Aggregate
Aggregate Discounted Discounted
Number of Number Contract Contract
State(1) Contracts of Contracts Balance Balance
- -------- --------- ------------- ----------- -------------
% $ %
Total.......... % $ %
======== ======== =======
- ----------
(1) Based on the addresses of the Obligors.
Substitution
Pursuant to the Receivables Acquisition Agreement, the Servicer will have
the right (but not the obligation) at any time to substitute one or more
Eligible Receivables (each a "Substitute Receivable") [and the Vehicles subject
thereto (or a perfected security interest therein)] for a Receivable
("Predecessor Receivable") [and the Vehicles subject thereto (or a perfected
security interest therein)] if:
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(i) the Predecessor Receivable is then in default and, as of the
most recent Cut-Off Date, has been in default for at least ________
[(___)] consecutive days or a bankruptcy petition has been filed by or
against the Obligor;
[(ii) the Vehicles subject to the Substitute Receivable or
Receivables has a current estimated fair market value and a projected
residual value, respectively, equal to or greater than the current fair
market value and projected residual value of the Vehicles subject to the
Predecessor Receivable;] and
(iii) the Substitute Receivable or Receivables require the obligor
or obligors thereunder to make Contract Payments during each month ending
on or prior to the final payment date of the Certificate in an amount
which is at least as great as the Contract Payment required under the
Predecessor Receivable during each such month.
[provided, however, that the Aggregate Discounted Contract Balance of all
Contracts substituted shall not exceed [10%] of the Aggregate Discounted
Contract Balance of the Initial Receivables and the Additional Receivables.]
[Upon repossession and disposition of any Vehicles subject to a Defaulted
Contract, any deficiency remaining will be pursued to the extent deemed
practicable by the Servicer. [The Servicer on behalf of the Issuer is directed
to maximize the Net Residual Value of the Vehicles relating to any Defaulted
Contract, and, in such regard, the Servicer may sell such Vehicles at the best
available price, refurbish such Vehicles and re-lease such Vehicles to third
parties, or take any other commercially reasonable steps to maximize such
Vehicles's Net Residual Value. Liquidation proceeds with respect to any such
Defaulted Contract, including any future payments received with respect to such
Defaulted Contracts, shall be paid to the Collection Account. If the Servicer
reasonably believes that the Net Residual Value of any Vehicles is zero or de
minimis, it will dispose of such Vehicles in accordance with its standard
procedures.]
The original counterpart of each Contract constituting chattel paper and
the Contract Files will be held by _________________, as Trustee on behalf of
the Certificateholders. The Trustee will be required to indicate that the
Contracts have been transferred by the Originator to the Trust.
[The Additional Receivables
Subject to the conditions set forth below, in consideration of the
Trustee's delivery on the related Additional Receivable Transfer Date upon the
order of the Sponsor of all or a portion of the balance of funds in the
Pre-Funding Account, the Originator shall on any Additional Receivable Transfer
Date sell, transfer, assign, set over and otherwise convey without recourse, to
the Sponsor, all right, title and interest of the Originator in and to (i) each
Additional Receivable listed on the schedule delivered by the Originator to the
Sponsor and the Trustee (including all Contract Payments due thereunder); and
[(ii) the related Vehicles; provided, however, that the Originator reserves and
retains all of its right, title and interest in and to all Contract Payments
collected and interest accruing on each such Additional Receivable prior to the
related Additional Receivable Transfer Date.]
The amount released from the Pre-Funding Account shall be ___________
percent (___%) of the Discounted Contract Balances of the Additional Receivables
so transferred.
The Originator shall transfer to the Issuer the Additional Receivables and
the other property and rights related thereto only upon the satisfaction of each
of the following conditions on or prior to the related Additional Receivable
Transfer Date:
(i) the Originator shall have provided the Trustee with a timely
Addition Notice and shall have provided any information reasonably
requested by the Sponsor or the Trustee with respect to the Additional
Receivables;
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(ii) the Originator shall have delivered to the Sponsor and the
Trustee a duly executed written assignment (including an acceptance by the
Trustee) (the "Additional Receivable Transfer Agreement"), which shall
include schedules listing the Additional Receivables and any other
exhibits listed thereon;
(iii) the Originator shall have deposited in the Remittance Account
all collections in respect of the Additional Receivables received on or
after the related Additional Receivable Transfer Date;
(iv) as of each Additional Receivable Transfer Date, the Originator
was not insolvent, will not be made insolvent by such transfer nor is it
aware of any pending insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Sponsor or the Certificateholders;
(vi) the Originator shall have delivered to the Trustee an Officers'
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph and in the related Additional Receivable
Transfer Agreement;
(vii) the obligation of the Sponsor to purchase an Additional
Receivable on any Additional Receivable Transfer Date is subject to the
requirement that such Additional Receivable comply in all material
respects with the representations and warranties made by the Originator on
the Initial Receivables in the Pooling Agreement.]
THE ORIGINATOR AND THE SERVICER
General
The Originator is a company engaged in the business of originating and
acquiring retail installment sale contract financing to retail customers of
automotive dealers. The Originator provides full-service financing, primarily
through installment sales contracts, to retail purchasers of new and used
automobiles and light duty trucks through dealer programs.
The Originator has financed over $___ million of vehicles, representing
over _________ vehicles. The Originator currently services over ___ customers
through its direct servicing activities and an additional __________ customers
in connection with its subsidiaries activities. As of _________________, the
Originator had __ employees.
Underwriting
[Description of the underwriting guidelines of the Originator is
transaction dependent - an example of disclosure language is set forth below.]
[The Originator's underwriting standards are intended to evaluate a
prospective buyer's credit standing and repayment ability and the adequacy of
the related financed vehicle as collateral. Generally, a prospective buyer is
required by the Originator to complete a credit application on a form prepared
or approved by the Originator. As part of the description of the applicant's
financial condition, the applicant is required to provide current information
enumerating, among other things, employment history, bank account information,
debts and credit references. Upon receipt, all application data is entered into
a centralized computer network that automatically obtains an independent credit
bureau report and then "scores" the application with the use of a scorecard. The
scorecard enables the Originator to review an application and establish the
probability that the proposed retail installment sale contract will be paid in
accordance with its terms. The credit scores are expressed as a numerical
estimate of the "odds of repayment" on a scheduled basis. For example, a score
of 15 means that, based on the Originator's past retail automobile and light
duty truck installment sale contract experience, the odds are 15 to 1 that over
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the life of the contract that the related account will not (i) be delinquent for
in excess of 30 days more than twice, (ii) be delinquent in excess of 60 days
more than once, (iii) ever be delinquent for more than 90 days or (iv) require
the related financed vehicle to be repossessed.
This numerical credit scoring system was developed by ________ (the
"Credit Score Analysts"), an automobile lending and leasing consulting firm,
specifically for the Originator, based upon an analysis of the historical
performance of the retail automobile and light duty truck installment sale and
lease contract portfolios of the Originator. To determine the appropriate
characteristics for credit scoring, the Credit Score Analysts reviewed a random
sample of 10,000 retail installment sale contracts and 10,000 lease contracts
from the portfolio of the Originator. The Credit Score Analysts then compiled a
list of ten to twelve characteristics that cumulatively carried the most weight
in predicting historical performance and assigned point values and weighting to
each of these characteristics. Each scorecard assigns at least a 50% weighting
to the credit bureau report. This weighting system is particularly significant
because the credit bureau report is beyond the control of the Originator and
cannot be manipulated. The Credit Score Analysts determined that the most
accurate determinative of the performance of an installment sale or lease
contract was the credit bureau report. Based on such historical performance, the
Credit Score Analysts prepared two retail credit scorecards (which differ
according to type of contract and the geographical location of the applicant)
and two lease scorecards.
The Credit Score Analysts' scorecard system was implemented in ________
and has been used for all retail installment sale contracts originated
subsequent thereto. Prior to this time, the Originator used a scoring model
which, while not developed specifically for it, is used extensively in the
automobile lending industry. This scoring model evaluated an applicant's
creditworthiness based on specific characteristics gathered from the credit
investigation process and the amount of the contract requested. Based on the
applicant's score, each applicant was identified as falling into one of four
credit risk categories ranging from A to D. Applicants with a risk category of A
or B were normally approved by the credit supervisor at the branch. Those in a
risk category below B went to local office management for review and final
approval, qualification or rejection.
