As filed with the Securities and Exchange Commission on June 27, 1997
Registration No. 333-26581
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------
MORGAN STANLEY ABS
CAPITAL II INC.
(Sponsor of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
Delaware Not Yet Available
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation of Organization)
1585 Broadway
New York, New York 10036
(212) 761-2063
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Craig S. Phillips
President
Morgan Stanley ABS Capital II Inc.
1585 Broadway
New York, New York 10036
(212) 761-1817
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
Copies to:
Siegfried P. Knopf, Esq. Gregory Walker, Esq.
Brown & Wood LLP Morgan Stanley & Co. Incorporated
One World Trade Center 1585 Broadway
New York, New York 10048 New York, New York 10036
(212) 839-5334 (212) 761-6745
-------------------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
----------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of Securities Amount to Be Proposed Maximum Proposed Maximum Amount of
to Be Registered Registered Offering Price Per Aggregate Offering Registration
Unit (1) Price(1) Fee(2)
- -------------------- ------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C>
Asset Backed $1,000,000 100% $1,000,000 $304
Securities
</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
(2) Previously paid.
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 THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
INTRODUCTORY NOTE
This Registration Statement contains a form of Prospectus relating to
the offering of series of Asset Backed Notes and/or Asset Backed Certificates
by various Trusts created from time to time by Morgan Stanley ABS Capital II
Inc. and two forms of Prospectus Supplement relating to the offering by a
Trust of the particular series of Asset Backed Notes and Asset Backed
Certificates or of Asset Backed Certificates, as applicable, described
therein. Each form of Prospectus Supplement relates only to the securities
described therein and is a form that may be used, among others, by the
registrant to offer Asset Backed Notes and/or Asset Backed Certificates under
this Registration Statement.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the prospectus to which it
relates shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any state in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
Subject to completion, dated , 1997
---- --
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 199__)
$( )
(________________________) TRUST 199 -( )
(Floating Rate) ASSET BACKED NOTES, CLASS ( )
(Floating Rate) ASSET BACKED NOTES, CLASS ( )
( %) ASSET BACKED CERTIFICATES
MORGAN STANLEY ABS CAPITAL II INC., DEPOSITOR
(________________________________) , SERVICER
____________________
(________________) Trust 199 ( ) (the "Trust") will be governed
pursuant to a Trust Agreement to be dated as of , 199 , between
Morgan Stanley ABS Capital II Inc. (the "Depositor") and (
), as (Owner) Trustee. The Trust will issue $
aggregate principal amount of (Floating Rate) Asset Backed Notes, Class ( )
(the "Class ( ) Notes") and $ aggregate principal amount of
(Floating Rate) Asset Backed Notes, Class ( ) (the "Class ( ) Notes" and,
together with the Class ( ) Notes, the "Notes") pursuant to an Indenture to
be dated as of , 199 , between the Trust and
, as Indenture Trustee. (No principal payments will be made in the Class
( ) Notes until the Class ( ) Notes have been paid in full, and to that
extent, the rights of the holders of the Class ( ) Notes to receive
distributions with respect to the Receivables are subordinated to the rights
of the holders of the Class ( ) Notes, as more fully described herein.)
(Cover continued on following page)
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS
IN MORGAN STANLEY ABS CAPITAL II INC., THE SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES. NONE OF THE NOTES, THE CERTIFICATES OR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
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.
<TABLE>
<CAPTION>
ORIGINAL
PRINCIPAL PRICE TO UNDERWRITING PROCEEDS TO THE
AMOUNT PUBLIC(1) DISCOUNT DEPOSITOR (1)(2)
<S> <C> <C> <C> <C>
Per Class ( ) Note . $ % % %
Per Class ( ) Note . % % %
Per Certificate . . . % % %
Total $ $ $ $
</TABLE>
- ------------------
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The Notes and the Certificates are offered subject to prior sale and subject
to the Underwriter's right to reject any order in whole or in part. It is
expected that delivery of the Notes and the Certificates will be made in
book-entry form only through the facilities of The Depository Trust Company
and, in the case of the Notes, Cedel Bank, societe anonyme, and the Euroclear
System on or about , 199 .
____________________
MORGAN STANLEY DEAN WITTER
____________________
, 199 .
(Continued from previous page)
The Trust will also issue $ aggregate principal amount of
( %) Asset Backed Certificates (the "Certificates" and, together with the
Notes, the "Securities"). The assets of the Trust will include a pool of
retail installment sale contracts or retail installment loans (the
"Receivables"), secured by security interests in new or used automobiles,
light duty trucks, recreational vehicles and recreational sport and
power boats (including any boat motors and accompanying trailers) and yachts
(both power and sail) (the "Financed Assets") and certain monies due or
received thereunder on or after , 199 , transferred to the
Trust by the Seller on the Closing Date. The Notes will be secured by the
assets of the Trust pursuant to the Indenture.
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the
Notes. See "Risk Factors -- Subordination of the Certificates for the Notes"
herein.
Interest on the Class ( ) and Class ( ) Notes will accrue at the
respective (floating) interest rates specified above. Interest on the Notes
will generally be payable on the day of each month or, if any such
day is not a Business Day, on the next succeeding Business Day (each, a
"Distribution Date"), commencing , 199 . Principal of the Notes will
be payable on each Distribution Date to the extent described herein; however,
no principal payments will be made on the Class ( ) Notes until the Class (
) Notes have been paid in full.
The Certificates will represent fractional undivided interests in the
Trust. Interest, to the extent of the Pass Through Rate specified above,
will be distributed to the Certificateholders on each Distribution Date. No
distributions of principal on the Certificates will be made until all the
Notes have been paid in full.
Each class of the Notes and the Certificates will be payable in full on
the applicable final scheduled Distribution Date as set forth herein.
However, payment in full of a class of Notes or of the Certificates could
occur earlier than such dates as described herein. In addition, the Class (
) Notes will be subject to redemption in whole, but not in part, and the
Certificates will be subject to prepayment in whole, but not in part, on any
Distribution Date on which the Servicer exercises its option to purchase the
Receivables. The Servicer may purchase the Receivables when the aggregate
principal balance of the Receivables shall have declined to % or less of
the initial aggregate principal balance of the Receivables purchased by the
Trust.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" AT PAGE S-10 HEREIN AND ON PAGE (12) 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. TO THE EXTENT ANY
STATEMENTS IN THIS PROSPECTUS SUPPLEMENT CONFLICT WITH STATEMENTS IN THE
PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
Certain persons participating in this offering may engage in
transactions that stabilize, maintain, or otherwise affect the price of the
Securities. Such transactions may include stabilizing and the purchase of
Securities. Such transactions may include stabilizing and the purchase of
Securities to cover syndicate short positions. For a description of these
activities, see "Underwriting" herein.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
monthly 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 and the Certificates. 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
Depositor, as originator of 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 of the Commission thereunder.
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 . . . . . . . . . . . . . (_____________________) Trust 199
-( ) (the "Trust" or the
"Issuer"), a (___________) a
business trust to be governed
pursuant to a Trust Agreement
dated as of ,
199 (as amended and supplemented
from time to time, the "Trust
Agreement"), between the Depositor
and the Owner Trustee.
Depositor . . . . . . . . . . . . Morgan Stanley ABS Capital II Inc.
(the "Depositor").
Servicer . . . . . . . . . . . . (_______________________________)
(in such capacity, the
"Servicer").
Indenture Trustee . . . . . . . . , as
trustee under the Indenture (the
"Indenture Trustee").
Owner Trustee . . . . . . . . . . , as
trustee under the Trust Agreement
(the "Owner Trustee").
The Notes . . . . . . . . . . . . The Trust will issue Asset Backed
Notes pursuant to an Indenture to
be dated as of , 199
(as amended and supplemented from
time to time, the "Indenture"),
between the Trust and the
Indenture Trustee, as follows:
(i) (Floating Rate) Asset Backed
Notes, Class ( ) (the "Class (
) Notes") in the aggregate initial
principal amount of $
; and (ii) (Floating Rate) Asset
Backed Notes, Class ( ) (the
"Class ( ) Notes") in the
aggregate initial principal amount
of $ . The Class
( ) Notes and the Class ( )
Notes are collectively referred to
herein as the "Notes".
The Notes will be secured by the
assets of the Trust pursuant to
the Indenture.
The Certificates . . . . . . . . The Trust will issue ( %) Asset
Backed Certificates (the
"Certificates" and, together with
the Notes, the "Securities") with
an aggregate initial Certificate
Balance of $
. The Certificates will represent
fractional undivided interests in
the Trust and will be issued
pursuant to the Trust Agreement.
The Receivables . . . . . . . . . On the Closing Date, the Trust
will purchase Receivables having
an aggregate principal balance of
approximately
$ (the
"Initial Pool Balance") as of
, 199 (the
"Cutoff Date") from the Depositor
pursuant to a Sale and Servicing
Agreement to be dated as of
, 199 (as amended and
supplemented from time to time,
the "Sale and Servicing
Agreement"), among the Trust, the
Depositor and the Servicer. See
"Description of the Transfer and
Servicing Agreements -- Sale and
Assignment of Receivables" herein
and in the Prospectus. The
Receivables will consist of retail
installment sale contracts or
retail installment loans between
Obligors and Dealers secured by
new or used automobiles, light-
duty trucks, recreational vehicles
and recreational sport and
power boats (including any boat
motors and accompanying trailers)
and yachts (both power and sail)
(the "Financed Assets"). The
retail installment sale contracts
were purchased by __________,
__________ and __________ (the
"Seller"). The Receivables will
be transferred by the Depositor to
the Trust, based on the criteria
specified in the Sale and
Servicing Agreement and described
herein and in the Prospectus. As
of the Cutoff Date, the weighted
average annual percentage rate of
the Receivables was approximately
%, the weighted average
remaining maturity of the
Receivables was approximately
months, and the weighted average
original maturity of the
Receivables was approximately
months. No Receivable has a
scheduled maturity later than
, 20__ (the "Final
Scheduled Maturity Date"). See
"The Receivables Pool" herein.
The "Pool Balance" at any time
will represent the aggregate
principal balance of the
Receivables at the end of the
preceding Collection Period, after
giving effect to all payments
(other than Payaheads) received
from Obligors, Advances and
Purchase Amounts to be remitted by
the Servicer or the Depositor, as
the case may be, all for such
Collection Period, and all losses
realized on Receivables liquidated
during such Collection Period.
Terms of the Notes . . . . . . . The principal terms of the Notes
will be as described below:
A. Distribution Dates . . .
Payments of interest and principal
on the Notes will be made on the
day of each month or, if any
such day is not a Business Day, on
the next succeeding Business Day
(each, a "Distribution Date"),
commencing , 199 . Each
reference to a "Payment Date" in
the Prospectus shall refer to a
Distribution Date herein.
Payments will be made to holders
of record of the Notes (the
"Noteholders") as of the day
immediately preceding such
Distribution Date or, if
Definitive Notes are issued, as of
the day of the preceding
month (a "Record Date"). A
"Business Day" is a day other than
a Saturday, a Sunday or a day on
which banking institutions or
trust companies in the States of
(_________) are authorized by law,
regulation or executive order to
be closed.
B. Interest Rates . . . . . The Class ( ) Notes will bear
interest at a per annum rate of
(Floating Rate) (the "Class ( )
Rate") and the Class ( ) Notes
will bear interest at a per annum
rate of Floating Rate (the "Class
( ) Rate"). (The per annum rate
of interest with respect to the
Class ( ) Notes for each
Interest Reset Period (the "Class
( ) Rate") will equal LIBOR for
such Interest Reset Period, plus
%; provided that the Class ( )
Rate shall not exceed % per
annum.)
The interest rates for the various
classes of Notes are referred to
herein collectively as "Interest
Rates".
C. Interest . . . . . . . . Interest on the outstanding
principal amount of the Notes
(other than the Class ( ) Notes)
will accrue at the applicable
Interest Rate from the Closing
Date (in the case of the first
Distribution Date) or from the
day of the month preceding the
month of a Distribution Date to
and including the day of
the month of such Distribution
Date (each an "Interest Accrual
Period"). (Interest on the
outstanding principal amount of
the Class ( ) Notes will accrue
at the Class ( ) Rate from the
Closing Date (in the case of the
first Distribution Date) or from
the most recent Distribution Date
on which interest has been paid to
but excluding the following
Distribution Date (each, a
"Floating Rate Interest Accrual
Period").) Interest on the Class
( ) Notes will be calculated on
the basis of a 360-day year
consisting of twelve 30-day
months. Interest on the Class (
) Notes will be calculated on the
basis of the actual number of days
in each Floating Rate Interest
Accrual Period divided by 360.
See "Description of the Notes --
Payments of Interest".
D. Principal . . . . . . . Principal of the Notes will be
payable on each Distribution Date
in an amount equal to the
Noteholders' Principal
Distributable Amount for the
calendar month (the "Collection
Period") preceding such
Distribution Date (in the case of
the first Distribution Date, the
period from and including
, 199 to and including ,
199 (exclusive of the scheduled
payments of principal due on the
Precomputed Receivables during
that period)) to the extent of
funds available therefor. The
"Noteholders' Principal
Distributable Amount" will equal
the sum of (i) the Regular
Principal Distribution Amount plus
(ii) the Accelerated Principal
Distribution Amount. The "Regular
Principal Distribution Amount"
with respect to any Distribution
Date will equal the amount of
principal paid or, in certain
circumstances, scheduled to be
paid with respect to the
Receivables (exclusive of
Payaheads allocable to principal
that have not been applied as
payments under the related
Receivables in the related
Collection Period and inclusive of
Payaheads allocable to principal
that have been applied as payments
under the related Receivables in
such Collection Period) plus, in
certain circumstances, the
principal balance of defaulted
Receivables, as calculated by the
Servicer as described under
"Description of the Transfer and
Servicing Agreements --
Distributions". The "Accelerated
Principal Distribution Amount"
with respect to a Distribution
Date will equal the portion, if
any, of the Total Distribution
Amount for the related Collection
Period that remains after payment
of (a) the Servicing Fee (together
with any portion of the Servicing
Fee that remains unpaid from prior
Distribution Dates), (b) the
interest due on the Notes, (c) the
Regular Principal Distribution
Amount, (d) the interest due on
the Certificates, and (e) the
amount, if any, required to be
deposited in the Reserve Account
on such Distribution Date.
On the Business Day immediately
preceding each Distribution Date
(a "Determination Date"), the
Indenture Trustee shall determine
the amount in the Collection
Account available for distribution
on the related Distribution Date.
Payments to Securityholders will
be made on each Distribution Date
in accordance with such
determination. The Servicing Fee
in respect of a Collection Period
(together with any portion of the
Servicing Fee that remains unpaid
from prior Distribution Dates)
will be paid at the beginning of
such Collection Period out of
collections for such Collection
Period.
No principal payments will be made
on the Class ( ) Notes until the
Class ( ) Notes have been paid in
full.
The outstanding principal amount
of the Class ( ) Notes, to the
extent not previously paid, will
be payable on the
(199 )(20 ) Distribution Date
(the "Class ( ) Final Scheduled
Distribution Date"); and the
outstanding principal amount of
the Class ( ) Notes, to the
extent not previously paid, will
be payable on the (199
)(20 ) Distribution Date (the
"Class ( ) Final Scheduled
Distribution Date").
E. Optional Redemption . . The Notes will be redeemed in
whole, but not in part, on any
Distribution Date on which the
Servicer exercises its option to
purchase the Receivables. The
Servicer will have the option to
purchase all of the Receivables on
any Distribution Date on or after
the Distribution Date on which the
Pool Balance has declined to ( )%
or less of the Initial Pool
Balance. The price at which the
Servicer will be required to
purchase the Receivables in order
to exercise such option will be
equal to the aggregate of the
Purchase Amounts of the
Receivables as of the end of the
related Collection Period. The
Servicer will be required to give
not less than ( ) days notice to
the Trustee of its intention to
exercise such option. In
addition, the Servicer will not be
permitted to exercise such option
unless the resulting distribution
would be sufficient to retire the
Notes at a redemption price equal
to the unpaid principal amount of
the Class ( ) Notes plus accrued
and unpaid interest thereon. See
"Description of the Notes --
Optional Redemption" herein.
Terms of the Certificates . . . . The principal terms of the
Certificates will be as described
below:
A. Distribution Dates . . . Distributions with respect to the
Certificates will be made on each
Distribution Date, commencing
, 199 . Distributions will
be made to holders of record of
the Certificates (the
"Certificateholders" and, together
with the Noteholders, the
"Securityholders") as of the
related Record Date (which will be
the day of the preceding
month if Definitive Certificates
are issued).
B. Pass Through Rate ( )% per annum (the "Pass
Through Rate").
C. Interest . . . . . . . . On each Distribution Date, the
Owner Trustee will distribute pro
rata to Certificateholders 30 days
of accrued interest at the Pass
Through Rate on the outstanding
Certificate Balance generally to
the extent of funds available
following payment of the Servicing
Fee and distributions in respect
of the Notes from the Total
Distribution Amount and the
Reserve Account. Interest will be
calculated on the basis of a
360-day year consisting of twelve
30-day months. Interest in
respect of a Distribution Date
will accrue from the Closing Date
(in the case of the first
Distribution Date) or from the
day of the month preceding the
month of the Distribution Date to
and including the day of the
month of such Distribution Date.
D. Principal . . . . . . . No distributions of principal on
the Certificates will be made
until all of the Notes have been
paid in full. On each
Distribution Date commencing on
the Distribution Date on which the
Class ( ) Notes are paid in
full, principal of the
Certificates will be payable in an
amount generally equal to the
Certificateholders' Principal
Distributable Amount for the
Collection Period preceding such
Distribution Date, to the extent
of funds available therefor
following payment of the Servicing
Fee, payments of interest and
principal, if any, due in respect
of the Notes and the distribution
of interest in respect of the
Certificates. The
Certificateholders' Principal
Distributable Amount will be the
Regular Principal Distribution
Amount (less, on the Distribution
Date on which the Notes are paid
in full, the portion thereof
payable on the Notes), and will be
calculated by the Servicer in the
manner described under
"Description of the Transfer and
Servicing Agreements --
Distributions".
E. Optional Prepayment . . If the Servicer exercises its
option to purchase the
Receivables, the terms of which
option are summarized under "Terms
of the Notes -- E. Optional
Redemption" above, the
Certificates will be retired. The
Servicer will not be permitted to
exercise such option unless the
resulting distribution to
Certificateholders would be equal
to the outstanding Certificate
Balance together with accrued
interest at the Pass Through Rate.
See "Description of the
Certificates -- Optional
Prepayment" herein.
Reserve Account . . . . . . . . . (DESCRIBE RESERVE ACCOUNT FORMULA)
Collection Account; Priority of
Payments . . . . . . . . . . . . Except under certain conditions
described herein or as otherwise
acceptable to each Rating Agency,
the Servicer will be required to
remit collections received with
respect to the Receivables within
Business Days of receipt
thereof to one or more accounts in
the name of the Indenture Trustee
(the "Collection Account"). At
the beginning of each Collection
Period the Indenture Trustee will
apply collections in the
Collection Account to pay to the
Servicer the Servicing Fee for
such Collection Period and any
overdue Servicing Fees. Pursuant
to the Sale 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 such funds on
each Distribution Date to the
following (in the priority
indicated): (i) the Servicing
Fee, together with any unpaid
Servicing Fees from prior
Distribution Dates (if for any
reason such amount was not paid at
the beginning of the Collection
Period as described above), to the
Servicer, (ii) the Noteholders'
Interest Distributable Amount and
the Noteholders' Principal
Distributable Amount into the Note
Distribution Account, (iii) the
Certificateholders' Interest
Distributable Amount and, after
the Notes have been paid in full,
the Certificateholders' Principal
Distributable Amount into the
Certificate Distribution Account
and (iv) the remaining balance, if
any, to the Reserve Account.
Tax Status . . . . . . . . . . . In the opinion of Brown & Wood
LLP, counsel to the Trust ("Tax
Counsel"), for federal income tax
purposes, the Notes will be
characterized as debt, and the
Trust will not be characterized as
an association (or a publicly
traded partnership) taxable as a
corporation. Each Noteholder, by
the acceptance of a Note, will
agree to treat the Notes as
indebtedness, and each
Certificateholder, by the
acceptance of a Certificate, will
agree to treat the Trust as a
partnership in which the
Certificateholders are partners
for federal income and state
income tax purposes. Alternative
characterizations of the Trust and
the Certificates are possible, but
would not result in materially
adverse tax consequences to
Certificateholders. See "Federal
Income Tax Consequences" herein
and "Federal Income Tax
Consequences" in the Prospectus
for additional information
concerning the application of
federal income and state tax laws
to the Trust and the Securities.
ERISA Considerations . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
Prospectus, the Notes are eligible
for purchase by employee benefit
plans. The Certificates may not
be acquired by any employee
benefit plan subject to the
Employee Retirement Income
Security Act of 1974, as amended
("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as
amended (the "Code"), or by an
individual retirement account.
See "ERISA Considerations" herein
and in the Prospectus.
Rating of the Notes . . . . . . . It is a condition to the issuance
of the Notes that they be rated "
" by at least one Rating Agency.
The rating of the Notes by a
Rating Agency reflects such Rating
Agency's assessment of the
likelihood that the Noteholders
will receive payments and interest,
however, the
rating on the Notes does not
address the timing of
distributions of principal of the
Notes prior to the Final Scheduled
Distribution Date. A rating is
not a recommendation to buy, sell
or hold securities and may be
subject to revision or withdrawal
at any time by the assigning
Rating Agency. Each rating should
be evaluated independently of any
other rating. See "Risk Factors -
- Ratings of the Securities"
herein.
Rating of the Certificates . . . It is a condition to the issuance
of the Certificates that they be
rated at least in the " "
category or its equivalent by at
least one Rating Agency. The
rating of the Certificates by a
Rating Agency reflects such Rating
Agency's assessment of the
likelihood that the
Certificateholders will receive
payments of principal and interest,
however, the
rating on the Certificates does
not address the timing of the
distributions of principal in
respect of the Certificates prior
to the Final Scheduled
Distribution Date. A rating is
not a recommendation to buy, sell
or hold securities and may be
subject to revision or withdrawal
at any time by the assigning
Rating Agency. Each rating should
be evaluated independently of any
other rating. See "Risk Factors -
- Ratings of the Securities"
herein.
RISK FACTORS
Investors should consider, among other things, the matters discussed
under "Risk Factors" in the Prospectus and the following risk factors in
connection with purchases of the Notes and/or Certificates.
LIMITED LIQUIDITY; ABSENCE OF A SECONDARY MARKET. There is currently no
secondary market for the Securities. Each Underwriter currently intends to
make a market in the Securities, but it is under no obligation to do so.
There can be no assurance that a secondary market will develop or, if a
secondary market does develop, that it will provide the Securityholders with
liquidity of investment or that it will continue for the life of the
Securities offered hereby.
(GEOGRAPHIC CONCENTRATION. Economic conditions in states where Obligors
reside may affect the delinquency, loan loss and repossession experience of
the Trust with respect to the Receivables. Obligors on Receivables
representing approximately _____% by principal balance of the Receivables
were located in (__________________) at the Cut off Date. As a result,
economic conditions in such states may have a disproportionate affect on
prepayments and/or defaults in respect of the Receivables and thus
potentially adversely affect the amount available for distribution to the
Securityholders. In particular, an economic downturn in one or more of such
states could adversely affect the performance of the Trust as a whole (even
if national economic conditions remain unchanged or improve) as Obligors in
such state or states experience the effects of such a downturn and face
greater difficulty in making payments on their Financed Assets. See "The
Receivables Pool.")
SUBORDINATION OF THE CERTIFICATES TO THE NOTES. Distributions of
interest and principal on the Certificates will be subordinated in priority
of payment to interest and principal due on the Notes. Consequently, the
Certificateholders will not receive any distributions with respect to a
Collection Period until the full amount of interest on and principal of the
Notes due on such Distribution Date has been deposited in the Note
Distribution Account. The Certificateholders will not receive any
distributions of principal until the Distribution Date on which all of the
Notes have been paid in full.
LIMITED ASSETS OF THE TRUST. The Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds
other than the Receivables and the Reserve Account. Holders of the Notes and
the Certificates must rely for repayment upon payments on the Receivables
and, if and to the extent available, amounts on deposit in the Reserve
Account. Although funds in the Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and
principal on the Notes and the Certificates, amounts to be deposited in the
Reserve Account are limited in amount. If the Reserve Account is exhausted,
the Trust will depend solely on current distributions on the Receivables to
make payments on the Notes and the Certificates.
RATINGS OF THE SECURITIES. It is a condition to the issuance of the
Securities that each class of the Notes be rated in the highest investment
rating category, and that the Certificates be rated at least in the " "
category or its equivalent, by at least one nationally recognized rating
agency (the "Rating Agency"). 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 ratings of the
Securities address the likelihood of the payment of principal and interest on
the Securities pursuant to their terms. There can be 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 TRUST
GENERAL
The Issuer, (____________________________________) Trust 199 -( ), is a
business trust formed under the laws of the State of (________) pursuant to
the Trust Agreement for the transactions described in this Prospectus
Supplement. After its formation, the Trust will not engage in any activity
other than (i) acquiring, holding and managing the Receivables and the other
assets of the Trust and proceeds therefrom, (ii) issuing the Notes and the
Certificates, (iii) making payments on the Notes and the Certificates and
(iv) engaging in other activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity equal to the
Certificate Balance of $ , excluding amounts deposited in
the Reserve Account. The equity of the Trust, together with the net proceeds
from the sale of the Notes, will be used by the Trust to purchase the
Receivables from the Depositor pursuant to the Sale and Servicing Agreement.
If the protection provided to the investment of the Securityholders by
the Reserve Account is insufficient, the Trust will look only to the Obligors
on the Receivables and the proceeds from the repossession and sale of
Financed Assets which secure defaulted Receivables. In such event, certain
factors, such as the Trust's not having first priority perfected security
interests in some of the Financed Assets, may affect the Trust's ability to
realize on the collateral securing the Receivables, and thus may reduce the
proceeds to be distributed to Securityholders with respect to the Securities.
See "Description of the Transfer and Servicing Agreements -- Distributions"
and "-- Reserve Account" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
The Trust's principal offices are in , ,
in care of ( ), as Owner Trustee, at the address
listed below under "-- The Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of
the Closing Date, as if the issuance and sale of the Notes and the
Certificates had taken place on such date:
Class ( ) Notes . . . . . . . .
Class ( ) Notes . . . . . . . .
Certificates . . . . . . . . . . _____________________
Total . . . . . . . . . . . $
=====================
THE OWNER TRUSTEE
is the Owner Trustee under the Trust
Agreement. is a (state) banking
corporation and its principal offices are located at ,
, . The Depositor and its affiliates may
maintain normal commercial banking relations with the Owner Trustee and its
affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include only the
Receivables purchased on the Closing Date. The Receivables (will be)(have
been) purchased by the Depositor from the Seller which purchased the
Receivables, directly or indirectly, from Dealers in the ordinary course of
business and were selected from the Depositor's portfolio for inclusion in
the Receivables Pool by several criteria, some of which are set forth in the
Prospectus under "The Receivables Pools", as well as the requirement that, as
of the Cutoff Date, each Receivable (i) had an outstanding gross balance of
at least $ and (ii) was not more than 60 days past due (an account is
not considered past due if the amount past due is less than % of the
scheduled monthly payment). As of the Cutoff Date, no Obligor on any
Receivable was noted in the related records of the Seller as being the
subject of a bankruptcy proceeding. No selection procedures believed by the
Depositor to be adverse to Securityholders were used in selecting the
Receivables.
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate ("APR") and the
geographic distribution of the Receivables Pool as of the Cutoff Date.
( ) TRUST 199 -( )
COMPOSITION OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Aggregate Average Average Average
APR of Principal Number of Remaining Original Principal
Receivables Balance Receivables Term Term Balance
- ------------ ---------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
_____% $________________ __________ _____ months _____ months $__________
</TABLE>
(______________________) TRUST 199 - ( )
DISTRIBUTION BY APR OF THE RECEIVABLES POOL
<TABLE>
<CAPTION> Percent of
Aggregate
Number of Aggregate Principal
APR Range Receivables Principal Balance Balance(1)
- --------- ------------ ----------------- ----------
<S> <C> <C> <C>
0.00% - 5.00% . . . . . . . . . . . $ %
5.01% - 6.00% . . . . . . . . . . .
6.01% - 7.00% . . . . . . . . . . .
7.01% - 8.00% . . . . . . . . . . .
8.01% - 9.00% . . . . . . . . . . .
9.01% - 10.00% . . . . . . . . . . .
10.01% - 11.00% . . . . . . . . . . .
11.01% - 12.00% . . . . . . . . . . .
12.01% - 13.00% . . . . . . . . . . .
13.01% - 14.00% . . . . . . . . . . .
14.01% - 15.00% . . . . . . . . . . .
15.01% - 16.00% . . . . . . . . . . .
16.01% - 17.00% . . . . . . . . . . .
17.01% - 18.00% . . . . . . . . . . .
Greater than 18.00% . . . . . . . . .
</TABLE>
_______________
(1) Percentages may not add to 100.0% because of rounding.
(______________________) TRUST 199 -( )
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
PERCENTAGE AGGREGATE
STATE(2) PRINCIPAL BALANCE(1)
_________
%
_______________
(1) Percentages may not add to 100.0% because of rounding.
(2) Based on physical addresses of the Obligors at the Cut off Date.
Approximately % of the aggregate principal balance of the
Receivables, constituting % of the number of the Receivables, represent
previously titled vehicles.
By aggregate principal balance, approximately % of the receivables
are Precomputed Receivables and % of the Receivables are Simple Interest
Receivables. See "The Receivables Pools" in the Prospectus for a further
description of the characteristics of Precomputed Receivables and Simple
Interest Receivables.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning the experience of the
Seller pertaining to retail new and used automobile and light-duty truck
receivables, including those previously sold which the Servicer continues to
service. There can be no assurance that the delinquency, repossession and
net loss experience on the Receivables will be comparable to that set forth
below.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT DECEMBER 31, AT ____________________,
199 199 199 199
--- --- --- ---
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio . . . . $ $ $ $
Period of
Delinquency
31-60 Days . .
61 Days or More
--------- ------ --------- ------ --------- ------ --------- ------
Total $ $ $ $
Delinquencies . .
Total
Delinquencies
as a Percent of % % % % % % % %
the Portfolio . . .
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------
199 199 199
--- --- ---
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------ --------- ------ --------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Portfolio . . . . . . . $ $ $
Period of Delinquency
31-60 Days . . . . .
61 Days or More . . .
--------- ------ --------- ------ --------- ------
Total Delinquencies . .
Total Delinquencies
as a Percent of the
Portfolio . . . . . . % % % % % %
</TABLE>
_______________
(1) All amounts and percentages are based on the gross amount scheduled
to be paid on each contract, including unearned finance and other
charges. The information in the table includes an immaterial
amount of retail installment sale contracts on vehicles other than
automobiles and light duty trucks and includes previously sold
contracts which the Servicer continues to service.
<TABLE>
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<CAPTION>
_____________ ENDED
March , YEAR ENDED DECEMBER31,
---------------------- ------------------------------------------
199 199 199 199 199 199 199
--- --- --- --- --- --- ---
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding
During the Period . . . . . . . . . . . $ $ $ $ $ $ $
Average Number of Contracts
Outstanding During the Period . . . . .
Percent of Contracts Acquired During the
Period with Recourse to the Dealer . . % % % % % % %
Repossessions as a Percent of Average
Number of Contracts Outstanding . . . . % % % % % % %
Net Losses as a Percent of
Liquidations(3)(4) . . . . . . . . . . % % % % % % %
Net Losses as a Percent of Average
Amount Outstanding(2)(3) . . . . . . . % % % % % % %
</TABLE>
____________________
(1) (Except as indicated, all amounts and percentages are based on the
gross amount scheduled to be paid on each contract, including
unearned finance and other charges. The information in the table
includes previously sold contracts that the Servicer continues to
service.)
(2) Percentages have been annualized for the _____ months ended
____________, 199 and 199 and are not necessarily indicative of
the experience for the year.
(3) (Net losses are equal to the aggregate of the balances of all
contracts which are determined to be uncollectible in the period,
less any recoveries on contracts charged off in the period or any
prior periods, including any losses resulting from disposition
expenses and any losses resulting from the failure to recover
commissions to dealers with respect to contracts that are prepaid
or charged off.)
(4) Liquidations represent a reduction in the outstanding balances of
the contracts as a result of monthly cash payments and charge-offs.
(The net loss figures above reflect the fact that Seller had recourse to
Dealers on a portion of its retail installment sale contracts. By aggregate
principal balance, approximately % of the Receivables represent
contracts with recourse to Dealers. The Seller applies underwriting
standards to the purchase of contracts without regard to whether recourse to
Dealers is provided. However, the net loss experience of contracts without
recourse against Dealers is higher than that of contracts with recourse
against Dealers because, under its recourse obligation, the Dealer is
responsible to the Seller for payment of the unpaid balance of the contract,
provided that the Seller repossesses the vehicle or boat from the retail
buyer and returns it to the Dealer within a specified time. In the event of
a Dealer's bankruptcy, a bankruptcy trustee might attempt to characterize
recourse sales of contracts as loans to the Dealer secured by the contracts.
Such an attempt, if successful, could result in payment delays or losses on
the affected Receivables.)
THE SELLER
(DESCRIPTION OF SELLER AND ITS UNDERWRITING AND SERVICING STANDARDS)
THE SERVICER
(DESCRIPTION OF SERVICER AND ITS SERVICING STANDARDS)
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Weighted Average Life of
the Securities" in the Prospectus. No principal payments will be made on the
Class ( ) Notes until all Class ( ) Notes have been paid in full. In
addition, no principal payments on the Certificates will be made until all of
the Notes have been paid in full. See "Description of the Notes -- Payments
of Principal" and "Description of the Certificates -- Distributions of
Principal Payments" herein. As the rate of payment of principal of each class
of Notes and the Certificates depends primarily on the rate of payment
(including prepayments) of the principal balance of the Receivables, final
payment of any class of the Notes and the final distribution in respect of
the Certificates could occur significantly earlier than their respective
final scheduled Distribution Dates. In addition, the rate of payment of
principal of each class of Notes will be affected by the Accelerated
Principal Distribution Amounts applied to the payment of the principal of the
Notes. Securityholders will bear the risk of being able to reinvest
principal payments on the Securities at yields at least equal to the yields
on their respective Securities.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form
of which has been filed as an exhibit to the Registration Statement. 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
subject to, and is qualified in its entirety by reference to, all 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
, will be the Indenture Trustee under the Indenture.
PAYMENTS OF INTEREST
The Notes will constitute Floating Rate Securities, as such term is
defined under "Certain Information Regarding the Securities -- Floating Rate
Securities" in the Prospectus. The Base Rate with respect to the Notes will
be ( ). Interest on the principal balances of the classes of the Notes
will accrue at their respective per annum Interest Rates and will be payable
to the Noteholders monthly on each Distribution Date, commencing
, 199 . Interest on the outstanding principal amount of the Notes (other than
the Class ( ) Notes) will accrue at the applicable Interest Rate from the
Closing Date (in the case of the first Distribution Date) or from the
day of the month preceding the month of a Distribution Date to and
including the day of the month of the Distribution Date (each an
"Interest Accrual Period"). Interest on the outstanding principal amount of
the Class ( ) Notes will accrue at the Class ( ) Rate from the Closing Date
(in the case of the first Distribution Date) or from the most recent
Distribution Date on which interest has been paid to but excluding the
following Distribution Date (each, a "Floating Rate Interest Accrual
Period"). Interest on the Notes (other than the Class ( ) Notes) will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest on the Class ( ) Notes will be calculated on the basis of the
actual number of days in each applicable Floating Rate Interest Accrual
Period divided by 360. Interest payments on the 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.
Interest payments to all classes of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on
any Distribution Date, in which case each class of Noteholders will receive
their ratable share (based upon the aggregate amount of interest due to such
class of Noteholders) of the aggregate amount available to be distributed in
respect of interest on the Notes.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution
Date in an amount generally equal to the sum of (i) the Regular Principal
Distribution Amount plus (ii) the Accelerated Principal Distribution Amount.
The "Regular Principal Distribution Amount" with respect to any Distribution
Date will equal the sum of principal payments received with respect to the
Receivables during the preceding Collection Period or, in certain cases,
scheduled to be paid during such Collection Period (exclusive of Payaheads
allocable to principal that have not been applied as payments under the
related Receivables in such Collection Period and inclusive of Payaheads
allocable to principal that have been applied as payments under the related
Receivables in such Collection Period) plus the principal balances of
defaulted Receivables written off in respect of such Collection Period,
subject to certain limitations. The "Accelerated Principal Distribution
Amount" with respect to any Distribution Date will equal the portion, if any,
of the Total Distribution Amount for the related Collection Period that
remains after payment of (a) the Servicing Fee, (b) the Noteholders' Interest
Distributable Amount, (c) the Regular Principal Distribution Amount, (d) the
Certificateholders' Interest Distributable Amount, and (e) the amount, if
any, required to be deposited in the Reserve Account on such Distribution
Date. Principal payments on the Notes will generally be derived from the
Total Distribution Amount and the amount, if any, in the Reserve Account up
to the Available Amount remaining after the payment of the Servicing Fee and
the Noteholders' Interest Distributable Amount and, in the case of any
Accelerated Principal Distribution Amount, the Certificateholders' Interest
Distributable Amount and the amount, if any, required to be deposited into
the Reserve Account. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Reserve Account" herein.
On the Business Day immediately preceding each Distribution Date (a
"Determination Date"), the Indenture Trustee shall determine the amount in
the Collection Account for the related Collection Period allocable to
interest and the amount allocable to principal on an actual basis, and
payments to Securityholders on the following Distribution Date will be based
on such allocation.
On each Distribution Date, principal payments on the Notes will be
applied in the following order of priority: (i) to the principal balance of
the Class ( ) Notes until the principal balance of the Class ( ) Notes is
reduced to zero; and (ii) to the principal balance of the Class ( ) Notes
until the principal balance of the Class ( ) Notes is reduced to zero. The
principal balance of the Class ( ) Notes, to the extent not previously paid,
will be due on the Class ( ) Final Scheduled Distribution Date; and the
principal balance of the Class ( ) Notes, to the extent not previously paid,
will be due on the Class ( ) Final Scheduled Distribution Date. The actual
date on which the aggregate outstanding principal amount of any class of
Notes is paid may be earlier than the respective Final Scheduled Distribution
Dates set forth above based on a variety of factors, including those
described under "Weighted Average Life of the Securities" herein and in the
Prospectus.