Both the alphabetical and numerical scoring models are intended to provide
a means of analysis to assist in decision making, but the final decision rests
with the Originator's credit specialists. Notwithstanding the foregoing, the
ability of a credit specialist to override the scorecard analysis is limited to
no more than 10% of all applications, and both the number of overrides granted
by each credit specialist and the aggregate number of overrides granted by all
credit specialists are tracked by the Originator daily in order to insure the
statistical validity of the scoring models. Detailed reporting on all aspects of
the numerical scoring model is utilized to track performance of the Originator's
retail automobile and light duty truck installment sale contract portfolio and
to enable the Originator, with the assistance of the Credit Score Analysts, to
fine tune the scoring model according to statistical indications in order to
continually assure the statistical validity of the scoring models. Approximately
__% and approximately __% of the Contracts, based on Aggregate Discounted
Contract Balance, are expected to have been underwritten using the Credit Score
Analysts' numerical scorecard and using the alphabetical scoring model,
respectively. The remaining Contracts were not underwritten using either scoring
model.
For the period _________ through ___________, the Originator booked
approximately __% of all credit applications.
The amount of a retail installment sale contract generally will not exceed
(i) when secured by a new vehicle, the price paid by the dealer for such vehicle
or (ii) when secured by a used vehicle, the average wholesale value of such
vehicle stated in the most recent edition of the National Auto Dealers
Association Used Car Guide, plus in each case various taxes and fees in
connection with the sale. The Originator regularly reviews the quality of the
contracts which it purchases and periodically conducts quality audits to ensure
compliance with its established policies and procedures.]
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Insurance
[The Originator requires each obligor under an automobile or light duty
truck retail installment sale contract to obtain comprehensive and collision
insurance with respect to the related financed vehicle and verifies the
existence of such insurance before it will purchase such contract. Following
such purchase, the Originator monitors the maintenance of such physical damage
insurance but does not force-place physical damage insurance if the related
obligor does not maintain such insurance. Instead, each such financed vehicle is
covered by a policy of vendor's single interest physical damage insurance in
favor of the Originator issued by ______________ (the "VSI Insurance Policy"),
which provides limited coverage (subject to deductibles) for, among other
things, (i) physical loss or damage from any external cause to such financed
vehicle and (ii) inability to locate such financed vehicle or the related
obligor. The VSI Insurance Policy is in effect from the date a contract is
purchased from the related Dealer and the premium for such VSI Insurance Policy
is paid for by the Originator. The Originator will represent and warrant in the
Receivables Acquisition Agreement, and the Sponsor will represent and warrant in
the Pooling Agreement, as to each Contract, that the related Vehicle is insured
under the VSI Insurance Policy, the premiums for which have been paid in full,
and that such VSI Insurance Policy is in full force and effect.
The Originator does not require obligors to maintain credit disability or
life or credit or health insurance or other similar insurance coverage which
provides for payments to be made on the automobile and light duty truck retail
installment sale contracts which it purchases on behalf of such obligors in the
event of disability or death. To the extent that any such insurance coverage is
obtained on behalf of an Obligor, payments received in respect of such coverage
may be applied to payments on the related Contract to the extent that the
Obligor's beneficiary chooses to do so.]
Delinquency and Default Experience
There can be no assurance that the levels of delinquency and loss
experience reflected in Table 1 and Table 2, below, are indicative of the
performance of the Receivables included in the Collateral for the Notes.
S-18
<PAGE>
TABLE 1
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
=========================================================================================
Year Ended December 31,
---------------------------------------------------------------
1991 1992 1993
===============================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Originator Portfolio
at Year End
Delinquencies:
31-60 Days
61 + Days
Total Delinquencies
Total Delinquencies as a
% of Total Portfolio
=========================================================================================
</TABLE>
TABLE 2
<TABLE>
<CAPTION>
LOSS EXPERIENCE
=========================================================================================
Year Ended December 31,
---------------------------------------------------------------
1991 1992 1993
===============================================================
Dollar Percentage Dollar Percentage Dollar Percentage
Amount of Total Amount of Total Amount of Total
(000) Portfolio (000) Portfolio (000) Portfolio
----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Acquisitions (1)
($000's)
Gross Defaults ($000's)
Gross Recoveries
($000's)
Net Losses ($000's)
=========================================================================================
</TABLE>
(1) Total Acquisition = total cost (aggregate purchase price of the Vehicles)
to the Originator since inception in ____ through and including the year
end set forth above.
Litigation
The Originator is not involved in any legal proceedings, and is not aware
of any pending or threatened legal proceedings that would have a material
adverse effect upon its financial condition or results of operations.
Servicing
The Contracts will be serviced by the Originator, as Servicer, pursuant to
the Pooling Agreement.
S-19
<PAGE>
The Pooling Agreement requires that servicing of the Contracts by the
Originator shall be carried out in the same manner in which it services
contracts and vehicles held for its own account and consistent with customary
practices of servicers in the retail automobile industry, but in performing its
duties hereunder, the Originator will act on behalf and for the benefit of the
Sponsor, the Trustee and the holders of the Certificates, subject at all times
to the provisions of the Pooling Agreement, without regard to any relationship
which the Originator or any Affiliate of the Originator may otherwise have with
a Obligor. Except as permitted by the terms of any Contract following a default
thereunder, the Originator shall not take any action which would result in the
interference with the Obligor's right to quiet enjoyment of the Vehicles subject
to the Contract during the term thereof.
Following each Determination Date, the Originator shall advance and remit
to the Trustee, in such manner as will ensure that the Trustee will have
immediately available funds on account thereof by 11:00 a.m. New York time on
the [______] Business Day prior to the next succeeding Payment Date, a Servicer
Advance equal to the Contract Payment due during the preceding Contract Payment
Period with respect to each Contract (other than a Contract which became a
Defaulted Contract on or prior to such Determination Date) under which the
Obligor has not made such payment by such Determination Date; provided, however,
that the Originator will not be obligated to make a Servicer Advance with
respect to any Contract if the Originator, in its good faith judgment, believes
that such Servicer Advance would be a Nonrecoverable Advance. If the Originator
determines that any Contract Payment it has made, or is contemplating making,
would be a Nonrecoverable Advance, the Originator shall deliver to the Trustee
an Officers' Certificate stating the basis for such determination.
Servicing Compensation and Payment of Expenses
For its servicing of the Receivables, the Originator will be entitled to
receive a Servicing Fee equal to the product of (i) one-twelfth, (ii) ___% and
(iii) the Aggregate Discounted Contract Balance of all Contracts as of the
preceding Determination Date, payable out of the Remittance Account, plus
Servicing Charges and Investment Earnings.
All costs of servicing each Contract in the manner required by the Pooling
Agreement shall be borne by the Originator, but the Originator shall be entitled
to retain, out of any amounts actually recovered with respect to any Defaulted
Contract [or the Vehicles subject thereto,] the Originator's actual
out-of-pocket expenses reasonably incurred with respect to such Defaulted
Contract [or Vehicles]. In addition, the Originator shall be entitled to receive
on each Payment Date any unreimbursed Nonrecoverable Advances or Servicer
Advances with respect to any Defaulted Contract and the Servicing Fee.
The servicing compensation will compensate the Originator for customary
contract servicing activities to be performed for the Sponsor and the
Originator, as well as additional administrative services to be performed by the
Originator.
Evidence as to Compliance
The Pooling Agreement requires that with each set of financial statements
delivered pursuant to the Pooling Agreement, the Originator will deliver an
Officers' Certificate stating (i) that the officers signing such Certificate
have reviewed the relevant terms of the Pooling Agreement and have made, or
caused to be made under such officers' supervision, a review of the activities
of the Originator during the period covered by the statements then being
furnished, (ii) that the review has not disclosed the existence of any Servicer
Event of Default or, if a Servicer Event of Default exists, describing its
nature and what action the Originator has taken and is taking with respect
thereto, and (iii) that on the basis of such review the officers signing such
certificate are of the opinion that during such period the Originator has
serviced the Receivables in compliance with the required procedures except as
described in such certificate.