OPTIONAL REDEMPTION
The Class ( ) Notes will be redeemed in whole, but not in part, on any
Distribution Date after all the other classes of Notes have been paid in full
on which the Servicer exercises its option to purchase the Receivables. The
Servicer will have the option to purchase all, but not less than all, of the
Receivables on any Distribution Date on or after the Distribution Date on
which the Pool Balance has declined to ( )% or less of the Initial Pool
Balance. The price at which the Servicer will be required to purchase the
Receivables in order to exercise such option will be equal to the aggregate
of the Purchase Amounts of the Receivables as of the end of the related
Collection Period. The Servicer will be required to give not less than ( )
days notice to the Trustee of its intention to exercise such option. In
addition, the Servicer will not be permitted to exercise such option unless
the resulting distribution would be sufficient to retire the Notes at a
redemption price equal to the unpaid principal amount of such Notes plus
accrued and unpaid interest thereon (the "Redemption Price"). See
"Description of the Transfer and Servicing Agreements -- Termination" in the
Prospectus.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. 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 subject to, and qualified in its entirety
by reference to, all 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 INTEREST INCOME
On each Distribution Date, commencing , (199 )(20 ) , the
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 Certificates will constitute Fixed Rate Securities,
as such term is defined under "Certain Information Regarding the
Securities -- Fixed Rate Securities" in the Prospectus. Interest in respect
of a Distribution Date will accrue from the Closing Date (in the case of the
first Distribution Date) or from the day of the month preceding
the month of the Distribution Date to and including the day of the
month of such Distribution Date. Interest in respect of the Certificates
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest distributions due for any Distribution Date but not
distributed on such Distribution Date will be due on the next Distribution
Date increased by an amount equal to interest on such amount at the Pass
Through Rate (to the extent lawful). Interest distributions with respect to
the Certificates will generally 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 of principal on
each Distribution Date, commencing with the Distribution Date on which the
Notes are paid in full, in an amount generally equal to the Regular Principal
Distribution Amount (less, on the Distribution Date on which the Notes are
paid in full, the portion thereof payable on the Notes). Distributions with
respect to principal payments will generally be funded from the portion of
the Total Distribution Amount and funds in the Reserve Account remaining
after the distribution of the Servicing Fee, the Noteholders' Distributable
Amount (on the Distribution Date on which the Notes are paid in full) and the
Certificateholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements -- Distributions" and "-- Reserve Account".
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables, the
terms of which option are described under "Description of the Notes --
Optional Redemption" herein, the Certificates will be retired. The Servicer
will not be permitted to exercise such option unless the resulting
distribution to the Certificateholders would be equal to the outstanding
Certificate Balance together with accrued interest at the Pass Through Rate.
See "Description of the Transfer and Servicing Agreements -- Termination" in
the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and Servicing
Agreement, the Administration Agreement and the Trust Agreement
(collectively, the "Transfer and Servicing Agreements"). Forms of the
Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement. A copy of the Sale and Servicing Agreement will be
filed with the Commission following the issuance of the Securities. The
summary does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all the provisions of the Transfer and
Servicing Agreements. The following summary supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of the Transfer and Servicing Agreements set forth in the
Prospectus, to which description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information regarding the conveyance of the Receivables by the
Depositor to the Trust on the Closing Date pursuant to the Sale and Servicing
Agreement is set forth in the Prospectus under "Description of the Transfer
and Servicing Agreements -- Sale and Assignment of Receivables".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for the
Servicer will be % per annum of the Pool Balance as of the first day of
---
the related Collection Period. The Servicing Fee in respect of a Collection
Period (together with any portion of the Servicing Fee that remains unpaid
from prior Distribution Dates) will be paid at the beginning of such
Collection Period out of collections for such Collection Period. See
"Description of the Transfer and Servicing Agreements -- Servicing
Compensation and Payment of Expenses" in the Prospectus.
DISTRIBUTIONS
DEPOSITS TO COLLECTION ACCOUNT. On or before each Distribution Date,
the Servicer will cause all collections and other amounts constituting the
Total Distribution Amount to be deposited into the Collection Account. The
"Total Distribution Amount" for a Distribution Date shall be the sum of the
Interest Distribution Amount and the Regular Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses). "Realized
Losses" means the excess of the principal balance of any Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
The "Interest Distribution Amount" on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(including Payaheads) allocable to interest plus that portion of Payaheads
allocable to principal (less an amount equal to Payaheads, if any, that have
been returned to the related Obligors during such Collection Period);
(ii) all proceeds of the liquidation of defaulted Receivables ("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 ("Liquidation Proceeds"), to the
extent attributable to interest due thereon in accordance with the Servicer's
customary servicing procedures, and all recoveries in respect of Liquidated
Receivables which were written off in prior Collection Periods; (iii) all
Advances made by the Servicer of interest due on the Receivables; (iv) the
Purchase Amount of each Receivable that was repurchased by the Depositor and
simultaneously, repurchased by the Seller or purchased by the Servicer under
an obligation which arose during the related Collection Period, to the extent
attributable to accrued interest thereon; and (v) Investment Earnings for
such Distribution Date. The Interest Distribution Amount shall be determined
on the related Determination Date on an actual basis.
The "Regular Principal Distribution Amount" on any Distribution Date
will generally be the sum of the following amounts with respect to the
preceding Collection Period: (i) that portion of all collections on the
Receivables (exclusive of Payaheads allocable to principal that have not been
applied as payments under the related Receivables in such Collection Period
and inclusive of Payaheads allocable to principal that have been applied as
payments under the related Receivables in such Collection Period) allocable
to principal; (ii) all Liquidation Proceeds attributable to the principal
amount of Receivables which became Liquidated Receivables during such
Collection Period in accordance with the Servicer's customary servicing
procedures, plus the amount of Realized Losses with respect to such
Liquidated Receivables; (iii) all Precomputed Advances made by the Servicer
of principal due on the Precomputed Receivables; (iv) to the extent
attributable to principal, the Purchase Amount received with respect to each
Receivable repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period; (v) partial
prepayments relating to refunds of extended warranty protection plan costs or
of physical damage, credit life or disability insurance policy premiums, but
only if such costs or premiums were financed by the respective Obligor as of
the date of the original contract; and (vi) on the Distribution Date
immediately following the Final Scheduled Maturity Date (the "Final Scheduled
Distribution Date"), any amounts advanced by the Servicer with respect to
principal on the Receivables. The Regular Principal Distribution Amount
shall be determined on the related Determination Date on an actual basis.
The Interest Distribution Amount and the Regular Principal Distribution
Amount on any Distribution Date shall exclude the following:
(i) amounts received on Precomputed Receivables to the extent that
the Servicer has previously made an unreimbursed Precomputed Advance;
(ii) Liquidation Proceeds with respect to a particular Precomputed
Receivable to the extent of any unreimbursed Precomputed Advances
thereon;
(iii) all payments and proceeds (including Liquidation
Proceeds) of any Receivables, the Purchase Amount of which has been
included in the Total Distribution Amount in a prior Collection Period;
(iv) amounts received in respect of interest on Simple Interest
Receivables during the preceding Collection Period in excess of the
amount of interest that would have been due during the Collection Period
on Simple Interest Receivables at their respective APRs (assuming that a
payment is received on each Simple Interest Receivable on the due date
thereof); and
(v) Liquidation Proceeds with respect to a Simple Interest
Receivable attributable to accrued and unpaid interest thereon (but not
including interest for the then current Collection Period) but only to
the extent of any unreimbursed Simple Interest Advances.
DEPOSITS TO THE DISTRIBUTION ACCOUNTS. At the beginning of each
Collection Period, the Indenture Trustee will apply funds available in the
Collection Account to pay to the Servicer the Servicing Fee for such
Collection Period and any overdue Servicing Fees. On each Distribution Date,
the Servicer will instruct the Indenture Trustee to make the following
deposits and distributions, to the extent of the amount then on deposit in
the Collection Account, in the following order of priority:
(i) to the Servicer, from the Interest Distribution Amount (as so
allocated) the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods, to the extent, if any, such amounts are not paid at
the beginning of the related Collection Period;
(ii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the payment of the Servicing Fee for such
Collection Period and all unpaid Servicing Fees from prior Collection
Periods, 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 Noteholders' Principal Distributable Amount;
(iv) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii), the Certificateholders' Interest Distributable Amount;
(v) after all of the Notes have been paid in full, to the
Certificate Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (i) through (iv), the
Certificateholders' Principal Distributable Amount; and
(vi) the remaining balance, if any, to the Reserve Account.
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable
Amount and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued for the related
Interest Accrual Period or Floating Rate Interest Accrual Period, as
applicable, on each class of Notes at the respective Interest Rate for
such class on the outstanding principal balance of the Notes of such
class on the immediately preceding Distribution Date (or, in the case of
the first Distribution Date, on the Closing Date), after giving effect
to all payments of principal to the Noteholders of such class on or
prior to such Distribution Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any
outstanding Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is
actually deposited in the Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not
paid to Noteholders on the preceding Distribution Date, to the extent
permitted by law, at the respective Interest Rates borne by each class
of the Notes for the related Interest Accrual Period or Floating Rate
Interest Accrual Period, as applicable.
"Noteholders' Principal Distributable Amount" means, with respect
to any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided, however, that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal balance
of the Notes; and provided, further, that (i) the Noteholders' Principal
Distributable Amount on the Class ( ) Final Scheduled Distribution Date
shall not be less than the amount that is necessary (after giving effect
to other amounts to be deposited in the Note Distribution Account on
such Distribution Date and allocable to principal) to reduce the
outstanding principal balance of the Class ( ) Notes to zero; and
(ii) the Noteholders' Principal Distributable Amount on the Class ( )
Final Scheduled Distribution Date shall not be less than the amount that
is necessary (after giving effect to other amounts to be deposited in
the Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal balance of the Class ( )
Notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to each Distribution Date, the sum of (i) the Regular Principal
Distribution Amount and (ii) the Accelerated Principal Distribution
Amount.
"Noteholders' Principal Carryover Shortfall" means, as of the close
of any Distribution Date, the excess of the Noteholders' Monthly
Principal Distributable Amount and any outstanding Noteholders'
Principal Carryover Shortfall from the preceding Distribution Date over
the amount in respect of principal that is actually deposited in the
Note Distribution Account.
"Certificateholders' Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Principal
Distributable Amount and the Certificateholders' Interest Distributable
Amount.
"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution
Date.
"Certificateholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, 30 days of interest (or, in the
case of the first Distribution Date, interest accrued from and including
the Closing Date to but excluding such Distribution Date, calculated on
the basis of a 360-day year consisting of twelve 30-day months) at the
Pass Through Rate on the Certificate Balance on the immediately
preceding Distribution Date, after giving effect to all payments
allocable to the reduction of the Certificate Balance made on or prior
to such Distribution Date (or, in the case of the first Distribution
Date, on the Closing Date).
"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Certificateholders'
Monthly Interest Distributable Amount for the preceding Distribution
Date and any outstanding Certificateholders' Interest Carryover
Shortfall on such preceding Distribution Date, over the amount in
respect of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus interest
on such excess, to the extent permitted by law, at the Pass Through Rate
for the related Interest Accrual Period.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and
the Certificateholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Final Scheduled Distribution
Date, the principal required to be deposited into the Certificate
Distribution Account will include the lesser of (a) (i) any scheduled
payments of principal due and remaining unpaid on each Precomputed
Receivable and (ii) any principal due and remaining unpaid on each
Simple Interest Receivable, in each case, in the Trust as of the Final
Scheduled Distribution Date or (b) the amount that is necessary (after
giving effect to the other amounts to be deposited in the Certificate
Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero.
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date prior to the Distribution Date on
which the Notes are paid in full, zero; and with respect to any
Distribution Date commencing on the Distribution Date on which the Notes
are paid in full, the Regular Principal Distribution Amount (less, on
the Distribution Date on which the Notes are paid in full, the portion
thereof payable on the Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of the
Certificateholders' Monthly Principal Distributable Amount and any
outstanding Certificateholders' Principal Carryover Shortfall from the
preceding Distribution Date, over the amount in respect of principal
that is actually deposited in the Certificate Distribution Account.
"Certificate Balance" equals, initially, $ and,
thereafter, equals the initial Certificate Balance, reduced by all
amounts allocable to principal previously distributed to
Certificateholders.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account (other than Investment Earnings) will be generally paid
in the following order of priority:
(i) to the applicable Noteholders, accrued and unpaid interest on
the outstanding principal balance of the applicable class of Notes at
the applicable Interest Rate;
(ii) the Noteholders' Principal Distributable Amount in the
following order of priority:
(a) to the Class ( ) Noteholders in reduction of principal
until the principal balance of the Class ( ) Notes has been
reduced to zero; and
(b) to the Class ( ) Noteholders in reduction of principal
until the principal balance of the Class ( ) Notes has been
reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults and delinquencies on the Receivables
as provided in the Sale and Servicing Agreement. The protection afforded to
the Noteholders through subordination will be effected both by the
preferential right of the Noteholders to receive current distributions with
respect to the Receivables and by the establishment of the Reserve Account.
The Reserve Account will be created with an initial deposit by the (________)
on the Closing Date of cash or Eligible Investments in the amount of $ .
(DESCRIBE RESERVE ACCOUNT FORMULA)
If the amount on deposit in the Reserve Account on any Distribution Date
(after giving effect to all deposits therein or other withdrawals therefrom
on such Distribution Date) is greater than the Specified Reserve Account
Balance for such Distribution Date, except as described below and subject to
certain limitations, the Servicer shall instruct the Indenture Trustee to
distribute such excess to the Depositor. Upon any distribution to the
Depositor of amounts from the Reserve Account, neither the Noteholders nor
the Certificateholders will have any rights in, or claims to, such amounts.
Subsequent to any reduction or withdrawal by any Rating Agency of its rating
of any class of Notes, unless such rating has been restored, any such excess
released from the Reserve Account on a Distribution Date will be deposited in
the Note Distribution Account for payment to Noteholders as an accelerated
payment of principal on such Distribution Date.
Amounts held from time to time in the Reserve Account will continue to
be held for the benefit of Noteholders and Certificateholders. On each
Distribution Date, funds will be withdrawn from the Reserve Account up to the
Available Amount to the extent that the Total Distribution Amount (after the
payment of the Servicing Fee) with respect to any Collection Period is less
than the Noteholders' Distributable Amount and will be deposited in the Note
Distribution Account. In addition, after giving effect to such withdrawal,
funds will be withdrawn from the Reserve Account up to the Available Amount
(as reduced by any withdrawal pursuant to the preceding sentence) to the
extent that the portion of the Total Distribution Amount remaining after the
payment of the Servicing Fee and the deposit of the Noteholders'
Distributable Amount in the Note Distribution Account is less than the
Certificateholders' Distributable Amount and will be deposited in the
Certificate Distribution Account. If funds applied in accordance with the
preceding sentence are insufficient to distribute interest due on the
Certificates, subject to certain limitations, funds will be withdrawn from
the Reserve Account and applied to distribute interest due on the
Certificates to the extent of the Certificate Interest Reserve Amount. On
each Distribution Date, the Reserve Account will be reinstated up to the
Specified Reserve Account Balance to the extent of the portion, if any, of
the Total Distribution Amount remaining after payment of the Servicing Fee,
the deposit of the Noteholders' Distributable Amount into the Note
Distribution Account and the deposit of the Certificateholders' Distributable
Amount into the Certificate Distribution Account.
"Available Amount" means, with respect to any Distribution Date, the
amount of funds on deposit in the Reserve Account on such Distribution Date
(other than Investment Earnings) less the Certificate Interest Reserve Amount
with respect to such Distribution Date, in each case, before giving effect to
any reduction thereto on such Distribution Date.
"Certificate Interest Reserve Amount" means the lesser of (i) $
less the amount of any application of the Certificate Interest Reserve
Amount to pay interest on the Certificates on any prior Distribution Date and
(ii) % of the Certificate Balance on such Distribution Date (before
giving effect to any reduction thereof on such Distribution Date); provided,
however, that the Certificate Interest Reserve Amount shall be zero
subsequent to any reduction by any Rating Agency to less than " " or its
equivalent, or withdrawal by any Rating Agency, of its rating of any class of
Notes, unless such rating has been restored.
If on any Distribution Date the entire Noteholders' Distributable Amount
for such Distribution Date (after giving effect to any amounts withdrawn from
the Reserve Account) is not deposited in the Note Distribution Account, the
Certificateholders generally will not receive any distributions other than
those, if any, in respect of interest made from the Certificate Interest
Reserve Amount.
After the payment in full, or the provision for such payment, of (i) all
accrued and unpaid interest on the Securities and (ii) the outstanding
principal balance of the Securities, any funds remaining on deposit in the
Reserve Account, subject to certain limitations, will be paid to the
Depositor.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due them and to decrease the likelihood that
the Noteholders will experience losses. In addition, the Reserve Account is
intended to enhance the likelihood of receipt by Certificateholders of the
full amount of principal and interest due them and to decrease the likelihood
that the Certificateholders will experience losses. However, in certain
circumstances, the Reserve Account could be depleted. If the amount required
to be withdrawn from the Reserve Account to cover shortfalls in collections
on the Receivables exceeds the amount of available cash in the Reserve
Account, Noteholders or Certificateholders could incur losses or a temporary
shortfall in the amounts distributed to the Noteholders or the
Certificateholders could result, which could, in turn, increase the average
life of the Notes or the Certificates.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP counsel for the Trust, for federal
income tax purposes, the Notes will be characterized as debt, and the Trust
will not be characterized as an association (or a publicly traded
partnership) taxable as a corporation. The Notes, including the Class ( )
Notes, will not be issued with original issue discount ("OID"). (The Class (
) Notes provide for stated interest at a floating rate based on __________,
subject to a cap of % per year.) Under Treasury regulations, stated
interest payable at a variable rate is not treated as OID or contingent
interest if the variable rate is a qualified floating rate or a qualifying
objective rate. The stated interest on the Class ( ) Notes represents
interest payable at a qualified floating rate and thus will be taxable to
holders of Class ( ) Notes as interest and not as OID or contingent
interest. For additional information regarding federal income tax
consequences, see "Federal Income Tax Consequences" in the Prospectus.
ERISA CONSIDERATIONS
THE NOTES
The Notes may be purchased by an employee benefit plan or an individual
retirement account (a "Plan") subject to ERISA or Section 4975 of the Code.
A fiduciary of a Plan must determine that the purchase of an 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. For additional information regarding treatment of
the Notes under ERISA, see "ERISA Considerations" in the Prospectus.
The Notes may not be purchased with the assets of a Plan if the Seller,
the Indenture Trustee, the Owner Trustee or any of their affiliates (a) has
investment or administrative discretion with respect to such Plan assets;
(b) has authority or responsibility to give, or regularly gives, investment
advice with respect to such Plan assets for a fee and pursuant to an
agreement or understanding that such advice (i) will serve as a primary basis
for investment decisions with respect to such Plan assets and (ii) will be
based on the particular investment needs for such Plan; or (c) is an employer
maintaining or contributing to such Plan.
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 or which uses plan assets to acquire Certificates.
By its acceptance of a Certificate, each Certificateholder will be deemed to
have represented and warranted that it is not subject to the foregoing
limitation. In this regard, purchasers that are insurance companies should
consult with their counsel with respect to the United States Supreme Court
case interpreting the fiduciary responsibility rules of ERISA, John Hancock
Life Ins. Co. v. Harris Trust and Sav. Bank, 114 S.
--------------------------------------------------------
Ct. 517 (1993). In John Hancock, the Supreme Court ruled that assets held
------------
in an insurance company's general account may be deemed to be "plan assets"
for ERISA purposes under certain circumstances. Prospective purchasers
should determine whether the decision affects their ability to make purchases
of the Certificates. In particular, such an insurance company should
consider the exemptive relief granted by the Department of Labor for
transactions involving insurance company general accounts in Prohibited
Transactions Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995). For
additional information regarding treatment of the Certificates under ERISA,
see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "Underwriting Agreement"), the Depositor has agreed to cause
the Trust to sell to the Underwriter, and the Underwriter has agreed to
purchase, the entire principal amount of the Notes and the Certificates.
The Depositor has been advised by the Underwriter that it proposes
initially to offer the Notes to the public at the prices set forth herein,
and to certain dealers at such prices less the initial concession not in
excess of % per Class ( ) Note and % per Class ( ) Note. The
Underwriter may allow and such dealers may reallow a concession not in excess
of % per Class ( ) Note and % per Class ( ) Note to certain other
dealers. After the initial public offering of the Notes, the public offering
price and such concessions may be changed.
The Depositor has been advised by the Underwriter that it proposes
initially to offer the Certificates to the public at the price set forth
herein and to certain dealers at such price less the initial concession not
in excess of % per Certificate. The Underwriter 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.
Until the distribution of the Notes and Certificates is completed, rules
of the Commission may limit the ability of the Underwriter and certain
selling group members to bid for and purchase the Notes and Certificates. As
an exception to these rules, the Underwriter is permitted to engage in
certain transactions that stabilize the price of the Notes and Certificates.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Certificates.
If the Underwriter creates a short position in the Notes and
Certificates in connection with the offering, i.e., if it sells more Notes
and Certificates than are set forth on the cover page of this Prospectus
Supplement, the Underwriter may reduce that short position by purchasing
Notes and Certificates in the open market.
In general, the purchase of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the Depositor nor any Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the prices of the Notes and
Certificates. In addition, Neither the Depositor nor any Underwriter makes
any representation that the Underwriter will engage in such transactions or
that such transactions, once commenced, will not be discontinued without notice.
The Underwriter has represented and agreed that (a) it has not offered
or sold, and will not offer or sell, any Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
that do not constitute an offer to the public in the United Kingdom for the
purposes of the Public Offers of Securities Regulations 1995, (b) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 of Great Britain with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom and
(c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document in connection with the issue of the Notes to a
person who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person
to whom the document may otherwise lawfully be issued or passed on.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from the Underwriter or a request by
such investor's representative within the period during which there is an
obligation to deliver a Prospectus Supplement and Prospectus, the Seller or
the Underwriter will promptly deliver, or cause to be delivered, without
charge, a paper copy of the Prospectus Supplement and Prospectus.
LEGAL OPINIONS
Certain legal matters relating to the Notes and the Certificates and
certain federal income tax matters and certain state tax matters will be
passed upon for the Depositor by Brown & Wood LLP New York, New York.
(Certain legal matters relating to the Notes and the Certificates will be
passed upon for the Underwriter by Brown & Wood LLP.)
INDEX OF TERMS
Accelerated Principal Distribution Amount . . . . . . . . . . . . . . . S-
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Available Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cedel Participants . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Certificate Interest Reserve Amount . . . . . . . . . . . . . . . . . . S-
Certificate Underwriter(s) . . . . . . . . . . . . . . . . . . . . . . S-
Certificate Underwriting Agreement . . . . . . . . . . . . . . . . . . S-
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Certificateholders' Distributable Amount . . . . . . . . . . . . . . . S-
Certificateholders' Interest Carryover Shortfall . . . . . . . . . . . S-
Certificateholders' Interest Distributable Amount . . . . . . . . . . . S-
Certificateholders' Monthly Interest Distributable Amount . . . . . . . S-
Certificateholders' Monthly Principal Distributable Amount . . . . . . S-
Certificateholders' Principal Carryover Shortfall . . . . . . . . . . . S-
Certificateholders' Principal Distributable Amount . . . . . . . . . . S-
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Final Scheduled Distribution Date . . . . . . . . . . . . . S-
Class ( ) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Final Scheduled Distribution Date . . . . . . . . . . . . . S-
Class ( ) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Final Scheduled Distribution Date . . . . . . . . . . . . . S-
Class ( ) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Final Scheduled Distribution Date . . . . . . . . . . . . . S-
Class ( ) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class ( ) Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . S-
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . S-
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . S-
Floating Rate Interest Accrual Period . . . . . . . . . . . . . . . . S-
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . S-
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . S-
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . S-
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . . . . S-
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . S-
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . S-
Note Underwriter(s) . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Note Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . S-
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Noteholders' Distributable Amount . . . . . . . . . . . . . . . . . . . S-
Noteholders' Interest Carryover Shortfall . . . . . . . . . . . . . . . S-
Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . S-
Noteholders' Monthly Interest Distributable Amount . . . . . . . . . . S-
Noteholders' Monthly Principal Distributable Amount . . . . . . . . . . S-
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . . S-
Noteholders' Principal Distributable Amount . . . . . . . . . . . . . . S-
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Regular Principal Distribution Amount . . . . . . . . . . . . . . . . . S-
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . S-
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . S-
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Telerate Page 3750 . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . S-
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . S-
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . S-
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Underwriter(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR OR BY THE UNDERWRITER(S). THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE IN
ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT OR PROSPECTUS.
___________________
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Average Life of the Securities . . . . . . . . . . . . . . . . . . .
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . . .
Description of the Transfer and Servicing . . . . . . . . . . . . . . . . . .
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . .
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annex I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Documents by
Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Receivables Pools . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Average Life of the Securities . . . . . . . . . . . . . . . . . . .
Pool Factors and Trading Information . . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . . .
Certain Information Regarding the Securities . . . . . . . . . . . . . . . .
Description of the Transfer and Servicing Agreements . . . . . . . . . . . .
Certain Legal Aspects of the Receivables . . . . . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . .
Certain State Tax Consequences with respect to Trusts for
which a Partnership Election Is Made . . . . . . . . . . . . . . . . . . . .
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS WHEN ACTING AS UNDERWRITER(S) AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
____________________
____________________
____________________
____________________
$( )
(___________________________) TRUST
199 -( )
$
(FLOATING RATE)( %)
ASSET BACKED NOTES, CLASS ( )
$
(FLOATING RATE)( %)
ASSET BACKED NOTES, CLASS ( )
$
(FLOATING RATE)( %)
ASSET BACKED CERTIFICATES
MORGAN STANLEY ABS CAPITAL II INC.
DEPOSITOR
____________________
PROSPECTUS SUPPLEMENT
____________________
MORGAN STANLEY DEAN WITTER
____________________
, 199
____________________
____________________
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the prospectus to which it
relates shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any state in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
Subject to completion, dated , 1997
---- --
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 199__)
$( )
__________________ TRUST 199 -( )
( %) ASSET BACKED CERTIFICATES, CLASS A
( %) ASSET BACKED CERTIFICATES, CLASS B
MORGAN STANLEY ABS CAPITAL II INC., DEPOSITOR
__________________________________, SERVICER
____________________
The Asset Backed Certificates, Series 199_-_ (the "Certificates") will
consist of two Classes of Certificates, the Class A Certificates and the
Class B Certificates. The Class A Certificates will evidence in the
aggregate an undivided ownership interest of approximately ___% in a trust
(the "Trust") to be formed pursuant to a Pooling and Servicing Agreement to
be entered into among Morgan Stanley ABS Capital II Inc., as Depositor (the
"Depositor"), _______________________, as Servicer (the "Servicer"), and
_____________________, as Trustee (the "Trustee"). The Class B Certificates
will evidence in the aggregate an undivided ownership interest of
approximately ___% in the Trust. The rights of the Class B
Certificateholders to receive distributions with respect to the Receivables
are subordinated to the rights of the Class A Certificateholders, to the
extent described herein. The Trust property will include a pool of retail
installment sale contracts or retail installment loans (the "Receivables")
secured by new or used automobiles, light-duty trucks, recreational vehicles
and recreational sport and power boats (including any boat motors and
accompanying trailers) and yachts (both power and sail) (the "Financed
Assets"), all monies due thereunder on or after __________, security
interests in the Financed Assets and certain other property.
Principal, and interest to the extent of the Pass-Through Rate of ___%
per annum, will be distributed on the __th day of each month (or the next
following business day) beginning ________, 199_ (the "Distribution Date").
The Final Scheduled Distribution Date on the Certificates will be __________.
(Cover continued on following page)
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN MORGAN STANLEY ABS CAPITAL II INC.,
THE SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF THE CERTIFICATES
OR THE RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
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.
<TABLE>
<CAPTION>
ORIGINAL
PRINCIPAL PRICE TO UNDERWRITING PROCEEDS TO THE
AMOUNT PUBLIC(1) DISCOUNT DEPOSITOR(1)(2)
<S> <C> <C> <C> <C>
Per Class A Certificate $ % % %
Per Class B Certificate % % %
Total $ $ $ $
</TABLE>
- ------------------
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The Certificates are offered subject to prior sale and subject to the
Underwriter's right to reject any order in whole or in part. It is expected
that delivery of the Certificates will be made in book-entry form only
through the facilities of The Depository Trust Company, Cedel Bank, soci t
anonyme, and the Euroclear System on or about , 199 .
____________________
MORGAN STANLEY DEAN WITTER
____________________
, 199 .
(Continued from previous page)
The Servicer may purchase the Receivables when the aggregate principal
balance of the Receivables shall have declined to (10%) or less of the
initial aggregate principal balance of the Receivables purchased by the
Trust.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" AT PAGE S-6 HEREIN AND ON PAGE 12 IN THE ACCOMPANYING PROSPECTUS.
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. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS
PROSPECTUS SUPPLEMENT SHALL CONTROL.
Certain persons participating in this offering may engage in
transactions that stabilize, maintain, or otherwise affect the price of the
Certificates. Such transactions may include stabilizing and the purchase of
Certificates to cover syndicate short positions. For a description of these
activities, see
"Underwriting" herein.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly 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 Certificates. See "Description of the Certificates --
Book-Entry Registration" and "-- Reports to Certificateholders" in the
accompanying Prospectus (the "Prospectus"). Such reports will not constitute
financial statements prepared in accordance with generally accepted
accounting principles. The Depositor, as originator of 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 of the Commission
thereunder.
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 . . . . . . . . . . . . . _______________ Trust 199 -( )
(the "Trust" or the "Issuer"), to
be formed pursuant to a Pooling
and Servicing Agreement to be
dated as of __________, 199_ among
the Depositor, the Servicer and
the Trustee (the "Pooling and
Servicing Agreement")
Depositor . . . . . . . . . . . . Morgan Stanley ABS Capital II Inc.
(the "Depositor").
Servicer . . . . . . . . . . . . ______________________ (in such
capacity, the "Servicer").
Trustee . . . . . . . . . . . . . , as
trustee under the Pooling and
Servicing Agreement (the
"Trustee").
The Certificates . . . . . . . . The Certificates will consist of
two classes, entitled ___% Asset
Backed Certificates, Class A (the
"Class A Certificates") and ___%
Asset Backed Certificates, Class B
(the "Class B Certificates").
Each Certificate will represent a
fractional undivided ownership
interest in the Trust.
The Class A Certificates will
evidence in the aggregate an
undivided ownership interest (the
"Class A Percentage") of
approximately ___% of the Trust
(initially representing
$__________) and the Class B
Certificates will evidence in the
aggregate an undivided ownership
interest (the "Class B
Percentage") of approximately ___%
of the Trust (initially
representing $__________). The
Class B Certificates are
subordinated to the Class A
Certificates, to the extent
described herein.
The Receivables . . . . . . . . . The Receivables will have an
aggregate principal balance of
approximately $ (the
"Initial Pool Balance") as of
, 199 (the "Cutoff
Date"). The Receivables will
consist of retail installment sale
contracts or installment loans
between Obligors and Dealers
secured by new or used
automobiles, light duty trucks,
recreational vehicles and
recreational sport and power boats
(including any boat motors and
accompanying trailers) and yachts
(both power and sail) (the
"Financed Assets"). The retail
installment sale contracts were
purchased by __________ (the
"Seller"). The Receivables will
be transferred by the Depositor to
the Trust, based on the criteria
specified in the Pooling and
Servicing Agreement and described
herein and in the Prospectus. As
of the Cutoff Date, the weighted
average annual percentage rate of
the Receivables was approximately
%, the weighted average
remaining maturity of the
Receivables was approximately
months, and the weighted average
original maturity of the
Receivables was approximately
months. No Receivable has a
scheduled maturity later than
, 20__ (the "Final
Scheduled Maturity Date"). See
"The Receivables Pool" herein.
The "Pool Balance" at any time
will represent the aggregate
principal balance of the
Receivables at the end of the
preceding Collection Period, after
giving effect to all payments
(other than Payaheads) received
from Obligors, Advances and
Purchase Amounts to be remitted by
the Servicer or the Depositor, as
the case may be, all for such
Collection Period, and all losses
realized on Receivables liquidated
during such Collection Period.
Distribution Dates . . . . . . . Distributions with respect to the
Certificates will be made on the
day of each month or, if any
such day is not a Business Day, on
the next succeeding Business Day
(each, a "Distribution Date")
commencing , 199 . The
Servicer shall determine the
amount to be distributed on the
Distribution Date on or before the
Business Day preceding such
Distribution Date (the
"Determination Date").
Distributions will be made to
holders of the Certificates (the
"Certificateholders") of record as
of the day immediately preceding
such Distribution Date or, if
Definitive Certificates are
issued, as of the day of the
preceding month (a "Record Date").
Class A Pass Through Rate . . . . ___% per annum.
Class B Pass Through Rate . . . . ___% per annum.
Interest . . . . . . . . . . . . On each Distribution Date, the
Trustee will distribute to the
Class A Certificateholders 30 days
of interest at the Class A Pass-
Through Rate on the Class A
Certificate Balance as of the last
day of the preceding calendar
month (before giving effect to
distributions of principal on the
related Distribution Date)
generally to the extent of funds
available from (i) the Class A
Percentage of the Interest
Distribution Amount; (ii) the
Reserve Account and (iii) the
Class B Percentage of the Total
Distribution Amount. The "Class A
Certificate Balance" shall equal,
initially, the Class A Percentage
of the Pool Balance as of the
Cutoff Date and thereafter shall
equal the initial Class A
Certificate Balance, reduced by
all principal distributions on the
Class A Certificates. Interest on
the Certificates will be
calculated on the basis of a 360-
day year consisting of twelve 30-
day months.
Class A Principal . . . . . . . . On each Distribution Date, the
Trustee will distribute to Class A
Certificateholders an amount equal
to the Class A Percentage of the
Principal Distribution Amount for
the Collection Period preceding
such Distribution Date to the
extent of funds available
therefor. The "Principal
Distribution Amount" is the amount
of principal paid or, in certain
circumstances, the principal
balance of defaulted Receivables,
as calculated by the Servicer as
described under "Description of
the Certificates --
Distributions." The Class A
Percentage of the Principal
Distribution Amount will be passed
through on each Distribution Date
to the Class A Certificateholders
to the extent of funds available
from (i) the Class A Percentage of
the Principal Distribution Amount
(exclusive of the portion thereof
attributable to Realized Losses),
(ii) the Reserve Account and (iii)
the Class B Percentage of the
Total Distribution Amount.
"Realized Losses" means the excess
of the principal balance of any
Liquidated Receivable over
Liquidation Proceeds to the extent
allocable to principal received in
the Collection Period in which the
Receivable became a Liquidated
Receivable. A "Collection Period"
with respect to a Distribution
Date will be the calendar month
preceding the month in which such
Distribution Date occurs.
Class B Interest . . . . . . . . On each Distribution Date, the
Trustee will distribute to the
Class B Certificateholders 30 days
of interest at the Class B Pass
Through Rate on the Class B
Certificate Balance as of the last
day of the preceding calendar
month (before giving effect to
distributions of principal on such
Distribution Date) generally to
the extent of funds available,
after giving effect to the prior
rights of the Class A
Certificateholders to receive the
distribution of principal and
interest due them as described
above, from (i) the Class B
Percentage of the Interest
Distribution Amount and (ii) the
Reserve Account. The "Class B
Certificate Balance" will equal,
initially, $ and,
thereafter, will equal the initial
Class B Certificate Balance
reduced by all amounts previously
distributed to Class B
Certificateholders (or deposited
in the Reserve Account, exclusive
of the Reserve Account Initial
Deposit) and allocable to
principal and by Realized Losses.
Class B Principal . . . . . . . . On each Distribution Date, the
Trustee will distribute the Class
B Percentage of the Principal
Distribution Amount to the Class B
Certificateholders to the extent
of funds available (after giving
effect to the distribution of the
interest and principal due to the
Class A Certificateholders and the
interest due to the Class B
Certificateholders) from (i) the
Class B Percentage of the
Principal Distribution Amount
(exclusive of the portion thereof
attributable to Realized Losses)
and (ii) the Reserve Account.
Optional Prepayment . . . . . . . The Servicer will have the option
to purchase all, but not less than
all, of the Receivables on any
Distribution Date on or after the
Distribution Date on which the
Pool Balance has declined the (
)% or less of the Initial Pool
Balance. The price at which the
Servicer will be required to
purchase the Receivables in order
to exercise such option will be
equal to the aggregate of the
Purchase Amounts of the
Receivables as of the end of the
related Collection Period. The
Servicer will be required to give
not less than ( ) days notice to
the Trustee of its intention to
exercise such option. In
addition, the Servicer will not be
permitted to exercise such option
unless the resulting distribution
would be sufficient to distribute
to the Class A Certificateholders
will receive an amount equal to
the Class A Certificate Balance
together with accrued interest at
the Class A Pass Through Rate and
to the Class B Certificateholders
an amount equal to the Class B
Certificate Balance together with
accrued interest at the Class B
Pass Through Rate. Upon such a
distribution the Certificates will
be retired.
Reserve Account . . . . . . . . . The Reserve Account will be
created with an initial deposit by
( ) on the Closing Date of cash
or Eligible Investments having a
value of at least $ .
Certain amounts in the Reserve
Account on any Distribution Date
(after giving effect to all
distributions to be made on such
Distribution Date) in excess of
the Specified Reserve Account
Balance for such Distribution Date
will be released to the ______.
The "Specified Reserve Account
Balance" with respect to any
Distribution Date generally will
be equal to (state formula). The
amount in the Reserve Account will
be increased by the deposit
thereto on each Distribution Date
of the amount, if any, of the
Total Distribution Amount
remaining after the payment of the
Servicing Fee and any prior unpaid
Servicing Fee, the Class A
Distributable Amount and the Class
B Distributable Amount until the
amount in the Reserve Account
equals the Specified Reserve
Account Balance. Amounts in the
Reserve Account on any
Distribution Date (after giving
effect to all distributions made
on such Distribution Date) in
excess of the Specified Reserve
Account Balance for such
Distribution Date generally will
be released to the ______ and will
no longer be available to the
Certificateholders. The Reserve
Account will be maintained with
the Trustee as a segregated trust
account, but will not be part of
the Trust.