The Originator shall cause a firm of independent certified public
accountants (who may also render other services to the Originator) to deliver to
the Trustee, with a copy to the Rating Agency and each
S-20
<PAGE>
holder of the Certificates, within [90] days following the end of each fiscal
year of the Originator, beginning with the Originator's fiscal year ending
____________, 199__, a written statement to the effect that such firm has
examined in accordance with generally accepted practices samples of the
accounts, records, and computer systems of the Originator for the fiscal year
ended on the previous _______ relating to the Receivables (which accounts,
records, and computer systems shall be described in one or more schedules to
such statement), that such firm has compared the information contained in the
Originator's reports delivered in the relevant period with information contained
in the accounts, records, and computer systems for such period, and that, on the
basis of such examination and comparison, such firm is of the opinion that the
Originator has, during the relevant period, serviced the Receivables in
compliance with such servicing procedures, manuals, and guides and in the same
manner as it services comparable contracts for itself or others, that such
accounts, records, and computer systems have been maintained, and that such
certificates, accounts, records, and computer systems have been properly
prepared and maintained in all material respects, except in each case for (a)
such exceptions as such firm shall believe to be immaterial and (b) such other
exceptions as shall be set forth in such statement.
Other Servicing Procedures
At least [___] days prior to each Payment Date, the Originator shall
deliver a report in writing (the "[Monthly] Servicer Report") to each holder of
the Certificates, the Trustee and the Rating Agency.
If an Obligor has [____] Contract Payments which are due and unpaid as of
any Calculation Date, such Obligor's Contract shall become a Defaulted Contract.
Where no satisfactory arrangements can be made for collection of delinquent
payments within [___] days of a Contract becoming a Defaulted Contract, the
Originator shall foreclose or otherwise liquidate any such Defaulted Contract
[(together with the related Vehicles)] within [60] days of such Contract
becoming a Defaulted Contract. In connection with any foreclosure or other
liquidation, the Originator will take such action as is appropriate, consistent
with the Originator's administration of contracts in its own portfolio,
including such action as may be necessary to cause, or attempt to cause, the
Obligor thereunder to cure such default (if the same may be cured) or to
terminate or attempt to terminate such Contract and to recover, or attempt to
recover, all damages resulting from such default.
[The Originator will use its best efforts (i) to sell or re-lease any
Vehicles subject to a Defaulted Contract in a timely manner and upon reasonable
terms and conditions so as to reduce as expeditiously as is consistent with
sound commercial practice any unreimbursed amounts drawn by the Trustee on the
Reserve Account and (ii) to sell or re-lease any Vehicles remaining subject to
the lien of the Trustee upon the expiration of the Contract to which such
Vehicles is subject, in a timely manner and in a manner consistent with that
utilized by the Originator with respect to vehicles owned by it so as to
realize, to the extent possible under then prevailing market conditions, the Net
Residual Value of such Vehicles.]
[All Residual Payments realized by the Originator in the performance of
its duties with respect to any item of Vehicles remaining subject to the Lien of
the Trustee (net of the Originator's actual out-of-pocket expenses reasonably
incurred in such realization) shall be held in trust by the Originator, as agent
for the Trustee, and turned over to the Trustee within [___] Business Days for
application in accordance with the provisions of the Pooling Agreement, provided
that, to the extent that (i) the Originator has made any advances with respect
to any Contract which thereafter became a Defaulted Contract and (ii) the
Originator has not otherwise been fully reimbursed for such advances, the
Originator shall reimburse itself for such advances from any Residual Payments
recovered with respect to such Defaulted Contract before remitting to the
Trustee any such amounts for deposit in the Remittance Account.]
Removal of the Servicer
The Pooling Agreement will provide that the Originator may not resign from
its obligations and duties as Servicer thereunder, except upon a determination
that the Originator's performance of such duties is no longer permissible under
applicable law. the Originator can only be removed pursuant to a
S-21
<PAGE>
Servicer Event of Default. If a Servicer Event of Default shall have occurred
and be continuing, the Trustee shall give written notice to the Originator of
the termination of all of the rights and obligations of the Originator (but none
of the Originator's obligations thereunder, which shall survive any such
termination) under the Pooling Agreement. On and after the time the Originator
receives a notice of termination, the Trustee shall be the successor in all
respects to the Originator in its capacity as servicer under the Pooling
Agreement of the Receivables. The Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act, give notice of such fact to each
holder of the Certificates and (i) appoint an established institution,
satisfactory to the holders of Certificates evidencing not less than [______%]
of the Voting Rights, as the successor to the Originator to assume all of the
rights and obligations of the Originator, including, without limitation, the
Originator's right to receive the Servicing Fee (but not the obligations of the
Originator contained in the Pooling Agreement) or, (ii) if no such institution
is so appointed, petition a court of competent jurisdiction to appoint an
institution meeting such criteria as the Originator.
THE TRUSTEE
The Trustee, ____________, has an office at ________________________.
The Trustee may resign, subject to the conditions set forth below, at any
time upon written notice to the Sponsor, the Servicer and the Certificate
Insurer, in which event the Servicer, with the consent of the Certificate
Insurer, will be obligated to appoint a successor Trustee. If no successor
Trustee shall have been so appointed and have accepted such appointment within
[30] days after the giving of such notice of resignation, the resigning Trustee
may petition a court of competent jurisdiction for the appointment of a
successor Trustee. Any successor Trustee shall meet the financial and other
standards for qualifying as a successor Trustee under the Pooling Agreement. The
Servicer, the Certificate Insurer or Certificateholders evidencing more than
[___%] of the Percentage Interests of the Trust may also remove the Trustee if
the Trustee ceases to be eligible to continue as such under the Pooling
Agreement and fails to resign after written request therefor, or is legally
unable to act, or if the Trustee is adjudicated to be insolvent. In such
circumstances, the Servicer, the Certificate Insurer or such Certificateholders
will also be obligated to appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee will not become
effective until acceptance of the appointment by the successor Trustee.
THE TRUST
The Trust, as a master trust, is expected to issue additional Series from
time to time. The Trust has not engaged and will not engage in any business
activity other than acquiring and holding Trust Assets and proceeds therefrom,
issuing Series of Certificates and the Sponsor's Certificate and making payments
thereon and related activities. As a consequence, the Trust does not and is not
expected to have any source of capital resources other than the Trust Assets.
The Trust will be administered in accordance with the laws of the State of
Nevada.
The Sponsor will convey to the Trust, without recourse, its interest in
all the Receivables listed in the Series 199__-1 Supplement. The Trust Fund will
consist of the Contracts, [any related Vehicles or a security interest in such
Vehicles,] all monies due or to become due thereunder, the proceeds of the
Contracts, all monies on deposit in the Collection Account and in certain other
accounts maintained for the benefit of the Certificateholders and any Series
Enhancements. The Trust Fund is expected to change over the life of the Trust as
Additional Receivables become subject to the Trust and as Contracts terminate,
are charged off or removed and are no longer subject to the Trust. Pursuant to
the Pooling Agreement, the Sponsor will have the right (subject to certain
limitations and conditions), and in some circumstances will be obligated, to
designate Additional Receivables to the Trust Fund.
S-22
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the [Class A] Certificates will be paid
to the Sponsor and distributed to the Originator in payment for the Receivables.
SERIES PROVISIONS
The Series 199__-1 Certificates will consist of two Classes, the [Class A]
Certificates and the [Class B] Certificates. The [Class A] Certificates and
[Class B] Certificates will be issued pursuant to the Pooling Agreement and a
Supplement thereto relating to the [Class A] Certificates and [Class B]
Certificates (the "Series 199__-1 Supplement"). The following summary describes
the material terms generally applicable to Series 199__-1 and is qualified in
its entirety by reference to the Series 199__-1 Supplement. The Servicer will
provide, without charge, to any prospective purchaser of the [Class A]
Certificates a copy of the Pooling Agreement and the Series 199__-1 Supplement.
Reference should be made to "Description of the Securities" and "Description of
the Trust Agreements" in the Prospectus for additional information concerning
the Series 199__-1 Certificates and the Pooling Agreement.
Payments with respect to [Class B] Certificates will be subordinated to
the payment of interest and certain other amounts due with respect to the [Class
A] Certificates. The [Class B] Certificates initially will be retained by the
Sponsor; however, subject to certain restrictions, the Sponsor may sell a
portion of the Class B Certificates subsequent to the Series Issuance Date, and
in connection with such transfer, the Trustee and the Sponsor may agree to amend
the Series 199__-1 Supplement and the Pooling Agreement, including changing the
Series Enhancement provided for the Series 199__-1 Certificates to add Series
Enhancement for the [Class B] Certificates, so long as no Ratings Effect or Pay
Out Event results from such amendment. The [Class B] Certificates are not
offered hereby.
Interest
Interest will accrue on the [Class A] Invested Amount at the Certificate
Rate. Interest will be distributed to the [Class A] Certificateholders on
____________, 199__, and on each Distribution Date thereafter in an amount equal
to one-twelfth of the product of the Certificate Rate and the [Class A] Invested
Amount as of the preceding Record Date, except that interest for the first
Distribution Date will be equal to the interest accrued at the Certificate Rate
for the period from and including ___________, 199__ to but excluding such first
Distribution Date. Interest will be calculated on the basis of a 360-day year of
twelve 30-day months. Interest with respect to the [Class A] Certificates due
but not paid on any Distribution Date will be due on the next succeeding
Distribution Date with additional interest on such amount at the Certificate
Rate to the extent permitted by law. Interest payments on the [Class A]
Certificates on any Distribution Date will be funded from (a) Available Finance
Charge Collections for the related Collection Period as described herein under
"--Application of Collections--Payments of Interest, Fees and Other Items" and
(b) to the extent necessary, withdrawals from the Reserve Account as described
under "--Reserve Account."
Principal
During the Scheduled Amortization Period principal will be paid to the
[Class A] Certificateholders monthly on each Distribution Date in an amount up
to the Controlled Distribution Amount with respect to such Distribution Date.
The Scheduled Amortization Period will commence on the Series Cut-Off Date and
will end at the close of business on _____________, 199__, unless terminated
earlier upon the occurrence of a Pay Out Event, in which case it will end at the
close of business on the last day of the Collection Period during which the Pay
Out Event occurs. Upon the completion or termination of the Scheduled
Amortization Period, the Full Amortization Period will begin, and principal
equal to the Available Principal Collections for each Collection Period will be
paid to the [Class A] Certificateholders monthly on each Distribution Date until
the Invested Amount of the [Class A] Certificates is paid in full.
S-23
<PAGE>
Allocation Percentages
Pursuant to the Pooling Agreement, for each Collection Period during the
Scheduled Amortization Period, the Servicer will allocate among the [Class A]
Certificateholders' Interest, the [Class B] Certificateholders' Interest, the
Sponsor's Interest and the Certificateholders' Interest of the other Series
issued and outstanding from time to time that are in their Scheduled
Amortization Periods, all Finance Charge Payments and Principal Payments and the
Defaulted Amount with respect to Receivables allocated to the Trust's Floating
Receivable Pool. Because Series 199__-1 is the first Series to be issued by the
Trust, the Floating Receivable Pool is not expected to contain any Participation
Interests created in connection with the formation of Full Amortization Pools
with respect to other Series while Series 199__-1 is in its Scheduled
Amortization Period. Collections of Finance Charge Payments, Principal Payments
and the Defaulted Amount with respect to Receivables (and Participation
Interests, if any) in the Floating Receivable Pool will be allocated during the
Scheduled Amortization Period to the [Class A] Certificateholders' Interest
based on the Floating Allocation Percentage with respect to the [Class A]
Certificates and to the [Class B] Certificateholders' Interest based on the
Floating Allocation Percentage with respect to the [Class B] Certificates.
The "[Class A] Invested Amount" for any day means an amount equal to (i)
the initial principal amount of the [Class A] Certificates, minus (ii) the
amount of principal payments made to [Class A] Certificateholders prior to such
day, and minus (iii) the excess, if any, of the aggregate amount of Investor
Charge-Offs for all Distribution Dates preceding such day over the aggregate
amount of Investor Charge-Offs reimbursed prior to such day.
The "[Class B] Invested Amount" for any day means an amount determined
with respect to the [Class B Certificates] in the same manner as the [Class A]
Invested Amount.
"Series 199__-1 Invested Amount" for any day means the sum of the [Class
A] Invested Amount and the [Class B] Invested Amount.
"Floating Allocation Percentage" means, for the [Class A] Certificates and
the [Class B] Certificates, as applicable, with respect to any Collection
Period, the percent equivalent of a fraction, the numerator of which equals the
Invested Amount of such Class as of the day before the last day of the
Collection Period and the denominator of which equals (i) during the Scheduled
Amortization Period, the Floating Contract Pool Balance or (ii) during the Full
Amortization Period, the Full Amortization Pool Balance allocated to Series
199__-1, as applicable, as of such day.
Upon the commencement of the Full Amortization Period, the Trustee will
segregate all the Receivables (and Participation Interests, if any) included in
the Trust's Floating Receivable Pool as of such date into a Full Amortization
Pool. Contract Payments and the Defaulted Amount with respect to the Receivables
allocated to the Full Amortization Pool will be the only Contract Payments and
Defaulted Amounts allocated to the Full Amortization Pool and Series 199__-1
Certificateholders will thereafter have an interest in only such Contract
Payments and Defaulted Amount. The interest in such Contract Payments and
Defaulted Amount not allocated to the Series 199__-1 Certificateholders'
Interest will represent the Participation Interest and will be allocated
initially to the Floating Receivable Pool. The Full Amortization Pool for Series
199__-1 is expected to be the first Full Amortization Pool created for the
Trust. Consequently, the Floating Pool is not expected to contain any
Participation Interest at the time the Series 199__-1 Full Amortization Pool is
segregated, and the Series 199__-1 Full Amortization Pool is not expected to
have a Participation Interest allocated to it.
Contract Payments and the Defaulted Amount allocated to the Full
Amortization Pool will be allocated to the Series 199__-1 Certificateholders'
Interest on the basis of the applicable Fixed Allocation Percentage. Contract
Payments and the Defaulted Amount initially allocated to the Series 199__-1
Certificateholders' Interest will be allocated further between the [Class A]
Certificateholders' Interest and the [Class B] Certificateholders' Interest on
the basis of the Floating Allocation Percentage applicable to
S-24
<PAGE>
each such Class. The Full Amortization Period will continue until the Invested
Amount of the Series 199__-1 Certificates is paid in full or the Full
Amortization Pool Balance is zero, whichever first occurs.
"Fixed Allocation Percentage" for Series 199__-1 shall equal the
percentage equivalent of a fraction, the numerator of which is the Invested
Amount of Series 199__-1 on the day before the last day of the first Collection
Period in the Full Amortization Period and the denominator of which is the Full
Amortization Pool Balance on such day.
Application of Collections
Payments of Interest, Fees and Other Items. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply all amounts
allocated to the [Class A] Certificateholders' Interest with respect to
collections of Finance Charge Payments for the preceding Collection Period (as
described above under "--Allocation Percentages"), all amounts allocated to the
[Class B] Certificateholders' Interest with respect to collections of Finance
Charge Payments and Principal Payments for the preceding Collection Period (as
described under "--Subordination") and any Additional Finance Charges with
respect to other Series that are allocated to Series 199__-1 in accordance with
the Pooling Agreement (collectively, "Available Finance Charge Collections"), to
make the following payments and deposits in the following order of priority:
[(i) an amount equal to the Monthly Investor Servicing Fee with
respect to the Series 199__-1 Certificates for such Distribution Date,
plus the amount of any Monthly Investor Servicing Fee with respect to the
Series 199__-1 Certificates previously due but not distributed to the
Servicer on a prior Distribution Date, plus the amount of any outstanding
Servicer Advances allocable to the Series 199__-1 Certificates that the
Servicer has determined will not be recovered from the Receivables to
which the Servicer Advances were related as described under "Description
of the Trust Agreements--Servicing Procedures" in the Prospectus, will be
distributed to the Servicer;
(ii) an amount equal to Monthly Interest for such Distribution Date
due on the [Class A] Certificates, plus the amount of any Monthly Interest
previously due but not distributed to the [Class A] Certificateholders on
a prior Distribution Date, plus any additional interest at the Certificate
Rate with respect to interest amounts that were due but not paid to [Class
A] Certificateholders on a prior Distribution Date, will be distributed to
the [Class A] Certificateholders;
(iii) an amount equal to the Investor Default Amount for such
Distribution Date will be treated as a portion of Available Principal
Collections for such Distribution Date;
(iv) an amount equal to the aggregate amount of Investor Charge-Offs
which have not been previously reimbursed will be treated as a portion of
Available Principal Collections for such Distribution Date;
(v) an amount up to the deficiency, if any, between the Required
Reserve Amount and the remaining Available Reserve Amount will be used to
increase the amount on deposit in the Reserve Account up to the Required
Reserve Amount;
(vi) an amount equal to any unreimbursed draws under any letter of
credit or surety bond obtained by the Servicer will be paid to the
provider of such letter of credit or surety bond;
(vii) an amount equal to the amount of Finance Charge Payments with
respect to the [Class B] Certificates included in Available Finance Charge
Collections will be reallocated to the [Class B] Certificates for the
payment of interest on the [Class B] Certificates pursuant to the terms of
the Series 199__-1 Supplement ("Class B Reallocated Finance Charge
Collections");
S-25
<PAGE>
(viii) an amount equal to the amount of Principal Payments with
respect to the [Class B] Certificates included in Available Finance Charge
Collections will be reallocated to the [Class B] Certificates for the
payment of principal on the [Class B] Certificates pursuant to the Series
199__-1 Supplement ("[Class B] Reallocated Principal Collections"); and
(ix) the balance, if any, will constitute a portion of Additional
Finance Charges for such Distribution Date and will be available for
allocation to other Series in the Trust or to the Sponsor.]