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 Trustee (the
"Collection Account"). Pursuant
to the Pooling and Servicing
Agreement, the Servicer will have
the revocable power to instruct
the Trustee to withdraw funds on
deposit in the Collection Account
and to apply such funds on each
Distribution 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 Class A
Distributable Amount to the Class
A Certificateholders, (iii) the
Class B Distributable Amount to
the Class B Certificateholders,
and (iv) the remaining balance, if
any, to the Reserve Account.
Tax Status . . . . . . . . . . . In the opinion of Brown & Wood
LLP, counsel to the Trust ("Tax
Counsel") the Trust will be
treated as a grantor trust for
federal income tax purposes and
will not be subject to federal
income tax. Certificate Owners
will report their pro rata share
of all income earned on the
Receivables (other than amounts,
if any, treated as "stripped
coupons") and, subject to certain
limitations in the case of
Certificate Owners who are
individuals, trusts, or estates,
may deduct their pro rata share of
reasonable servicing and other
fees. See "Federal Income Tax
Consequences" in the Prospectus
for additional information
concerning the application of
federal income tax laws to the
Trust and the Certificates.
ERISA Considerations . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
Prospectus, the Class A
Certificates are eligible for
purchase by employee benefit
plans.
The Class B Certificates may not
be acquired by any employee
benefit plan subject to the
Employee Retirement Income
Security Act of 1974, as amended
("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as
amended (the "Code"), or by an
individual retirement account.
See "ERISA Considerations" herein
and in the Prospectus.
Ratings of the Class A
Certificates . . . . . . . . . . It is a condition to the issuance
of the Class A Certificates that
they be rated " " by at least
one Rating Agency. The rating of
the Class A Certificates by a
Rating Agency reflects such Rating
Agency's assessment of the
likelihood that the holders of the
Class A Certificates will receive
payments principal and interest,
however, the
rating on the Class A Certificates
does not address the timing of
distributions of principal in
respect of the Class A
Certificates prior to the Final
Scheduled Distribution Date. A
rating is not a recommendation to
buy, sell or hold securities and
may be subject to revision or
withdrawal at any time by the
assigning Rating Agency. Each
rating should be evaluated
independently of any other rating.
See "Risk Factors -- Ratings of
the Certificates" herein.
Ratings of the Class B
Certificates . . . . . . . . . . It is a condition to the issuance
of the Class B Certificates that
they be rated at least in the "
" category or its equivalent by at
least one Rating Agency. The
rating of the Class B Certificates
by a Rating Agency reflects such
Rating Agency's assessment of the
likelihood that the holders of the
Class B Certificates will receive
payments of principal and
interests,
however, the rating on the Class B
Certificates does not address the
timing of distributions of
principal in respect of the
Certificates prior to the Final
Scheduled Distribution Date. A
rating is not a recommendation to
buy, sell or hold securities and
may be subject to revision or
withdrawal at any time by the
assigning Rating Agency. Such
rating should be evaluated
independently of any other rating.
See "Risk Factors -- Ratings of
the Certificates" herein.
RISK FACTORS
Investors should consider, among other things, the matters discussed
under "Risk Factors" in the Prospectus and the following risk factors in
connection with purchases of the Certificates.
LIMITED LIQUIDITY; ABSENCE OF A SECONDARY MARKET. There is currently no
secondary market for the Certificates. Each Underwriter currently intends to
make a market in the Certificates, but it is under no obligation to do so.
There can be no assurance that a secondary market will develop or, if a
secondary market does develop, that it will provide the Certificateholders
with liquidity of investment or that it will continue for the life of the
Certificates offered hereby.
(GEOGRAPHIC CONCENTRATION. Economic conditions in states where Obligors
reside may affect the delinquency, loan loss and repossession experience of
the Trust with respect to the Receivables. Obligors on Receivables
representing approximately _____% by principal balance of the Receivables
were located in ( ) as of the Cutoff Date. As a result, economic
conditions in such states may have a disproportionate affect on prepayments
and/or defaults in respect of the Receivables and thus potentially adversely
affect the amount available for distribution to Certificateholders. In
particular, an economic downturn in one or more of such states could
adversely affect the performance of the Trust as a whole (even if national
economic conditions remain unchanged or improve) as Obligors in such state or
states experience the effects of such a downturn and face greater difficulty
in making payments on their Financed Assets. See "The Receivables Pool.")
SUBORDINATION. Distributions of interest and principal
on the Class B Certificates will be subordinated in priority of payment to
interest and principal due on the Class A Certificates. Consequently, the
Class B Certificateholders will not receive any distributions with respect to
a Collection Period until the full amount of interest on and principal of the
Class A Certificates due on such Distribution Date has been deposited in the
Certificate Distribution Account.
LIMITED ASSETS OF THE TRUST. The Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds
other than the Receivables and the Reserve Account. Holders of the
Certificates must rely for repayment upon payments on the Receivables and, if
and to the extent available, amounts on deposit in the Reserve Account.
Although funds in the Reserve Account will be available on each Distribution
Date to cover shortfalls in distributions of interest and principal on the
Certificates, amounts to be deposited in the Reserve Account are limited in
amount. If the Reserve Account is exhausted, the Trust will depend solely on
current distributions on the Receivables to make payments on the
Certificates.
PAYMENT DELAY. The effective yield on the Certificates will be reduced
below the yield otherwise proreduced because interest accrued through the end
of each calendar month will not be distributed until the Distribution Date in
the following month, and the amount distributable on such Distribution Date
will not bear interest during such delay. As a result, the market value of
the Certificates will be lower than would be the case if there was no such
delay.
RATINGS OF THE CERTIFICATES. It is a condition to the issuance of the
Certificates that the Class A Certificates be rated in the highest investment
rating category, and that the Class B Certificates be rated at least in the "
" category or its equivalent, by at least one nationally recognized rating
agency (the "Rating Agency"). A rating is not a recommendation to purchase,
hold or sell Certificates, inasmuch as such rating does not comment as to
market price or suitability for a particular investor. The ratings of the
Certificates address the likelihood of the payment of principal and interest
on the Certificates pursuant to their terms. There can be no assurance that
a rating will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant.
THE TRUST
GENERAL
The Depositor will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the
Pooling and Servicing Agreement and will be compensated for acting as the
Servicer. See "Description of the Certificates -- Servicing Compensation and
Payment of Expenses". To facilitate servicing and to minimize administrative
burden and expense, the Servicer will be appointed custodian for the
Receivables by the Trustee, but will not stamp the Receivables to reflect the
sale and assignment of the Receivables to the Trust. In addition, due to
administrative burden and expense, (i) the certificates of title to the
Financed Motor Vehicles and those Financed Recreational Vehicles and Financed
Boats financed in states where security interests in recreational vehicles or
boats, as applicable, are subject to certificate of title statutes will not
be amended to reflect such assignments, (ii) UCC financing statements in
respect of those Financed Recreational Vehicles and Financed Boats financed
in states where security interests in recreational vehicles or boats, as
applicable, are perfected by filing a UCC-1 financing statement will not be
amended to reflect such assignments and (iii) and the assignment of liens
created pursuant to Preferred Mortgages in respect of Financed Boats
documented under federal law will not be filed as required by federal law to
reflect such assignments. In the absence of such procedures, such Trust may
not have a perfected in the Financed Assets in some states and will not have
a perfected security interest in the Financed Boats documented under Federal
law. See "Certain Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to the Certificateholders by the Reserve
Account and, in the case of the Class A Certificateholders, the subordination
of the Class B Certificates is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale
of Financed Assets which secure defaulted Receivables. In such event,
certain factors, such as the Trust's not having first priority perfected
security interests in some of the Financed Assets, may affect the Trust's
ability to realize on the Financed Assets securing the Receivables, and thus
may reduce the proceeds to be distributed to Certificateholders with respect
to the Certificates. See "Description of the Certificates -- Distributions"
and "-- Reserve Account" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
Each Certificate represents a fractional undivided ownership interest in
the Trust. The Trust property includes retail installment sale contracts
between Dealers and Obligors, and all payments due thereunder on or after the
related Cutoff Date with respect to the Precomputed Receivables and all
payments received thereunder on or after the related Cutoff Date with respect
to the Simple Interest Receivables. The Trust property also includes (i)
such amounts as from time to time may be held in one or more trust accounts
established and maintained by the Servicer pursuant to the Pooling and
Servicing Agreement, as described below; (ii) security interests in the
Financed Assets and any accessions thereto; (iii) the rights to proceeds with
respect to the Receivables from claims on physical damage, credit life and
disability insurance policies covering the Financed Assets or the Obligors,
as the case may be; (iv) the interest of the Seller in any proceeds with
respect to the Receivables from recourse, if any, to Dealers on Receivables
or Financed Assets with respect to which the Servicer has determined that
eventual repayment in full is unlikely; (v) any property that shall have
secured a Receivable and that shall have been acquired by the Trustee; and
(vi) any and all proceeds of the foregoing. The Reserve Account will be
maintained by the Trustee for the benefit of the Certificateholders, but will
not be part of the Trust.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include only the
Receivables purchased on the Closing Date. The Receivables (will be) (have
been) purchased by the Depositor from the Seller, which purchased the
Receivables, directly or indirectly, from Dealers in the ordinary course of
business or in acquisitions. The Receivables were selected from the
Depositor's portfolio for inclusion in the Receivables Pool by several
criteria, some of which are set forth in the Prospectus under "The
Receivables Pools", as well as the requirement that, as of the Cutoff Date,
each Receivable (i) had an outstanding gross balance of at least $ and
(ii) was not more than 60 days past due (an account is not considered past
due if the amount past due is less than % of the scheduled monthly
payment). As of the Cutoff Date, no Obligor on any Receivable was noted in
the related records of the Seller as being the subject of a bankruptcy
proceeding. No selection procedures believed by the Depositor to be adverse
to Certificateholders were used in selecting the Receivables.
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate ("APR") and the
geographic distribution of the Receivables Pool as of the Cutoff Date.
_____________ TRUST 199 -( )
COMPOSITION OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Aggregate Average Average Average
APR of Principal Number of Remaining Original Principal
Receivables Balance Receivables Term Term Balance
-------------- ------------ --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
_____% $________________ __________ _____ months _____ months $__________
</TABLE>
_______________ TRUST 199 - ( )
DISTRIBUTION BY APR OF THE RECEIVABLES POOL
<TABLE>
<CAPTION> Percentof
Aggregate
Number of Aggregate Principal
APR Range Receivables Principal Balance Balance(1)
- ----------- ------------- ------------------- -------------
<S> <C> <C> <C>
0.00% - 5.00% . . . . . . . . . . . . . . . . $ %
5.01% - 6.00% . . . . . . . . . . . . . . . .
6.01% - 7.00% . . . . . . . . . . . . . . . .
7.01% - 8.00% . . . . . . . . . . . . . . . .
8.01% - 9.00% . . . . . . . . . . . . . . . .
9.01% - 10.00% . . . . . . . . . . . . . . . .
10.01% - 11.00% . . . . . . . . . . . . . . . .
11.01% - 12.00% . . . . . . . . . . . . . . . .
12.01% - 13.00% . . . . . . . . . . . . . . . .
13.01% - 14.00% . . . . . . . . . . . . . . . .
14.01% - 15.00% . . . . . . . . . . . . . . . .
15.01% - 16.00% . . . . . . . . . . . . . . . .
16.01% - 17.00% . . . . . . . . . . . . . . . .
17.01% - 18.00% . . . . . . . . . . . . . . . .
Greater than 18.00% . . . . . . . . . . . . . .
</TABLE>
_______________
(1) Percentages may not add to 100.0% because of rounding.
_______________ TRUST 199 -( )
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
PERCENTAGE AGGREGATE
STATE(2) PRINCIPAL BALANCE(1)
- -------- -----------------------
[S]
. . . . . . . . . . . . . . . . . . %
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
_________
%
_______________
(1) Percentages may not add to 100.0% because of rounding.
(2) Based on physical addresses of the Obligors as of the Cutoff Date.
Approximately % of the aggregate principal balance of the
Receivables, constituting % of the number of the Receivables, represent
previously titled vehicles.
By aggregate principal balance, approximately % of the receivables
are Precomputed Receivables and % of the Receivables are Simple Interest
Receivables. See "The Receivables Pools" in the Prospectus for a further
description of the characteristics of Precomputed Receivables and Simple
Interest Receivables.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning the experience of the
Seller pertaining to retail new and used automobile and light duty truck
receivables, recreational vehicle receivables and boat receivables, including
those previously sold which the Servicer continues to service. There can be
no assurance that the delinquency, repossession and net loss experience on
the Receivables will be comparable to that set forth below.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT , AT DECEMBER 31,
199 199 199 199
--- --- --- ---
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio . . . . . . . $ $ $ $
Period of Delinquency
31-60 Days . . . . .
61 Days or More . . .
--------- ------ --------- ------ --------- ------ --------- ------
Total Delinquencies . . $ $ $ $
Total Delinquencies
as a Percent of the
Portfolio . . . . . . % % % % % % % %
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
199 199 199
--- --- ---
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------ --------- ------ --------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Portfolio . . . . . . . . . . $ $ $
Period of Delinquency
31-60 Days . . . . . . . .
61 Days or More . . . . . .
--------- ------ --------- ------ --------- ------
Total Delinquencies . . . . .
Total Delinquencies
as a Percent of the
Portfolio . . . . . . . . . % % % % % %
</TABLE>
_______________
(1) All amounts and percentages are based on the gross amount scheduled
to be paid on each contract, including unearned finance and other
charges.
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
_____________ ENDED
, YEAR ENDED DECEMBER 31,
----------------- ----------------------------------------------
199 199 199 199 199 199 199 199
--- --- --- --- --- --- --- ---
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding
During the Period . . . . . . . . . . . $ $ $ $ $ $ $
Average Number of Contracts
Outstanding During the Period . . . . .
Percent of Contracts Acquired During the
Period with Recourse to the Dealer . . % % % % % % %
Repossessions as a Percent of Average
Number of Contracts Outstanding . . . . % % % % % % %
Net Losses as a Percent of
Liquidations(3)(4) . . . . . . . . . . % % % % % % %
Net Losses as a Percent of Average
Amount Outstanding(2)(3) . . . . . . . % % % % % % %
</TABLE>
____________________
(1) (Except as indicated, all amounts and percentages are based on the
gross amount scheduled to be paid on each contract, including
unearned finance and other charges. The information in the table
includes previously sold contracts that the Servicer continues to
service.)
(2) Percentages have been annualized for the _____ months ended
____________, 199 and 199 and are not necessarily indicative of
the experience for the year.
(3) (Net losses are equal to the aggregate of the balances of all
contracts which are determined to be uncollectible in the period,
less any recoveries on contracts charged off in the period or any
prior periods, including any losses resulting from disposition
expenses and any losses resulting from the failure to recover
commissions to dealers with respect to contracts that are prepaid
or charged off.)
(4) Liquidations represent a reduction in the outstanding balances of
the contracts as a result of monthly cash payments and charge-offs.
(The net loss figures above reflect the fact that Seller had recourse to
Dealers on a portion of its retail installment sale contracts. By aggregate
principal balance, approximately % of the Receivables represent
contracts with recourse to Dealers. The Seller applies underwriting
standards to the purchase of contracts without regard to whether recourse to
Dealers is provided. However, the net loss experience of contracts without
recourse against Dealers is higher than that of contracts with recourse
against Dealers because, under its recourse obligation, the Dealer is
responsible to the Seller for payment of the unpaid balance of the contract,
provided that the Originator repossesses the vehicle or boat from the retail
buyer and returns it to the Dealer within a specified time. In the event of
a Dealer's bankruptcy, a bankruptcy trustee might attempt to characterize
recourse sales of contracts as loans to the Dealer secured by the contracts.
Such an attempt, if successful, could result in payment delays or losses on
the affected Receivables.)
THE SELLER
(Description of Seller and its underwriting and servicing standards.)
THE SERVICER
(Description of Servicer and its servicing standards.)
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations
with respect to the Certificates is set forth under "Weighted Average Life of
the Certificates" in the Prospectus. As the rate of payment of principal of
the Certificates depends primarily on the rate of payment (including
prepayments on liquidations due to default) of the principal balance of the
Receivables, the final distribution in respect of the Certificates could
occur significantly earlier than their final scheduled Distribution Date.
Certificateholders will bear the risk of being able to reinvest principal
payments on the Certificates at yields at least equal to the yields on their
respective Certificates.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Pooling and
Servicing Agreement, a form of which has been filed as an exhibit to the
Registration Statement. A copy of the Pooling and Servicing Agreement will
be filed with the Commission following the issuance of the Certificates. The
following summary describes certain terms of the Certificates and the Pooling
and Servicing Agreement. The summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of the Certificates and the Pooling and Servicing 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 Pooling and Servicing Agreement set forth in the
Prospectus, to which description reference is hereby made.
In general, it is intended that Class A Certificateholders receive, on
each Distribution Date, the Class A Percentage of the Principal Distribution
Amount plus interest at the Class A Pass Through Rate on the Class A
Certificate Balance. Subject to the prior rights of the Class A
Certificateholders, it is intended that the Class B Certificateholders
receive, on each Distribution Date, the Class B Percentage of the Principal
Distribution Amount plus interest at the Class B Pass Through Rate on the
Class B Certificate Balance.
The Certificates will evidence interests in the Trust created pursuant
to the Pooling and Servicing Agreement. The Class A Certificates will
evidence in the aggregate an undivided ownership interest (the "Class A
Percentage") of approximately % of the Trust and the Class B Certificates
will evidence in the aggregate an undivided ownership interest (the "Class B
Percentage") of approximately % of the Trust.
OPTIONAL PREPAYMENT
The Servicer will have the option to purchase all, but not less than
all, of the Receivables on any Distribution Date on or after the Distribution
Date on which the Pool Balance has declined to ( )% or less of the Initial
Pool Balance. The price at which the Servicer will be required to purchase
the Receivables in order to exercise such option will be equal to the
aggregate of the Purchase Amounts of the Receivables as of the end of the
related Collection Period. The Servicer will be required to give not less
than ( ) days notice to the Trustee of its intention to exercise such
option. In addition, the Servicer will not be permitted to exercise such
option unless the resulting distribution would be sufficient to distribute to
the Class A Certificateholders an amount equal to the Class A Certificate
Balance together with accrued interest at the Class A Pass Through Rate, and
to the Class B Certificateholders an amount equal to the Class B Certificate
Balance together with accrued interest at the Class B Pass Through Rate.
Upon such a distribution, the Certificates will be retired.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information regarding the conveyance of the Receivables by the
Depositor to the Trust on the Closing Date pursuant to the Pooling and
Servicing Agreement is set forth in the Prospectus under "Description of the
Pooling and Servicing Agreement -- Sale and Assignment of Receivables".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for the
Servicer will be ____% per annum of the Pool Balance as of the first day of
the related Collection Period. The Servicing Fee in respect of a Collection
Period (together with any portion of the Servicing Fee that remains unpaid
from prior Distribution Dates) will be paid at the beginning of such
Collection Period out of collections for such Collection Period. See
"Description of the Pooling and Servicing Agreement -- Servicing Compensation
and Payment of Expenses" in the Prospectus.
DISTRIBUTIONS
DEPOSITS TO COLLECTION ACCOUNT. On or before each Distribution Date,
the Servicer will cause all collections and other amounts constituting the
Total Distribution Amount to be deposited into the Collection Account. The
"Total Distribution Amount" for a Distribution Date shall be the sum of the
Interest Distribution Amount and the Principal Distribution Amount (other
than the portion thereof attributable to Realized Losses). "Realized Losses"
means the excess of the principal balance of any Liquidated Receivable over
Liquidation Proceeds to the extent allocable to principal received in the
Collection Period in which the Receivable became a Liquidated Receivable.
The "Interest Distribution Amount" on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(including Payaheads that have been applied as payments on the related
Receivables in that Collection Period) allocable to interest; (ii) all
proceeds of the liquidation of defaulted Receivables ("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 ("Liquidation Proceeds"), to the
extent attributable to interest due thereon in accordance with the Servicer's
customary servicing procedures, and all recoveries in respect of Liquidated
Receivables which were written off in prior Collection Periods; (iii) all
Advances made by the Servicer of interest due on the Receivables; (iv) the
Purchase Amount of each Receivable that was repurchased by the Seller or
purchased by the Servicer under an obligation which arose during the related
Collection Period, to the extent attributable to accrued interest thereon;
and (v) Investment Earnings for such Distribution Date. The Interest
Distribution Amount shall be determined on the related Determination Date.
The "Principal Distribution Amount" on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(exclusive of Payaheads allocable to principal that have not been applied as
payments under the related Receivables in such Collection Period and
inclusive of Payaheads allocable to principal that have been applied as
payments under the related Receivables in such Collection Period) allocable
to principal; (ii) all Liquidation Proceeds attributable to the principal
amount of Receivables which became Liquidated Receivables during such
Collection Period in accordance with the Servicer's customary servicing
procedures, plus the amount of Realized Losses with respect to such
Liquidated Receivables; (iii) all Precomputed Advances made by the Servicer
of principal due on the Precomputed Receivables; (iv) to the extent
attributable to principal, the Purchase Amount received with respect to each
Receivable repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period; (v) partial
prepayments relating to refunds of extended warranty protection plan costs or
of physical damage, credit life or disability insurance policy premiums, but
only if such costs or premiums were financed by the respective Obligor as of
the date of the original contract; and (vi) on the Distribution Date
immediately following the Final Scheduled Maturity Date (the "Final Scheduled
Distribution Date"), any amounts advanced by the Servicer with respect to
principal on the Receivables. The Regular Principal Distribution Amount
shall be determined on the related Determination Date.
The Interest Distribution Amount and the Regular Principal Distribution
Amount on any Distribution Date shall exclude the following:
(i) amounts received on Precomputed Receivables to the extent that
the Servicer has previously made an unreimbursed Precomputed Advance;
(ii) Liquidation Proceeds with respect to a particular Precomputed
Receivable to the extent of any unreimbursed Precomputed Advances
thereon;
(iii) all payments and proceeds (including Liquidation
Proceeds) of any Receivables, the Purchase Amount of which has been
included in the Total Distribution Amount in a prior Collection Period;
(iv) amounts received in respect of interest on Simple Interest
Receivables during the preceding Collection Period in excess of the
amount of interest that would have been due during the Collection Period
on Simple Interest Receivables at their respective APRs (assuming that a
payment is received on each Simple Interest Receivable on the due date
thereof); and
(v) Liquidation Proceeds with respect to a Simple Interest
Receivable attributable to accrued and unpaid interest thereon (but not
including interest for the then current Collection Period) but only to
the extent of any unreimbursed Simple Interest Advances.
CALCULATION OF DISTRIBUTABLE AMOUNTS. The "Class A Distributable
Amount" with respect to a Distribution Date will be an amount equal to the
sum of (i) the "Class A Principal Distributable Amount", consisting of the
Class A Percentage of the Principal Distribution Amount, plus (ii) the "Class
A Interest Distributable Amount", consisting of thirty (30) days' interest at
the Class A Pass Through Rate on the Class A Certificate Balance as of the
close of business on the last day of the preceding Collection Period. In
addition, on the Final Scheduled Distribution Date, the Class A Principal
Distributable Amount will include the lesser of (A) the Class A Percentage of
any payments of principal due and remaining unpaid on each Receivable in the
Trust as of the last day of the preceding Collection Period and (B) the
portion of such amount necessary (after giving effect to the other amounts
described above to be distributed to the Class A Certificateholders on such
Distribution Date and allocable to principal) to reduce the Class A
Certificate Balance to zero.
The "Class A Certificate Balance" will equal, initially, $ and,
thereafter, shall equal the initial Class A Certificate Balance reduced by
all amounts previously distributed to Class A Certificateholders and
allocable to principal.
The "Class B Distributable Amount" with respect to a Distribution Date
shall be an amount equal to the sum of (i) the "Class B Principal
Distributable Amount", consisting of the Class B Percentage of the Principal
Distribution Amount plus (ii) the "Class B Interest Distributable Amount",
consisting of thirty (30) days' interest at the Class B Pass Through Rate to
the Class B Certificate Balance as of the close of business on the last day
of the preceding Collection Period. In addition, on the Final Scheduled
Distribution Date, the principal required to be distributed on the Class B
Certificateholders will include the lesser of (i) the Class B Percentage of
any payments of principal due and remaining unpaid with respect to the
Receivables in the Trust as of the last day of the preceding Collection
Period and (ii) the portion of the amount in clause (i) above that is
necessary (after giving effect to all other amounts distributed to Class A
and Class B Certificateholders on such Distribution Date and allocable to
principal) to reduce the Class B Certificate Balance to zero.
The "Class B Certificate Balance" shall equal, initially, $__________
and, thereafter, shall equal the initial Class B Certificate Balance, reduced
by all amounts previously distributed to Class B Certificateholders (or
deposited in the Reserve Account, but not including the Reserve Account
Initial Deposit) and allocable to principal and by Realized Losses.
CALCULATION OF AMOUNTS TO BE DISTRIBUTED. Prior to each Distribution
Date, the Servicer will calculate the Total Distribution Amount, the Class A
Distributable Amount and the Class B Distributable Amount.
The holders of the Class A Certificates will receive on any Distribution
Date, to the extent of available funds, the Class A Distributable Amount and
any outstanding Class A Interest Carryover Shortfall and Class A Principal
Carryover Shortfall as of the close of the preceding Distribution Date. On
each Distribution Date on which the sum of the Class A Interest Distributable
Amount and any outstanding Class A Interest Carryover Shortfall from the
preceding Distribution Date (plus interest on such Class A Interest Carryover
Shortfall at the Class A Pass Through Rate from such preceding Distribution
Date to the current Distribution Date, to the extent permitted by law)
exceeds the Class A Percentage of the Interest Distribution Amount (after
payment of the Servicing Fee) on such Distribution Date, the Class A
Certificateholders shall be entitled generally to receive such amounts,
first, from the Class B Percentage of the Interest Distribution Amount;
second, if such amounts are insufficient, from the amounts available in the
Reserve Account; and third, if such amounts are insufficient, from the Class
B Percentage of the Principal Distribution Amount (other than the portion
thereof attributable to Realized Losses). The "Class A Interest Carryover
Shortfall" as of the close of any Distribution Date means the excess of the
Class A Interest Distributable Amount for such Distribution Date, plus any
outstanding Class A Interest Carryover Shortfall from the preceding
Distribution Date, plus interest on such outstanding Class A Interest
Carryover Shortfall, to the extent permitted by law, at the Class A Pass
Through Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of the Class
A Certificates actually received on such current Distribution Date.
On each Distribution Date on which the sum of the Class A Principal
Distributable Amount and any outstanding Class A Principal Carryover
Shortfall from the preceding Distribution Date exceeds the Class A Percentage
of the Principal Distribution Amount (exclusive of the portion thereof
attributable to Realized Losses) on such Distribution Date, the Class A
Certificateholders shall be entitled to receive such amounts, first, from the
Class B Percentage of the Principal Distribution Amount (other than the
portion thereof attributable to Realized Losses); second, if such amounts are
insufficient, from amounts available in the Reserve Account; and third, if
such amounts are insufficient, from the Class B Percentage of the Interest
Distribution Amount. The "Class A Principal Carryover Shortfall" as of the
close of any Distribution Date means the excess of the Class A Principal
Distributable Amount plus any outstanding Class A Principal Carryover
Shortfall from the preceding Distribution Date over the amount of principal
that the holders of the Class A Certificates actually received on such
current Distribution Date.
The holders of the Class B Certificates will receive on any Distribution
Date, to the extent of available funds, the Class B Distributable Amount and
any outstanding Class B Interest Carryover Shortfall and Class B Principal
Carryover Shortfall as of the close of the preceding Distribution Date. On
each Distribution Date on which the sum of the Class B Interest Distributable
Amount and any outstanding Class B Interest Carryover Shortfall from the
preceding Distribution Date (plus interest on such Class B Interest Carryover
Shortfall at the Class B Pass Through Rate from such preceding Distribution
Date to the current Distribution Date, to the extent permitted by law)
exceeds the Class B Percentage of the Interest Distribution Amount (after
payment of the Servicing Fee) on such Distribution Date less any portion
thereof required to be distributed to the Class A Certificateholders pursuant
to their prior rights as described above, the Class B Certificateholders
shall be entitled generally to receive such amounts, first, from the Class A
Percentage of the Interest Distribution Amount that is not otherwise required
to be distributed to the Class A Certificateholders as described above and,
second, from the amount, if any, available in the Reserve Account (after
giving effect to any withdrawals therefrom for distribution to the Class A
Certificateholders on such Distribution Date). The "Class B Interest
Carryover Shortfall" as of the close of any Distribution Date means the
excess of the Class B Interest Distributable Amount for such Distribution
Date, plus any outstanding Class B Interest Carryover Shortfall from the
preceding Distribution Date, plus interest on such outstanding Class B
Interest Carryover Shortfall, to the extent permitted by law, at the Class B
Pass Through Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of the Class
B Certificates actually received on such current Distribution Date.
On each Distribution Date on which the sum of the Class B Principal
Distributable Amount and any outstanding Class B Principal Carryover
Shortfall from the preceding Distribution Date exceeds the Class B Percentage
of the Principal Distribution Amount (exclusive of the portion thereof
attributable to Realized Losses) on such Distribution Date less any portion
thereof required to be distributed to the Class A Certificateholders pursuant
to their prior rights as described above, the Class B Certificateholders
shall be entitled to receive such amounts, first, from the Interest
Distribution Amount that is not otherwise required to be distributed to the
Class A or Class B Certificateholders as described above and, second, from
amounts available in the Reserve Account (after giving effect to any
withdrawals therefrom on such Distribution Date for distribution to the Class
A Certificateholders and for distribution of interest to the Class B
Certificateholders). The "Class B Principal Carryover Shortfall" as of the
close of any Distribution Date means the excess of the Class B Principal
Distributable Amount plus any outstanding Class B Principal Carryover
Shortfall from the preceding Distribution Date over the amount of principal
that the holders of Class B Certificates actually received on such current
Distribution Date.
SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE ACCOUNT
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables generally will be subordinated to the rights
of the Class A Certificateholders in the event of defaults and delinquencies
on the Receivables as described herein and provided in the Pooling and
Servicing Agreement. The protection afforded to the Class A
Certificateholders through subordination will be effected both by the
preferential right of the Class A Certificateholders to receive current
distributions with respect to the Receivables and by the establishment of the
Reserve Account. The Reserve Account will be created with an initial deposit
by the Seller of the Reserve Account Initial Deposit and will be augmented by
deposit therein on each Distribution Date of the amount, if any, remaining
from the Total Distribution Amount after the distributions due to the
Certificateholders have been made until the amount in the Reserve Account
reaches the Specified Reserve Account Balance for such Distribution Date.
The Reserve Account will not be part of or otherwise includible in the
Trust and will be a segregated trust account held by the Trustee. On each
Distribution Date, (i) if the amounts on deposit in the Reserve Account are
less than the Specified Reserve Account Balance for such Distribution Date,
the Trustee will, after payment of any amounts required to be distributed to
Certificateholders and the payment of the Servicing Fee due with respect to
the related Collection Period (including any unpaid Servicing Fees with
respect to prior Collection Periods), withdraw from the Collection Account
and deposit in the Reserve Account the amount, if any, remaining in the
Collection Account that would otherwise be distributed to the Seller, or such
lesser portion thereof as is sufficient to restore the amount in the Reserve
Account to such Specified Reserve Account Balance for such Distribution Date,
and (ii) if the amount on deposit in the Reserve Account on such Distribution
Date (after giving effect to all deposits or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account Balance for
such Distribution Date, the Trustee will release and distribute any such
excess to the Seller. Upon any such distribution to the Seller, the
Certificateholders will have no rights in, or claims to, such amounts.
Amounts held from time to time in the Reserve Account will continue to
be held for the benefit of holders of the Class A Certificates and holders of
the Class B Certificates. Funds in the Reserve Account shall be invested as
provided in the Pooling and Servicing Agreement in Eligible Investments. The
Seller will be entitled to receive all investment earnings on amounts in the
Reserve Account. Investment income on amounts in the Reserve Account will
not be available for distribution to the Certificateholders or otherwise
subject to any claims or rights of the Certificateholders.
The time necessary for the Reserve Account to reach and maintain the
Specified Reserve Account Balance at any time after the Closing Date will be
affected by the delinquency, credit loss, repossession and prepayment
experience of the Receivables and, therefore, cannot be accurately predicted.
The subordination of the Class B Certificates and the Reserve Account
described above are intended to enhance the likelihood of receipt by Class A
Certificateholders of the full amount of principal and interest on the Class
A Certificates due them and to decrease the likelihood that the Class A
Certificateholders will experience losses. However, in certain
circumstances, the Reserve Account could be depleted and shortfalls could
result.
If on any Distribution Date the holders of the Class A Certificates do
not receive the sum of the Class A Distributable Amount, the Class A Interest
Carryover Shortfall and the Class A Principal Carryover Shortfall for such
Distribution Date (after giving effect to any amounts withdrawn from the
Reserve Account and the Class B Percentage of the Total Distribution Amount
and applied to such deficiency, as described above), the holders of the Class
B Certificates generally will not receive any portion of the Total
Distribution Amount. While the Class B Certificateholders are entitled to
receive amounts from the Reserve Account as described above, such entitlement
is subordinated to the rights of the Class A Certificateholders to receive
amounts from the Reserve Account as described above. If the Reserve Account
becomes depleted, the Class B Certificateholders may experience shortfalls in
the distributions due them and incur a loss on their investment.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, counsel to the Trust, the Trust will
be treated as a grantor trust for federal income tax purposes and will not be
subject to federal income tax. For additional information regarding federal
income tax consequences, see "Federal Income Tax Consequences" in the
Prospectus.
ERISA CONSIDERATIONS
THE CLASS A CERTIFICATES
Subject to the considerations set forth under "ERISA Considerations --
Senior Certificates" in the Prospectus, the Class A Certificates may be
purchased by an employee benefit plan or an individual retirement account (a
"Plan") subject to 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. For additional information regarding treatment of the Class A
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
The Class A Certificates may not be purchased with the assets of a Plan
if the Seller, the Trustee or any of their affiliates (a) has investment or
administrative discretion with respect to such Plan assets; (b) has authority
or responsibility to give, or regularly gives, investment advice with respect
to such Plan assets for a fee and pursuant to an agreement or understanding
that such advice (i) will serve as a primary basis for investment decisions
with respect to such Plan assets and (ii) will be based on the particular
investment needs for such Plan; or (c) is an employer maintaining or
contributing to such Plan.
THE CLASS B CERTIFICATES
The Class B 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 or which uses plan assets to acquire Class B
Certificates. By its acceptance of a Class B Certificate, each Class B
Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitation. In this regard, purchasers that are
insurance companies should consult with their counsel with respect to the
United States Supreme Court case interpreting the fiduciary responsibility
rules of ERISA, John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114 S.
--------------------------------------------------------
Ct. 517 (1993). In John Hancock, the Supreme Court ruled that assets held
------------
in an insurance company's general account may be deemed to be "plan assets"
for ERISA purposes under certain circumstances. Prospective purchasers
should determine whether the decision affects their ability to make purchases
of the Class B Certificates. In particular, such an insurance company should
consider the exemptive relief granted by the Department of Labor for
transactions involving insurance company general accounts in Prohibited
Transactions Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995). For
additional information regarding treatment of the Class B Certificates under
ERISA, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "Underwriting Agreement"), the Depositor has agreed to cause
the Trust to sell to the Underwriter, and the Underwriter has agreed to
purchase, the entire principal amount of the Certificates.
The Depositor has been advised by the Underwriter that it proposes
initially to offer the Certificates to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession not
in excess of % per Class A Certificate and % per Class B Certificate.
The Underwriter may allow and such dealers may reallow a concession not in
excess of % per Class A Certificate and % per Class B Certificate
to certain other dealers. After the initial public offering of the
Certificates, the public offering prices and such concessions may be changed.
Until the distribution of the Certificates is completed, rules of the
Commission may limit the ability of the Underwriter and certain selling group
members to bid for and purchase the Certificates. As an exception to these
rules, the Underwriter is permitted to engage in certain transactions that
stabilize the price of the Certificates. Such transactions consist of bids
or purchases for the purpose of pegging, fixing or maintaining the price of
the Certificates.
If the Underwriter creates a short position in the Certificates in
connection with the offering, i.e., if it sells more Certificates than are
set forth on the cover page of this Prospectus Supplement, the Underwriter
may reduce that short position by purchasing Certificates in the open market.
In general, the purchase of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the Depositor nor any Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the prices of the Certificates. In
addition, neither the Depositor nor any Underwriter makes any representation
that the Underwriter will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.
The Underwriter has represented and agreed that (a) it has not offered
or sold, and will not offer or sell, any Certificates to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
that do not constitute an offer to the public in the United Kingdom for the
purposes of the Public Offers of Securities Regulations 1995, (b) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 of Great Britain with respect to anything done by it in
relation to the Certificates in, from or otherwise involving the United
Kingdom and (c) it has only issued or passed on and will only issue or pass
on in the United Kingdom any document in connection with the issue of the
Certificates to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995 or is a person to whom the document may otherwise lawfully be issued or
passed on.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from the Underwriter or a request by
such investor's representative within the period during which there is an
obligation to deliver a Prospectus Supplement and Prospectus, the Seller or
the Underwriter will promptly deliver, or cause to be delivered, without
charge, a paper copy of the Prospectus Supplement and Prospectus.
LEGAL OPINIONS
Certain legal matters relating to the Certificates and certain federal
income tax matters will be passed upon for the Depositor by Brown & Wood LLP,
New York, New York. (Certain legal matters relating to the Certificates will
be passed upon for the Underwriter by Brown & Wood LLP.)
INDEX OF TERMS
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Class A Certificate Balance . . . . . . . . . . . . . . . . . . . . S-2,S-14
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Class A Distributable Amount . . . . . . . . . . . . . . . . . . . . . S-14
Class A Interest Carryover Shortfall . . . . . . . . . . . . . . . . . S-15
Class A Interest Distributable Amount . . . . . . . . . . . . . . . . . . S-1
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . S-1,S-12
Class A Principal Carryover Shortfall . . . . . . . . . . . . . . . . . S-15
Class A Principal Distributable Amount . . . . . . . . . . . . . . . . S-14
Class B Certificate Balance . . . . . . . . . . . . . . . . . . . . S-3,S-14
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Class B Distributable Amount . . . . . . . . . . . . . . . . . . . . . S-14
Class B Interest Carryover Shortfall . . . . . . . . . . . . . . . . . S-15
Class B Interest Distributable Amount . . . . . . . . . . . . . . . . . S-14
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . S-1,S-12
Class B Principal Carryover Shortfall . . . . . . . . . . . . . . . . . S-15
Class B Principal Distributable Amount . . . . . . . . . . . . . . . . S-14
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-1
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-2
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . S-13
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . S-2
Financed Assets . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-1
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . S-13
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . S-13
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . S-13
Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . S-1
Principal Distribution Amount . . . . . . . . . . . . . . . . . . . S-2,S-13
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . S-4
stripped coupons . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . S-13
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-1
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . S-17
(BACK COVER OF PROSPECTUS SUPPLEMENT)
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR OR BY THE UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE CERTIFICATES OFFERED HEREBY TO ANYONE IN
ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT OR PROSPECTUS.
___________________
TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Reports to Certificateholders . . . . . . . . . . . . . . . . . . . . . Cover
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
The Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
The Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Weighted Average Life of the Certificates . . . . . . . . . . . . . . . S-12
Description of the Certificates . . . . . . . . . . . . . . . . . . . . S-12
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . S-17
ERISA Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . 3
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The Receivables Pools . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Weighted Average Life of the Certificates . . . . . . . . . . . . . . . . 20
Pool Factors and Trading Information . . . . . . . . . . . . . . . . . . 21
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . 22
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . 25
Certain Information Regarding the Securities . . . . . . . . . . . . . . 26
Description of the Transfer and Servicing Agreements . . . . . . . . . . 36
Certain Legal Aspects of the Receivables . . . . . . . . . . . . . . . . 44
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . 50
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(BACK COVER OF PROSPECTUS SUPPLEMENT, CONT.)
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES OFFERED BY THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS WHEN ACTING AS UNDERWRITER(S) AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$( )
______________ TRUST 199_ -( )
$
____% ASSET BACKED CERTIFICATES, CLASS A
$
____% ASSET BACKED CERTIFICATES, CLASS B
MORGAN STANLEY ABS CAPITAL II INC.
DEPOSITOR
____________________
PROSPECTUS SUPPLEMENT
____________________
MORGAN STANLEY DEAN WITTER
____________________
, 199
____________________
____________________
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted without the delivery of a final prospectus
supplement and prospectus. This prospectus and the accompanying prospectus
supplement shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
Subject to completion, dated _______ ___, 1997
PROSPECTUS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
(EACH ISSUABLE IN SERIES)
---------------------
MORGAN STANLEY ABS CAPITAL II INC.
Depositor
---------------------
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates
(the "Certificates" and, together with the Notes, the "Securities") described
herein 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 (a "Prospectus Supplement"). Each series
of Securities, which may include one or more classes of Notes and/or one or
more classes of Certificates, will be issued by a trust to be formed with
respect to such series (each, a "Trust"). Each Trust will be formed pursuant
to either (i) a Trust Agreement to be entered into between Morgan Stanley ABS
Capital II Inc. (the "Depositor") and the Trustee specified in the related
Prospectus Supplement (the "Trustee"), or (ii) a Pooling and Servicing
Agreement to be entered into among the Trustee, the Depositor and the
servicer specified in the related Prospectus Supplement (the "Servicer"). If
a series of Securities includes Notes, such Notes will be issued and secured
pursuant to an Indenture between the Trust and the Indenture Trustee
specified in the related Prospectus Supplement (the "Indenture Trustee") and
will represent indebtedness of the related Trust. The Certificates of a
series will represent fractional undivided interests in the related Trust.
The related Prospectus Supplement will specify which class or classes of
Notes, if any, and which class or classes of Certificates, if any, of the
related series are being offered thereby. The property of each Trust will
include a pool of retail installment sale contracts, installment loans,
purchase money notes or other notes (the "Receivables") secured by new or
used (i) automobiles and light-duty trucks, (ii) recreational vehicles and/or
(iii) recreational sport and power boats (including any boat motors and
accompanying trailers) and yachts (both power and sail), certain monies due
or received thereunder on and after the applicable Cutoff Date set forth in
the related Prospectus Supplement, security interests in the items financed
thereby and certain other property, all as described herein and in the
related Prospectus Supplement. In addition, if so specified in the related
Prospectus Supplement, the property of the Trust will include monies on
deposit in a trust account (the "Pre-Funding Account") to be established with
the Indenture Trustee, which will be used to purchase additional Receivables
(the "Subsequent Receivables") from the Depositor from time to time during
the Funding Period specified in the related Prospectus Supplement.
Each class of Securities of any series will represent the right to
receive a specified amount of payments on the related Receivables, at the
rates, on the dates and in the manner described herein and in the related
Prospectus Supplement. If a series includes multiple classes of Securities,
the rights of one or more classes of Securities to receive payments may be
senior or subordinate to the rights of one or more of the other classes of
such series. Distributions on Certificates of a series may be subordinated
in priority to payments due on any related Notes to the extent described
herein and in the related Prospectus Supplement. A series may include one or
more classes of Notes and/or Certificates which differ as to the timing and
priority of payment, interest rate or amount of distributions in respect of
principal or interest or both. A series may include one or more classes of
Notes or Certificates entitled to distributions in respect of principal with
disproportionate, nominal or no interest distributions, or to interest
distributions with disproportionate, nominal or no distributions in respect
of principal. The rate of payment in respect of principal of any class of
Notes and distributions in respect of the Certificate Balance of the
Certificates of any class will depend on the priority of payment of such
class and the rate and timing of payments (including prepayments, defaults,
liquidations and 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.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" AT PAGE 12 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF
A SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED
BY, MORGAN STANLEY ABS CAPITAL II INC., THE SERVICER, THE SELLER(S) OR ANY OF
THEIR RESPECTIVE AFFILIATES. NONE OF THE NOTES, THE CERTIFICATES OR THE
RECEIVABLES ARE GUARANTEED OR INSURED BY ANY GOVERNMENT AGENCY OR
INSTRUMENTALITY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not be used
to consummate
sales of Securities offered hereby unless accompanied by a Prospectus
Supplement.
------------------------
____________, 199__.
AVAILABLE INFORMATION
Morgan Stanley ABS Capital II Inc. (the "Depositor") 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 Notes and the
Certificates 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 Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and Seven World Trade Center, Suite 1300, 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. The Commission maintains a Web
site at http://www.sec.gov containing reports, proxy and information
statements and other information regarding registrants, including Morgan
Stanley ABS Capital II Inc., that file electronically with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Depositor as originator of the Trust referred
to in the accompanying Prospectus Supplement, pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), subsequent to the date of
this Prospectus and prior to the termination of the offering of the Securities
offered by such Trust shall be deemed to be incorporated by reference in this
Prospectus. 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 any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Depositor will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is
delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated herein or in any related Prospectus
Supplement by reference, except the exhibits to such documents (unless such
exhibits are specifically incorporated by reference in such documents).
Requests for such copies should be directed to Secretary, Morgan Stanley ABS
Capital II, Inc., 1585 Broadway, New York, New York 10036 (212-761-1817.)
------------------------
TABLE OF CONTENTS
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . 3
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The Receivables Pools . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Weighted Average Life of the Certificates . . . . . . . . . . . . . . . . 20
Pool Factors and Trading Information . . . . . . . . . . . . . . . . . . 21
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . 22
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . 25
Certain Information Regarding the Securities . . . . . . . . . . . . . . 26
Description of the Transfer and Servicing Agreements . . . . . . . . . . 36
Certain Legal Aspects of the Receivables . . . . . . . . . . . . . . . . 44
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . 50
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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 this
summary are defined elsewhere in this Prospectus on the pages indicated in
the "Index of Terms".
Issuer . . . . . . . . . . . . . With respect to each series of
Securities, the trust (referred to
herein as the "Trust" or the
"Issuer") to be formed pursuant to
either a Trust Agreement (as
amended and supplemented from time
to time, a "Trust Agreement")
among the Depositor and the
trustee specified in the related
Prospectus Supplement (the
"Trustee") or a Pooling and
Servicing Agreement (as amended
and supplemented from time to
time, the "Pooling and Servicing
Agreement") among the Trustee, the
Depositor and the servicer
specified in the related
Prospectus Supplement (the
"Servicer").
Depositor . . . . . . . . . . . . Morgan Stanley ABS Capital II Inc.
Seller(s) . . . . . . . . . . . . With respect to each series of
Securities, the Seller(s) will be
specified in the related
Prospectus Supplement.
Servicer . . . . . . . . . . . . With respect to each series of
Securities, the Servicer will be
specified in the related
Prospectus Supplement.
Trustee . . . . . . . . . . . . . With respect to each series of
Securities, the Trustee will be
specified in the related
Prospectus Supplement.
Indenture Trustee . . . . . . . . With respect to any applicable
series of Securities, the
Indenture Trustee will be
specified in the related
Prospectus Supplement.
The Notes . . . . . . . . . . . . A series of Securities may include
one or more classes of Notes,
which will be issued pursuant to
an Indenture between the Trust and
the Indenture Trustee (as amended
and supplemented from time to
time, an "Indenture"). The
related Prospectus Supplement will
specify which class or classes, if
any, of Notes of the related
series are being offered thereby.
Unless otherwise specified in the
related Prospectus Supplement,
Notes will be available for
purchase in minimum denominations
of $1,000 and will be available in
book-entry form only. Unless
otherwise specified in the related
Prospectus Supplement, Noteholders
will be able to receive Definitive
Notes only in the limited
circumstances described herein or
in the related Prospectus
Supplement. See "Certain
Information Regarding the
Securities -- Definitive
Securities".
Except in the case of any Strip
Notes, as described below, each
class of Notes will have a stated
principal amount and will bear
interest at a specified rate or
rates (with respect to each class
of Notes, the "Interest Rate").
Each class of Notes may have a
different Interest Rate, which may
be a fixed, variable or adjustable
Interest Rate, or any combination
of the foregoing. The related
Prospectus Supplement will specify
the Interest Rate for each class
of Notes, or the method for
determining the Interest Rate.
With respect to a series that
includes two or more classes of
Notes, each class may differ as to
the timing and priority of
payments, seniority, allocations
of losses, Interest Rate or amount
of payments of principal or
interest, or payments of principal
or interest in respect of any such
class or classes may or may not be
made upon the occurrence of
specified events or on the basis
of collections from designated
portions of the Receivables Pool.
In addition, a series may include
one or more classes of Notes
("Strip Notes") entitled to
(i) principal payments with
disproportionate, nominal or no
interest payments or (ii) interest
payments with disproportionate,
nominal or no principal payments.
If the Servicer exercises its
option to purchase the Receivables
of a Trust (or, if not and, if and
to the extent provided in the
related Prospectus Supplement,
satisfactory bids for the purchase
of such Receivables are received),
in the manner and on the
respective terms and conditions
described under "Description of
the Transfer and Servicing
Agreements -- Termination", the
outstanding Notes will be redeemed
as set forth in the related
Prospectus Supplement. In
addition, if the related
Prospectus Supplement provides
that the property of a Trust will
include a Pre-Funding Account (as
such term is defined in the
related Prospectus Supplement, the
"Pre-Funding Account"), one or
more classes of the outstanding
Notes will be subject to partial
redemption on or immediately
following the end of the Funding
Period (as such term is defined in
the related Prospectus Supplement,
the "Funding Period") in an amount
and manner specified in the
related Prospectus Supplement. In
the event of such partial
redemption, the Noteholders may be
entitled to receive a prepayment
premium from the Trust, in the
amount and to the extent provided
in the related Prospectus
Supplement.
The Certificates . . . . . . . . A series may include one or more
classes of Certificates and may
not include any Notes. The
related Prospectus Supplement will
specify which class or classes, if
any, of the Certificates are being
offered thereby.
Unless otherwise specified in the
related Prospectus Supplement,
Certificates will be available for
purchase in a minimum denomination
of $1,000 and will be available in
book-entry form only. Unless
otherwise specified in the related
Prospectus Supplement,
Certificateholders will be able to
receive Definitive Certificates
only in the limited circumstances
described herein or in the related
Prospectus Supplement. See
"Certain Information Regarding the
Securities -- Definitive
Securities".
Except in the case of any Strip
Certificates, as described below,
each class of Certificates will
have a stated Certificate Balance
specified in the related
Prospectus Supplement (the
"Certificate Balance") and will
accrue interest on such
Certificate Balance at a specified
rate (with respect to each class
of Certificates, the "Pass Through
Rate"). Each class of
Certificates may have a different
Pass Through Rate, which may be a
fixed, variable or adjustable Pass
Through Rate, or any combination
of the foregoing. The related
Prospectus Supplement will specify
the Pass Through Rate for each
class of Certificates or the
method for determining the Pass
Through Rate.
With respect to a series that
includes two or more classes of
Certificates, each class may
differ as to timing and priority
of distributions, seniority,
allocations of losses, Pass
Through Rate or amount of
distributions in respect of
principal or interest, or
distributions in respect of
principal or interest in respect
of any such class or classes may
or may not be made upon the
occurrence of specified events or
on the basis of collections from
designated portions of the
Receivables Pool. In addition, a
series may include one or more
classes of Certificates ("Strip
Certificates") entitled to
(i) distributions in respect of
principal with disproportionate,
nominal or no interest
distributions or (ii) interest
distributions with
disproportionate, nominal or no
distributions in respect of
principal.
If a series of securities includes
classes of Notes, distributions in
respect of the Certificates may be
subordinated in priority of
payment to payments on the Notes
to the extent specified in the
related Prospectus Supplement.
If the Servicer exercises its
option to purchase the Receivables
of a Trust (or, if not, and if and
to the extent provided in the
related Prospectus Supplement,
satisfactory bids for the purchase
of such Receivables are received),
in the manner and on the
respective terms and conditions
described under "Description of
the Transfer and Servicing
Agreements -- Termination",
Certificateholders will receive as
a prepayment an amount in respect
of the Certificates as specified
in the related Prospectus
Supplement. In addition, if the
related Prospectus Supplement
provides that the property of a
Trust will include a Pre-Funding
Account, Certificateholders may
receive a partial prepayment of
principal on or immediately
following the end of the Funding
Period in an amount and manner
specified in the related
Prospectus Supplement. In the
event of such partial prepayment,
the Certificateholders may be
entitled to receive a prepayment
premium from the Trust, in the
amount and to the extent provided
in the related Prospectus
Supplement.
The Trust Property . . . . . . . The property of each Trust will
include a pool of retail
installment sale contracts,
installment loans, purchase money
notes, or other notes (the
"Receivables") secured by new or
used (i) automobiles and light-
duty trucks (the "Financed Motor
Vehicles"), (ii) recreational
vehicles (the "Financed
Recreational Vehicles") and/or
(iii) recreational sport and
power boats (including any boat
motors and accompanying trailers)
and yachts (both power and sail)
(the "Financed Boats"), including
rights to receive certain payments
made with respect to such
Receivables, security interests in
the Financed Motor Vehicles and
Financed Recreational Vehicles
(collectively, the "Financed
Vehicles") and Financed Boats (the
"Financed Vehicles" and "Financed
Boats" being referred to
collectively as the "Financed
Assets"), as applicable, financed
thereby, certain accounts and the
proceeds thereof and any proceeds
from claims on certain related
insurance policies. If so
specified in the related
Prospectus Supplement, Receivables
held by a Trust may be held in the
form of one or more certificates
evidencing participation interests
in such Receivables, each such
participation interest evidencing
a direct ownership interest in the
Receivables evidenced thereby,
and, in such event, all references
to "Receivables" shall include and
be deemed to be references to the
Receivables held in such form. On
or prior to the Closing Date
specified in the related
Prospectus Supplement with respect
to a Trust, the Seller(s) will
sell or transfer Receivables (the
"Initial Receivables") having an
aggregate principal balance
specified in the related
Prospectus Supplement as of the
dates specified therein (the
"Initial Cutoff Date") to the
Depositor, which will transfer the
Initial Receivables to such Trust
on the Closing Date pursuant to
either a Sale and Servicing
Agreement among the Depositor, the
Servicer and the Trustee (as
amended and supplemented from time
to time, a "Sale and Servicing
Agreement") or, if the Trust is to
be treated as a grantor trust for
federal income tax purposes, the
related Pooling and Servicing
Agreement among the Depositor, the
Servicer and the Trustee. The
property of each Trust will also
include amounts on deposit in
certain trust accounts, including
the related Collection Account,
any Pre-Funding Account, any
Reserve Account and any other
account identified in the
applicable Prospectus Supplement.
To the extent provided in the
related Prospectus Supplement, the
Seller(s) will be obligated
(subject only to the availability
thereof) to sell to the Depositor
which will be obligated to
purchase and sell to the related
Trust, and such Trust will then be
obligated to purchase (subject to
the satisfaction of certain
conditions described in the
applicable Sale and Servicing
Agreement or Pooling and Servicing
Agreement), additional Receivables
(the "Subsequent Receivables")
from time to time (as frequently
as daily) during the Funding
Period specified in the related
Prospectus Supplement having an
aggregate principal balance
approximately equal to the amount
on deposit in the Pre-Funding
Account (the "Pre-Funded Amount")
on such Closing Date. With
respect to any Trust that is to be
treated as a grantor trust for
federal income tax purposes, the
Funding Period, if any, will not
exceed 90 days in length from the
Closing Date, and with respect to
any other Trust will not exceed
one-year in length from the
Closing. With respect to each
Trust, the Pre-Funded Amount on
the Closing Date will not exceed
25% of the aggregate initial
principal balance of the
Securities.
The Receivables arise or will
arise from loans originated by
motor vehicle, recreational
vehicle and boat dealers (the
"Dealers") and purchased, directly
or indirectly, by a Seller(s) and
sold to the Depositor. The
Receivables will be selected from
the contracts and loans owned by a
Seller(s) or the Depositor based
on the criteria specified in the
Sale and Servicing Agreement or
Pooling and Servicing Agreement,
as applicable, and described
herein and in the related
Prospectus Supplement.
Credit and Cash Flow Enhancement If and to the extent specified in
the related Prospectus Supplement,
credit and cash flow enhancement
with respect to a Trust or any
class or classes of Securities may
include any one or more of the
following: subordination of one
or more other classes of
Securities, a Reserve Account,
over-collateralization, letters of
credit, credit or liquidity
facilities, surety bonds,
guaranteed investment contracts,
swaps or other interest rate
protection agreements, repurchase
obligations, yield supplement
agreements or accounts, other
agreements with respect to third
party payments or other support,
cash deposits or other
arrangements. Unless otherwise
specified in the related
Prospectus Supplement, any form of
credit or cash flow enhancement
will have certain limitations and
exclusions from coverage
thereunder, which will be
described in the related
Prospectus Supplement.
Transfer and Servicing Agreements With respect to each Trust, the
Seller will sell the related
Receivables to the Depositor,
which, in turn, will sell the
related Receivables to such Trust
pursuant to a Sale and Servicing
Agreement or a Pooling and
Servicing Agreement. The rights
and benefits of any Trust under a
Sale and Servicing Agreement will
be assigned to the Indenture
Trustee as collateral for the
Notes of the related series. The
Servicer will agree with such
Trust to be responsible for
servicing, managing, maintaining
custody of and making collections
on the Receivables. The person
specified in the related
Prospectus Supplement will
undertake certain administrative
duties under an Administration
Agreement with respect to any
Trust that has issued Notes.
Unless otherwise specified in the
related Prospectus Supplement, the
Servicer will advance scheduled
payments under each Precomputed
Receivable which shall not have
been timely made (a "Precomputed
Advance"), to the extent that the
Servicer, in its sole discretion,
expects to recoup the Precomputed
Advance from subsequent payments
on or with respect to such
Receivable or from other
Precomputed Receivables. With
respect to Simple Interest
Receivables, the Servicer shall
advance any interest shortfall (a
"Simple Interest Advance" and,
together with a Precomputed
Advance, an "Advance"). The
Servicer shall be entitled to
reimbursement of Advances from
subsequent payments on or with
respect to the Receivables to the
extent described herein and in the
related Prospectus Supplement.
Unless otherwise provided in the
related Prospectus Supplement, the
Depositor will be obligated to
repurchase any Receivable from the
Trust, and the related Seller will
be obligated to simultaneously
repurchase such Receivable from
the Depositor, if the interest of
the applicable Trust in such
Receivable is materially adversely
affected by a breach of any
representation or warranty made by
such Seller with respect to the
Receivable, if the breach has not
been cured following the discovery
by or notice to such Seller and
the Depositor of the breach. If
so specified in the related
Prospectus Supplement, the related
Seller or the Depositor will be
permitted, in a circumstance where
it would otherwise be required to
repurchase a Receivable as
described in the preceding
sentence, to instead substitute a
comparable Receivable for the
Receivable otherwise requiring
repurchase, subject to certain
conditions and eligibility
criteria for the substitute to be
summarized in the related
Prospectus Supplement.
Unless otherwise provided in the
related Prospectus Supplement, the
Servicer will be obligated to
purchase or make Advances with
respect to any Receivable if,
among other things, it extends the
date for final payment by the
Obligor of such Receivable beyond
the applicable Final Scheduled
Maturity Date (as defined in the
related Prospectus Supplement, the
"Final Scheduled Maturity Date"),
changes the annual percentage rate
("APR") or amount of a scheduled
payment of such Receivable or
fails to maintain a perfected
security interest in the related
Financed Asset.
Unless otherwise specified in the
related Prospectus Supplement, the
Servicer will be entitled to
receive a fee for servicing the
Receivables of each Trust equal to
a specified percentage of the
aggregate principal balance of the
related Receivables Pool, as set
forth in the related Prospectus
Supplement, plus certain late
fees, prepayment charges and other
administrative fees or similar
charges. See "Description of the
Transfer and Servicing Agreements
-- Servicing Compensation and
Payment of Expenses" herein and in
the related Prospectus Supplement.
Certain Legal Aspects of the
Receivables; In connection with the sale of
Repurchase Obligations . . . . Receivables to a Trust, security
interests in the Financed Assets
securing such Receivables will be
assigned, directly or indirectly,
by the related Dealer to the
Seller(s) and by the Seller(s) to
the Depositor and by the Depositor
to such Trust. Due to
administrative burden and expense,
the certificates of title to the
Financed Motor Vehicles and those
Financed Recreational Vehicles and
Financed Boats financed in states
where security interests in
recreational vehicles or boats, as
applicable, are subject to
certificate of title statutes will
not be amended to reflect any such
assignments, the Uniform
Commercial Code ("UCC") financing
statements in respect of those
Financed Recreational Vehicles and
Financed Boats financed in states
where security interests in
recreational vehicles or boats, as
applicable, are perfected by
filing a UCC-1 financing statement
will not be amended to reflect
such assignments, and the
assignment of liens perfected
pursuant to federal law
("Preferred Mortgages") in respect
of Financed Boats documented under
federal law will not be filed as
required under federal law to
reflect such assignments. In the
absence of such procedures, such
Trust may not have a perfected
security interest in the Financed
Assets Vehicles or Financed Boats
in some states and will not have a
perfected security interest in
Financed Boats documented under
federal law. If such Trust does
not have a perfected security
interest in a Financed Asset, its
ability to realize on such
Financed Asset in the event of a
default may be adversely affected.
To the extent the security
interest is perfected, such Trust
will have a prior claim over
subsequent purchasers of such
Financed Asset and holders of
subsequently perfected security
interests. However, as against
liens for repairs of a Financed
Assets or for taxes unpaid by an
Obligor under a Receivable, or
because of fraud or negligence,
such Trust could lose the priority
of its security interest or its
security interest in Financed
Assets.
Federal and state consumer
protection laws impose
requirements upon creditors in
connection with extensions of
credit and collections of retail
installment loans, and certain of
these laws make an assignee of
such a loan liable to the obligor
thereon for any violation by the
lender. Unless otherwise
specified in the related
Prospectus Supplement, the
Depositor will be obligated to
repurchase from the Trust and the
related Seller will be obligated
to simultaneously repurchase from
the Depositor any Receivable which
fails to comply with such
requirements. The Depositor's
obligation to make such repurchase
is contingent upon the related
Seller performing its obligation
to repurchase such Receivable from
the Depositor on account of such
failure.
Tax Status . . . . . . . . . . . Unless the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor trust
and, upon the issuance of the
related series of Securities, Tax
Counsel to such Trust will deliver
an opinion to the effect that, for
federal income tax purposes:
(i) all or certain specified
classes of Notes of such series
will be characterized as debt and
(ii) such Trust will not be
characterized as an association
(or a publicly traded partnership)
taxable as a corporation. In
respect of any such series, each
Noteholder, by the acceptance of a
Note of such series, will agree to
treat such Note as indebtedness,
and each Certificateholder, by the
acceptance of a Certificate of
such series, will agree to treat
such Trust as a partnership in
which such Certificateholder is a
partner for federal income and
state income tax purposes.
Alternative characterizations of
such Trust and such Certificates
are possible, but would not result
in materially adverse tax
consequences to
Certificateholders.
If the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor
trust, upon the issuance of the
related series of Certificates,
Tax Counsel to such Trust will
deliver an opinion to the effect
that such Trust will be treated as
a grantor trust for federal income
tax purposes and will not be
subject to federal income tax.
See "Federal Income Tax
Consequences" for additional
information concerning the
application of federal and state
tax laws.
ERISA Considerations . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
related Prospectus Supplement, and
unless otherwise specified
therein, any Notes of a series and
any Certificates that are issued
by a Trust that is a grantor trust
and are not subordinated to any
other class of Certificates are
eligible for purchase by employee
benefit plans.
Unless otherwise specified in the
related Prospectus Supplement, the
Certificates of any series that
are subordinated to any other
Security of that series may not be
acquired by any employee benefit
plan subject to the Employee
Retirement Income Security Act of
1974, as amended ("ERISA"), or by
any individual retirement account.
See "ERISA Considerations" herein
and in the related Prospectus
Supplement.
RISK FACTORS
CERTAIN LEGAL ASPECTS -- SECURITY INTERESTS IN FINANCED ASSETS. Trusts
May Not Have A Perfected Security Interest in Certain Financed Assets. In
connection with the sale of Receivables to a Trust, security interests in the
Financed Assets securing such Receivables will be, or will have been,
assigned by the Seller(s) to the Depositor and by the Depositor to such Trust
simultaneously with the sale of such Receivables to such Trust. Due to
administrative burden and expense, (i) the certificates of title to the
Financed Motor Vehicles and those Financed Recreational Vehicles and Financed
Boats financed in states where security interests in recreational vehicles or
boats, as applicable, are subject to certificate of title statutes will not
be amended to reflect such assignments, (ii) UCC financing statements in
respect of those Financed Recreational Vehicles and Financed Boats financed
in states where security interests in recreational vehicles or boats, as
applicable, are perfected by filing a UCC-1 financing statement will not be
amended to reflect such assignments and (iii) and the assignment of liens
created pursuant to Preferred Mortgages in respect of Financed Boats
documented under federal law will not be filed as required by federal law to
reflect such assignments. In the absence of such procedures, such Trust may
not have a perfected security interest in the Financed Assets in some states
and will not have a perfected security interest in the Financed Boats
documented under Federal Law.
Unless otherwise provided in the related Prospectus Supplement, the
Depositor will be obligated to repurchase from the related Trust and the
related Seller will be obligated to simultaneously repurchase from the
Depositor any Receivable sold to such Trust as to which a perfected security
interest in the name of the related Seller in the Financed Asset securing
such Receivable shall not exist as of the date such Receivable is transferred
to such Trust, if such failure shall materially adversely affect the interest
of such Trust in such Receivable and if such failure shall not have been
cured by the last day of the second month following the discovery by or
notice to the Seller(s) of such breach. The Depositor's obligation to make
such repurchase is contingent upon the related Seller performing its
obligation to repurchase such Receivable from the Depositor on account of
such failure. Moreover, such repurchase obligations will not address or
remedy the circumstance where a perfected security interest in the name of
the related Seller in the Financed Asset securing a Receivable has not been
perfected in the related Trust as a result of the absence of the procedures
described in the preceding paragraph or for any other reason. If such Trust
does not have a perfected security interest in a Financed Vehicle or Financed
Boat, its ability to realize on such Financed Asset in the event of a default
may be adversely affected. This could adversely affect the amount available
for distribution to the Securityholder.
CERTAIN LIENS WILL HAVE PRIORITY OVER A PERFECTED SECURITY INTEREST.
To the extent the security interest
is perfected, such Trust will have a prior claim over subsequent purchasers
of such Financed Asset and holders of subsequently perfected security
interests. However, as against liens for repairs of a Financed Asset or for
taxes unpaid by an Obligor under a Receivable, or through fraud or negligence,
such Trust could lose the priority of its security interest or its
security interest in a Financed Asset.
In addition, in the case of a Financed Boat,
certain additional liens, including a lien for damages arising out of a
maritime tort, for wages of a stevedore when employed directly by the owner,
operator, master, ship's husband, or agent of the vessel, for wages of the crew
of a vessel, for general average, or a
lien for salvage may, as a matter of law, have priority over perfected first
priority liens. None of the Seller(s), the Servicer or the Depositor will
have any obligation to repurchase a Receivable as to which any of the
aforementioned occurrences result in such Trust's losing the priority of its
security interest or its security interest in such Financed Asset after the
date such security interest was conveyed to such Trust. See "Certain Legal
Aspects of the Receivables -- Security Interest in Vehicles" and "- Security
Interest in Boats" herein.
Certain Legal Aspects -- Security Interest in the Receivables. The
Receivables will be treated by each Trust as "chattel paper" as defined in
the UCC. Pursuant to the UCC, the sale of chattel paper is treated
in a manner similar to a security interest in chattel paper. Perfection of
a security interest in chattel paper may generally be made by filing UCC-1
financing statements in respect thereof or by possession of the chattel paper.
In order to protect each Trust's ownership or security interest in its
Receivables, the Depositor will file UCC-1 financing statements with the
appropriate authorities in the States of New York, Delaware and any other
states deemed advisable by the Depositor to give notice of such Trust's
ownership interest (and any related Indenture Trustee's security interest) in
the Receivables and proceeds thereof. Under each Sale and Servicing Agreement
and Pooling and Servicing Agreement, the Servicer will be appointed custodian
of the Receivables by the Trustee and the Servicer will otherwise be obligated
to maintain the perfection of each Trust's and any related Indenture Trustee's
interest in the Receivables. The filing of UCC-1 financing statements as
described above and possession of the chattel paper by the Servicer will reduce
but not eliminate the risks involved in perfection. A Trust could lose
priority of its security interest in the Receivables to certain liens arising
by operation of law or in certain cases by fraud or negligence. Moreoever,
if the Servicer should lose or inadvertently give up possession of the
chattel paper, a good faith purchaser of the chattel paper without knowledge
who gives new value and takes possession of it in the ordinary course of
such purchaer's business has priority over a security interest (including
an ownership interest) in the chattel paper that is perfected by filing
UCC-1 financing statements. In addition, the Receivables will not be
stamped to reflect the sale and assignment of the Receivables to the
Trust. Therefore, any good faith purchaser of the chattel paper
described above would not be deemed to have knoweldge of the security
interest (including an ownership interset) therein because such purchaser
would not learn of the sale of or security interest in the Receivables
from a review of the chattel paper.
CERTAIN LEGAL ASPECTS -- CONSUMER PROTECTION LAWS. Federal and state
consumer protection laws impose requirements upon creditors in connection
with extensions of credit and collections of retail installment loans and
certain of these laws make an assignee of such a loan (such as such Trust)
liable to the obligor thereon for any violation by the lender. The
application of such laws could render a Receivable unenforceable or otherwise
uncollectible. The inability of Trust to realize amounts owed in respect of
such Receivable could adversely affect the amount available for distribution
to the Securityholders. Unless otherwise specified in the related Prospectus
Supplement, the Depositor will be obligated to repurchase from the Trust and
the related Seller will be obligated to simultaneously repurchase from the
Depositor any Receivable which fails to comply with such requirements. The
Depositor's obligation to make such repurchase is contingent upon the related
Seller performing its obligation to repurchase such Receivable from the
Depositor on account of such failure. See "Certain Legal Aspects of the
Receivables -- Consumer Protection Laws" herein.
CERTAIN LEGAL ASPECTS -- INSOLVENCY CONSIDERATIONS. Each Seller will
represent and warrant that the transfer of the Receivables by it to the
Depositor will constitute a sale. In addition, the Depositor intends
that the Transfer of Receivables by it to a Trust will constitute a sale.
CONSIDERATIONS RELATING TO THE INSOLVENCY OF A BANK SELLER.
In the case of a seller
(a "Bank Seller") that is a depository institution whose deposits are insured
by the Federal Deposit Insurance Corporation (the "FDIC"), if such Bank
Seller were to become insolvent, the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 ("FIRREA") sets forth certain powers that the
FDIC could exercise if it were appointed as receiver of such Bank Seller.
Subject to clarification by FDIC regulations or interpretations, it would
appear from the positions taken by the FDIC before and after the passage of
FIRREA that the FDIC in its capacity as receiver for a Bank Seller would not
interfere with the timely transfer to the Depositor of payments collected on
the Receivables. If the transfer to the Depositor were to be characterized
as a secured loan, to the extent that the Seller would be deemed to have
granted a security interest in the Receivables to the Depositor, and that
interest had been validly perfected before the Bank Seller's insolvency and
had not been taken in contemplation of insolvency, that security interest
should not be subject to avoidance, and payments to the Trust with respect to
the Receivables should not be subject to recovery by the FDIC as receiver of
the Bank Seller. If however, the FDIC were to assert a contrary position,
such as by requiring the Indenture Trustee or the Trustee to establish its
right to those payments by submitting to and completing the administrative
claims procedure established under FIRREA, delays in payments on the related
Securities and possible reductions in the amount of those payments could
occur. See "Certain Legal Aspects of the Receivables -- Other Limitations".
CONSIDERATIONS RELATING TO THE INSOLVENCY OF A NONBANK SELLER OR THE
DEPOSITOR. If either a Seller other than a Bank Seller (a "Nonbank Seller") or
the Depositor were to become a debtor in a bankruptcy case (or if the parent
of either were to become a debtor in a bankruptcy case and the assets of the
Nonbank Seller or Depositor, as applicable, were consolidated with those of
its parent) and a creditor or trustee-in-bankruptcy of such debtor or such
debtor itself were to take the position that the transfer of Receivables to
the Depositor or such Trust, as the case may be, should, notwithstanding the
intent of the parties that it be treated as a sale, instead be treated as a
pledge of such Receivables to secure a borrowing of such debtor, delays in
payments of collections of Receivables to the related Securityholders could
occur or (should the court rule in favor of any such trustee, debtor or
creditor) reductions in the amounts of such payments could result. If the
transfer of Receivables by a Nonbank Seller to the Depositor or by the
Depositor to a Trust is treated as a pledge instead of a sale, a tax or
government lien on the property of the Nonbank Seller or the Depositor, as
applicable, arising before such Receivables transfer may have priority over
such Trust's interest in such Receivables. If the transactions contemplated
herein are treated as a sale, the Receivables would not be part of the
Nonbank Seller's or Depositor's bankruptcy estate and would not be available
to their respective creditors.
With respect to each Trust that is not a grantor trust, if the related
Prospectus Supplement so provides, upon the occurrence of an Insolvency Event
of the Depositor, the Indenture Trustee or Trustee for such Trust will
promptly sell, dispose of or otherwise liquidate the related Receivables
in a commercially reasonable manner on commercially reasonable terms,
except under certain limited circumstances. The proceeds from any such sale,
disposition or liquidation of Receivables will be treated as collections
on the Receivables and deposited in the Collection Account of such Trust.
If the proceeds from the liquidation of the Receivables and any amounts on
deposit in the Reserve Account, the Note Distribution Account, if any, and
the Certificate Distribution Account with respect to any such Trust and any
amounts available from any credit enhancement are not sufficient to pay any
Notes and the Certificates of the related series in full, the amount of
principal returned to any Noteholders or the Certificatheolders will be
reduced and such Noteholders and Certificateholders will incur a loss.
See "Description of the Transfer and Servicing Agreements -- Insolvency
Event".
OCTAGON GAS CASE. In Octagon Gas Systems, Inc. v. Rimmer, 995
F.2d 948 (10th Cir. ------------------------ ------
1993), the U.S. Court of Appeals for the 10th Circuit determined that
"accounts," a defined term under the Uniform Commercial Code, would be
included in the bankruptcy estate of a transferor regardless of whether the
transfer is treated as a sale or a secured loan. Although the Receivables
are likely to be viewed as "chattel paper," as defined under the Uniform
Commercial Code, rather than as accounts, the Octagon holding is equally
applicable to chattel paper. The circumstances under which the Octagon ruling
would apply are not fully known and the extent to which the Octagon decision
will be followed in other courts or outside of the Tenth Circuit is not
certain. If the holding in the Octagon case were applied in a bankruptcy of
the Depositor or a Seller, however, even if the transfer of Receivables to
the Depositor and the transfer of the Receivables to the Trust were treated
as a sale, the Receivables would be part of the Depositor's or Seller's
bankruptcy estate (as applicable) and would be subject to claims of certain
creditors, and delays and reductions in payments to the Securityholders could
result.
RELIANCE ON REPRESENTATIONS AND WARRANTIES BY THE DEPOSITOR, THE SELLER(S)
AND THE SERVICER. None of the Seller(s), the Servicer, the Depositor or any of
their respective affiliates will generally be obligated to make any payments
in respect of any Notes, the Certificates or the Receivables of a Trust.
However, in connection with the sale of Receivables by the Seller(s) to the
Depositor and the Depositor to a Trust, the Seller(s) will make
representations and warranties with respect to the characteristics of such
Receivables and, in certain circumstances, the Depositor may be required to
repurchase from the Trust and the related Seller would be required to
simultaneously repurchase from the Depositor Receivables with respect to
which such representations and warranties have been breached. Alternatively,
if so specified in the related Prospectus Supplement, the related Seller or
the Depositor will be permitted, in a circumstance where it would otherwise
be required to repurchase a Receivable as described in the preceding
sentence, to instead substitute a comparable Receivable for the Receivable
otherwise requiring repurchase, subject to certain conditions and eligibility
criteria for the substitute Receivable to be summarized in the related
Prospectus Supplement. The Depositor's obligation to make such repurchase or
substitution is contingent upon the related Seller performing its obligation
to repurchase or substitute for such Receivable from the Depositor. See
"Description of the Transfer and Servicing Agreements -- Sale and Assignment
of Receivables". In addition, under certain circumstances, the Servicer may
be required to purchase Receivables. See "Description of the Transfer and
Servicing Agreements -- Servicing Procedures". If collections on any
Receivable were reduced as a result of any matter giving rise to a repurchase
or purchase obligation on the part of the Depositor, the Seller and/or the
Servicer, as the case may be, and the Depositor, the Seller and/or the
Servicer failed for any reason to perform in accordance with that obligation,
then delays in payments on the Securities and possible reductions in the
amount of those payments could occur. Moreover, if the Servicer 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.