"Monthly Interest" means, with respect to any Distribution Date,
one-twelfth of the product of (i) the Certificate Rate and (ii) the [Class A]
Invested Amount as of the preceding Record Date; provided, however, that Monthly
Interest with respect to the first Distribution Date will be equal to the
interest accrued on the initial principal amount of the [Class A] Certificates
at the Certificate Rate for the period from the Series Issuance Date to but
excluding the first Distribution Date.
"Required Amount" means, with respect to any Distribution Date, the
excess, if any, of the full amount required to be allocated pursuant to
paragraphs (i), (ii) and (iii) of the second preceding paragraph for such
Distribution Date over the amount of Available Finance Charge Collections for
such Distribution Date.
"Investor Default Amount" means, (x) with respect to any Distribution Date
in the Scheduled Amortization Period, the product of (i) the Floating Allocation
Percentage with respect to the [Class A] Certificates for the related Collection
Period and (ii) the Defaulted Amount with respect to the Floating Contract Pool
for such Collection Period and (y) with respect to any Distribution Date in the
Full Amortization Period, the product of (i) the Fixed Allocation Percentage
with respect to Series 199__-1, (ii) the Floating Allocation Percentage with
respect to the [Class A] Certificates for the related Collection Period and
(iii) the Defaulted Amount with respect to the Full Amortization Pool for such
Collection Period.
Payments of Principal. On each Distribution Date, the Trustee, acting
pursuant to the Servicer's instructions, will apply all amounts allocated to the
[Class A] Certificateholders' Interest with respect to collections of Principal
Payments for the preceding Collection Period (as described above under
"--Allocation Percentages"), any Shared Principal Collections with respect to
other Series that are allocable to the [Class A] Certificates and any other
amounts which are to be allocated in the same manner as Available Principal
Collections (as described above under "--Payment of Interest, Fees and Other
Items") (collectively, "Available Principal Collections") and will distribute
such amounts on each Distribution Date with respect to the Scheduled
Amortization Period or the Full Amortization Period in the following order of
priority:
[(i) an amount equal to Monthly Principal for such Distribution Date
will be distributed to the [Class A] Certificates;
(ii) an amount up to the deficiency, if any, between the Required
Reserve Amount and the remaining Available Reserve Amount (after giving
effect to any deposit made from Available Finance Charge Collections as
described above) will be used to increase the amount on deposit in the
Reserve Account up to the Required Reserve Amount;
(iii) the amount necessary to be paid to the Sponsor in exchange for
any related Additional Receivables;
(iv) an amount equal to any unreimbursed draws under any letter of
credit or surety bond obtained by the Servicer will be paid to the
provider of such letter of credit or surety bond;
(v) the balance, if any, will be allocated to Shared Principal
Collections.]
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<PAGE>
"Monthly Principal" with respect to any Distribution Date relating to the
Scheduled Amortization Period or the Full Amortization Period will equal the
least of (i) the Available Principal Collections for such Distribution Date,
(ii) for each Distribution Date with respect to the Scheduled Amortization
Period, the Controlled Deposit Amount for such Distribution Date and (iii) the
[Class A] Invested Amount.
"Controlled Distribution Amount" means, for any Distribution Date with
respect to the Scheduled Amortization Period, an amount equal to the sum of the
Controlled Amortization Amount for such Distribution Date and any Deficit
Controlled Amortization Amount for the preceding Distribution Date.
"Controlled Amortization Amount" means, for any Distribution Date with
respect to the Scheduled Amortization Period, the amount set forth for such
Distribution Date on the "Schedule of Class A Controlled Amortization Amounts."
"Deficit Controlled Amortization Amount" means, (x) on the first
Distribution Date with respect to the Scheduled Amortization Period, the excess,
if any, of the Controlled Amortization Amount for such Distribution Date over
the amount distributed as Monthly Principal for such Distribution Date and (y)
on each subsequent Distribution Date with respect to the Scheduled Amortization
Period, the excess, if any, of the sum of the Controlled Amortization Amount for
such subsequent Distribution Date and any Deficit Controlled Amortization Amount
for the prior Distribution Date over the amount distributed as Monthly Principal
on such subsequent Distribution Date.
The schedule below shows the [Class A] Invested Amount and the [Class A]
Controlled Amortization Amount for each Distribution Date with respect to the
Scheduled Amortization Period for the [Class A] Certificates, assuming each
[Class A] Controlled Amortization Amount is paid in full on the date indicated,
no Payout Event occurs and losses allocable to the [Class A] Certificates do not
exceed the amounts available to cover such losses. The [Class A] Controlled
Amortization Amount is equal to the [Class A] Certificateholders' allocable
share of Scheduled Principal Payments due with respect to the Original
Receivables for each of the Distribution Dates shown.
SCHEDULE OF CLASS A
CONTROLLED AMORTIZATION AMOUNTS
Class A
Class A Controlled
Invested Amortization
Distribution Date Amount Amount
- ----------------------------------------------- ------------ -------------
Original Invested Amount....................... $ $
December 199_..................................
January 199_...................................
February 199_..................................
March 199_.....................................
April 199_.....................................
May 199_.......................................
June 199_......................................
July 199_......................................
August 199_....................................
September 199_.................................
October 199_...................................
November 199_..................................
Subordination. The fractional undivided interest in the Trust represented
by the [Class B] Certificates will be subordinated to the extent described
herein to fund payments with respect to the [Class A] Certificates. The [Class
B] Invested Amount represents the [Class B] Certificateholders' Interest in the
Trust Assets and represents the subordinated amount which, in addition to the
Reserve Account,
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any Additional Finance Charges and any Shared Principal Collections, is
available to fund payments of interest and certain other amounts due with
respect to the [Class A] Certificates as described under "Series
Provision--Application of Collections--Payments of Interest, Fees and Other
Items." No principal or interest will be distributed on the [Class B]
Certificates with respect to a Distribution Date unless all interest payments,
the Investor Default Amount and aggregate unreimbursed Investor Charge-Offs have
been covered with respect to the [Class A] Certificates with respect to such
Distribution Date and the Available Reserve Amount equals the Required Reserve
Amount on such Distribution Date. See "--Payments of Interest, Fees and Other
Items" and "--Payments of Principal." To the extent the [Class B] Invested
Amount is reduced to zero, withdrawals will then be made from the Reserve
Account. If the Reserve Account is reduced to zero as described under "--Reserve
Account," the [Class A] Invested Amount may be reduced as described under
"--Investor Charge-Offs" and the [Class A] Certificateholders will bear directly
the credit and other risks associated with their interest in the Trust.
The [Class B] Certificates will receive distributions of interest on each
Distribution Date equal to the lesser of (x) [Class B] Available Finance Charge
Collections and (y) interest accrued and unpaid on the [Class B] Invested Amount
at the [Class B] Certificate Rate ("[Class B] Monthly Interest"). Any remaining
[Class B] Available Finance Charge Collections will be allocated in the
following priority: (a) an amount equal to the [Class B] Investor Default Amount
for the Collection Period will be treated as a portion of [Class B] Available
Principal Collections for such Distribution Date, (b) an amount equal to the
aggregate amount of [Class B] Investor Charge-Offs which have not previously
been reimbursed will be treated as a portion of [Class B] Available Principal
Collections for such Distribution Date and (c) the balance will be available for
allocation to the Sponsor. The [Class B] Certificates will receive distributions
of principal on each Distribution Date equal to the lesser of the [Class B]
Available Principal Collections and the principal payable to the [Class B]
Certificates pursuant to the Series 199__-1 Supplement. Any remaining [Class B]
Available Principal Collections will be allocated in the following priority: (x)
the amount necessary to be paid to the Sponsor in exchange for any related
Additional Receivables and (y) the balance, if any, will be remitted to the
Seller.
"[Class B] Required Amount" means, with respect to any Distribution Date,
the excess, if any, of the full amount required to be allocated pursuant to
clause (a) in the preceding paragraph for such Distribution Date over the
remaining [Class B] Available Finance Charge Collections for such Distribution
Date.
"[Class B] Available Finance Charge Collections" for any Distribution Date
means [Class B] Reallocated Finance Charge Collections as described above under
"--Payments of Interest, Fees and Other Items."
"[Class B] Available Principal Collections" for any Distribution Date
means the sum of [Class B] Reallocated Principal Collections and any other
amounts treated as a portion of [Class B] Available Principal Collections as
described above.
"[Class B] Investor Default Amount" will be calculated with respect to the
[Class B] Certificates for any Distribution Date in the same manner as Investor
Default Amount is calculated with respect to the [Class A] Certificates.
Reserve Account
The Trustee will hold the Reserve Account for the benefit of the [Class A]
Certificateholders and the Reserve Sponsor, as their interests may appear. The
interest of the Reserve Sponsor will be subordinated to the interests of the
[Class A] Certificateholders as provided in the Series 199__-1 Supplement. The
Reserve Account will be one or more Eligible Deposit Accounts and funds on
deposit in the Reserve Account will be invested in Eligible Investments. A
portion of such funds may be invested in debt obligations of the Reserve Sponsor
or its affiliates to the extent such obligations qualify as Eligible
Investments.
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<PAGE>
The Reserve Account will be funded on the Series Issuance Date by the
Sponsor from the proceeds of the issuance of the [Class A] Certificates in an
amount equal to the Initial Reserve Amount (with respect to the Reserve Account,
the Sponsor shall be referred to as the "Reserve Sponsor"). The Reserve Account
will be terminated following the earlier to occur of (a) the date on which the
[Class A] Certificates are paid in full and (b) the termination of the Trust.
Any amounts then remaining on deposit in the Reserve Account will be distributed
to the Reserve Sponsor.
On each Distribution Date, the amount available to be withdrawn from the
Reserve Account (the "Available Reserve Amount") will be equal to the lesser of
the amount on deposit in the Reserve Account (before giving effect to any
deposit to be made to the Reserve Account on such Distribution Date) and the
Required Reserve Amount. The "Required Reserve Amount" shall mean, with respect
to any Distribution Date, $______________ plus, if as of any Determination Date
an Additional Reserve Event shall have occurred and be continuing, the excess,
if any, of (i) __% of the [Class A] Invested Amount as of the last day of the
previous Collection Period over (ii) $____________. An "Additional Reserve
Event" shall occur with respect to Series 199__-1 if the average ratio on the
three preceding Determination Dates (as determined by the Servicer on any
Determination Date) of (x) the product of 12 and the aggregate Contract
Discounted Balances as of the last day of the previous Collection Period of all
Defaulted Contracts which became Defaulted Contracts during the previous
Collection Period to (y) the Discounted Contract Balance of the Receivables Pool
as of the last day of the previous Collection Period, exceeds ___%.
On each Distribution Date, a withdrawal will be made from the Reserve
Account in an amount equal to the Required Amount, if any, with respect to such
Distribution Date (but not in excess of the Available Reserve Amount on such
Distribution Date). Any such funds withdrawn from the Reserve Account will be
applied in accordance with, and subject to the priorities set forth in,
paragraphs (i), (ii) and (iii) under "--Application of Collections--Payment of
Interest, Fees and Other Items" above.
On each Distribution Date, the Trustee, acting pursuant to the Servicer's
instructions, will apply Available Finance Charge Collections and Available
Principal Collections (to the extent described above under "--Application of
Collections--Payment of Interest, Fees and Other Items" and "--Application of
Collections--Payments of Principal") to increase the amount on deposit in the
Reserve Account (to the extent such amount is less than the Required Reserve
Amount). On each Distribution Date, after giving effect to any deposit to be
made to, and any withdrawal to be made from, the Reserve Account on such
Distribution Date, the Trustee will withdraw from the Reserve Account an amount
equal to the excess, if any, of the amount on deposit in the Reserve Account
over the Required Reserve Amount and shall distribute such excess to (a) the
provider of any letter of credit or surety bond described in clause (vi) under
"--Application of Collections--Payments of Interest, Fees and Other Items" to
the extent of any unreimbursed draws under the letter of credit or surety bond
and (b) the balance, if any, will be treated as [Class B] Available Principal
Collections and distributed as provided under "--Application of
Collections--Subordination." Any amounts withdrawn from the Reserve Account and
distributed as described above will not be available for distribution to the
[Class A] Certificateholders.
Investor Charge-Offs
On each Distribution Date, if the Required Amount for such Distribution
Date exceeds the Available Reserve Amount with respect to such Distribution
Date, the [Class B] Invested Amount will be reduced by the amount of such
excess, but not by more than the Investor Default Amount for such Distribution
Date (a "[Class B] Investor Charge-Off"). If such reduction would cause the
[Class B] Invested Amount to be a negative number (or if the [Class B] Invested
Amount is already zero), the [Class B] Invested Amount will be reduced to or
remain at zero, and the [Class A] Invested Amount will be reduced by the amount
by which the [Class B] Invested Amount would have been reduced below zero, but
not more than the excess, if any, of the Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the [Class B]
Invested Amount with respect to such Distribution Date (an "Investor
Charge-Off").
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<PAGE>
If the [Class A] Invested Amount has been reduced by the amount of any
Investor Charge-Offs, it will thereafter be increased on any Distribution Date
(but not by an amount in excess of the aggregate Investor Charge-Offs) by the
amount of Available Finance Charge Collections allocated and available for such
purpose as described under "--Application of Collections--Payments of Interest,
Fees and Other Items." If an Investor Charge-Off is not subsequently reimbursed,
it will have the effect of slowing or reducing the return of principal to the
[Class A] Certificateholders.
On each Distribution Date, if the [Class B] Required Amount for such
Distribution Date is greater than zero, the [Class B] Invested Amount will be
reduced by the amount of such excess, but not below zero, and such reduction
will be a [Class B] Investor Charge-Off.
If the [Class B] Invested Amount has been reduced by the amount of any
[Class B] Investor Charge-Offs, it will thereafter be increased on any
Distribution Date (but not by an amount in excess of the aggregate [Class B]
Investor Charge-Offs) by the amount of Available [Class B] Finance Charge
Collections allocated and available for such purpose as described under
"--Application of Collections--Subordination."
Pay Out Events
A Pay Out Event will occur with respect to Series 199__-1 if the average
ratio on the three preceding Determination Dates (as determined by the Servicer
on any Determination Date) of (i) the product of 12 and the aggregate Discounted
Contract Balances as of the last day of the previous Collection Period of all
Defaulted Contracts which became Defaulted Contracts during the previous
Collection Period to (ii) the Discounted Contract Balance of the Receivables
Pool as of the last day of the previous Collection Period, exceeds ___%. Such
Pay Out Event shall occur immediately on such Determination Date without notice
or other action on the part of the Trustee or the Series 199__-1
Certificateholders.
Distributions
Payments to [Class A] Certificateholders will be made from the Collection
Account. The Servicer shall instruct the Trustee to apply, or have the Paying
Agent apply, the funds on deposit in such account to make the following
distributions:
(a) on each Distribution Date with respect to the [Class A]
Certificates, all amounts on deposit in the Collection Account which are
allocated and available to pay interest on the [Class A] Certificates will
be distributed to the [Class A] Certificateholders or applied as described
under "--Application of Collections--Payments of Interest, Fees and Other
Items"; and
(b) on each Distribution Date all amounts on deposit in the
Collection Account which are allocated and available to pay principal of
the [Class A] Certificates (as described under "--Application of
Collections--Payments of Principal") will be distributed to [Class A]
Certificateholders up to a maximum amount on any such date equal to (i)
during the Scheduled Amortization Period, the Controlled Distribution
Amount, and (ii) during the Full Amortization Period, the [Class A]
Invested Amount on such date (unless there has been an optional repurchase
of the [Class A] Certificateholders' Interest due to the failure to find a
successor Servicer upon a Servicer Default (as described in the Prospectus
under "Description of Trust Agreements--Servicer Default") in which event
the foregoing limitation shall not apply).