SUBORDINATION; LIMITED ASSETS. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one or more
classes of Certificates of a series may be subordinated in priority of
payment to interest and principal due on the Notes, if any, of such series or
one or more other classes of Certificates of such series. Moreover, each
Trust will not have, nor is it permitted or expected to have, any significant
assets or sources of funds other than the Receivables and, to the extent
provided in the related Prospectus Supplement, a Pre-Funding Account, a
Reserve Account and any other credit enhancement. The Notes of any series
will represent obligations solely of, and the Certificates of any series will
represent interests solely in, the related Trust and neither the Notes nor
the Certificates of any series will be insured or guaranteed by any of the
Seller(s), the Depositor, the applicable Trustee, any Indenture Trustee or
any other person or entity. Consequently, holders of the Securities of any
series must rely for repayment upon payments on the related Receivables and,
if and to the extent available, amounts on deposit in the Pre-Funding Account
(if any), the Reserve Account (if any) and any other credit enhancement, all
as specified in the related Prospectus Supplement. If such amounts and
credit enhancement are exhausted (and not replenished), the related Trust
will depend solely on payments on the Receivables to make distributions on
the Certificates, and the Certificateholders will bear the risk of
delinquency, loan loss and repossessions with respect to the Receivables.
MATURITY AND PREPAYMENT CONSIDERATIONS. All the Receivables are
prepayable at any time. (For this purpose the term "prepayments" includes
prepayments in full, partial prepayments (including those related to rebates
of extended warranty contract costs and insurance premiums) and liquidations
due to default, as well as receipts of proceeds from physical damage, credit
life and disability insurance policies and certain other Receivables
repurchased for administrative reasons). The rate of prepayments on the
Receivables may be influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may not sell or
transfer the Financed Asset securing a Receivable without the consent of the
Depositor. The rate of prepayment on the Receivables may also be influenced
by the structure of the loan evidencing the Receivable. In addition, under
certain circumstances, the Depositor will be obligated to repurchase from the
Trust, and the related Seller will be obligated to simultaneously repurchase
from the Depositor (or in either case, if so specified in the related
Prospectus Supplement and subject to the conditions summarized therein,
substitute for) Receivables pursuant to a Sale and Servicing Agreement or
Pooling and Servicing Agreement as a result of certain breaches of
representations and warranties and, under certain circumstances, the Servicer
will be obligated to purchase Receivables pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
certain covenants. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables". Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables held
by a given Trust will be borne entirely by the Securityholders of the related
series of Securities. See also "Description of the Transfer and Servicing
Agreements -- Termination" regarding the Servicer's option to purchase the
Receivables of a given Receivables Pool and "-- Insolvency Event" regarding
the sale of the Receivables owned by a Trust that is not a grantor trust if
an Insolvency Event with respect to the Depositor occurs.
RISK OF COMMINGLING. With respect to each Trust, the Servicer will
deposit all payments on the related Receivables (from whatever source) and
all proceeds of such Receivables collected during each Collection Period into
the Collection Account of such Trust within two business days of receipt
thereof. However, in the event that the Servicer satisfies certain
requirements for monthly or less frequent remittances and the Rating Agencies
(as such term is defined in the related Prospectus Supplement, the "Rating
Agencies") affirm their ratings of the related Securities at the initial
level, then for so long as the servicer specified in the related Prospectus
Supplement is the Servicer and provided that (i) there exists no Servicer
Default and (ii) each other condition to making such monthly or less frequent
deposits as may be specified by the Rating Agencies and described in the
related Prospectus Supplement is satisfied, the Servicer will not be required
to deposit such amounts into the Collection Account of such Trust until on or
before the business day preceding each Distribution Date. The Servicer will
deposit the aggregate Purchase Amount of Receivables purchased by the
Servicer into the applicable Collection Account on or before the business day
preceding each Distribution Date. Pending deposit into such Collection
Account, collections may be invested by the Servicer at its own risk and for
its own benefit and will not be segregated from funds of the Servicer. If
the Servicer were unable to remit such funds, such funds will not be
available for distribution to the applicable Securityholders and such
Securityholders might incur a loss. To the extent set forth in the related
Prospectus Supplement, the Servicer may, in order to satisfy the requirements
described above, obtain a letter of credit or other security for the benefit
of the related Trust to secure timely remittances of collections on the
related Receivables and payment of the aggregate Purchase Amount with respect
to Receivables purchased by the Servicer.
RISK ASSOCIATED WITH SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING ACCOUNT.
If so specified in the related Prospectus Supplement, the Seller(s) will be
obligated to sell, and the Depositor will be obligated to purchase and then
transfer to the related Trust which Trust will then be obligated to purchase,
Subsequent Receivables from time to time during the Funding Period specified
in the related Prospectus Supplement. With respect to any Trust that is to
be treated as a grantor trust for federal income tax purposes, the Funding
Period, if any, will not exceed 90 days in length from the Closing Date, and
with respect to any other Trust will not exceed one-year in length from the
Closing. With respect to each Trust, the Pre-Funded Amount on the Closing
Date will not exceed 25% of the aggregate initial principal balance of the
Securities.
Changes in Characteristics of Receivables Pool Due to Subsequent
Receivables. Amounts on deposit in any Pre-Funding
Account may be invested only in Eligible Investments. Subsequent Receivables
may be originated by the Dealers at a later date using credit criteria
different from those which were applied to any Initial Receivables and may be
of a different credit quality and seasoning. In addition, following the
transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust may
vary from those of the Initial Receivables transferred to such Trust. As a
result, it is possible that the credit quality of the Receivables in a Trust,
as a whole, may decline as a result of the inclusion of Subsequent
Receivables and may result in a higher rate of payment to the applicable
Securityholders as a result of an increased level of defaults on such
Receivables.
USE OF BALANCE IN PRE-FUNDING ACCOUNT TO PREPAY SECURITIES. To the
extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the conveyance of Subsequent Receivables to a Trust
by the end of the Funding Period and such amount exceeds the applicable
amount described in the related Prospectus Supplement, the holders of
Securities issued by the related trust will receive, on the Distribution Date
or Payment Date on or immediately following the last day of the applicable
Funding Period, a prepayment of principal in an amount equal to the amount
remaining in the Pre-Funding Account following the purchase of any Subsequent
Receivables on or immediately preceding such Distribution Date or Payment
Date. It is anticipated that the principal balance of Subsequent Receivables
sold to a Trust will not be exactly equal to the amount on deposit in the
Pre-Funding Account, and that therefore there will be at least a nominal
amount of principal prepaid to the holders of the Securities issued by such
Trust. Securityholders will bear all reinvestment risk associated with
distribution of amounts on deposit in the Prefunding Account after
termination of the applicable Funding Period. Any such distribution will have
the effect of a prepayment on the related Receivables and may result in a
reduction in the yield to maturity of any class of Securities to which such
amounts are distributed. In addition, a higher than expected rate of payment
may result in a reduction in the yield to maturity of any class of Securities
to which such payments are distributed.
RIGHTS OF NOTEHOLDERS TO DIRECT CERTAIN MATTERS AFFECTING THE
CERTIFICATEHOLDERS. In general, with respect
to any Trust issuing Notes, until the Notes have been paid in full,
the ability to
direct the related Trust with respect to certain actions permitted to be
taken under the related Transfer and Servicing Agreements rests with the
related Indenture Trustee and the Noteholders instead of the
Certificateholders.
For example, unless otherwise provided in the related Prospectus
Supplement with respect to a Trust issuing Notes, in the event a Servicer
Default occurs, the Indenture Trustee or the Noteholders with respect to such
series, as described under "Description of the Transfer and Servicing
Agreements -- Rights upon Servicer Default", may remove the Servicer without
the consent of the Trustee or any of the Certificateholders with respect to
such series. The Trustee or the Certificateholders with respect to such
series will not have the ability to remove the Servicer if a Servicer Default
occurs. In addition, the Noteholders of such series have the ability, with
certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially adversely affect the Certificateholders of
such series. See "Description of the Transfer and Servicing Agreements --
Waiver of Past Defaults".
BOOK-ENTRY REGISTRATION. Unless otherwise specified in the related
Prospectus Supplement, each class of Securities of a given series will be
initially represented by one or more certificates registered in the name of
Cede & Co. ("Cede"), or any other nominee for the Depository Trust Company
("DTC") set forth in the related Prospectus Supplement (Cede, or such other
nominee, "DTC's Nominee"), and will not be registered in the names of the
holders of the Securities of such series or their nominees. Because of this,
unless and until Definitive Securities for such series are issued, holders of
such Securities will not be recognized by the Trustee or any applicable
Indenture Trustee as "Certificateholders", "Noteholders" or
"Securityholders", as the case may be (as such terms are used herein or in
the related Pooling and Servicing Agreement or related Indenture and Trust
Agreement, as applicable). Hence, until Definitive Securities are issued,
holders of such Securities will only be able to exercise the rights of
Securityholders indirectly through DTC and its participating organizations.
See "Certain Information Regarding the Securities -- Book-Entry Registration"
and "-- Definitive Securities".
THE TRUSTS
With respect to each series of Securities, the Depositor will establish
a separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein and
in the related Prospectus Supplement. The property of each Trust will
include a pool (a "Receivables Pool") of retail installment sales contracts,
purchase money notes or other notes between dealers (the "Dealers") and
purchasers (the "Obligors") of new and used (i) automobiles and light-duty
trucks ("Financed Motor Vehicles," and the Receivables with respect thereto,
"Motor Vehicle Receivables"), (ii) recreational vehicles ("Financed
Recreational Vehicles," and the Receivables with respect thereto,
"Recreational Vehicle Receivables") and/or (iii) recreational sport and
power boats (including any boat motors and accompanying trailers) and yachts
(both power and sail) ("Financed Boats," and the Receivables with respect
thereto, "Marine Receivables") or installment loans made to Obligors for such
purchases and all payments due thereunder on and after the applicable cutoff
date (as such term is defined in the related Prospectus Supplement, a "Cutoff
Date") in the case of Precomputed Receivables and all payments received
thereunder on and after the applicable Cutoff Date in the case of Simple
Interest Receivables. A Receivables Pool may consist solely of Motor Vehicle
Receivables, Recreational Vehicle Receivables or Marine Receivables, or any
combination of such Receivables, all as specified in the related Prospectus
Supplement. The Receivables of each Receivables Pool were or will be
originated by the Dealers or lenders, purchased by the Seller(s), directly or
indirectly, pursuant to agreements with Dealers ("Dealer Agreements") or such
lenders and sold to the Depositor. Such Receivables will be serviced by the
Servicer. On or prior to the applicable Closing Date, the Seller(s) will
sell the Receivables to the Depositor. On the applicable Closing Date, the
Depositor will sell the Initial Receivables of the applicable Receivables
Pool to the Trust to the extent, if any, specified in the related Prospectus
Supplement. To the extent so provided in the related Prospectus Supplement,
Subsequent Receivables will be conveyed to the Trust as frequently as daily
during the Funding Period. Any Subsequent Receivables so conveyed will also
be assets of the applicable Trust, subject to the prior rights of the related
Indenture Trustee and the Noteholders, if any, therein. The property of each
Trust will also include (i) such amounts as from time to time may be held in
separate trust accounts established and maintained pursuant to the related
Sale and Servicing Agreement or Pooling and Servicing Agreement and the
proceeds of such accounts, as described herein and in the related Prospectus
Supplement; (ii) security interests in the Financed Assets and any other
interest of the Depositor in such Financed Assets; (iii) the rights to
proceeds from claims on certain physical damage, credit life and disability
insurance policies covering the Financed Assets or the Obligors, as the case
may be; (iv) the interest of the Depositor in any proceeds from recourse to
Dealers on Receivables or Financed Assets with respect to which the Servicer
has determined that eventual repayment in full is unlikely; (v) any property
that shall have secured a Receivable and that shall have been acquired by the
applicable Trust; and (vi) any and all proceeds of the foregoing. To the
extent specified in the related Prospectus Supplement, a Pre-Funding Account,
a Reserve Account or other form of credit enhancement may be a part of the
property of any given Trust or may be held by the Trustee or an Indenture
Trustee for the benefit of holders of the related Securities. Additionally,
pursuant to the Dealer Agreements, the Dealers have an obligation after
origination to repurchase Receivables as to which Dealers have made certain
misrepresentations.
With respect to each series of Securities, if so specified in the
related prospectus supplement, prior to its sale of Receivables to the Trust,
the Depositor may hold such assets in the form of one or more participation
certificates evidencing the entire undivided ownership interest therein
(each, a "Participation"). In such event, the related Trust will not
hold the Receivables in Participation form to the extent that the terms
of the sale of the
Receivables to the Trust and of any such Participation will provide that
immediately upon such sale, the Participation will be dissolved and the Trust
will hold the Receivables directly.
The Servicer will continue to service the Receivables held by each Trust
and will receive fees for such services. See "Description of the Transfer
and Servicing Agreements -- Servicing Compensation and Payment of Expenses"
herein and in the related Prospectus Supplement. To facilitate the servicing
of the Receivables, each Trustee will authorize the Servicer to retain
physical possession of the Receivables held by each Trust and other documents
relating thereto as custodian for each such Trust. Due to the administrative
burden and expense, the certificates of title of UCC financing statements, as
applicable, to the Financed Assets will not be amended to reflect the sale
and assignment of the security interest in the Financed Assets to each Trust,
and assignments to the Trust of the Preferred Mortgages in respect of
federally documented Financed Boats will not be filed. In the absence of
such an amendment or filing, a Trust may not have a perfected security
interest in the Financed Assets in all states and will not have a perfected
security interest in federally documented Financed Boats. See "Risk Factors
- -- Certain Legal Aspects -- Security Interest in Financed Assets," "Certain
Legal Aspects of the Receivables" and "Description of the Transfer and
Servicing Agreements -- Sale and Assignment of Receivables".
If the protection provided to any Noteholders of a series by the
subordination of the related Certificates and by the Reserve Account, if any,
or other credit enhancement for such series or the protection provided to
Certificateholders by any such Reserve Account or other credit enhancement is
insufficient, such Noteholders or Certificateholders, as the case may be,
would have to look principally to the Obligors on the related Receivables,
the proceeds from the repossession and sale of Financed Assets which secure
defaulted Receivables and the proceeds from any recourse against Dealers with
respect to such Receivables. In such event, certain factors, such as the
applicable Trust's not having perfected security interests in the Financed
Assets in all states or, if applicable, under federal law, may affect the
Servicer's ability to repossess and sell the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to the
holders of the Securities of such series. See "Description of the Transfer
and Servicing Agreements -- Distributions", "-- Credit and Cash Flow
Enhancement" and "Certain Legal Aspects of the Receivables".
The principal offices of each Trust and the related Trustee will be
specified in the applicable Prospectus Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale
of the related Securities is limited solely to the express obligations of
such Trustee set forth in the related Trust Agreement and the Sale and
Servicing Agreement or the related Pooling and Servicing Agreement, as
applicable. A Trustee may resign at any time, in which event the Servicer,
or its successor, will be obligated to appoint a successor trustee. The
Administrator of a Trust that is not a grantor trust and the Servicer in
respect of a Trust that is a grantor trust may also remove the Trustee if the
Trustee ceases to be eligible to continue as Trustee under the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, or if the
Trustee becomes insolvent. In such circumstances, the Administrator or
Servicer, as applicable, will be obligated to appoint a successor trustee.
Any resignation or removal of a Trustee and appointment of a successor
trustee will not become effective until acceptance of the appointment by the
successor trustee.
THE RECEIVABLES POOLS
GENERAL
The Receivables in each Receivables Pool are and will be retail
installment sales contracts, installment loans, purchase money orders or
other notes that have been or will be originated by a Dealer and purchased by
a Seller pursuant to a Dealer Agreement between the related seller (the
"Seller"), and the Dealer and will be Motor Vehicle Receivables, Recreational
Vehicle Receivables or Marine Receivables. Receivables held by any Seller
may have been acquired from other Sellers. The Sellers may include banks or
other financial institutions and will be entities involved in origination,
secondary market purchasing and/or servicing of the asset
types represented by the Receivables in the related Series. Each Seller
with respect to a Series
will be identified in the related Prospectus Supplement. A Receivables Pool
may consist solely of Motor Vehicle Receivables, Recreational Vehicle
Receivables or Marine Receivables, or any combination of such Receivables,
all as specified in the related Prospectus Supplement. In addition, to the
extent described in any Prospectus Supplement, the related Receivables Pool
may include Receivables acquired by an Affiliate through acquisitions.
Receivables of a Seller will be transferred to the Depositor pursuant to a
Receivables Purchase Agreement for sale by the Depositor to the applicable
Trust.
The Receivables to be held by each Trust will be purchased by the
Depositor from the portfolio of the Seller(s) for inclusion in a Receivables
Pool in accordance with several criteria, including that each Receivable
(i) is secured by a new or used motor vehicle, recreational vehicle or boat,
(ii) was originated in the United States, (iii) is a Simple Interest
Receivable or a Precomputed Receivable and (iv) as of the Cutoff Date (a) had
an outstanding principal balance of at least the amount set forth in the
related Prospectus Supplement, (b) was not more than 30 days (or such other
number of days specified in the related Prospectus Supplement) past due,
(c) had a remaining number of scheduled payments not more than the number set
forth in the related Prospectus Supplement, (d) had an original number of
scheduled payments not more than the number set forth in the related
Prospectus Supplement and (e) had a Contract Rate of not less than the rate
per annum set forth in the related Prospectus Supplement. No selection
procedures believed by the Depositor to be adverse to the Securityholders of
any series were or will be used in selecting the related Receivables. Terms
of the loans constituting such Receivables which are material to investors
are described herein or in the related Prospectus Supplement.
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level payment monthly installments. However, unlike the monthly
installment under an Actuarial Receivable, each monthly installment consists
of an amount of interest which is calculated on the basis of the outstanding
principal balance of the receivable multiplied by the stated Contract Rate
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 Receivable, the amount received is applied,
first, to interest accrued to the date of payment, second, to reduce the
unpaid principal balance, and third, to late fees and other fees and charges,
if any. 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 and unpaid accrued
interest. If a Simple Interest Receivable is prepaid, the Obligor is
required to pay interest only to the date of prepayment.
"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method, similar to the "Rule of 78's" ("Rule of 78's
Receivables"). An Actuarial Receivable provides for amortization of the loan
over a series of fixed level payment monthly installments. Each monthly
installment, including the monthly installment representing the final payment
on the Receivable, consists of an amount of interest equal to 1/12 of the APR
of the loan multiplied by the unpaid principal balance of the loan, and an
amount of principal equal to the remainder of the monthly payment. A Rule of
78's Receivable provides for the payment by the obligor of a specified total
amount of payments, payable in equal monthly installments on each due date,
which total represents the principal amount financed and add-on interest in
an amount calculated on the stated APR for the term of the receivable. The
rate at which such amount of add-on interest is earned and, correspondingly,
the amount of each fixed monthly payment allocated to reduction of the
outstanding principal are calculated in accordance with the "Rule of 78's".
Information with respect to each Receivables Pool will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition, the geographic distribution and distribution by Contract Rate
and the portion of such Receivables Pool consisting of Precomputed
Receivables and of Simple Interest Receivables and the portion of such
Receivables Pool made up by Motor Vehicle Receivables, Recreational Vehicle
Receivables and Marine Receivables and the portion of each category secured
by new Financed Assets and by used Financed Assets.
SUBSEQUENT RECEIVABLES
Subsequent Receivables may be originated by the Dealers at a later date
using credit criteria different from those which were applied to any Initial
Receivables and may be of a different credit quality and seasoning. In
addition, following the transfer of Subsequent Receivables to the applicable
Trust, the characteristics of the entire pool of Receivables included in such
Trust may vary significantly from those of the Initial Receivables
transferred to such Trust. Each Prospectus Supplement will describe the
effects that including such Subsequent Receivables may have on the
Receivables Pool included in the Trust Property of each Trust issuing
Securities.
UNDERWRITING
The related Prospectus Supplement will describe the Seller(s)'
underwriting procedures and guidelines, including the type of information
reviewed in respect of an applicant.
SERVICING AND COLLECTIONS
The related Prospectus Supplement will describe the Servicer's servicing
procedures, including the steps customarily taken in respect of delinquent
Receivables and the maintenance of physical damage insurance.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the Seller(s)' loss and delinquency
experience with respect to its portfolio of motor vehicle loans, recreational
vehicle loans and marine loans (including previously sold contracts which a
Seller continues to service), will be set forth in each Prospectus
Supplement. There can be no assurance that the delinquency, repossession and
net loss experience on any Receivables Pool will be comparable to prior
experience or to such information.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates, if
any, of any series will generally be influenced by the rate at which the
principal balances of the related Receivables are paid, which payment may be
in the form of scheduled amortization or prepayments. (For this purpose, the
term "prepayments" includes prepayments in full, partial prepayments
(including those related to rebates of extended warranty contract costs and
insurance premiums), liquidations due to default, as well as receipts of
proceeds from physical damage, credit life and disability insurance policies
and certain other Receivables repurchased by the Depositor or the Servicer
for administrative reasons.) All of the Receivables are prepayable at any
time without penalty to the Obligor. The rate of prepayment of automotive
receivables is influenced by a variety of economic, social and other factors,
including the fact that an Obligor generally may not sell or transfer the
Financed Asset securing a Receivable without the consent of the Servicer.
The rate of prepayment on the Receivables may also be influenced by the
structure of the loan. In addition, under certain circumstances, the
Depositor will be obligated to repurchase from a Trust and the related Seller
will be obligated to simultaneously repurchase from the Depositor (or in
either case, if so specified in the related Prospectus Supplement and subject
to the conditions summarized therein, substitute for) Receivables pursuant to
the related Sale and Servicing Agreement or Pooling and Servicing Agreement
as a result of breaches of representations and warranties and the Servicer
will be obligated to purchase Receivables from such Trust pursuant to such
Sale and Servicing Agreement or Pooling and Servicing Agreement as a result
of breaches of certain covenants. In the case of any Security purchased at a
discount to its principal amount, a slower than anticipated rate of
principal payments is likely to result in a lower than anticipated yield. In
the case of a Security purchased at a premium to its principal amount, a
faster than anticipated rate of principal payments is likely to result in a
lower than anticipated yield. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables" and "-- Servicing
Procedures". See also "Description of the Transfer and Servicing
Agreements -- Termination" regarding the Servicer's option to purchase the
Receivables from a given Trust. No prediction can be made as to the rate of
prepayment that the Receivables will experience.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes, if any, or the
Certificates, if any, of a given series on each Payment Date or Distribution
Date, as applicable, since such amount will depend, in part, on the amount of
principal collected on the related Receivables Pool during the applicable
Collection Period. Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables will be borne entirely by the
Noteholders, if any, and the Certificateholders of a given series. The
related Prospectus Supplement may set forth certain additional information
with respect to the maturity and prepayment considerations applicable to the
particular Receivables Pool and the related series of Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with
respect to such class of Notes indicating the remaining outstanding principal
balance of such class of Notes, as of the applicable Payment Date (after
giving effect to payments to be made on such Payment Date), as a fraction of
the initial outstanding principal balance of such class of Notes. The
"Certificate Pool Factor" for each class of Certificates will be a
seven-digit decimal which the Servicer will compute prior to each
distribution with respect to such class of Certificates indicating the
remaining Certificate Balance of such class of Certificates, as of the
applicable Distribution Date (after giving effect to distributions to be made
on such Distribution Date), as a fraction of the initial Certificate Balance
of such class of Certificates. Each Note Pool Factor and each Certificate
Pool Factor will initially be 1.0000000 and thereafter will decline to
reflect reductions in the outstanding principal balance of the applicable
class of Notes, or the reduction of the Certificate Balance of the applicable
class of Certificates, as the case may be. A Noteholder's portion of the
aggregate outstanding principal balance of the related class of Notes is the
product of (i) the original denomination of such Noteholder's Note and
(ii) the applicable Note Pool Factor. A Certificateholder's portion of the
aggregate outstanding Certificate Balance for the related class of
Certificates is the product of (a) the original denomination of such
Certificateholder's Certificate and (b) the applicable Certificate Pool
Factor.
Unless otherwise provided in the related Prospectus Supplement with
respect to a Trust, the Noteholders, if any, and the Certificateholders will
receive reports on or about each Payment Date concerning (i) with respect to
the Collection Period immediately preceding such Payment Date, payments
received on the Receivables, the Pool Balance (as such term is defined in the
related Prospectus Supplement, the "Pool Balance"), each Certificate Pool
Factor or Note Pool Factor, as applicable, and various other items of
information, and (ii) with respect to the Collection Period second preceding
such Payment Date, as applicable, amounts allocated or distributed on the
preceding Payment Date and any reconciliation of such amounts with
information provided by the Servicer prior to such current Payment Date. In
addition, Securityholders of record during any calendar year will be
furnished information for tax reporting purposes not later than the latest
date permitted by law. See "Certain Information Regarding the Securities --
Reports to Securityholders".
USE OF PROCEEDS
Unless the related Prospectus Supplement provides for other
applications, the net proceeds from the sale of the Securities of a given
series will be applied by the applicable Trust (i) to the purchase of the
Receivables from the Depositor, (ii) to make the initial deposit into the
Reserve Account, if any, and (iii) to make the deposit of the Pre-Funded
Amount into the Pre-Funding Account, if any. Unless otherwise specified in
the related Prospectus Supplement, the Depositor will use that portion of
such net proceeds paid to it with respect to any such Trust to purchase
Receivables from the Seller(s) and for general corporate purposes.
THE DEPOSITOR
Morgan Stanley ABS Capital II Inc. (the "Depositor") was incorporated in
the State of Delaware on May 5, 1997 as a wholly-owned subsidiary of Morgan
Stanley Group Inc. The Depositor maintains its principal office at 1585
Broadway, New York, New York 10036. Its telephone number is (212) 761-1817.
The only obligations, if any, of the Depositor with respect to a Series
of Certificates and/or Notes may be pursuant to certain limited
representations and warranties and limited undertakings to repurchase (or, if
so specified in related Prospectus Supplement, substitute for) Receivables
under certain circumstances, but only to the extent the related Seller
simultaneously performs its obligation to repurchase such Receivables. The
Depositor will have no ongoing servicing obligations or responsibilities with
respect to any Financed Asset. The Depositor does not have, nor is required
to have, nor is expected in the future to have, any significant assets.
As specified in the related Prospectus Supplement, the Servicer with
respect to any Series of Certificates and/or Notes may be an affiliate of the
Depositor. The Depositor anticipates that it will acquire Receivables in the
open market or in privately negotiated transactions, which may be through or
from a Seller.
Neither the Depositor, the Seller(s) nor any of their respective
affiliates will insure or guarantee the Receivables or the Certificates
and/or Notes of any series.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of
Notes of the related series will be issued pursuant to the terms of an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary does
not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Notes and the Indenture.
Unless otherwise specified in the related Prospectus Supplement, each
class of Notes will initially be represented by one or more Notes, in each
case registered in the name of the nominee of DTC (together with any
successor depository selected by the Trust, the "Depository") except as set
forth below. Unless otherwise specified in the related Prospectus Supplement,
the Notes will be available for purchase in denominations of $1,000 and
integral multiples thereof in book-entry form only. The Depositor has been
informed by DTC that DTC's nominee will be Cede, unless another nominee is
specified in the related Prospectus Supplement. Accordingly, such nominee is
expected to be the holder of record of the Notes of each class. Unless and
until Definitive Notes are issued under the limited circumstances described
herein or in the related Prospectus Supplement, no Noteholder will be
entitled to receive a physical certificate representing a Note. All
references herein and in the related Prospectus Supplement to actions by
Noteholders refer to actions taken by DTC upon instructions from its
participating organizations (the "Participants") and all references herein
and in the related Prospectus Supplement to distributions, notices, reports
and statements to Noteholders refer to distributions, notices, reports and
statements to DTC or its nominee, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC's procedures with respect
thereto. See "Certain Information Regarding the Securities -- Book-Entry
Registration" and "-- Definitive Securities".
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal
and interest on each class of Notes of a given series will be described in
the related Prospectus Supplement. The right of holders of any class of
Notes to receive payments of principal and interest may be senior or
subordinate to the rights of holders of any other class or classes of Notes
of such series, as described in the related Prospectus Supplement. Unless
otherwise provided in the related Prospectus Supplement, payments of interest
on the Notes of such series will be made prior to payments of principal
thereon. To the extent provided in the related Prospectus Supplement, a
series may include one or more classes of Strip Notes entitled to
(i) principal payments with disproportionate, nominal or no interest payments
or (ii) interest payments with disproportionate, nominal or no principal
payments. Each class of Notes may have a different Interest Rate, which may
be a fixed, variable or adjustable Interest Rate (and which may be zero for
certain classes of Strip Notes), or any combination of the foregoing. The
related Prospectus Supplement will specify the Interest Rate for each class
of Notes of a given series or the method for determining such Interest Rate.
See also "Certain Information Regarding the Securities -- Fixed Rate
Securities" and "-- Floating Rate Securities". One or more classes of Notes
of a series may be redeemable in whole or in part under the circumstances
specified in the related Prospectus Supplement, including at the end of the
Funding Period (if any) or as a result of the Servicer's exercising its
option to purchase the related Receivables Pool.
To the extent specified in any Prospectus Supplement, one or more
classes of Notes of a series may have fixed principal payment schedules, as
set forth in such Prospectus Supplement; Noteholders of such Notes would be
entitled to receive as payments of principal on any Payment Date the
applicable amounts set forth on such schedule with respect to such Notes, in
the manner and to the extent set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement,
payments to Noteholders of all classes within a series in respect of interest
will have the same priority. Under certain circumstances, the amount
available for such payments could be less than the amount of interest payable
on the Notes on any of the dates specified for payments in the related
Prospectus Supplement (each, a "Payment Date", which may be the same date as
each Distribution Date as specified in the related Prospectus Supplement), in
which case each class of Noteholders will receive its ratable share (based
upon the aggregate amount of interest due to such class of Noteholders) of
the aggregate amount available to be distributed in respect of interest on
the Notes of such series. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Credit and Cash Flow Enhancement".
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal
and interest, and any schedule or formula or other provisions applicable to
the determination thereof, of each such class will be set forth in the
related Prospectus Supplement. Payments in respect of principal and interest
of any class of Notes will be made on a pro rata basis among all the
Noteholders of such class.
THE INDENTURE
MODIFICATION OF INDENTURE. With respect to each Trust that has issued
Notes pursuant to an Indenture, the Trust and the Indenture Trustee may, with
the consent of the holders of a majority of the outstanding Notes of the
related series, execute a supplemental indenture to add provisions to, change
in any manner or eliminate any provisions of, the related Indenture, or
modify (except as provided below) in any manner the rights of the related
Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, in the absence of the consent of the holder of
each such outstanding Note affected thereby, no supplemental indenture will:
(i) change the due date of any installment of principal of or interest on any
such Note or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or change any place of
payment where or the coin or currency in which any such Note or any interest
thereon is payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the related Indenture regarding payment;
(iii) reduce the percentage of the aggregate amount of the outstanding Notes
of such series, the consent of the holders of which is required for any such
supplemental indenture or the consent of the holders of which is required for
any waiver of compliance with certain provisions of the related Indenture or
of certain defaults thereunder and their consequences as provided for in such
Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the applicable Trust, any other obligor
on such Notes, the Depositor, the Seller(s) or an affiliate of any of them;
(v) reduce the percentage of the aggregate outstanding amount of such Notes,
the consent of the holders of which is required to direct the related
Indenture Trustee to sell or liquidate the Receivables if the proceeds of
such sale would be insufficient to pay the principal amount and accrued but
unpaid interest on the outstanding Notes of such series; (vi) decrease the
percentage of the aggregate principal amount of such Notes required to amend
the sections of the related Indenture which specify the applicable percentage
of aggregate principal amount of the Notes of such series necessary to amend
such Indenture or certain other related agreements; or (vii) permit the
creation of any lien ranking prior to or on a parity with the lien of the
related Indenture with respect to any of the collateral for such Notes or,
except as otherwise permitted or contemplated in such Indenture, terminate
the lien of such Indenture on any such collateral or deprive the holder of
any such Note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trust and the applicable Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders;
provided that such action will not materially and adversely affect the
interest of any such Noteholder.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to the
Notes of a given series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of:
(i) a default for five days (or such longer period specified in the related
Prospectus Supplement) or more in the payment of any interest on any such
Note; (ii) a default in the payment of the principal of or any installment of
the principal of any such Note when the same becomes due and payable; (iii) a
default in the observance or performance of any covenant or agreement of the
applicable Trust made in the related Indenture and the continuation of any
such default for a period of 30 days after notice thereof is given to such
Trust by the applicable Indenture Trustee or to such Trust and such Indenture
Trustee by the holders of at least 25% in principal amount of such Notes then
outstanding; (iv) any representation or warranty made by such Trust in the
related Indenture or in any certificate delivered pursuant thereto or in
connection therewith having been incorrect in a material respect as of the
time made, and such breach not having been cured within 30 days after notice
thereof is given to such Trust by the applicable Indenture Trustee or to such
Trust and such Indenture Trustee by the holders of at least 25% in principal
amount of such Notes then outstanding; or (v) certain events of bankruptcy,
insolvency, receivership or liquidation of the applicable Trust. However,
the amount of principal required to be paid to Noteholders of such series
under the related Indenture will generally be limited to amounts available to
be deposited in the applicable Note Distribution Account. Therefore, unless
otherwise specified in the related Prospectus Supplement, the failure to pay
principal on a class of Notes generally will not result in the occurrence of
an Event of Default until the final scheduled Payment Date for such class of
Notes.
If an Event of Default should occur and be continuing with respect to
the Notes of any series, the related Indenture Trustee or holders of a
majority in principal amount of such Notes then outstanding may declare the
principal of such Notes to be immediately due and payable. Unless otherwise
specified in the related Prospectus Supplement, such declaration may, under
certain circumstances, be rescinded by the holders of a majority in principal
amount of such Notes then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have
the applicable Trust maintain possession of such Receivables and continue to
apply collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus
Supplement, however, such Indenture Trustee is prohibited from selling the
related Receivables following an Event of Default, other than a default in
the payment of any principal of or a default for five days or more in the
payment of any interest on any Note of such series, unless (i) the holders of
all such outstanding Notes consent to such sale, (ii) the proceeds of such
sale are sufficient to pay in full the principal of and the accrued interest
on such outstanding Notes at the date of such sale or (iii) such Indenture
Trustee determines that the proceeds of Receivables would not be sufficient
on an ongoing basis to make all payments on such Notes as such payments would
have become due if such obligations had not been declared due and payable,
and such Indenture Trustee obtains the consent of the holders of 66 2/3% of
the aggregate outstanding principal amount of such Notes.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such Notes, if
such Indenture Trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be
incurred by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the related Indenture,
the holders of a majority in principal amount of the outstanding Notes of a
given series will have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the applicable Indenture
Trustee, and the holders of a majority in principal amount of such Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in
respect of a covenant or provision of such Indenture that cannot be modified
without the waiver or consent of all the holders of such outstanding Notes.
Unless otherwise specified in the related Prospectus Supplement, no
holder of a Note of any series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
previously has given to the applicable Indenture Trustee written notice of a
continuing Event of Default, (ii) the holders of not less than 25% in
principal amount of the outstanding Notes of such series have made written
request to such Indenture Trustee to institute such proceeding in its own
name as Indenture Trustee, (iii) such holder or holders have offered such
Indenture Trustee reasonable indemnity, (iv) such Indenture Trustee has for
60 days failed to institute such proceeding and (v) no direction inconsistent
with such written request has been given to such Indenture Trustee during
such 60-day period by the holders of a majority in principal amount of such
outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or
other proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or
interest on the related Notes or for the agreements of such Trust contained
in the applicable Indenture.
CERTAIN COVENANTS. Each Indenture will provide that the related Trust
may not consolidate with or merge into any other entity, unless (i) the
entity formed by or surviving such consolidation or merger is organized under
the laws of the United States, any state or the District of Columbia,
(ii) such entity expressly assumes such Trust's obligation to make due and
punctual payments upon the Notes of the related series and the performance or
observance of every agreement and covenant of such Trust under the Indenture,
(iii) no Event of Default shall have occurred and be continuing immediately
after such merger or consolidation, (iv) such Trust has been advised that the
rating of the Notes or the Certificates of such series then in effect would
not be reduced or withdrawn by the Rating Agencies as a result of such merger
or consolidation and (v) such Trust has received an opinion of counsel to the
effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any related Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Transfer and Servicing
Agreements or certain related documents with respect to such Trust
(collectively, the "Related Documents"), sell, transfer, exchange or
otherwise dispose of any of the assets of such Trust, (ii) claim any credit
on or make any deduction from the principal and interest payable in respect
of the Notes of the related series (other than amounts withheld under the
Code or applicable state law) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or
assessed upon such Trust, (iii) dissolve or liquidate in whole or in part,
(iv) permit the validity or effectiveness of the related Indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to such Notes under such Indenture except as may be
expressly permitted thereby or (v) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance to be created on or extend
to or otherwise arise upon or burden the assets of such Trust or any part
thereof, or any interest therein or the proceeds thereof.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust". No Trust
will incur, assume or guarantee any indebtedness other than indebtedness
incurred pursuant to the related Notes and the related Indenture, pursuant to
any Advances made to it by the Servicer or otherwise in accordance with the
Related Documents.
ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture
Trustee under the related Indenture, any amounts advanced by it under the
Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to the applicable Indenture Trustee in its
individual capacity, the property and funds physically held by such Indenture
Trustee as such and any action taken by it that materially affects the
related Notes and that has not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be
discharged with respect to the collateral securing the related Notes upon the
delivery to the related Indenture Trustee for cancellation of all such Notes
or, with certain limitations, upon deposit with such Indenture Trustee of
funds sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may
resign at any time, in which event the Issuer will be obligated to appoint a
successor trustee for such series. The Issuer may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to continue
as such under the related Indenture or if such Indenture Trustee becomes
insolvent. In such circumstances, the Issuer will be obligated to appoint a
successor trustee for the applicable series of Notes. Any resignation or
removal of the Indenture Trustee and appointment of a successor trustee for
any series of Notes does not become effective until acceptance of the
appointment by the successor trustee for such series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of the
related series will be issued pursuant to the terms of a Trust Agreement or a
Pooling and Servicing Agreement, a form of each of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
The following summary does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of the
Certificates and the Trust Agreement or Pooling and Servicing Agreement, as
applicable.
Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a given series purchased by the
Depositor, each class of Certificates will initially be represented by one or
more Certificates registered in the name of the Depository, except as set
forth below. Unless otherwise specified in the related Prospectus Supplement
and except for the Certificates, if any, of a given series purchased by the
Depositor, the Certificates will be available for purchase in minimum
denominations of $1,000 in book-entry form only. The Depositor has been
informed by DTC that DTC's nominee will be Cede, unless another nominee is
specified in the related Prospectus Supplement. Accordingly, such nominee is
expected to be the holder of record of the Certificates of any series that
are not purchased by the Depositor. Unless and until Definitive Certificates
are issued under the limited circumstances described herein or in the related
Prospectus Supplement, no Certificateholder (other than the Depositor) will
be entitled to receive a physical certificate representing a Certificate.
All references herein and in the related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon instructions from the
Participants and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders refer to distributions, notices, reports and statements to
DTC or its nominee, as the case may be, as the registered holder of the
Certificates, for distribution to Certificateholders in accordance with DTC's
procedures with respect thereto. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and "-- Definitive Securities". Any
Certificates of a given series owned by the Depositor will be entitled to
equal and proportionate benefits under the applicable Trust Agreement, except
that such Certificates will be deemed not to be outstanding for the purpose
of determining whether the requisite percentage of Certificateholders have
given any request, demand, authorization, direction, notice, consent or other
action under the Related Documents (other than the commencement by the
related Trust of a voluntary proceeding in bankruptcy as described under
"Description of the Transfer and Servicing Agreements -- Insolvency Event").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of
losses, Pass Through Rate and amount of or method of determining
distributions with respect to principal and interest of each class of
Certificates will be described in the related Prospectus Supplement.
Distributions of interest on such Certificates will be made on the dates
specified in the related Prospectus Supplement (each, a "Distribution Date")
and will be made prior to distributions with respect to principal of such
Certificates. To the extent provided in the related Prospectus Supplement, a
series may include one or more classes of Strip Certificates entitled to
(i) distributions in respect of principal with disproportionate, nominal or
no interest distributions or (ii) interest distributions with
disproportionate, nominal or no distributions in respect of principal. Each
class of Certificates may have a different Pass Through Rate, which may be a
fixed, variable or adjustable Pass Through Rate (and which may be zero for
certain classes of Strip Certificates) or any combination of the foregoing.
The related Prospectus Supplement will specify the Pass Through Rate for each
class of Certificates of a given series or the method for determining such
Pass Through Rate. See also "Certain Information Regarding the Securities --
Fixed Rate Securities" and "-- Floating Rate Securities". Unless otherwise
provided in the related Prospectus Supplement, distributions in respect of
the Certificates of a given series that includes Notes may be subordinate to
payments in respect of the Notes of such series as more fully described in
the related Prospectus Supplement. Distributions in respect of interest on
and principal of any class of Certificates will be made on a pro rata basis
among all the Certificateholders of such class.
In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment or
amount of distributions in respect of interest and principal, and any
schedule or formula or other provisions applicable to the determination
thereof, of each such class shall be as set forth in the related Prospectus
Supplement.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Unless otherwise set
forth in the applicable Prospectus Supplement, interest on each class of
Fixed Rate Securities will be computed on the basis of a 360-day year of
twelve 30-day months. See "Description of the Notes -- Principal and
Interest on the Notes" and "Description of the Certificates -- Distributions
of Principal and Interest".
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities,
the "Interest Reset Period") at a rate per annum determined by reference to
an interest rate basis (the "Base Rate"), plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any, in each case as specified in
the related Prospectus Supplement. The "Spread" is the number of basis
points (one basis point equals one-hundredth of a percentage point) that may
be specified in the applicable Prospectus Supplement as being applicable to
such class, and the "Spread Multiplier" is the percentage that may be
specified in the applicable Prospectus Supplement as being applicable to such
class.
The applicable Prospectus Supplement will designate one of the following
Base Rates as applicable to a given Floating Rate Security: (i) LIBOR (a
"LIBOR Security"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate
Security"), (iii) the Treasury Rate (a "Treasury Rate Security"), (iv) the
Federal Funds Rate (a "Federal Funds Rate Security"), (v) the CD Rate (a "CD
Rate Security") or (vi) such other Base Rate as is set forth in such
Prospectus Supplement. The "Index Maturity" for any class of Floating Rate
Securities is the period of maturity of the instrument or obligation from
which the Base Rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates", or any successor publication, published
by the Board of Governors of the Federal Reserve System. "Composite
Quotations" means the daily statistical release entitled "Composite 3:30 p.m.
Quotations for U.S. Government Securities" published by the Federal Reserve
Bank of New York. "Interest Reset Date" will be the first day of the
applicable Interest Reset Period, or such other day as may be specified in
the related Prospectus Supplement with respect to a class of Floating Rate
Securities.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or
ceiling, on the rate at which interest may accrue during any interest period
and (ii) a minimum limitation, or floor, on the rate at which interest may
accrue during any interest period. In addition to any maximum interest rate
that may be applicable to any class of Floating Rate Securities, the interest
rate applicable to any class of Floating Rate Securities will in no event be
higher than the maximum rate permitted by applicable law, as the same may be
modified by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation
agent (each, a "Calculation Agent") to calculate interest rates on each such
class of Floating Rate Securities issued with respect thereto. The
applicable Prospectus Supplement will set forth the identity of the
Calculation Agent for each such class of Floating Rate Securities of a given
series, which may be either the related Trustee or Indenture Trustee with
respect to such series. All determinations of interest by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all purposes
and binding on the holders of Floating Rate Securities of a given class.
Unless otherwise specified in the applicable Prospectus Supplement, all
percentages resulting from any calculation of the rate of interest on a
Floating Rate Security will be rounded, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward.
CD RATE SECURITIES. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
CD Rate and the Spread or Spread Multiplier, if any, specified in such
Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"CD Rate" for each Interest Reset Period shall be the rate as of the second
business day prior to the Interest Reset Date for such Interest Reset Period
(a "CD Rate Determination Date") for negotiable certificates of deposit
having the Index Maturity designated in the applicable Prospectus Supplement
as published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date pertaining to such CD Rate Determination Date, then
the "CD Rate" for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index
Maturity designated in the applicable Prospectus Supplement as published in
Composite Quotations under the heading "Certificates of Deposit". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "CD Rate" for
such Interest Reset Period will be calculated by the Calculation Agent for
such CD Rate Security and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date, of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for such CD Rate Security for negotiable certificates of
deposit of major United States money center banks of the highest credit
standing (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the related
Prospectus Supplement in a denomination of $5,000,000; provided, however,
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting offered rates as mentioned in this sentence, the "CD Rate" for such
Interest Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment is
required to be made for any period following the applicable Interest Reset
Date.
COMMERCIAL PAPER RATE SECURITIES. Each Commercial Paper Rate Security
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any, specified in such Security and in the applicable
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Security as of the
second business day prior to the Interest Reset Date for such Interest Reset
Period (a "Commercial Paper Rate Determination Date") and shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper". In the event that such rate is not published
prior to 3:00 p.m., New York City time, on the Calculation Date pertaining to
such Commercial Paper Rate Determination Date, then the "Commercial Paper
Rate" for such Interest Reset Period shall be the Money Market Yield on such
Commercial Paper Rate Determination Date of the rate for commercial paper of
the specified Index Maturity as published in Composite Quotations under the
heading "Commercial Paper". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Commercial Paper Rate" for such Interest
Reset Period shall be the Money Market Yield of the arithmetic mean of the
offered rates, as of 11:00 a.m., New York City time, on such Commercial Paper
Rate Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for such Commercial Paper
Rate Security for commercial paper of the specified Index Maturity placed for
an industrial issuer whose bonds are rated "AA" or the equivalent by a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates
as mentioned in this sentence, the "Commercial Paper Rate" for such Interest
Reset Period will be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ------------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period
following the applicable Interest Reset Date.
FEDERAL FUNDS RATE SECURITIES. Each Federal Funds Rate Security will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to the Federal Funds Rate and the Spread or Spread Multiplier,
if any, specified in such Security and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal
Funds Rate Determination Date") for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)". In the event that such rate
is not published prior to 3:00 p.m., New York City time, on the Calculation
Date pertaining to such Federal Funds Rate Determination Date, the "Federal
Funds Rate" for such Interest Reset Period shall be the rate on such Federal
Funds Rate Determination Date as published in Composite Quotations under the
heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519)
or Composite Quotations, then the "Federal Funds Rate" for such Interest
Reset Period shall be the rate on such Federal Funds Rate Determination Date
made publicly available by the Federal Reserve Bank of New York which is
equivalent to the rate which appears in H.15(519) under the heading "Federal
Funds (Effective)"; provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the "Federal Funds Rate" for such Interest
Reset Period will be the same as the Federal Funds Rate in effect for the
immediately preceding Interest Reset Period. In the case of a Federal Funds
Rate Security that resets daily, the interest rate on such Security for the
period from and including a Monday to but excluding the succeeding Monday
will be reset by the Calculation Agent for such Security on such second
Monday (or, if not a business day, on the next succeeding business day) to a
rate equal to the average of the Federal Funds Rates in effect with respect
to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding business
LIBOR SECURITIES. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, with
respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Security as follows:
(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Security will determine the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period of
the Index Maturity specified in the applicable Prospectus Supplement,
commencing on such Interest Reset Date, which appear on either, as
specified in the related Prospectus Supplement, (a) the Reuters Screen
LIBO Page at approximately 11:00 a.m., London time, on such LIBOR
Determination Date, if at least two such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR Reuters") or (b) the Telerate Page 3750
("LIBOR Telerate"). For purposes of calculating LIBOR, "London Banking
Day" means any business day on which dealings in deposits in United
States dollars are transacted in the London interbank market; "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); and "Telerate Page 3750" means
the display designated as page "3750" on the Telerate Service (or such
other page as may replace the 3750 page on that service or services as
may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits). If
LIBOR is LIBOR Reuters and at least two such offered rates appear on the
Reuters Screen LIBO Page, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such offered rates as determined by the
Calculation Agent for such LIBOR Security. If neither LIBOR Reuters or
LIBOR Telerate is specified in the related Prospectus Supplement, LIBOR
will be determined as if LIBOR Telerate had been specified.
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page, or if no rate appears on the Telerate Page 3750, as
applicable, on such LIBOR Determination Date, the Calculation Agent for
such LIBOR Security will request the principal London offices of each of
four major banks in the London interbank market selected by such
Calculation Agent to provide such Calculation Agent with its offered
quotations for deposits in U.S. dollars for the period of the specified
Index Maturity, commencing on such Interest Reset Date, to prime banks
in the London interbank market at approximately 11:00 a.m., London time,
on such LIBOR Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that, in the Calculation Agent's
judgment, is representative of a single transaction in such market at
such time. If at least two such quotations are provided, "LIBOR" for
such Interest Reset Period will be the arithmetic mean of such
quotations. If fewer than two such quotations are provided, "LIBOR" for
such Interest Reset Period will be the arithmetic mean of rates quoted
by three major banks in The City of New York selected by the Calculation
Agent for such LIBOR Security at approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date for loans in U.S. dollars to
leading European banks, for the period of the specified Index Maturity,
commencing on such Interest Reset Date, and in a principal amount equal
to an amount of not less than $1,000,000 that, in the Calculation
Agent's judgment, is representative of a single transaction in such
market at such time; provided, however, that if the banks selected as
aforesaid by such Calculation Agent are not quoting rates as mentioned
in this sentence, "LIBOR" for such Interest Reset Period will be the
same as LIBOR for the immediately preceding Interest Reset Period.
TREASURY RATE SECURITIES. Each Treasury Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate for the
auction held on the Treasury Rate Determination Date for such Interest Reset
Period of direct obligations of the United States ("Treasury bills") having
the Index Maturity specified in the applicable Prospectus Supplement, as such
rate shall be published in H.15(519) under the heading "U.S. Government
Securities -- Treasury bills -- auction average (investment)" or, in the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date pertaining to such Treasury Rate Determination Date,
the auction average rate (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) on such
Treasury Rate Determination Date as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury bills having the specified Index Maturity are not published or
reported as provided above by 3:00 p.m., New York City time, on such
Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent for such Treasury Rate Security
and shall be the yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 p.m., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if the dealers selected as aforesaid by
such Calculation Agent are not quoting bid rates as mentioned in this
sentence, then the "Treasury Rate" for such Interest Reset Period will be the
same as the Treasury Rate for the immediately preceding Interest Reset
Period.
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such
Interest Reset Period falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is
so held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next succeeding week. If an auction date shall fall on any day that would
otherwise be an Interest Reset Date for a Treasury Rate Security, then such
Interest Reset Date shall instead be the business day immediately following
such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Treasury Rate Determination Date or, if such a day is not a business day, the
next succeeding business day or (b) the second business day preceding the
date any payment is required to be made for any period following the
applicable Interest Reset Date.
BOOK-ENTRY REGISTRATION
Holders of the Certificates or the Notes may hold through DTC (in the
United States) or, solely in the case of the Notes, Cedel or Euroclear (in
Europe) if they are participants of such systems, or indirectly through
organizations that are participants in such systems. The Certificates may
not be held, directly or indirectly, through Cedel or Euroclear. Cede, as
nominee for DTC, will hold the Securities. Cedel and Euroclear will hold
omnibus positions in the Notes on behalf of the Cedel Participants and the
Euroclear 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
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's participating organizations (the "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 Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the
relevant 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 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.
Unless otherwise specified in the related Prospectus Supplement,
Securityholders that are not Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
Securities may do so only through Participants and Indirect Participants. In
addition, Securityholders will receive all distributions of principal and
interest from the related Indenture Trustee or the related Trustee, as
applicable (the "Applicable Trustee"), through Participants. Under a
book-entry format, Securityholders may experience some delay in their receipt
of payments, since such payments will be forwarded by the Applicable Trustee
to DTC's nominee. DTC will forward such payments to its Participants, which
thereafter will forward them to Indirect Participants or Securityholders.
Except to the extent the Depositor holds Certificates with respect to any
series of Securities, it is anticipated that the only "Securityholder",
"Noteholder" and "Certificateholder" will be DTC's nominee. Noteholders will
not be recognized by each Indenture Trustee as Noteholders, as such term is
used in each Indenture, and Noteholders will be permitted to exercise the
rights of Noteholders only indirectly through DTC and its Participants.
Similarly, Certificateholders will not be recognized by each Trustee as
Certificateholders as such term is used in each Trust Agreement or Pooling
and Servicing Agreement, and Certificateholders will be permitted to exercise
the rights of Certificateholders 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 among Participants on whose behalf it acts with
respect to the Securities and to receive and transmit distributions of
principal of, and interest on, the Securities. Participants and Indirect
Participants with which Securityholders have accounts with respect to the
Securities similarly are required to make book-entry transfers and receive
and transmit such payments on behalf of their respective Securityholders.
Accordingly, although 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 to pledge Securities 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 has advised the Depositor that it will take any action permitted to
be taken by a Noteholder under the related Indenture or a Certificateholder
under the related Trust Agreement or Pooling and Servicing Agreement only at
the direction of one or more Participants to whose accounts with DTC the
applicable Notes or Certificates are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Participants whose holdings include such
undivided interests.
Cedel Bank, soci t anonyme ("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
and may include the Underwriter(s). 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.
The Euroclear System 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 movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in
Euroclear in any of 32 currencies, including United States dollars. The
Euroclear System includes various other services, including securities
lending and borrowing, and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers
with DTC. The Euroclear System is operated by Morgan Guaranty Trust Company
of New York, Brussels, Belgium office (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance System, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear 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 Underwriter(s).
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 or relationship with
persons holding through Euroclear Participants.
Distributions with respect to Notes held through Cedel or Euroclear will
be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures,
to the extent received by its Depositary. Such distributions will be subject
to tax reporting in accordance with relevant United States tax laws and
regulations. See "Certain Federal Income Tax Consequences" in the Prospectus
and "Global Clearance, Settlement and Tax Documentation Procedures" in Annex
I to this Prospectus Supplement. Cedel or the Euroclear Operator, as the
case may be, will take any other action permitted to be taken by a Noteholder
under the Indenture on behalf of a Cedel Participant or Euroclear Participant
only in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any
time.
In the event that any of DTC, Cedel or Euroclear should discontinue its
services, the Administrator would seek an alternative depository (if
available) or cause the issuance of Definitive Securities to the owners
thereof or their nominees in the manner described in the Prospectus under
"Certain Information Regarding the Securities -- Definitive Securities".
Except as required by law, neither the Administrator, if any, the
applicable Trustee nor the applicable Indenture Trustee, if any, will have
any liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Securities of any series
held by DTC's Nominee, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
DEFINITIVE SECURITIES
If so specified in the related Prospectus Supplement, the Notes, if any,
and the Certificates of a series will be issued in fully registered,
certificated form ("Definitive Notes" and "Definitive Certificates",
respectively, and collectively referred to herein as "Definitive Securities")
to Noteholders or Certificateholders or their respective nominees, rather
than to DTC or its nominee, only if (i) the related Administrator or Trustee,
as applicable, determines that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities
and such Administrator or Trustee is unable to locate a qualified successor
(and if it is an Administrator that has made such determination, such
Administrator so notifies the Applicable Trustee in writing), (ii) the
Administrator or Trustee, as applicable, at its option, elects to terminate
the book-entry system through DTC or (iii) after the occurrence of an Event
of Default or a Servicer Default with respect to such Securities, holders
representing at least a majority of the outstanding principal amount of the
Notes or the Certificates, as the case may be, of such series advise the
Applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) with respect to such
Notes or Certificates is no longer in the best interest of the holders of
such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Securityholders of a given series through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing the corresponding 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 Definitive
Securities will thereafter be made by the Applicable Trustee in accordance
with the procedures set forth in the related Indenture or the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, 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 Definitive Security, however, will be made only upon
presentation and surrender of such Definitive Security at the office or
agency specified in the notice of final distribution to the applicable
Securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the Applicable Trustee or of a registrar named in a notice
delivered to holders of 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.
LIST OF SECURITYHOLDERS
Unless otherwise specified in the related Prospectus Supplement with
respect to the Notes of any series, three or more holders of the Notes of
such series or one or more holders of such Notes evidencing not less than 25%
of the aggregate outstanding principal balance of such Notes may, by written
request to the related Indenture Trustee, obtain access to the list of all
Noteholders maintained by such Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
related Indenture or under such Notes. Such Indenture Trustee may elect not
to afford the requesting Noteholders access to the list of Noteholders if it
agrees to mail the desired communication or proxy, on behalf of and at the
expense of the requesting Noteholders, to all Noteholders of such series.
Unless otherwise specified in the related Prospectus Supplement with
respect to the Certificates of any series, three or more holders of the
Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the related Trustee, obtain access to the list of
all Certificateholders maintained by such Trustee for the purpose of
communicating with other Certificateholders with respect to their rights
under the related Trust Agreement or Pooling and Servicing Agreement or under
such Certificates.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that includes Notes, on or
prior to each Payment Date, the Servicer will prepare and provide to the
related Indenture Trustee a statement to be delivered to the related
Noteholders on such Payment Date. With respect to each series of Securities,
on or prior to each Distribution Date, the Servicer will prepare and provide
to the related Trustee a statement to be delivered to the related
Certificateholders. With respect to each series of Securities, each such
statement to be delivered to Noteholders will include (to the extent
applicable) the following information (and any other information so specified
in the related Prospectus Supplement) as to the Notes of such series with
respect to such Payment Date or the period since the previous Payment Date,
as applicable, and each such statement to be delivered to Certificateholders
will include (to the extent applicable) the following information (and any
other information so specified in the related Prospectus Supplement) as to
the Certificates of such series with respect to such Distribution Date or the
period since the previous Distribution Date, as applicable:
(i) the amount of the distribution allocable to principal of each
class of such Notes and to the Certificate Balance of each class of such
Certificates;
(ii) the amount of the distribution allocable to interest on or
with respect to each class of Securities of such series;
(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, each after
giving effect to all payments reported under clause (i) above on such
date;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods, as the
case may be;
(vi) the Interest Rate or Pass Through Rate for the next period for
any class of Notes or Certificates of such series with variable or
adjustable rates;
(vii) the amount of the aggregate realized losses, if any, for the
second preceding Collection Period;
(viii) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus
Supplement), if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding statement;
(ix) the aggregate Purchase Amounts for Receivables, if any, that
were repurchased or substituted for in such Collection Period;
(x) the balance of the Reserve Account (if any) on such date,
after giving effect to changes therein on such date;
(xi) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following
the end of the Funding Period (if any), the amount of any remaining
Pre-Funded Amount that has not been used to fund the purchase of
Subsequent Receivables and is being passed through as payments of
principal on the Securities of such series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii)
with respect to the Notes or the Certificates of any series will be expressed
as a dollar amount per $1,000 of the initial principal balance of such Notes
or the initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year
has been a Securityholder with respect to such Trust and received any payment
thereon a statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Certain
Federal Income Tax Consequences".
In addition, the filing with the Commission of periodic reports with
respect to each Trust will cease following completion of the reporting period
required by Rule 15d-1 of Regulation 15D under the Exchange Act.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Sale and Servicing
Agreement or Pooling and Servicing Agreement pursuant to which a Trust will
purchase Receivables from the Depositor and the Servicer will agree to
service such Receivables, each Trust Agreement (in the case of a grantor
trust, the Pooling and Servicing Agreement) pursuant to which a Trust will be
created and Certificates will be issued and each Administration Agreement
pursuant to which the Servicer (or such other person named in the related
Prospectus Supplement) will undertake certain administrative duties with
respect to a Trust that issues Notes (collectively, the "Transfer and
Servicing Agreements"). Forms of the Transfer and Servicing Agreements have
been filed as exhibits to the Registration Statement of which this Prospectus
forms a part. This summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all the provisions of the
Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On or prior to the closing date (the "Closing Date") specified in the
Prospectus Supplement for a Trust, the Seller(s) specified in such Prospectus
Supplement will transfer and assign, without recourse, to the Depositor their
respective entire interests in the related Initial Receivables and their
security interests in the related Financed Assets pursuant to a receivables
purchase agreement (a "Receivables Purchase Agreement"). On or prior to such
Closing Date, the Depositor will transfer and assign to the applicable
Trustee, without recourse, pursuant to a Sale and Servicing Agreement or a
Pooling and Servicing Agreement, as applicable, its entire interest in such
Initial Receivables, including its security interests in the related Financed
Assets. Each such Receivable will be identified in a schedule appearing as
an exhibit to such Pooling and Servicing Agreement or Sale and Servicing
Agreement (a "Schedule of Receivables"). The Applicable Trustee will,
concurrently with such transfer and assignment, execute and deliver the
related Notes and/or Certificates. The Applicable Trustee will not verify
the existence of the Receivables or review the Receivables files. Unless
otherwise provided in the related Prospectus Supplement, the net proceeds
received from the sale of the Certificates and the Notes of a given series
will be applied to the purchase of the related Receivables from the Seller(s)
and, to the extent specified in the related Prospectus Supplement, to the
deposit of the Pre-Funded Amount into the Pre-Funding Account. The related
Prospectus Supplement for a given Trust will specify whether, and the terms,
conditions and manner under which, Subsequent Receivables will be sold by the
Seller(s) to the Depositor and by the Depositor to the applicable Trust from
time to time during any Funding Period on each date specified as a transfer
date in the related Prospectus Supplement (each, a "Subsequent Transfer
Date").
In each Receivables Purchase Agreement the related Seller will represent
and warrant to the Depositor and, in each Sale and Servicing Agreement or
Pooling and Servicing Agreement, the Depositor will represent and warrant to
the applicable Trust, among other things, that: (i) the information provided
in the related Schedule of Receivables is correct in all material respects;
(ii) the Obligor on each related Receivable is required to maintain physical
damage insurance covering the Financed Asset in accordance with the
Seller(s)' normal requirements; (iii) as of the applicable Closing Date or
the applicable Subsequent Transfer Date, if any, to the best of its
knowledge, 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) as of the Closing Date
or the applicable Subsequent Transfer Date, if any, each of such Receivables
is or will be secured by a first perfected security interest in favor of the
Seller in the Financed Asset; (v) each related Receivable, at the time it was
originated, complied and, as of the Closing Date or the applicable Subsequent
Transfer Date, if any, complies in all material respects with applicable
federal and state laws, including, without limitation, consumer credit, truth
in lending, equal credit opportunity and disclosure laws; and (vi) any other
representations and warranties that may be set forth in the related
Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, as of
the last day of the second (or, if the Seller(s) elects, the first) month
following the discovery by or notice to the Seller(s) of a breach of any
representation or warranty of the Seller(s) that materially and adversely
affects the interests of the related Trust in any Receivable, the Depositor,
unless the breach is cured, will repurchase such Receivable from such Trust
and the related Seller will be obligated to simultaneously repurchase such
Receivable from the Depositor at a price equal to the unpaid principal
balance owed by the Obligor thereon plus interest thereon at the respective
APR to the last day of the month of repurchase (the "Purchase Amount").
Alternatively, if so specified in the related Prospectus Supplement, the
related Seller or the Depositor will be permitted, in a circumstance where it
would otherwise be required to repurchase a Receivable as described in the
preceding sentence, to instead substitute a comparable Receivable for the
Receivable otherwise requiring repurchase, subject to certain conditions and
eligibility criteria for the substitute Receivable to be summarized in the
related Prospectus Supplement. The repurchase obligation (or, if applicable,
the substitution alternative with respect thereto) constitutes the sole
remedy available to the Certificateholders or the Trustee and any Noteholders
or Indenture Trustee in respect of such Trust for any such uncured breach.
The Depositor's obligation to make such purchase or substitution is
contingent upon the related Seller performing its corresponding obligation to
purchase (or, if applicable, substitute for) such Receivable from the
Depositor.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, to assure uniform quality in servicing the Receivables and to
reduce administrative costs, each Trust will designate the Servicer as
custodian to maintain possession, as such Trust's agent, of the related motor
vehicle retail installment sale contracts, installment loan, or marine loans
and any other documents relating to the Receivables. The Depositor and the
Seller(s)' accounting records and computer systems will reflect the sale and
assignment of the related Receivables to the applicable Trust, and Uniform
Commercial Code ("UCC") financing statements reflecting such sales and
assignments will be filed. The Receivables will not be segregated, stamped
or otherwise marked to indicate that they have been sold to the related
Trust. If through inadvertence or otherwise, another party purchases (or
takes a security interest in) the Receivables for new value in the ordinary
course of business and takes possession of the Receivables without actual
knowledge of the related Trust's interest, the purchaser (or secured party)
will acquire an interest in the Receivables superior to the interest of the
related Trust.
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will
establish and maintain with the related Indenture Trustee one or more
accounts, in the name of the Indenture Trustee on behalf of the related
Noteholders and Certificateholders, into which all payments made on or with
respect to the related Receivables will be deposited (the "Collection
Account"). The Servicer will establish and maintain with such Indenture
Trustee an account, in the name of such Indenture Trustee on behalf of such
Noteholders, into which amounts released from the Collection Account and any
Pre-Funding Account, Reserve Account or other credit enhancement for payment
to such Noteholders will be deposited and from which all distributions to
such Noteholders will be made (the "Note Distribution Account"). The
Servicer will establish and maintain with the related Trustee an account, in
the name of such Trustee on behalf of such Certificateholders, into which
amounts released from the Collection Account and any Pre-Funding Account,
Reserve Account or other credit or cash flow enhancement for distribution to
such Certificateholders will be deposited and from which all distributions to
such Certificateholders will be made (the "Certificate Distribution
Account"). With respect to each Trust that does not issue Notes, the
Servicer will also establish and maintain the Collection Account and any
other Trust Account in the name of the related Trustee on behalf of the
related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish for each series an additional account (the "Payahead Account"), in
the name of the related Indenture Trustee, into which, to the extent required
by the Sale and Servicing Agreement, early payments by or on behalf of
Obligors on Precomputed Receivables will be deposited until such time as the
payment becomes due. Until such time as payments are transferred from the
Payahead Account to the Collection Account, they will not constitute
collected interest or collected principal and will not be available for
distribution to the applicable Noteholders or Certificateholders. The
Payahead Account will initially be maintained with the applicable Indenture
Trustee or, in the case of each Trust that does not issue Notes, the
applicable Trustee.
Any other accounts to be established with respect to a Trust, including
any Pre-Funding Account or any Reserve Account, will be described in the
related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the Note
Distribution Account and any Pre-Funding Account, Reserve Account and other
accounts identified as such in the related Prospectus Supplement
(collectively, the "Trust Accounts") will be invested as provided in the
related Sale and Servicing Agreement or Pooling and Servicing Agreement in
Eligible Investments. "Eligible Investments" are generally limited to
investments acceptable to the Rating Agencies rating such Securities as being
consistent with the rating of such Securities and may include motor vehicle,
recreational vehicle and/or boat retail sale contracts or installment loans.
Except as described below or in the related Prospectus Supplement, Eligible
Investments are limited to obligations or securities that mature on or before
the date of the next distribution for such series. However, to the extent
permitted by the Rating Agencies, funds in any Reserve Account may be
invested in securities that will not mature prior to the date of the next
distribution with respect to such Certificates or Notes 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 the Reserve Account. If the amount
required to be withdrawn from any Reserve Account to cover shortfalls in
collections on the related Receivables (as provided in the related Prospectus
Supplement) exceeds the amount of cash in the Reserve Account, a temporary
shortfall in the amounts distributed to the related Noteholders or
Certificateholders could result, which could, in turn, increase the average
life of the Notes or the Certificates of such series. Investment earnings on
funds deposited in the Trust Accounts, net of losses and investment expenses
(collectively, "Investment Earnings"), shall be allocated in the manner
described in the related Prospectus Supplement.
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 have 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 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), (i) which has either (A) a long-term unsecured debt rating acceptable
to the Rating Agencies or (B) 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.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with
the related Sale and Servicing Agreement or Pooling and Servicing Agreement,
follow such collection procedures as it follows with respect to motor
vehicle, recreational vehicle or marine retail installment sale contracts,
installment loans, purchase money notes or other notes that it services for
itself or others and that are comparable to such Receivables. Consistent
with its normal procedures, the Servicer may, in its discretion, arrange with
the Obligor on a Receivable to extend or modify the payment schedule, but no
such arrangement will, for purposes of any Sale and Servicing Agreement or
Pooling and Servicing Agreement, modify the original due dates or the amount
of the scheduled payments or extend the final payment date of any Receivable
beyond the Final Scheduled Maturity Date (as such term is defined with
respect to any Receivables Pool in the related Prospectus Supplement). Some
of such arrangements may result in the Servicer purchasing the Receivable for
the Purchase Amount, while others may result in the Servicer making Advances.
The Servicer may sell the Financed Asset securing the respective Receivable
at public or private sale, or take any other action permitted by applicable
law. See "Certain Legal Aspects of the Receivables".
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "Collection Period") into the related
Collection Account within two business days after receipt thereof. However,
at any time that and for so long as (i) the Servicer (or its successor) is
the Servicer, (ii) there exists no Servicer Default and (iii) each other
condition to making deposits less frequently than daily as may be specified
by the Rating Agencies or set forth in the related Prospectus Supplement is
satisfied, the Servicer will not be required to deposit such amounts into the
Collection Account until on or before the applicable Distribution Date or
Payment Date. Pending deposit into the Collection Account, collections may
be invested by the Servicer at its own risk and for its own benefit and will
not be segregated from its own funds. If the Servicer were unable to remit
such funds, Securityholders might incur a loss. To the extent set forth in
the related Prospectus Supplement, the Servicer may, in order to satisfy the
requirements described above, obtain a letter of credit or other security for
the benefit of the related Trust to secure timely remittances of collections
on the related Receivables and payment of the aggregate Purchase Amount with
respect to Receivables purchased by the Servicer.
Collections on a Precomputed Receivable made during a Collection Period
shall be applied first to repay any outstanding Precomputed Advances made by
the Servicer with respect to such Receivable (as described below), and to the
extent that collections on a Precomputed Receivable during a Collection
Period exceed the outstanding Precomputed Advances, the collections shall
then be applied to the scheduled payment on such Receivable. If any
collections remaining after the scheduled payment is made are insufficient to
prepay the Precomputed Receivable in full, then, unless otherwise provided in
the related Prospectus Supplement, generally such remaining collections (the
"Payaheads") shall be transferred to and kept in the Payahead Account, until
such later Collection Period as the collections may be transferred to the
Collection Account and applied either to the scheduled payment or to prepay
such Receivable in full.
ADVANCES
Unless otherwise provided in the related Prospectus Supplement, to the
extent the collections of interest and principal on a Precomputed Receivable
with respect to a Collection Period fall short of the respective scheduled
payment, the Servicer will make a Precomputed Advance of the shortfall. The
Servicer will be obligated to make a Precomputed Advance on a Precomputed
Receivable only to the extent that the Servicer, in its sole discretion,
expects to recoup such advance from subsequent collections or recoveries on
such Receivable or other Precomputed Receivables in the related Receivables
Pool. The Servicer will deposit the Precomputed Advance in the applicable
Collection Account on or before the business day preceding the applicable
Distribution Date or Payment Date. The Servicer will recoup its Precomputed
Advance from subsequent payments by or on behalf of the respective Obligor or
from insurance or liquidation proceeds with respect to the Receivable and
will release its right to reimbursement in conjunction with its purchase of
the Receivable as Servicer, or, upon the determination that reimbursement
from the preceding sources is unlikely, will recoup its Precomputed Advance
from any collections made on other Precomputed Receivables in the related
Receivables Pool.
Unless otherwise provided in the related Prospectus Supplement, on or
before the business day prior to each applicable Distribution Date or Payment
Date, the Servicer shall deposit into the related Collection Account as a
Simple Interest Advance an amount equal to the amount of interest that would
have been due on the related Simple Interest Receivables at their respective
APRs for the related Collection Period (assuming that such Simple Interest
Receivables are paid on their respective due dates) minus the amount of
interest actually received on such Simple Interest Receivables during the
related Collection Period. If such calculation results in a negative number,
an amount equal to such amount shall be paid to the Servicer in reimbursement
of outstanding Simple Interest Advances. In addition, in the event that a
Simple Interest Receivable becomes a Liquidated Receivable (as such term is
defined in the related Prospectus Supplement), the amount of accrued and
unpaid interest thereon (but not including interest for the then current
Collection Period) shall be withdrawn from the Collection Account and paid to
the Servicer in reimbursement of outstanding Simple Interest Advances. No
advances of principal will be made with respect to Simple Interest
Receivables. As used herein, "Advances" means both Precomputed Advances and
Simple Interest Advances.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the Prospectus Supplement with respect to
any Trust, the Servicer will be entitled to receive the Servicing Fee for
each Collection Period in an amount equal to a specified percentage per annum
(as set forth in the related Prospectus Supplement, the "Servicing Fee Rate")
of the Pool Balance as of the first day of the related Collection Period (the
"Servicing Fee"). The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates or 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 of the given series.
Unless otherwise provided in the related Prospectus Supplement with
respect to a given Trust, the Servicer will also collect and retain any late
fees, prepayment charges and other administrative fees or similar charges
allowed by applicable law with respect to the related Receivables and will be
entitled to reimbursement from such 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 motor vehicle, recreational vehicle
and boat receivables as an agent for their beneficial owner, including
collecting and posting all payments, responding to inquiries of Obligors on
the Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors, paying costs of collections
and disposition of defaults and policing the collateral. The Servicing Fee
also will compensate the Servicer for administering the particular
Receivables Pool, including making Advances, accounting for collections and
furnishing monthly and annual statements to the related Trustee and Indenture
Trustee with respect to distributions and generating federal income tax
information for such Trust and for the related Noteholders and
Certificateholders. The Servicing Fee also will reimburse the Servicer for
certain taxes, the fees of the related Trustee and Indenture Trustee, if any,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering the applicable Receivables Pool.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment Date
or Distribution Date, as applicable, 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 Trustee to the Noteholders and the
Certificateholders of such series. The timing, calculation, allocation,
order, source, priorities of and requirements for all payments to 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 Trust, on each Payment Date and Distribution Date,
as applicable, collections on the related Receivables will be transferred
from the Collection Account to the Note Distribution Account, if any, and the
Certificate Distribution Account for distribution to Noteholders, if any, and
Certificateholders to the extent provided in the related Prospectus
Supplement. Credit enhancement, such as a Reserve Account, will 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 one or more
classes of Certificates of such series may be subordinate to payments in
respect of Notes, if any, of such series or other classes of Certificates of
such series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Securities of a given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in the related
Prospectus Supplement, credit and cash flow enhancement may be in the form of
subordination of one or more classes of Securities, Reserve Accounts,
over-collateralization, letters of credit, credit or liquidity facilities,
surety bonds, guaranteed investment contracts, swaps or other interest rate
protection agreements, repurchase obligations, yield supplement agreements,
other agreements with respect to third party payments or other support, cash
deposits or such other arrangements as may be described in the related
Prospectus Supplement or any combination of two or more of the foregoing. If
specified in the applicable Prospectus Supplement, credit or cash flow
enhancement for a class of Securities may cover one or more other classes of
Securities of the same series, and credit or cash flow enhancement for a
series of Securities may cover one or more other series of Securities.
The presence of a Reserve Account and other forms of credit enhancement
for the benefit of any class or series of Securities is intended to enhance
the likelihood of receipt by the Securityholders of such class or series of
the full amount of principal and interest due thereon and to decrease the
likelihood that such Securityholders will experience losses. The credit
enhancement for a class or series of Securities may not provide protection
against all risks of loss and may not guarantee repayment of the entire
principal balance and interest thereon; any such limitations will be
described in the related Prospectus Supplement. 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.
RESERVE ACCOUNT. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Depositor will establish for a series or class of Securities
an account, as specified in the related Prospectus Supplement (the "Reserve
Account"), which will be maintained with the related Trustee or Indenture
Trustee, as applicable. Unless otherwise provided in the related Prospectus
Supplement, the Reserve Account will be funded by an initial deposit by the
Depositor or such other person specified in the related Prospectus Supplement
on the Closing Date in the amount set forth in the related Prospectus
Supplement and, if the related series has a Funding Period, will also be
funded on each Subsequent Transfer Date to the extent described in the
related Prospectus Supplement. As further described in the related
Prospectus Supplement, the amount on deposit in the Reserve Account will be
increased on each Distribution Date or Payment Date thereafter up to the
Specified Reserve Account Balance (as defined in the related Prospectus
Supplement) by the deposit therein of the amount of collections on the
related Receivables remaining on each such Distribution Date or Payment Date
after the payment of all other required payments and distributions on such
date. The related Prospectus Supplement will describe the circumstances and
manner under which distributions may be made out of the Reserve Account,
either to holders of the Securities covered thereby, to the Depositor or such
other person specified in the related Prospectus Supplement.