S-30
<PAGE>
CERTAIN FEDERAL AND STATE INCOME TAX CONSIDERATIONS
The following is a general discussion of certain federal income tax
consequences to the original purchasers of the [Class A] Certificates of the
purchase, ownership and disposition of the [Class A] Certificates. It does not
purport to discuss all federal income tax consequences that may be applicable to
investment in the [Class A] Certificates or to particular categories of
investors, some of which may be subject to special rules. In particular, this
discussion applies only to institutional investors that purchase Series 199__-__
Certificates directly from the Sponsor and hold the Series 199__-__ Certificates
as capital assets.
The discussion that follows, and the opinion set forth below of Dewey
Ballantine, special tax counsel to Trust ("Tax Counsel"), are based on the
provisions of the Internal Revenue Code of 1986, as amended (the "Code") and the
Treasury regulations promulgated thereunder as in effect on the date hereof and
on existing judicial and administrative interpretations thereof. These
authorities are subject to change and to differing interpretations, which could
apply retroactively. The opinion of Tax Counsel is not binding on the courts or
the Internal Revenue Service (the "IRS"). Potential investors should consult
their own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of the
[Class A] Certificates.
Characterization of the [Class A] Certificates as Indebtedness
In the opinion of Tax Counsel, based on the application of existing law to
the facts as set forth in the Contribution Agreement, Pooling Agreement,
Insurance Agreement and other relevant documents and such investigations as it
deemed appropriate, the [Class A] Certificates will be treated as indebtedness
for federal income tax purposes.
In general, whether instruments such as the [Class A] Certificates
constitute indebtedness for federal income tax purposes is a question of fact,
the resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
The IRS and the courts have set forth various factors to be taken into account
in determining whether or not an instrument constitutes indebtedness for federal
income tax purposes. On the basis of a review of such factors as applied to the
facts of the contemplated transaction, Tax Counsel has concluded, as stated
above, that the [Class A] Certificates constitute indebtedness for federal
income tax purposes.
In Article ____ of the Pooling Agreement, the parties thereto and all
successors and assigns thereof, including, upon acquisition of the [Class A]
Certificates, the Certificateholders, express their mutual intent that the
[Class A] Certificates shall constitute indebtedness for all applicable tax
purposes and, further, covenant and agree to treat the [Class A] Certificates as
indebtedness for all applicable tax purposes in all tax filings, reports and
returns and otherwise. Notwithstanding such agreement, because different
criteria are used to determine the non-tax accounting characterization of the
issuance and sale of the [Class A] Certificates, the Originator and the Sponsor
intend to treat the transaction as a sale by the Sponsor of interests in the
Receivables for financial accounting purposes.
Although the economic substance of a transaction is generally of primary
importance in determining its proper treatment for federal income tax purposes,
nevertheless, a party to a transaction will be held to a high standard of proof
in establishing that the form of the transaction, if at variance with the
economic substance of the transaction, should not be treated as controlling. In
some instances, courts have indicated that a taxpayer should be bound by the
particular form it has chosen for a transaction, even if the substance of the
transaction does not accord with its form. Tax Counsel is nonetheless of the
opinion that the [Class A] Certificates will be treated as indebtedness for
federal income tax purposes because (i) in many respects the form of the
transaction as reflected in the operative provisions of the documents accords
with the characterization of the [Class A] Certificates as indebtedness, (ii)
the parties have stated unambiguously their intention to treat the [Class A]
Certificates as indebtedness for tax
S-31
<PAGE>
purposes and (iii) the characteristics of the [Class A] Certificates strongly
indicate that in economic substance the [Class A] Certificates are a form of
indebtedness.
Possible Classification of the Transaction as a Partnership or Association
Taxable as a Corporation
Notwithstanding Tax Counsel's opinion, potential investors should
recognize that there is some uncertainty as to the correct characterization of
the [Class A] Certificates. It is possible that the IRS could assert that, for
federal income tax purposes, the transaction contemplated by this Prospectus
Supplement constitutes the sale of a direct or indirect interest in [the
Vehicles and] the Receivables to the Certificateholders and that the proper
classification of the legal relationship between the Servicer, the Sponsor and
the [Class A] Certificateholders resulting from this transaction is that of a
partnership or an association taxable as a corporation. Since Tax Counsel is of
the opinion that the [Class A] Certificates will be treated as indebtedness in
the hands of the Certificateholders for federal income tax purposes, the
Servicer and the Sponsor will not attempt to comply with the federal income tax
reporting requirements applicable to either partnerships or corporations.
If the transaction were treated as creating a partnership between the
Certificateholders, the Servicer and the Sponsor, the partnership itself would
not be subject to federal income tax (unless characterized as a publicly traded
partnership taxable as a corporation); rather, the Servicer, the Sponsor and
each Certificateholder would be taxed individually on their respective
distributive shares of the partnership's income, gain, loss, deductions and
credits. The amount, timing and characterization of items of income and
deductions for a Certificateholder would differ if the [Class A] Certificates
were held to constitute partnership interests, rather than indebtedness.
If it were determined that this transaction created an entity classified
as a corporation (including a publicly traded partnership taxable as a
corporation), the Trust would be subject to federal income tax at corporate
income tax rates on the income it derives from the Receivables, which would
reduce the amounts available for distribution to the Certificateholders. Cash
distributions to the Certificateholders generally would be treated as dividends
for tax purposes to the extent of such corporation's earnings and profits.
Taxation of Interest Income of Certificateholders
Assuming, in accordance with the opinion of Tax Counsel, that the [Class
A] Certificates will constitute indebtedness for federal income tax purposes,
interest thereon will be includable as ordinary income when received or accrued
by the Certificateholders in accordance with their respective methods of tax
accounting.
Sales of [Class A] Certificates
Upon the sale or exchange of a [Class A] Certificate, the
Certificateholder will realize a gain or loss equal to the difference between
the amount realized on the sale and the adjusted basis of such [Class A]
Certificate.
Backup Withholding with Respect to Certificates
Payments of interest and principal, together with payments of proceeds
from the sale of [Class A] Certificates, may be subject to the "backup
withholding tax" under Section 3406 of the Code at a rate of 31% if recipients
of such payments fail to furnish to the payor certain information, including
their taxpayer identification numbers, or otherwise fail to establish an
exemption from such tax. Any amounts deducted and withheld from a payment to a
recipient would be allowed as a credit against such recipient's federal income
tax. Furthermore, certain penalties may be imposed by the IRS on a recipient of
payments that is required to supply information but that does not do so in the
proper manner.
S-32
<PAGE>
Foreign Investors in [Class A] Certificates
A Certificateholder that is not a "United States person" may be subject to
United States federal withholding tax in respect of distributions on a [Class A]
Certificate. Whether withholding of tax would be required, and, if so, the rate
at which such withholding would be imposed, would depend upon a number of
factors, including the characterization of the [Class A] Certificates and the
Trust for federal income tax purposes, and, under current law, the withholding
rate could be as high as 35 percent. For these purposes, "United States person"
means a citizen or resident of the United States, a corporation, partnership
organized in or under the laws of the United States or any political subdivision
thereof or an estate or trust the income of which from sources without the
United States is includable in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States.
[Proposed Tax Legislation
Legislation pending before Congress would apply special rules to "large
partnerships," generally defined as partnerships with at least 250 partners
during a taxable year (counting towards such total each owner during the year of
a partnership interest that is transferred during the year). Under the
legislation, certain computations are made at the partnership level rather than
the partner level. In particular, taxable income is calculated at the
partnership level, and is calculated generally in the same manner as for an
individual, except that 70% of miscellaneous itemized deductions (such as
expenses for the production of nonbusiness income) are disallowed. As a result,
all partners (including corporations) might have a portion of their share of
partnership deductions (other than interest expense) disallowed. Moreover, large
partnerships would become subject to new audit procedures; among other things,
an adjustment to taxable income of the partnership for a prior year would flow
through to current partners in the year the audit was settled, and the
partnership itself (rather than the partners) would be subject to any applicable
interest or penalties. As proposed, these rules would apply to partnership
taxable years ending on or after December 31, 1993.