NET DEPOSITS
As an administrative convenience, unless the Servicer is required to
remit collections daily (see "-- Collections" above), the Servicer will be
permitted to make the deposit of collections, aggregate Advances and Purchase
Amounts for any Trust for or with respect to the related Collection Period
net of distributions to be made to the Servicer for such Trust with respect
to such Collection Period. The Servicer may cause to be made a single, net
transfer from the Collection Account to the related Payahead Account, if any,
or vice versa. The Servicer, however, will account to the Trustee, any
Indenture Trustee, the Noteholders, if any, and the Certificateholders with
respect to each Trust as if all deposits, distributions and transfers were
made individually. With respect to any Trust that issues both Certificates
and Notes, if the related Payment Dates do not coincide with Distribution
Dates, all distributions, deposits or other remittances made on a Payment
Date will be treated as having been distributed, deposited or remitted on the
Distribution Date for the applicable Collection Period for purposes of
determining other amounts required to be distributed, deposited or otherwise
remitted on such Distribution Date.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date or Payment Date with respect to each
series of Securities, the Servicer will provide to the applicable Indenture
Trustee, if any, and the applicable Trustee as of the close of business on
the last day of the preceding 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
"Certain Information Regarding the Securities -- Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that a firm of independent public accountants will furnish to
the related Trust and Indenture Trustee or Trustee, as applicable, annually a
statement as to compliance by the Servicer during the preceding twelve months
(or, in the case of the first such certificate, from the applicable Closing
Date) with certain standards relating to the servicing of the applicable
Receivables, the Servicer's accounting records and computer files with
respect thereto and certain other matters.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will also provide for delivery to the related Trust and Indenture Trustee or
Trustee, as applicable, substantially simultaneously with the delivery of
such accountants' statement referred to above, of a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, throughout the preceding twelve months (or, in the
case of the first such certificate, from the Closing Date) or, if there has
been a default in the fulfillment of any such obligation, describing each
such default. The Servicer has agreed to give each Indenture Trustee and
each Trustee notice of certain Servicer Defaults under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, as applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Servicer may not resign from its obligations and duties
as Servicer thereunder, except upon determination that the Servicer's
performance of such duties is no longer permissible under applicable law. No
such resignation will become effective until the related Indenture Trustee or
Trustee, as applicable, or a successor servicer has assumed the Servicer's
servicing obligations and duties under such Sale and Servicing Agreement or
Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will further provide that neither the Servicer nor any of its directors,
officers, employees and agents will be under any liability to the related
Trust or the related Noteholders or Certificateholders for taking any action
or for refraining from taking any action pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement or for errors in judgment;
except that neither the Servicer nor any such person will be protected
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of the Servicer's
duties thereunder or by reason of reckless disregard of its obligations and
duties thereunder. In addition, each Sale and Servicing Agreement and
Pooling and Servicing Agreement will provide that the Servicer is under no
obligation to appear in, prosecute or defend any legal action that is not
incidental to the Servicer's servicing responsibilities under such Sale and
Servicing Agreement or Pooling and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability.
Under the circumstances specified in each Sale and Servicing Agreement
and Pooling and Servicing 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, which corporation or other entity in each of
the foregoing cases assumes the obligations of the Servicer, will be the
successor of the Servicer under such Sale and Servicing Agreement or Pooling
and Servicing Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of (i) any failure by the Servicer to
deliver to the Applicable Trustee for deposit in any of the Trust Accounts or
the Certificate Distribution Account any required payment or to direct the
Applicable Trustee to make any required distributions therefrom, which
failure continues unremedied for three business days after written notice
from the Applicable Trustee is received by the Servicer or after discovery of
such failure 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 Sale and Servicing Agreement or Pooling and Servicing Agreement, which
failure materially and adversely affects the rights of the Noteholders or the
Certificateholders of the related series and which continues unremedied for
60 days after the giving of written notice of such failure (A) to the
Servicer or the Depositor, as the case may be, by the Applicable Trustee or
(B) to the Servicer and to the Applicable Trustee by holders of Notes or
Certificates of such series, as applicable, evidencing not less than 25% in
principal amount of such outstanding Notes or of such Certificate Balance;
and (iii) the occurrence of an Insolvency Event with respect to the Servicer.
"Insolvency Event" means, with respect to any Person, any of the following
events or actions: certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings with respect to
such Person and certain actions by such Person indicating its insolvency,
reorganization pursuant to bankruptcy proceedings or inability to pay its
obligations.
RIGHTS UPON SERVICER DEFAULT
In the case of any Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, as long as a Servicer Default
under a Sale and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related series evidencing not
less than 25% of the principal amount of such Notes then outstanding may
terminate all the rights and obligations of the Servicer under such Sale and
Servicing Agreement, whereupon such Indenture Trustee or a successor servicer
appointed by such Indenture Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under such Sale and Servicing
Agreement and will be entitled to similar compensation arrangements. In the
case of any Trust that has not issued Notes, unless otherwise provided in the
related Prospectus Supplement, as long as a Servicer Default under the
related Pooling and Servicing Agreement remains unremedied, the related
Trustee or holders of Certificates of the related series evidencing not less
than 25% of the principal amount of such Certificates then outstanding may
terminate all the rights and obligations of the Servicer under such Pooling
and Servicing Agreement, whereupon such Trustee or a successor servicer
appointed by such Trustee will succeed to all the responsibilities, duties
and liabilities of the Servicer under such Pooling and Servicing Agreement
and will be entitled to similar compensation arrangements. If, however, a
bankruptcy trustee or similar official has been appointed for the Servicer,
and no Servicer Default other than such appointment has occurred, such
trustee or official may have the power to prevent such Indenture Trustee,
such Noteholders, such Trustee or such Certificateholders from effecting a
transfer of servicing. In the event that such Indenture Trustee or 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 $100,000,000 and whose regular business includes the servicing of
motor vehicle receivables. Such Indenture Trustee or Trustee may make such
arrangements for compensation to be paid, which in no event may be greater
than the servicing compensation to the Servicer under such Sale and Servicing
Agreement or Pooling and Servicing Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, the holders of Notes
evidencing at least a majority in principal amount of the then outstanding
Notes of the related series (or the holders of the Certificates of such
series evidencing not less than a majority of the outstanding Certificate
Balance, in the case of any Servicer Default which does not adversely affect
the related Indenture Trustee or such Noteholders) may, on behalf of all such
Noteholders and Certificateholders, waive any default by the Servicer in the
performance of its obligations under the related Sale and Servicing Agreement
and its consequences, except a Servicer Default in making any required
deposits to or payments from any of the Trust Accounts or to the Certificate
Distribution Account in accordance with such Sale and Servicing Agreement.
With respect to each Trust that has not issued Notes, holders of Certificates
of such series evidencing not less than a majority of the principal amount of
such Certificates then outstanding may, on behalf of all such
Certificateholders, waive any default by the Servicer in the performance of
its obligations under the related Pooling and Servicing Agreement, except a
Servicer Default in making any required deposits to or payments from the
Certificate Distribution Account or the related Trust Accounts in accordance
with such Pooling and Servicing Agreement. No such waiver will impair such
Noteholders' or Certificateholders' rights with respect to subsequent
defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each of
the Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Transfer and Servicing Agreements or of
modifying in any manner the rights of such Noteholders or Certificateholders;
provided that such action will not, in the opinion of counsel satisfactory to
the related Trustee or Indenture Trustee, as applicable, materially and
adversely affect the interest of any such Noteholder or Certificateholder.
Unless otherwise specified in the related Prospectus Supplement, the Transfer
and Servicing Agreements may also be amended by the Depositor, the Servicer,
the related Trustee and any related Indenture Trustee with the consent of the
holders of Notes evidencing at least a majority in principal amount of then
outstanding Notes, if any, of the related series and the holders of the
Certificates of such series evidencing at least a majority of the principal
amount of such Certificates then outstanding, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of such Transfer and Servicing Agreements or of modifying in any manner the
rights of such Noteholders or Certificateholders; provided, however, that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the related
Receivables or distributions that are required to be made for the benefit of
such Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the Notes or Certificates of such series which are required to
consent to any such amendment, without the consent of the holders of all the
outstanding Notes or Certificates, as the case may be, of such series.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect
to the related Trust without the unanimous prior approval of all
Certificateholders (including the Depositor) of such Trust and the delivery
to such Trustee by each such Certificateholder (including the Depositor) of a
certificate certifying that such Certificateholder reasonably believes that
such Trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and
the satisfaction and discharge of the related Indenture, the related Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the
Depositor, the related Trustee and the related Indenture Trustee, if any,
pursuant to the Transfer and Servicing Agreements will terminate upon the
earlier 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, (ii) the payment to Noteholders, if any, and
Certificateholders of the related series of all amounts required to be paid
to them pursuant to the Transfer and Servicing Agreements and (iii) the
occurrence of either event described below.
Unless otherwise provided in the related Prospectus Supplement, in order
to avoid excessive administrative expense, the Servicer will be permitted at
its option to purchase from each Trust, as of the end of any applicable
Collection Period, if the then outstanding Pool Balance with respect to the
Receivables held by such Trust is 5% (or such other percentage as is
specified in the related Prospectus Supplement) or less of the Initial Pool
Balance (as defined in the related Prospectus Supplement, the "Initial Pool
Balance"), all remaining related Receivables at a price equal to the
aggregate of the Purchase Amounts thereof as of the end of such Collection
Period.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the Applicable Trustee will, within ten days following a
Distribution Date or 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 the Applicable
Trustee receives satisfactory bids as described in such Prospectus
Supplement, then the Receivables remaining in such Trust 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 or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
The person named as such in the related Prospectus Supplement (the
"Administrator"), will enter into an agreement (as amended and supplemented
from time to time, an "Administration Agreement") with each Trust that issues
Notes and the related Indenture Trustee pursuant to which the Administrator
will agree, to the extent provided in such Administration Agreement, to
provide the notices and to perform other administrative obligations required
by the related Indenture. Unless otherwise specified in the related
Prospectus Supplement with respect to any such Trust, as compensation for the
performance of the Administrator's obligations under the applicable
Administration Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly administration fee
in an amount equal to $100 per year, or such other amount as may be set forth
in the related Prospectus Supplement (the "Administration Fee"), which fee
will be paid by the Servicer.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The Receivables will be treated by each Trust as "chattel paper" as
defined in the UCC. Pursuant to the UCC, the sale of chattel paper is
treated in a manner similar to a security interest in chattel paper. In
order to protect each Trust's ownership or security interest in its
Receivables, the Depositor will file UCC-1 financing statements with the
appropriate authorities in the States of New York, Delaware and any other
states deemed advisable by the Depositor to give notice of such Trust's and
any related Indenture Trustee's ownership of and security interest in the
Receivables and their proceeds. Under each Sale and Servicing Agreement and
Pooling and Servicing Agreement, the Servicer will be obligated to maintain
the perfection of each Trust's and any related Indenture Trustee's interest
in the Receivables. It should be noted, however, that a purchaser of chattel
paper who gives new value and takes possession of its in the ordinary course
of such purchaser's business has priority over a security interest, including
an ownership interest, in the chattel paper that is perfected by filing UCC-1
financing statements, and not by possession of such chattel paper by the
original secured party, if such purchaser acts in good faith without
knowledge that the related chattel paper is subject to a security interest,
including an ownership interest. Any such purchaser would not be deemed to
have such knowledge because there are UCC filings and would not learn of the
sale of or security interest in the Receivables from a review of the
Receivables since they would not be marked to show such sale.
SECURITY INTEREST IN VEHICLES
In states in which retail installment sale contracts and installment
loans such as the Motor Vehicle and Recreational Vehicle Receivables evidence
the credit sale of automobiles, light-duty trucks or recreational vehicles by
dealers to obligors, the contracts or loans also constitute personal property
security agreements and include grants of security interests in the vehicles
under the applicable UCC. Perfection of security interests in the
automobiles and recreational vehicles is generally governed by the motor
vehicle registration laws of the state in which the vehicle is located. In
all states in which the Receivables have been originated, except as noted
below, a security interest in Financed Vehicles is perfected by obtaining the
certificate of title to the Financed Vehicle or notation of the secured
party's lien on the Financed Vehicle's certificate of title. Notwithstanding
the foregoing, in certain states, folding camping trailers and/or slide-in
campers, which may constitute the Financed Vehicle with respect to certain
Recreational Vehicle Receivables, are not subject to state titling and
vehicle registration laws and a security interest in such recreation vehicles
is perfected by filing pursuant to the provisions of the UCC.
Unless otherwise specified in the related Prospectus Supplement, each
Seller will be obligated to have taken all actions necessary under the laws
of the state in which the Financed Vehicle is located to perfect its security
interest in the Financed Vehicle securing the related Receivable purchased by
it from a Dealer, including, where applicable, by having a notation of its
lien recorded on such vehicle's certificate of title or, if appropriate, by
perfecting its security interest in the related recreational vehicles under
the UCC. Because the Servicer will continue to service the contracts and
loans, the Obligors on the contracts and loans will not be notified of the
sales from a Seller to the Depositor or from the Depositor to the Trust, and
no action will be taken to record the transfer of the security interest from
a Seller to the Depositor or from the Depositor to the Trust by amendment of
the certificates of title for the Financed Vehicles or Boats or otherwise.
Pursuant to each Receivables Purchase Agreement, each Seller will assign
to the Depositor its interests in the Financed Vehicles securing the Motor
Vehicle and Recreational Vehicle Receivables assigned by that Seller to the
Depositor and, with respect to each Trust, pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, the Depositor will
assign its interests in the Financed Vehicles or Boats securing the related
Receivables to such Trust. However, because of the administrative burden and
expense, none of the Seller, the Depositor, the Servicer or the related
Trustee will amend any certificate of title to identify either the Depositor
or such Trust as the new secured party on such certificate of title relating
to a Financed Vehicle nor will any such entity execute and file any transfer
instrument (including, among other instruments, UCC-3 assignments for those
Financed Recreational Vehicles for which perfection is governed by the UCC).
In most states, an assignment such as that under each Receivables
Purchase Agreement, Sale and Servicing Agreement or Pooling and Servicing
Agreement is an effective conveyance of a security interest without amendment
of any lien noted on a vehicle's certificate of title or the execution or
filing of any transfer instrument, and the assignee succeeds thereby to the
assignor's rights as secured party. In some states, however, in the absence
of such an amendment, execution or filing, the assignment to the Applicable
Trustee of a security interest in Financed Vehicles registered therein may
not be effective or such security interest may not be perfected. If any
otherwise effectively assigned security interest in favor of the Applicable
Trustee is not perfected, such assignment of the security interest to such
Trustee may not be effective against creditors or a trustee in bankruptcy of
the applicable Seller, which continues to be specified as lienholder on any
certificates of title or as secured party on any UCC filing. However, UCC
financing statements with respect to the transfer of each Seller's security
interest in related Financed Vehicles to the Depositor and the transfer to
the applicable Trust of the Seller's security interest in such Financed
Vehicles will be filed. In addition, the Servicer will continue to hold any
certificates of title relating to the Financed Vehicles in its possession as
custodian for such Trust pursuant to the related Sale and Servicing Agreement
or Pooling and Servicing Agreement. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables".
In addition, even in those states where an assignment such as that under
each Receivables Purchase Agreement, Sale and Servicing Agreement or Pooling
and Servicing Agreement is an effective conveyance of a security interest
without amendment of any lien noted on a vehicle's certificate of title, by
not identifying a Trust as the secured party on the certificate of title, the
security interest of such Trust in the vehicle could be defeated through
fraud or negligence. In such states, in the absence of fraud or forgery by
the vehicle owner or the Seller or administrative error by state or local
agencies, the notation of the Seller's lien on the certificates of title will
be sufficient to protect a Trust against the rights of subsequent purchasers
of a Financed Vehicle or subsequent lenders who take a security interest in a
Financed Vehicle. If there are any Financed Vehicles as to which the Seller
failed to obtain a perfected security interest, the security interest of the
related Trust would be subordinate to, among others, the interests of
subsequent purchasers of the Financed Vehicles and holders of perfected
security interests therein. Such a failure, however, would constitute a
breach of the warranties of the Depositor under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement and of the related
Seller under the Receivables Purchase Agreement and would create an
obligation of the Depositor to repurchase the related Receivable from the
Trust and of the related Seller to simultaneously repurchase the related
Receivable from the Depositor unless the breach were cured. See "Description
of the Transfer and Servicing Agreements -- Sale and Assignment of
Receivables" and "Special Considerations -- Certain Legal Aspects -- Security
Interests in Financed Vehicles or Boats".
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the owner thereof re-registers the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to re-register a
vehicle. Accordingly, a secured party must surrender possession if it holds
the certificate of title to the vehicle or, in the case of a vehicle
registered in a state providing for the notation of a lien on the certificate
of title but not possession by the secured party, the secured party would
receive notice of surrender if the security interest is noted on the
certificate of title. Thus, the secured party would have the opportunity to
re-perfect its security interest in the vehicle in the state of relocation.
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 a certificate of title for
registration of a motor vehicle or recreational vehicle, re-registration
could defeat perfection. In the ordinary course of servicing motor vehicle
or recreational vehicle receivables, the Servicer takes steps to effect
re-perfection upon receipt of notice of re-registration or information from
the obligor as to relocation. Similarly, when an obligor sells a vehicle, the
Servicer must surrender possession of the certificate of title or will
receive notice as a result of its lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related loan before
release of the lien. Under each Sale and Servicing Agreement and Pooling and
Servicing Agreement, the Servicer will be obligated to take appropriate
steps, at the Servicer's expense, to maintain perfection of security
interests in the Financed Vehicles and is obligated to purchase the related
Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle or recreational vehicle and liens for unpaid taxes take priority over
even a perfected security interest in a financed vehicle. The Code also
grants priority to certain federal tax liens over the lien of a secured
party. The laws of certain states and federal law permit the confiscation of
vehicles by governmental authorities under certain circumstances if used in
unlawful activities, which may result in the loss of a secured party's
perfected security interest in the confiscated vehicle or boat. Under each
Receivables Purchase Agreement, the Seller will represent to the related
Trust that, as of the date the related Receivable is sold to such Trust, each
security interest in a Financed Vehicle is or will be prior to all other
present liens (other than tax liens and other liens that arise by operation
of law) upon and security interests in such Financed Vehicle. However, liens
for repairs or taxes could arise, or the confiscation of a Financed Vehicle
could occur, at any time during the term of a Receivable. No notice will be
given to the Trustee, any Indenture Trustee, any Noteholders or the
Certificateholders in respect of a given Trust if such a lien arises or
confiscation occurs and any such lien or confiscation arising after the
applicable Closing Date would not give rise to the related Seller's
repurchase obligation under the applicable Receivables Purchase Agreement.
SECURITY INTERESTS IN BOATS
Generally, security interests in boats may be perfected in one of three
ways: in "title" states, a security interest is perfected by notation of the
secured party's lien on the certificate of title issued by an applicable
state motor vehicle department or other appropriate state agency; in other
states, a security interest may be perfected by filing a UCC-1 financing
statement, however, a purchase money lien in consumer goods is perfected
without any filing requirement; and if a boat qualifies for documentation
under Federal law, a Preferred Mortgage may be obtained under the Ship
Mortgage Act by filing the mortgage with the Secretary of Transportation and
endorsing the secured party's lien on the certificate of documentation.
Vessels of at least five net tons qualify for documentation under Federal
law. If documented, the boat becomes a "vessel of the United States" and the
exclusive method for perfecting a security interest in a "vessel of the
United States" is to comply with Federal law. Accordingly, a Preferred
Mortgage under the Ship Mortgage Act supersedes a security interest perfected
under state law.
The related Seller will represent that it has taken such measures
necessary to perfect its security interest in each related Financed Boat
under the laws of the state in which the Financed Boat is registered or the
Ship Mortgage Act, as applicable. Typically, a Dealer will make proper and
prompt application to any applicable state motor vehicle department or other
appropriate state agency to have a notation of the lien made on the
certificate of title of each Financed Boat at the time of sale if the
Financed Boat is subject to a title statute. When a UCC-1 financing
statement is filed, the Dealer is required to obtain the necessary signature
on the UCC-1 financing statement to allow filing by the related Seller. If
under Federal or state law a filing or other action is required to perfect a
security interest and if the related Seller, because of clerical error or
otherwise, has failed to take such action with respect to a Financed Boat,
the related Seller will not have a perfected security interest in the
Financed Boat under such law and its security interest may be subordinate to
the interest of, among others, subsequent purchasers of the Financed Boat,
holders of perfected security interests and the bankruptcy trustee of the
Obligor. The related Seller's state law security interest may also be
subordinate to such third parties in the event of fraud or forgery by the
Obligor or administrative error by state recording officials or if the
Financed Boat is documented under Federal law. In addition, under certain
certificate of title statutes the related Seller must perfect is security
interest in boat motors otherwise subject to certificate of title statutes
under the UCC.
Federal law requires documentation under the Ship Mortgage Act of all
boats over five net tons in weight and 30 feet in length. Once documented, a
Preferred Mortgage under the Ship Mortgage Act is obtained. If a qualifying
Financed Boat is not documented or if the documentation, because of clerical
error or otherwise, fails to comply with applicable procedures under Federal
regulations, the related Seller will not have a Preferred Mortgage on the
Financed Boat. In such case, the related Seller's security interest under
state law will still be effective. However, if the Financed Boat is later
documented by a third party, the related Seller's state law security interest
will cease to be perfected, and the related Seller will be subordinated to
the interests of, among others, subsequent purchasers of the Financed Boat,
holders of security interests perfected under Federal law and the trustee-in-
bankruptcy of the Obligor.
A security interest perfected by a Preferred Mortgage has a nationwide
scope and no further action is necessary when an Obligor moves or relocates
the collateral. Security interests perfected under state law may have to be
refiled if the Obligor moves to a state other than the state in which a
security interest is originally perfected and in addition if the security
interest is perfected under the UCC, a new filing must be made under the UCC
in order to continue the perfected security interest.
If the security interest in the boat is perfected under a title statute
and the related Obligor moves to a state other than the state in which the
boat is registered, under the laws of most title states the perfection of the
security interest in the boat would continue for a brief period of time after
such relocation. A majority of states issuing certificates of title on boats
require surrender of a certificate of title to reregister a boat. In those
states that also provide for possession of the certificate of title by the
secured party, the related Seller must surrender possession of the
certificate of title in such circumstance for any related Financed Boat to be
reregistered. Some states do not give the secured party possession of the
certificate of title, but indicate the secured party on the certificate of
title and provide notice to such secured party of surrender of the
certificate of title by another person. If either the Servicer is in
possession of a certificate of title that must be surrendered to reregister
the Financed Boat or the Servicer receives notice of any surrender of the
certificate of title by another person, the Servicer would then have the
opportunity to continue the perfection of the security interest in the
Financed Boat in the state of registration. If the Obligor moves to a state
which does not require surrender of a certificate of title for reregistration
of a boat, re-registration could defeat perfection. In the ordinary course
of servicing its portfolio of marine contracts, the Servicer generally takes
steps to effect such perfection upon receipt of notice of surrender or
information from the Obligor as to relocation in those states that require
any action to be taken. Similarly, when an Obligor sells a boat, under the
laws of many states, the purchaser cannot reregister the boat unless the
related lienholder of record (which in the case of the Financed Boats covered
by such laws would be the related Seller) surrenders possession of the
certificate of title and accordingly the Servicer, in such circumstance,
would have an opportunity to require satisfaction of the related Receivable
before release of the lien.
If the related Seller has perfected the related Seller's security
interest by the filing of a UCC-1 financing statement, or the Obligor moves
from a title state to a non-title state, the Servicer will be required to
file a UCC-1 financing statement in the new state of the Obligor as soon as
possible after receiving notice of the Obligor's change of residence. UCC-1
financing statements expire after five years. When the term of a loan
exceeds five years, the filing must be continued in order to maintain the
related Seller's perfected security interest. The Servicer will be required
to take steps to effect such continuation. In the event that an Obligor
moves to a state other than the state in which the UCC-1 financing statement
is filed or in certain states to a different county in such state, under the
laws of most states the perfection of the security interest in the Financed
Boat would continue for four months after such relocation, unless the
perfection in the original jurisdiction would have expired earlier. A new
financing statement must be filed in the state of relocation or, if such
state is a title state, a notation on the certificate of title must be made
in order to continue the related Seller's security interest.
Under the laws of many states, liens for storage and repairs performed
on a boat and certain tax liens take priority even over a perfected state law
security interest. As noted above, a Preferred Mortgage supersedes a
perfected state law security interest. However, under the Ship Mortgage Act,
a Preferred Mortgage is subordinate to preferred maritime liens.
Unless otherwise specified in the related Prospectus Supplement, due to
the administrative burden and expense of (i) endorsing the certificate of
title of each Financed Boat to reflect a Trust's interest therein and
delivering each such certificate of title to the Trustee for filing (and the
payment of related filing fees), in the case of Financed Boats licensed in
states where security interests in boats are subject to certificate of title
statutes; (ii) filing amendments to UCC-1 financing statement relating to
each Financed Boat (and the payment of related filing fees) to reflect the
Trust's interest therein, in the case of Financed Boats licensed in states
where security interests in boats are perfected by filing a UCC-1 financing
statement; and (iii) filing each assignment of the Preferred Mortgages (and
the payment of related filing fees) as required under Federal law to perfect
the Trust's interest therein, in the case of Financed Boats which are
documented under Federal law, none of such certificates of title will be
endorsed, delivered and filed, UCC-1 financing statements amended, or
assignments of Preferred Mortgages filed. In the absence of such procedures,
neither the Depositor nor the Trust may have a perfected security interest in
the Financed Boats licensed in certificate of title or UCC states, and will
not have a perfected security interest in Financed Boats documented under
Federal law, but the failure to make such endorsements, filings or
recordations will not affect the validity of the original security interest
as against the Obligor under a Receivable in UCC states.
In the case of "title" states, in the absence of the step described in
clause (i) above, the related Seller will continue to be named as the secured
party on the certificates of title relating to the Financed Boats registered
in such states. In most such states, such an assignment would be an
effective conveyance of such a security interest and the new secured party
would succeed to the related Seller's rights as the secured party. In the
absence of fraud or forgery by the Obligor or administrative error by
Federal, state or local recording officials, the notation of the lien of the
related Seller's on the certificate of title will be sufficient to protect
the Trust against the rights of subsequent purchasers of a Financed Boat
covered by the laws of such state or subsequent lenders who take a security
interest in the Financed Boat. There exists a risk, however, in not
identifying the Trust as the new secured party on the certificate of title,
that the Trust may in some states by subordinate to claims of creditors or
the receiver of the related Seller in the event of the insolvency of the
related Seller and that, through fraud or negligence, the security interest
of such Trust could be released by the related Seller as security holder of
record.
Similarly, the related Seller will not cause the documentation for
Financed Boats which are subject to a Preferred Mortgage to be endorsed to
reflect the Trust's interest therein nor will the assignment be filed with
the Secretary of Transportation, and under Federal law no assignment of a
Preferred Mortgage is valid against a third party without notice until the
assignment is recorded. While the interpretation of this provision by a
court might depend upon the factual circumstances, under the terms of the
Federal statute, a Trust's security interest in federally documented Financed
Boats is subordinate to creditors and the receiver of the related Seller in
the event of the related Seller's insolvency and to the rights of subsequent
purchasers of such a Financed Boat, subsequent lenders who take a security
interest in the Financed Boat and the bankruptcy trustee of the Obligor.
This provision does not affect the validity of the original security interest
as against the Obligor. Moreover, under Federal law, a Preferred Mortgage or
state law security interest can be subordinate to certain preferred maritime
liens, including maritime liens arising prior to the recording of the
Preferred Mortgage, liens for necessaries (e.g., stevedoring charges)
incurred prior to the recording of the Preferred Mortgage, liens for crew
wages, salvage and general damages arising out of tort claims. The holder of
a preferred maritime lien who arrests a boat under Federal law to enforce
that lien is required to give notice of the suit to all lienholders of
record. However, if the holder of a Preferred Mortgage does not receive
notice of the suit (e.g., because an assignment of the Preferred Mortgage was
not recorded and the current holder did not receive notice of the arrest) and
consequently does not intervene in the arrest action, or otherwise fails to
so intervene, the boat can be sold free and clear of the Preferred Mortgage.
If the holder of the Preferred Mortgage does not arrest the boat and
foreclose the mortgage under Federal law in Federal court, but rather
repossesses and resells the boat under state law, any preferred maritime
liens on the boat are not terminated by such sale and may impair the
Preferred Mortgage holder's ability to transfer clear title to the Boat. The
Trustee will be qualified as an approved trustee under the Shipping Act and
the Ship Mortgage Act. If the Trustee becomes disqualified at any time, an
appropriate successor trustee must be appointed.
Each Seller will warrant in the related Receivables Purchase Agreement
that there shall exist a valid, subsisting and enforceable first priority
security interest in each Financed Boat in favor of such Seller as of the
Closing Date, and that such security interest will be assigned to the related
Trust albeit unaccompanied by any of the procedures described in clauses (i),
(ii) and (iii) of the third preceding paragraph above. In the event of a
material adverse breach of such warranty, the only recourse of the Trust
would be to require the Seller to repurchase the related Receivables. See
"Risk Factors - Certain Legal Aspects - Security Interests in Financed
Assets" herein.
REPOSSESSION
In the event of default by vehicle or boat purchasers, the holder of the
motor vehicle, recreational vehicle or boat retail installment sale contract
or installment loan has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. Among the UCC
remedies, the secured party has the right to perform self-help repossession
unless such act would constitute a breach of the peace. Self-help is the
method employed by the Servicer in most cases and is accomplished simply by
retaking possession of the financed vehicle or boat. In the event of default
by the obligor, some jurisdictions require that the obligor be notified of
the default and be given a time period within which he may cure the default
prior to repossession. Generally, the right of reinstatement may be exercised
on a limited number of occasions in any one-year period. In cases where the
obligor objects or raises a defense to repossession, or if otherwise required
by applicable state law, a court order must be obtained from the appropriate
state court, and the vehicle or boat must then be repossessed in accordance
with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the 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.
The obligor has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus
reasonable expenses for repossessing, holding and preparing the collateral
for disposition and arranging for its sale, plus, in some jurisdictions,
reasonable attorneys' fees, or, in some states, by payment of delinquent
installments or the unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles or boats generally will be
applied first to the expenses of resale and repossession and then to the
satisfaction of the indebtedness. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not
cover the full amount of the indebtedness, a deficiency judgment can be
sought in those states that do not prohibit or limit such judgments.
However, the deficiency judgment would be a personal judgment against the
obligor for the shortfall, and a defaulting obligor can be expected to have
very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment
or, if one is obtained, it may be settled at a significant discount.
Occasionally, after resale of a vehicle or boat and payment of all
expenses and all indebtedness, there is a surplus of funds. In that case,
the UCC requires the creditor to remit the surplus to any holder of a lien
with respect to the vehicle or if no such lienholder exists or there are
remaining funds, the UCC requires the creditor to remit the surplus to the
former owner of the vehicle or boat.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair
Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Procedures Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the
Texas Consumer Credit Code, state adoptions of the National Consumer Act and
of the Uniform Consumer Credit Code and state motor vehicle retail
installment sales acts, retail installment sales acts and other similar laws.
Also, state laws impose finance charge ceilings and other restrictions on
consumer transactions and require contract disclosures in addition to those
required under federal law. These requirements impose specific statutory
liabilities upon creditors who fail to comply with their provisions. In some
cases, this liability could affect an assignee's ability to enforce consumer
finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated
by the Uniform Consumer Credit Code, other statutes or the common law, has
the effect of subjecting a 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 of the
goods. Liability under the FTC Rule is limited to the amounts paid by the
obligor under the contract and the holder of the contract may also be unable
to collect any balance remaining due thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable
Financed Vehicle or Boat may assert against the seller of the Financed
Vehicle or Boat. Such claims are limited to a maximum liability equal to the
amounts paid by the Obligor on the Receivable. If an Obligor were successful
in asserting any such claim or defense, such claim or defense would
constitute a breach of the Seller's warranties under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement and would create an
obligation of the Seller to repurchase the Receivable unless the breach is
cured. See "Description of the Transfer and Servicing Agreements -- Sale and
Assignment of Receivables".
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and resale
by the creditor do not involve sufficient state action to afford
constitutional protection to borrowers.
Under each Receivables Purchase Agreement, the related Seller will
warrant to the related Depositor (who will in turn assign its rights under
such warranty to the applicable Trust under the related Sale and Servicing
Agreement or Pooling and Servicing Agreement) that each Receivable complies
with all requirements of law in all material respects. Accordingly, if an
Obligor has a claim against such Trust for violation of any law and such
claim materially and adversely affects such Trust's interest in a Receivable,
such violation would constitute a breach of the warranties of the Seller
under such Receivables Purchase Agreement and would create an obligation of
the Seller to repurchase the Receivable unless the breach is cured. See
"Description of the Transfer and Servicing Agreements -- Sale and Assignment
of Receivables".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured
party to realize upon collateral or to 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 vehicle or boat, and, as part of
the rehabilitation plan, reduce the amount of the secured indebtedness to the
market value of the vehicle at the time of bankruptcy (as determined by the
court), leaving the creditor 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.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment
of Noteholders or Certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases
or Internal Revenue Service ("IRS") rulings on similar transactions involving
both debt and equity interests issued by a trust with terms similar to those
of the Notes and the Certificates. As a result, the IRS may disagree with
all or a part of the discussion below. Prospective investors are urged to
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 Notes and the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be
provided with an opinion of special Federal tax counsel to each Trust
specified in the related Prospectus Supplement ("Tax Counsel"), regarding
certain federal income tax matters discussed below. An opinion of Tax
Counsel, however, is not binding on the IRS or the courts. No ruling on any
of the issues discussed below will be sought from the IRS. For purposes of
the following summary, references to the Trust, the Notes, the Certificates
and related terms, parties and documents shall be deemed to refer, unless
otherwise specified herein, to each Trust and the Notes, Certificates and
related terms, parties and documents applicable to such Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether an election is made to treat the Trust as a partnership
under the Code or whether the Trust will be treated as a grantor trust. The
Prospectus Supplement for each series of Certificates will specify whether a
partnership election will be made or the Trust will be treated as a grantor
trust.
Prior to issuance of each series of Notes and Certificates, the
Depositor shall file with the Commission a Form 8-K on behalf of the related
Trust containing an opinion of Tax Counsel with respect to the validity of
the information set forth under "Federal Income Tax Considerations" herein
and in the related Prospectus Supplement.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
Tax Counsel will deliver its opinion that a Trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on counsel's conclusions
that the nature of the income of the Trust will exempt it from the rule that
certain publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any such
corporate income tax could materially reduce cash available to make payments
on the Notes and distributions on the Certificates, and Certificateholders
could be liable for any such tax that is unpaid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Depositor will agree, and
the Noteholders will agree by their purchase of Notes, to treat the Notes as
debt for federal income tax purposes. Tax Counsel will, except as otherwise
provided in the related Prospectus Supplement, advise the Trust that the
Notes will be classified as debt for federal income tax purposes. The
discussion below assumes this characterization of the Notes is correct.
OID, ETC. The discussion below assumes that all payments on the Notes
are denominated in U.S. dollars, and that the Notes are not Indexed
Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under Treasury regulations (the "OID regulations") relating to
original issue discount ("OID"), and that any OID on the Notes (i.e., any
excess of the principal amount of the Notes over their issue price) does not
exceed a de minimis amount (i.e., 1/4% of their principal amount multiplied
by the number of full years included in their term), all within the meaning
of the OID regulations. If these conditions are not satisfied with respect
to any given series of Notes, additional tax considerations with respect to
such Notes will be disclosed in the applicable Prospectus Supplement.
INTEREST INCOME ON THE NOTES. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered to be
issued with OID. The stated interest thereon will be taxable to a Noteholder
as ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder
of a Note issued with a de minimis amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Note. It
is believed that any prepayment premium paid as a result of a mandatory
redemption will be taxable as contingent interest when it becomes fixed and
unconditionally payable. A purchaser who buys a Note for more or less than
its principal amount will generally be subject, respectively, to the premium
amortization or market discount rules of the Code.
A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain
cash method holders, including regulated investment companies, as set forth
in Section 1281 of the Code) generally would be required to report interest
income as interest accrues on a straight-line basis over the term of each
interest period. Other cash basis holders of a Short-Term Note would, in
general, be required to report interest income as interest is paid (or, if
earlier, upon the taxable disposition of the Short-Term Note). However, a
cash basis holder of a Short-Term Note reporting interest income as it is
paid may be required to defer a portion of any interest expense otherwise
deductible on indebtedness incurred to purchase or carry the Short-Term Note
until the taxable disposition of the Short-Term Note. A cash basis taxpayer
may elect under Section 1281 of the Code to accrue interest income on all
nongovernment debt obligations with a term of one year or less, in which case
the taxpayer would include interest on the Short-Term Note in income as it
accrues, but would not be subject to the interest expense deferral rule
referred to in the preceding sentence. Certain special rules apply if a
Short-Term Note is purchased for more or less than its principal amount.
SALE OR OTHER DISPOSITION. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note.
The adjusted tax basis of a Note to a particular Noteholder will equal the
holder's cost for the Note, increased by any market discount, acquisition
discount, OID and gain previously included by such Noteholder in income with
respect to the Note and decreased by the amount of bond premium (if any)
previously amortized and by the amount of principal payments previously
received by such Noteholder with respect to such Note. Any such gain or loss
will be capital gain or loss if the Note was held as a capital asset, except
for gain representing accrued interest and accrued market discount not
previously included in income. Capital losses generally may be used only to
offset capital gains.