The proposed tax legislation dealing with large partnerships discussed
above was not adopted in the Revenue Reconciliation Act of 1993, which was
enacted into law in August 1993. No prediction can be made whether that proposal
or similar legislation might be enacted in the future, or the ultimate effective
date of such legislation or whether the number of Certificateholders would cause
the Trust to be considered a "large partnership."]
State, Local and Other Taxes
Investors should consult their own tax advisors regarding whether the
purchase of the [Class A] Certificates, either alone or in conjunction with an
investor's other activities, may subject an investor to any state or local taxes
based on an assertion that the investor is either "doing business" in, or
deriving income from a source located in, any state or local jurisdiction.
Additionally, potential investors should consider the state, local and other tax
consequences of purchasing, owning or disposing of a [Class A] Certificate.
State and local tax laws may differ substantially from the corresponding federal
tax law, and the foregoing discussion does not purport to describe any aspect of
the tax laws of any state or other jurisdiction. Accordingly, potential
investors should consult their own tax advisors with regard to such matters.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
The [Class A] Certificates may be purchased by an employee benefit plan or
an individual retirement account (a "Plan") subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code.
A fiduciary of a Plan must determine that the purchase of a [Class A]
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a nonexempt prohibited transaction as defined in Section 406 of ERISA
or Section 4975 of the Code. Employee benefit plans which 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 the fiduciary responsibility or
prohibited transaction provisions of ERISA or the Code. For additional
information regarding treatment of the [Class A] Certificates under ERISA, see
"ERISA Considerations" in the Prospectus.
If the [Class A] Certificates constitute equity interests, there can be no
assurance that any of the exceptions set forth in the Regulations will apply to
the purchase of [Class A] Certificates offered hereby. Under the terms of the
Regulations, if the Trust were deemed to hold Plan assets by reason of a Plan's
investment in [Class A] Certificates, such Plan assets would include an
undivided interest in the Receivables, and any other assets held by the Trust.
In such an event, the Originator, the Sponsor, the Trust, the Trustee and other
persons providing services with respect to the Receivables, may be subject to
the fiduciary responsibility provisions of Title Originator of ERISA and be
subject to the prohibited transaction provisions of Section 4975 of the Code
with respect to transactions involving the Receivables unless such transactions
are subject to a statutory or administrative exemption. Additionally, if the
Trust were deemed to hold Plan assets, each Certificateholder may be subject to
the fiduciary responsibility provisions of Title Originator of ERISA with
respect to its right to consent or withhold consent to amendments to the
Indenture and with respect to its right to vote on action to be taken or not
taken if an Indenture Event of Default occurs.
In addition, certain affiliates of the Originator, the Sponsor, the Trust
and the Trustee may be considered to be parties in interest or fiduciaries with
respect to many Plans. An investment by such a Plan in [Class A] Certificates
may be a prohibited transaction under ERISA and the Code unless such investment
is subject to a statutory or administrative exemption.
Any Plan fiduciary that proposes to cause a Plan to purchase Notes should
consider whether such purchase would be appropriate under the general fiduciary
standards of prudence and diversification, taking into account the overall
investment policy of the Plan and its existing portfolio and should consult with
its counsel with respect to the potential applicability of ERISA and the Code.
RATINGS
It is a condition to the issuance of the [Class A] Certificates that they
be rated "_____" by ____________. A security rating is not a recommendation to
buy, sell or hold securities and may be subject to revision or withdrawal at any
time. The ratings of ____________ assigned to [Class A] Certificates addresses
the likelihood of the receipt by Certificateholders of all distributions to
which such Certificateholders are entitled. The ratings do not address the
timely or ultimate payment of any withholding tax imposed. The ratings assigned
to [Class A] Certificates do not represent any assessment of the likelihood that
principal prepayments might differ from those originally anticipated or address
the possibility that Certificateholders might suffer a lower than anticipated
yield.
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UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Sponsor has agreed to cause the Trust to
sell to [each of] the underwriter(s) named below (the "Underwriter(s)"), and
each of the Underwriter(s) has severally, and not jointly, agreed to purchase,
the principal amount of [Class A] Certificates set forth opposite its name
below.
Principal
Amount of
Underwriter(s) Certificates
------------
__________________.......... $___________
__________________.......... ___________
------------
TOTAL................. $
============
In the Underwriting Agreement, the Underwriter(s) have agreed, subject to
the terms and conditions therein, to purchase all the [Class A] Certificates
offered hereby if any of such [Class A] Certificates are purchased. The Sponsor
has been advised by the Underwriter(s) that they propose initially to offer the
[Class A] Certificates to the public at the respective prices set forth herein,
and to certain dealers at such prices less a concession not in excess of _____%
per [Class A] Certificate. The Underwriter(s) may allow and such dealers may
reallow a concession not in excess of 0.__% per [Class A] Certificate to certain
other dealers. After the initial public offering, such prices and such
concessions may be changed.
The Underwriting Agreement provides that the Sponsor and the Originator
will indemnify the Underwriter(s) against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the
Underwriter(s) may be required to make in respect thereof.
The Trustee (on behalf of the Trust) may, from time to time, invest the
funds in the Trust Accounts in Eligible Investments acquired from the
Underwriter(s).
LEGAL MATTERS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the issuance of the Series 199__-__ Certificates,
including federal and state income tax consequences with respect thereto, as
well as other matters, will be passed upon for the Trust, the Sponsor and the
Underwriter(s) by Dewey Ballantine, New York, New York.
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INDEX OF DEFINED TERMS
Page
----
Additional Receivable Transfer Agreement 14
APR.........................................................................11
Articles of Incorporation...................................................21
Available Finance Charge Collections........................................25
Available Principal Collections.............................................26
Certificate Rate.............................................................2
Class B Reallocated Finance Charge Collections..............................26
Code........................................................................31
Contract Interest............................................................2
Contract Principal...........................................................2
Contracts.................................................................1, 3
Controlled Amortization Amount..............................................27
Controlled Distribution Amount..............................................27
Credit Score Analysts.......................................................15
Deficit Controlled Amortization Amount......................................27
Sponsor......................................................................1
Distribution Rate............................................................2
ERISA.......................................................................34
Exchange Act.................................................................2
Final Payment Date...........................................................2
Fixed Allocation Percentage.................................................25
Floating Allocation Percentage..............................................24
Independent Director........................................................21
Initial Reserve Amount.......................................................5
Investor Charge-Off.........................................................30
Investor Default Amount.....................................................26
IRS.........................................................................31
Monthly Interest............................................................26
Monthly Principal...........................................................27
[Monthly] Servicer Report...................................................20
Originator...................................................................1
Plan........................................................................34
Pooling Agreement............................................................1
Predecessor Receivable......................................................12
Prospectus...................................................................2
Receivables .................................................................1
Required Amount.............................................................26
Required Reserve Amount.....................................................29
Reserve Account..............................................................2
Reserve Sponsor..............................................................6
Rule of 78s.................................................................11
Series 199__-1 Invested Amount..............................................24
Series 199__-1 Supplement...................................................23
Servicer.....................................................................1
Series 199_ -1 Certificates..................................................1
Substitute Receivable.......................................................13
Tax Counsel ................................................................12
Trust........................................................................1
Trustee...................................................................1, 3
UCC.........................................................................10
Underwriters................................................................35
S-36
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Underwriting Agreement......................................................35
Underwriters................................................................35
United States person........................................................33
Vehicles.....................................................................1
VSI Insurance Policy........................................................16
[Class A] Certificateholders.................................................1
[Class A] Certificates.......................................................1
[Class A] Invested Amount...................................................24
[Class B] Available Finance Charge Collections..............................29
[Class B] Available Principal Collections...................................29
[Class B] Certificates.......................................................1
[Class B] Invested Amount...................................................24
[Class B] Investor Default Amount...........................................29
[Class B] Investor Charge-Off...............................................30
[Class B] Monthly Interest..................................................28
[Class B] Reallocated Principal Collections.................................26
[Class B] Required Amount...................................................29
S-37