FOREIGN HOLDERS. Interest payments made (or accrued) to a Noteholder
who is a nonresident alien, foreign corporation or other non-United States
person (a "foreign person") generally will be considered "portfolio
interest", and generally will not be subject to United States federal income
tax and withholding tax, if the interest is not effectively connected with
the conduct of a trade or business within the United States by the foreign
person and the foreign person (i) is not actually or constructively a "10
percent shareholder" of the Trust or the Depositor (including a holder of 10%
of the outstanding Certificates) or a "controlled foreign corporation" with
respect to which the Trust or the Depositor is a "related person" within the
meaning of the Code and (ii) provides the Owner Trustee or other person who
is otherwise required to withhold U.S. tax with respect to the Notes with an
appropriate statement (on Form W-8 or a similar form), signed under penalties
of perjury, certifying that the beneficial owner of the Note is a foreign
person and providing the foreign person's name and address. If a Note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed
statement must be accompanied by a Form W-8 or substitute form provided by
the foreign person that owns the Note. If such interest is not portfolio
interest, then it will be subject to United States federal income tax at
graduated rates (if received by a non-U.S. person with effectively connected
income) and withholding tax at a rate of 30 percent, unless reduced or
eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such 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.
BACKUP WITHHOLDING. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's
name, address, correct federal taxpayer identification number and a statement
that the holder is not subject to backup withholding. Should a nonexempt
Noteholder fail to provide the required certification, the Trust will be
required to withhold 31 percent of the amount otherwise payable to the
holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the
opinion of 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 would
likely be treated as 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.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. The Depositor and the Servicer
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in
part by income, with the assets of the partnership being the assets held by
the Trust, the partners of the partnership being the Certificateholders
(including the Depositor in its capacity as recipient of distributions from
the Reserve Account), and the Notes being debt of the partnership. However,
the proper characterization of the arrangement involving the Trust, the
Certificates, the Notes, the Depositor and the Servicer is not clear because
there is no authority on transactions closely comparable to that contemplated
herein.
A VARIETY OF ALTERNATIVE CHARACTERIZATIONS ARE POSSIBLE. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Depositor or the Trust. Any
such characterization would not result in materially adverse tax consequences
to Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
PARTNERSHIP TAXATION. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables
(including appropriate adjustments for market discount, OID and bond premium)
and any gain upon collection or disposition of Receivables. The Trust's
deductions will consist primarily of interest accruing with respect to the
Notes, servicing and other fees, and losses or deductions upon collection or
disposition of Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(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 month equal to the sum of (i) the interest that
accrues on the Certificates in accordance with their terms for such month,
including interest accruing at the Pass Through Rate for such month and
interest on amounts previously due on the Certificates but not yet
distributed; (ii) any Trust income attributable to discount on the
Receivables that corresponds to any excess of the principal amount of the
Certificates over their initial issue price; (iii) prepayment premium payable
to the Certificateholders for such month; and (iv) any other amounts of
income payable to the Certificateholders for such month. Such allocation
will be reduced by any amortization by the Trust of premium on Receivables
that corresponds to any excess of the issue price of Certificates over their
principal amount. All remaining taxable income of the Trust will be
allocated to the Depositor. Based on the economic arrangement of the
parties, this approach for allocating Trust income should be permissible
under applicable Treasury regulations, although no assurance can be given
that the IRS would not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the foregoing method of allocation,
Certificateholders 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 they have not received cash from the Trust
to pay such taxes. 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.
All of the taxable income allocated 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.
An individual taxpayer's share of expenses of the Trust (including fees
to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole
or in part and might result in such holder being taxed on an amount of income
that exceeds the amount of cash actually distributed to such holder over the
life of the Trust.
The Trust intends to make all tax calculations relating to 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 believed that
there would not be a material adverse effect on Certificateholders.
DISCOUNT AND PREMIUM. It is believed that the Receivables were not
issued with OID, and, therefore, the Trust should not have OID income.
However, the purchase price paid by the Trust for the Receivables may be
greater or less than the remaining principal balance of the Receivables at
the time of purchase. If so, the Receivables will have been acquired at a
premium or discount, as the case may be. (As indicated above, the Trust will
make this calculation on an aggregate basis, but might be required to
recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
against interest income on the Receivables. As indicated above, a portion of
such market discount income or premium deduction may be allocated to
Certificateholders.
SECTION 708 TERMINATION. Pursuant to final Treasury regulations issued
May 9, 1997 under section 708 of the Code, a sale or exchange of 50 percent
or more of the capital and profits in the Trust would cause a deemed
contribution of assets of the Trust (the "old partnership") to a new
partnership (the "new partnership") in exchange for interest in new
partnership. Such interests would be deemed distributed to the partners of
the old partnership in liquidation thereof, which would not constitute a sale
or exchange.
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 will generally equal
the holder's cost increased by the holder's share of Trust income (includible
in income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the
amount realized on a sale of a Certificate would include the holder's share
of the 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 portion of such aggregate
tax basis to the Certificates sold (rather than maintaining a separate tax
basis in each Certificate for purposes of computing gain or loss on a sale of
that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share
of unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets
that would give rise to such special reporting requirements. Thus, to avoid
those special reporting requirements, the Trust will elect to include market
discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the Certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates
owned by them as of the close of the last day of such month. As a result, a
holder purchasing Certificates may be allocated tax items (which will affect
its tax liability and tax basis) attributable to periods before the actual
transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or
losses of the Trust might be reallocated among the Certificateholders. The
Depositor is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
SECTION 754 ELECTION. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect
that higher (or lower) basis unless the Trust were to file an election under
Section 754 of the Code. In order to avoid the administrative complexities
that would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, the Trust will not
make such election. As a result, Certificateholders might be allocated a
greater or lesser amount of Trust income than would be appropriate based on
their own purchase price for Certificates.
ADMINISTRATIVE MATTERS. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be maintained
for financial reporting and tax purposes on an accrual basis and the fiscal
year of the Trust will be the calendar year. The Trustee will file a
partnership information return (IRS Form 1065) with the IRS for each taxable
year of the Trust and will report each Certificateholder's allocable share of
items of Trust income and expense to holders and the IRS on Schedule K-1.
The Trust will provide the Schedule K-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 Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust
with a statement containing certain information on the nominee, the
beneficial owners and the Certificates so held. Such information includes
(i) the name, address and taxpayer identification number of the nominee and
(ii) as to each beneficial owner (x) the name, address and 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, bought or sold on
behalf of such person throughout the year. In addition, brokers and
financial institutions that hold Certificates through a nominee are required
to furnish directly to the Trust information as to themselves and their
ownership of Certificates. A clearing agency registered under Section 17A of
the Exchange Act is not required to furnish any such information statement to
the Trust. The information referred to above for any calendar year must be
furnished to the Trust on or before the following January 31. Nominees,
brokers and financial institutions that fail to provide the Trust with the
information described above may be subject to penalties.
The Depositor will be designated as the tax matters partner in the
related Trust Agreement and, as such, 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 after the date on which
the partnership information return is filed. Any adverse determination
following an audit of the return of the Trust by the appropriate taxing
authorities could result in an adjustment of the returns of the
Certificateholders, and, under certain circumstances, a Certificateholder may
be precluded from separately litigating a proposed adjustment to the items of
the Trust. An adjustment could also result in an audit of a
Certificateholder's returns and adjustments of items not related to the
income and losses of the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. It is not clear whether
the Trust would be considered to be engaged in a trade or business in the
United States for purposes of federal withholding taxes with respect to
non-U.S. persons because there is no clear authority dealing with that issue
under facts substantially similar to those described herein. Although it is
not expected that the Trust would be engaged in a trade or business in the
United States for such purposes, the Trust will withhold as if it were so
engaged in order to protect the Trust from possible adverse consequences of a
failure to withhold. The Trust expects to withhold on the portion of its
taxable income that is allocable to foreign Certificateholders pursuant to
Section 1446 of the Code, as if such income were effectively connected to a
U.S. trade or business, at a rate of 35% for foreign holders that are taxable
as corporations and 39.6% for all other foreign holders. Subsequent adoption
of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures.
In determining a holder's withholding status, the Trust may rely on IRS Form
W-8, IRS Form W-9 or the holder's certification of nonforeign status signed
under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the
branch profits tax) on its share of the Trust's income. Each foreign holder
must obtain a taxpayer identification number from the IRS and submit that
number to the Trust on Form W-8 in order to assure appropriate crediting of
the taxes withheld. A foreign holder generally would be entitled to file
with the IRS a claim for refund with respect to taxes withheld by the Trust,
taking the position that no taxes were due because the Trust was not engaged
in a U.S. trade or business. However, interest payments made (or accrued) to
a Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard
to the income of the Trust. If these interest payments are properly
characterized as guaranteed payments, then the interest will not be
considered "portfolio interest." As a result, Certificateholders will be
subject to United States federal income tax and withholding tax at a rate of
30 percent, unless reduced or eliminated pursuant to an applicable treaty.
In such case, a foreign holder would only be entitled to claim a refund for
that portion of the taxes in excess of the taxes that should be withheld with
respect to the guaranteed payments.
BACKUP WITHHOLDING. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding
tax of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
If a partnership election is not made, Tax Counsel will deliver its
opinion that the Trust will not be classified as an association taxable as a
corporation and that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of the Code. In this case, owners of
Certificates (referred to herein as "Grantor Trust Certificateholders") will
be treated for federal income tax purposes as owners of a portion of the
Trust's assets as described below. The Certificates issued by a Trust that
is treated as a grantor trust are referred to herein as "Grantor Trust
Certificates".
CHARACTERIZATION. Each Grantor Trust Certificateholder will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will
be considered the equitable owner of a pro rata undivided interest in each of
the Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable
because of a default or delinquency in payment will be treated for federal
income tax purposes as having the same character as the payments they
replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire
income from the Receivables in the Trust represented by Grantor Trust
Certificates, including interest, OID, if any, prepayment fees, assumption
fees, any gain recognized upon an assumption and late payment charges
received by the Servicer. Under Sections 162 or 212 of the Code, each Grantor
Trust Certificateholder will be entitled to deduct its pro rata share of
servicing fees, prepayment fees, assumption fees, any loss recognized upon an
assumption and late payment charges retained by the Servicer, provided that
such amounts are reasonable compensation for services rendered to the Trust.
Grantor Trust Certificateholders that are individuals, estates or trusts will
be entitled to deduct their share of expenses only to the extent such
expenses plus all other Section 212 expenses exceed two percent of its
adjusted gross income. A Grantor Trust Certificateholder using the cash
method of accounting must take into account its pro rata share of income and
deductions as and when collected by or paid to the Servicer. A Grantor Trust
Certificateholder using an accrual method of accounting must take into
account its pro rata share of income and deductions as they become due or are
paid to the Servicer, whichever is earlier. If the servicing fees paid to
the Servicer are deemed to exceed reasonable servicing compensation, the
amount of such excess could be considered as an ownership interest retained
by the Servicer (or any person to whom the Servicer assigned for value all or
a portion of the servicing fees) in a portion of the interest payments on the
Receivables. The Receivables would then be subject to the "coupon stripping"
rules of the Code discussed below.
PREMIUM. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable
based on each Receivable's relative fair market value, so that such holder's
undivided interest in each Receivable will have its own tax basis. A Grantor
Trust Certificateholder that acquires an interest in Receivables at a premium
may elect to amortize such premium under a constant interest method.
Amortizable bond premium will be treated as an offset to interest income on
such Grantor Trust Certificate. The basis for such Grantor Trust Certificate
will be reduced to the extent that amortizable premium is applied to offset
interest payments. It is not clear whether a reasonable prepayment assumption
should be used in computing amortization of premium allowable under Section
171. A Grantor Trust Certificateholder that makes this election for a
Grantor Trust Certificate that is acquired at a premium will be deemed to
have made an election to amortize bond premium with respect to all debt
instruments having amortizable bond premium that such Grantor Trust
Certificateholder acquires during the year of the election or thereafter.
If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a Grantor Trust Certificate acquired at
a premium should recognize a loss if a Receivable prepays in full, equal to
the difference between the portion of the prepaid principal amount of such
Receivable that is allocable to the Grantor Trust Certificate and the portion
of the adjusted basis of the Grantor Trust Certificate that is allocable to
such Receivable. If a reasonable prepayment assumption is used to amortize
such premium, it appears that such a loss would be available, if at all, only
if prepayments have occurred at a rate faster than the reasonable assumed
prepayment rate. It is not clear whether any other adjustments would be
required to reflect differences between an assumed prepayment rate and the
actual rate of prepayments.
STRIPPED BONDS AND STRIPPED COUPONS
Although the tax treatment of stripped bonds is not entirely clear,
based on guidance by the IRS, each purchaser of a Grantor Trust Certificate
will be treated as the purchaser of a stripped bond which generally should be
treated as a single debt instrument issued on the day it is purchased for
purposes of calculating any original issue discount. Generally, under
recently issued Treasury regulations (the "Section 1286 Treasury
Regulations"), if the discount on a stripped bond is larger than a de minimis
amount (as calculated for purposes of the OID rules of the Code) such
stripped bond will be considered to have been issued with OID. See "Original
Issue Discount." Based on the preamble to the Section 1286 Treasury
Regulations, Tax Counsel is of the opinion that, although the matter is not
entirely clear, the interest income on the Certificates at the sum of the
Pass Through Rate and the portion of the Servicing Fee Rate that does not
constitute excess servicing will be treated as "qualified stated interest"
within the meaning of the Section 1286 Treasury Regulations, and such income
will be so treated in the Trustee's tax information reporting.
ORIGINAL ISSUE DISCOUNT. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently Sections 1271 through
1273 and 1275) will be applicable to a Grantor Trust Certificateholder's
interest in those Receivables meeting the conditions necessary for these
sections to apply. Generally, a Grantor Trust Certificateholder that acquires
an undivided interest in a Receivable issued or acquired with OID must
include in gross income the sum of the "daily portions," of the OID on such
Receivable for each day on which it owns a Certificate, including the date of
purchase but excluding the date of disposition. In the case of an original
Grantor Trust Certificateholder, the daily portions of OID with respect to a
Receivable generally would be determined as follows. A calculation will be
made of the portion of OID that accrues on the Receivable during each
successive monthly accrual period (or shorter period in respect of the date
of original issue or the final Distribution Date). This will be done, in the
case of each full monthly accrual period, by adding (i) the present value of
all remaining payments to be received on the Receivable under the prepayment
assumption used in respect of the Receivables and (ii) any payments received
during such accrual period, and subtracting from that total the "adjusted
issue price" of the Receivable at the beginning of such accrual period. No
representation is made that the Receivables will prepay at any prepayment
assumption. The "adjusted issue price" of a Receivable at the beginning of
the first accrual period is its issue price (as determined for purposes of
the OID rules of the Code) and the "adjusted issue price" of a Receivable at
the beginning of a subsequent accrual period is the "adjusted issue price" at
the beginning of the immediately preceding accrual period plus the amount of
OID allocable to that accrual period and reduced by the amount of any payment
(other than "qualified stated interest") made at the end of or during that
accrual period. The OID accruing during such accrual period will then be
divided by the number of days in the period to determine the daily portion of
OID for each day in the period. With respect to an initial accrual period
shorter than a full monthly accrual period, the daily portions of OID must be
determined according to an appropriate allocation under either an exact or
approximate method set forth in the OID Regulations, or some other reasonable
method, provided that such method is consistent with the method used to
determine the yield to maturity of the Receivables.
With respect to the Receivables, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Receivables. Subsequent purchasers that
purchase Receivables at more than a de minimis discount should consult their
tax advisors with respect to the proper method to accrue such OID.
MARKET DISCOUNT. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules
of Sections 1276 through 1278 to the extent an undivided interest in a
Receivable is considered to have been purchased at a "market discount."
Generally, the amount of market discount is equal to the excess of the
portion of the principal amount of such Receivable allocable to such holder's
undivided interest over such holder's tax basis in such interest. Market
discount with respect to a Grantor Trust Certificate will be considered to be
zero if the amount allocable to the Grantor Trust Certificate is less than
0.25% of the Grantor Trust Certificate's stated redemption price at maturity
multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have
not yet been issued; therefore, investors should consult their own tax
advisors regarding the application of these rules and the advisability of
making any of the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be
reduced by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the
holder of a market discount bond may elect to accrue market discount either
on the basis of a constant interest rate or according to one of the following
methods. If a Grantor Trust Certificate is issued with OID, the amount of
market discount that accrues during any accrual period would be equal to the
product of (i) the total remaining market discount and (ii) a fraction, the
numerator of which is the OID accruing during the period and the denominator
of which is the total remaining OID at the beginning of the accrual period.
For Grantor Trust Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of (i) the
total remaining market discount and (ii) a fraction, the numerator of which
is the amount of stated interest paid during the accrual period and the
denominator of which is the total amount of stated interest remaining to be
paid at the beginning of the accrual period. For purposes of calculating
market discount under any of the above methods in the case of instruments
(such as the Grantor Trust Certificates) that provide for payments that may
be accelerated by reason of prepayments of other obligations securing such
instruments, the same prepayment assumption applicable to calculating the
accrual of OID will apply. Because the regulations described above have not
been issued, it is impossible to predict what effect those regulations might
have on the tax treatment of a Grantor Trust Certificate purchased at a
discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry such Grantor Trust Certificate purchased with market
discount. For these purposes, the de minimis rule referred to above applies.
Any such deferred interest expense would not exceed the market discount that
accrues during such taxable year and is, in general, allowed as a deduction
not later than the year in which such market discount is includible in
income. If such holder elects to include market discount in income currently
as it accrues on all market discount instruments acquired by such holder in
that taxable year or thereafter, the interest deferral rule described above
will not apply.
PREMIUM. To the extent a Grantor Trust Certificateholder is considered
to have purchased an undivided interest in a Receivable for an amount that is
greater than its stated redemption price at maturity of such Receivable, such
Grantor Trust Certificateholder will be considered to have purchased the
Receivable with "amortizable bond premium" equal in amount to such excess. A
Grantor Trust Certificateholder (who does not hold the Certificate for sale
to customers or in inventory) may elect under Section 171 of the Code to
amortize such premium. Under the Code, premium is allocated among the
interest payments on the Receivables to which it relates and is considered as
an offset against (and thus a reduction of) such interest payments. With
certain exceptions, such an election would apply to all debt instruments held
or subsequently acquired by the electing holder. Absent such an election,
the premium will be deductible as an ordinary loss only upon disposition of
the Certificate or pro rata as principal is paid on the Receivables.
ELECTION TO TREAT ALL INTEREST AS OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in
income as interest, based on a constant yield method. If such an election
were to be made with respect to a Grantor Trust Certificate with market
discount, the Certificateholder would be deemed to have made an election to
include in income currently market discount with respect to all other debt
instruments having market discount that such Grantor Trust Certificateholder
acquires during the year of the election or thereafter. Similarly, a Grantor
Trust Certificateholder that makes this election for a Grantor Trust
Certificate that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Grantor Trust Certificateholder owns or
acquires. See "-- Premium" herein. The election to accrue interest,
discount and premium on a constant yield method with respect to a Grantor
Trust Certificate is irrevocable.
SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis
generally will equal the seller's purchase price for the Grantor Trust
Certificate, increased by the OID included in the seller's gross income with
respect to the Grantor Trust Certificate, and reduced by principal payments
on the Grantor Trust Certificate previously received by the seller. Such
gain or loss will be capital gain or loss to an owner for which a Grantor
Trust Certificate is a "capital asset" within the meaning of Section 1221,
and will be long-term or short-term depending on whether the Grantor Trust
Certificate has been owned for the long-term capital gain holding period
(currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the
sale of a Grantor Trust Certificate by a bank or a thrift institution to
which such section applies will be treated as ordinary income or loss.
NON-U.S. PERSONS. Generally, to the extent that a Grantor Trust
Certificate evidences ownership in underlying Receivables that were issued on
or before July 18, 1984, interest or OID paid by the person required to
withhold tax under Section 1441 or 1442 to (i) an owner that is not a U.S.
Person or (ii) a Grantor Trust Certificateholder holding on behalf of an
owner that is not a U.S. Person will be subject to federal income tax,
collected by withholding, at a rate of 30% or such lower rate as may be
provided for interest by an applicable tax treaty. Accrued OID recognized by
the owner on the sale or exchange of such a Grantor Trust Certificate also
will be subject to federal income tax at the same rate. Generally, such
payments would not be subject to withholding to the extent that a Grantor
Trust Certificate evidences ownership in Receivables issued after July 18,
1984, by natural persons if such Grantor Trust Certificateholder complies
with certain identification requirements (including delivery of a statement,
signed by the Grantor Trust Certificateholder under penalties of perjury,
certifying that such Grantor Trust Certificateholder is not a U.S. Person and
providing the name and address of such Grantor Trust Certificateholder).
Additional restrictions apply to Receivables where the obligor is not a
natural person in order to qualify for the exemption from withholding.
As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under the laws
of the United States or any political subdivision thereof or an estate, the
income of which from sources outside the United States is includible in gross
income for federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States or a trust if a court
within the United States is able to exercise primary supervision of the
administration of the trust and one or more United States fiduciaries have
the authority to control all substantial decisions of the trust.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Servicer will furnish
or make available, within a reasonable time after the end of each calendar
year, to each person who was a Grantor Trust Certificateholder at any time
during such year, such information as may be deemed necessary or desirable to
assist Grantor Trust Certificateholders in preparing their federal income tax
returns, or to enable holders to make such information available to
beneficial owners or financial intermediaries that hold Grantor Trust
Certificates as nominees on behalf of beneficial owners. If a holder,
beneficial owner, financial intermediary or other recipient of a payment on
behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that
such person has not reported all interest and dividend income required to be
shown on its federal income tax return, 31% backup withholding may be
required with respect to any payments. Any amounts deducted and withheld
from a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.
FASIT LEGISLATION During 1996, President Clinton signed into law the
"Small Business Job Protection Act of 1996" (the "Act"). The Act creates a
new type of entity for federal income tax purposes called a "financed asset
securitization investment trust" or "FASIT." Beginning in September of 1997,
the Act generally enables certain arrangements similar to a trust that is
treated as a partnership to elect to be treated as a FASIT. Under the Act, a
FASIT generally would avoid federal income taxation and could issue
securities substantially similar to the Certificates and Notes, and those
securities would be treated as debt for federal income tax purposes. If so
provided in the related Prospectus Supplement, the Trust Agreement and
Indenture will set forth certain conditions which, if satisfied, will permit
the Depositor to amend such trust agreement and indenture in order to enable
all or a portion of the Trust to qualify as a FASIT and to permit a FASIT
election to be made with respect thereto, and to make such modifications to
such Trust Agreement and Indenture as may be permitted by reason of the
making of such an election. However, there can be no assurance that the
Seller will or will not cause any permissible FASIT election to be made with
respect to a Trust or amend the related Trust Agreement and Indenture in
connection with any election. Furthermore, any such election will be made
only if an opinion of Tax Counsel is rendered that such election will not
have material adverse consequences to any holder of a Note or Certificate.
* * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR 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 NOTES AND
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
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual
retirement accounts and certain types of Keogh Plans (each a "Benefit Plan"),
from engaging in certain transactions with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect
to such Benefit Plan. A violation of these "prohibited transaction" rules
may result in an excise tax or other penalties and liabilities under ERISA
and the Code for such persons.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were deemed
to be assets of the Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of a
Trust would be treated as plan assets of a Benefit Plan for the purposes of
ERISA and the Code only if the Benefit Plan acquired an "equity interest" in
the Trust and none of the exceptions contained in the Plan Assets Regulation
was applicable. An equity interest is defined under the Plan Assets
Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. The likely treatment in this context of Notes and Certificates of
a given series will be discussed in the related Prospectus Supplement.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Securities of a given
series should consult its tax and/or legal advisors regarding whether the
assets of the related Trust would be considered plan assets, the possibility
of exemptive relief from the prohibited transaction rules and other issues
and their potential consequences.
SENIOR CERTIFICATES ISSUED BY TRUSTS THAT DO NOT ISSUE NOTES
Unless otherwise specified in the related Prospectus Supplement, the
following discussion applies only to nonsubordinated Certificates (referred
to herein as "Senior Certificates") issued by a Trust that does not issue
Notes.
The U.S. Department of Labor has granted to the lead Underwriter named
in the Prospectus Supplement an exemption (the "Exemption") from certain of
the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by the
Exemption include motor vehicle installment sales contracts such as the
Receivables. The Exemption will apply to the acquisition, holding and resale
of the Senior Certificates by a Benefit Plan, provided that certain
conditions (certain of which are described below) are met.
Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:
(1) The acquisition of the Senior Certificates by a Benefit Plan
is on terms (including the price for the Senior Certificates) that are
at least as favorable to the Benefit Plan as they would be in an arm's
length transaction with an unrelated party;
(2) The rights and interests evidenced by the Senior Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by other certificates of the Trust;
(3) The Senior Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from either Standard & Poor's
Corporation, Moody's Investors Service, Inc., Duff & Phelps Inc. or
Fitch Investors Service, Inc.;
(4) The Trustee is not an affiliate of any other member of the
Restricted Group;
(5) The sum of all payments made to the Underwriters in connection
with the distribution of the Senior Certificates represents not more
than reasonable compensation for underwriting the Senior Certificates;
the sum of all payments made to and retained by the Seller pursuant to
the sale of the Contracts to the Trust represents not more than the fair
market value of such Contracts; and the sum of all payments made to and
retained by the Servicer represents not more than reasonable
compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection
therewith; and
(6) The Benefit Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501 (a)(1) of Regulation D of
the Securities and Exchange Commission under the Securities Act of 1933.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior Certificates
in connection with the initial issuance, at least fifty (50) percent of the
Senior Certificates are acquired by persons independent of the Restricted
Group, (ii) the Benefit Plan's investment in Senior Certificates does not
exceed twenty-five (25) percent of all of the Senior Certificates outstanding
at the time of the acquisition, and (iii) immediately after the acquisition,
no more than twenty-five (25) percent of the assets of the Benefit Plan are
invested in certificates representing an interest in one or more trusts
containing assets sold or serviced by the same entity. The Exemption does
not apply to Plans sponsored by the Depositor, the related Seller, any
Underwriter, the Trustee, the Servicer, any obligor with respect to Contracts
included in the Trust constituting more than five percent of the aggregate
unamortized principal balance of the assets in the Trust, or any affiliate of
such parties (the "Restricted Group").
The Seller believes that the Exemption will apply to the acquisition and
holding by Benefit Plans of Senior Certificates sold by the Underwriter or
Underwriters named in the Prospectus Supplement and that all conditions of
the Exemption other than those within the control of the investors have been
met. In addition, as of the date hereof, no obligor with respect to
Contracts included in the Trust constitutes more than five percent of the
aggregate unamortized principal balance of the assets of the Trust.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes, if any, of a given series and an underwriting agreement
with respect to the Certificates of such series (collectively, the
"Underwriting Agreements"), the Depositor will agree to cause the related
Trust to sell to the underwriters named therein and in the related Prospectus
Supplement, and each of such underwriters will severally agree to purchase,
the principal amount of each class of Notes and Certificates, as the case may
be, of the related series set forth therein and in the related Prospectus
Supplement.
In each of the Underwriting Agreements with respect to any given series
of Securities, the several underwriters will agree, subject to the terms and
conditions set forth therein, to purchase all the Notes and Certificates, as
the case may be, described therein which are offered hereby and by the
related Prospectus Supplement if any of such Notes and Certificates, as the
case may be, are purchased.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Notes and Certificates, as the case may be, being offered
thereby will be offered to the public and any concessions that may be offered
to certain dealers participating in the offering of such Notes and
Certificates or (ii) specify that the related Notes and Certificates, as the
case may be, are to be resold by the underwriters in negotiated transactions
at varying prices to be determined at the time of such sale. After the
initial public offering of any such Notes and Certificates, such public
offering prices and such concessions may be changed.
Each Underwriting Agreement will provide that the Depositor will
indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters or from the
Depositor.
Pursuant to each Underwriting Agreement with respect to a given series
of Securities, the closing of the sale of any class of Securities subject to
such Underwriting Agreement will be conditioned on the closing of the sale of
all other such classes of Securities of that series.
The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust and the Depositor by Brown & Wood LLP, New
York, New York, and for the Underwriter for such series by Brown & Wood LLP.
Certain federal income tax will be passed upon for each Trust by Brown & Wood
LLP.
INDEX OF TERMS
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Actuarial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . 42
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 37
Applicable Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Bank Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . 26,27,28
CD Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
CD Rate Determination Date . . . . . . . . . . . . . . . . . . . . . . . 25
CD Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Cedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Cedel Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certificate Distribution Account . . . . . . . . . . . . . . . . . . . . 35
Certificate Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . 19
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . 15,30
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
chattel paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Commercial Paper Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Commercial Paper Rate Determination Date . . . . . . . . . . . . . . . . 26
Commercial Paper Rate Security . . . . . . . . . . . . . . . . . . . . . 25
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commodity Indexed Securities . . . . . . . . . . . . . . . . . . . . . . 29
Composite Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Currency Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . 29
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dealer Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,15
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 32
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,3,19
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DTC's Nominee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . 36
Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . 37
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . 31
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Funds Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Federal Funds Rate Determination Date . . . . . . . . . . . . . . . . . . 27
Federal Funds Rate Security . . . . . . . . . . . . . . . . . . . . . . . 25
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . 9
Financed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Financed Boats . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,7,15
Financed Motor Vehicles . . . . . . . . . . . . . . . . . . . . . . . . 6,15
Financed Recreational Vehicles . . . . . . . . . . . . . . . . . . . . . 6
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,7
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fixed Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Floating Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . 24
foreign person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
FTC Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Grantor Trust Certificateholders . . . . . . . . . . . . . . . . . . . . 54
Grantor Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . 54
H.15(519) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Index Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Indexed Commodity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Indexed Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Indexed Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . 29
Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Initial Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Reset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Investment Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LIBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
LIBOR Determination Date . . . . . . . . . . . . . . . . . . . . . . . . 27
LIBOR Reuters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
LIBOR Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
LIBOR Telerate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
London Banking Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Marine Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Money Market Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Motor Vehicle Receivables . . . . . . . . . . . . . . . . . . . . . . . . 15
Nonbank Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Note Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . 35
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,30
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
OID Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,29
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Payahead Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Payaheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Plan Assets Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 59
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . 4
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,5
Preferred Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Precomputed Advance . . . . . . . . . . . . . . . . . . . . . . . . . . 8,17
prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,6
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Receivables Purchase Agreement . . . . . . . . . . . . . . . . . . . . . 34
Recreational Vehicle Receivables . . . . . . . . . . . . . . . . . . . . 15
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . 3
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Reuters Screen LIBO Page . . . . . . . . . . . . . . . . . . . . . . . . 27
Rule of 78's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Rules of 78's Receivables . . . . . . . . . . . . . . . . . . . . . . . . 17
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . 7
Schedule of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 1286 Treasury Regulations . . . . . . . . . . . . . . . . . . . . 55
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,30
Seller(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Short-Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Simple Interest Advance . . . . . . . . . . . . . . . . . . . . . . . . . 8
Simple Interest Receivables . . . . . . . . . . . . . . . . . . . . . . . 17
Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Spread Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Stock Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . 29
Strip Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Strip Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 1,7
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . 34
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Telerate Page 3750 . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Transfer and Servicing Agreement . . . . . . . . . . . . . . . . . . . . 34
Treasury bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Treasury Rate Determination Date . . . . . . . . . . . . . . . . . . . . 28
Treasury Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . 25
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,23
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,4
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,35
Underwriting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 60
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE SELLER OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Securities
(the "Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities through
any of DTC, CEDEL or Euroclear. The Global Securities will be tradeable as
home market instruments in both the European and U.S. domestic markets.
Initial settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against-payment
basis through the respective Depositaries of CEDEL and Euroclear (in such
capacity) and DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, CEDEL and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts
as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior debt issues. Investors'
securities custody accounts will be credited with their holdings against
payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payments in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the procedures applicable to book-entry
securities in same-day funds.
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PURCHASER. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a CEDEL Participant or a Euroclear Participant, the
purchaser will send instructions to CEDEL or Euroclear through a CEDEL
Participant or Euroclear Participant at least one business day prior to
settlement. CEDEL or Euroclear, as applicable, will instruct its Depositary
to receive the Global Securities against payment. Payment will include
interest accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date. Payment will then be made
by such Depositary to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global
Securities will be credited to the applicable clearing system and by the
clearing system, in accordance with its usual procedures, to the CEDEL
Participant's or Euroclear Participant's account. The Global Securities
credit will appear the next day (European time) and the cash debit will be
back-valued to, and the interest on the Global Securities will accrue from,
the value date (which would be the preceding day when settlement occurred in
New York). If settlement is not completed on the intended value date (i.e.,
the trade fails), the CEDEL or Euroclear cash debit will be valued instead as
of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within CEDEL or
Euroclear. Under this approach, they may take on credit exposure to CEDEL or
Euroclear until the Global Securities are credited to their accounts one day
later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, CEDEL Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income
on the Global Securities earned during that one-day period may substantially
reduce or offset the amount of such overdraft charges, although this result
will depend on each CEDEL Participant's or Euroclear Participant's particular
cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of CEDEL Participants or
Euroclear Participants. The sale proceeds will be available to the DTC
seller on the settlement date. Thus, to the DTC Participant a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing systems,
through their respective Depositaries, to a DTC Participant. The seller will
send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. In
these cases, CEDEL or Euroclear will instruct their respective Depositaries,
as appropriate, to deliver the bonds to the DTC Participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last coupon payment date to and excluding the settlement
date. The payment will then be reflected in the account of the CEDEL
Participant or Euroclear Participant the following day, and receipt of the
cash proceeds in the CEDEL Participant's or Euroclear Participant's account
would be back-valued to the value date (which would be the preceding day,
when settlement occurred in New York). Should the CEDEL Participant or
Euroclear Participant have a line of credit with its clearing system and
elect to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges incurred
over that one-day period. If settlement is not completed on the intended
value date (i.e., the trade fails), receipt of the cash proceeds in the CEDEL
Participant's or Euroclear Participant's account would instead be valued as
of the actual settlement date. Finally, day traders that use CEDEL or
Euroclear and that purchase Global Securities from DTC Participants for
delivery to CEDEL Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their CEDEL or
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant
is at least one day prior to the value date for the sale to the CEDEL
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through CEDEL
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes
one of the following steps to obtain an exemption or reduced tax rate:
EXEMPTION OF NON-U.S. PERSONS (FORM W-8). Beneficial owners of
Notes that are non-U.S. Persons generally can obtain a complete
exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form W-8
changes, a new Form W-8 must be filed within 30 days of such change.
EXEMPTION FOR NON-U.S. PERSON WITH EFFECTIVELY CONNECTED INCOME
(FORM 4224). A non-U.S. Person, including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States
can obtain an exemption from the withholding tax by filing Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with
the Conduct of a Trade or Business in the United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY
COUNTRIES (FORM 1001). Non-U.S. Persons that are beneficial owners of
Notes residing in a country that has a tax treaty with the United States
can obtain an exemption or reduced tax rate (depending on the treaty
terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the beneficial
owner of Notes or such owner's agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The beneficial owner
of a Global Security or, in the case of a Form 1001 or a Form 4224
filer, such owner's agent, files by submitting the appropriate form to
the person through whom it holds the security (the clearing agency, in
the case of persons holding directly on the books of the clearing
agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under
the laws of the United States or any political subdivision thereof
or an estate, the income of which from sources outside the United
States is includible in gross income for federal income tax
purposes regardless of its connection with the conduct of a trade
or business within the United States or a trust if a court within
the United States is able to exercise primary supervision of the
administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions
of the trust.
This summary does not deal with all aspects of U.S. federal
income tax withholding that may be relevant to foreign holders of
the Global Securities. Investors are advised to consult their own
tax advisors for specific tax advice concerning their holding and
disposing of the Global Securities.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Expenses in connection with the offering of the Securities being
registered herein are estimated as follows:
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . $ **
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . **
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . **
Blue sky fees and expenses . . . . . . . . . . . . . . . . . . . . **
Rating agency fees . . . . . . . . . . . . . . . . . . . . . . . . **
Trustee's fees and expenses . . . . . . . . . . . . . . . . . . . **
Indenture Trustee's fees and expenses . . . . . . . . . . . . . . **
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . **
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . **
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . $
___________________
* All amounts except the SEC Registration Fee are estimates of expenses
incurred or to be incurred in connection with the issuance and
distribution of a Series of Securities in an aggregate principal amount
assumed for these purposes to be equal to $100,000,000 of Securities
registered hereby.
** To be filed by Amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Morgan Stanley ABS Capital II Inc. (the "Registrant") has undertaken in
its articles of incorporation and bylaws to indemnify, to the maximum extent
permitted by the Delaware General Corporation Law as from time to time
amended, any currently acting or former director, officer, employee and agent
of the Registrant against any and all liabilities incurred in connection with
their services in such capacities.
ITEM 16. EXHIBITS.
* 1.1 Form of Underwriting Agreement for Owner Trusts
* 1.2 Form of Underwriting Agreement for Grantor Trusts
* 3.1 Articles of Incorporation of the Registrant
* 3.2 Bylaws of the Registrant
* 4.1 Form of Trust Agreement (including form of Certificates)
* 4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)
* 4.3 Form of Indenture (including form of Notes)
* 5.1 Opinion of Brown & Wood LLP with respect to legality
* 8.1 Opinion of Brown & Wood LLP with respect to certain tax matters
*10.1 Form of Sale and Servicing Agreement
*10.2 Form of Administration Agreement
*10.3 Form of Receivables Purchase Agreement
*23.1 Consent of Brown & Wood LLP (included in Exhibit 5.1)
*23.2 Consent of Brown & Wood LLP (included in Exhibit 8.1)
**24.1 Power of Attorney
***25.1 Statement of Eligibility and Qualification of Indenture Trustee
___________________
* Filed herewith.
** Previously filed.
*** To be filed by Amendment.
ITEM 17. UNDERTAKINGS.
(a) As to Rule 415:
The undersigned 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective 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 to such information in the registration statement;
(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.
(b) As to documents subsequently filed that are incorporated by
reference:
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) As to indemnification:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act 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, as amended, 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.
(e) As to qualification of trust indentures:
The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
(f) The undersigned Registrant hereby undertakes to file in a current
report a Form 8-K or in a post-effective amendment an opinion with respect to
any Federal tax consequences material to an investor with regard to a
specific Series to be issued pursuant to this Registration Statement where
such tax consequences, have not been addressed in the prospectus or the
prospectus supplement related to such Series.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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
Form S-3 Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, the State of
New York, on May 6, 1997.
MORGAN STANLEY ABS CAPITAL II INC.
By: /s/ David R. Warren
---------------------------------------
Name: David R. Warren
Title: Vice President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Craig S. Phillips, Gail P. McDonnell,
David R. Warren and Ignacio J. Fanlo, or any of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Form S-3 Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
------------ ----- ----
<S> <C> <C>
* President and Director June 27, 1997
- ----------------------
Craig S. Phillips (Principal Executive Officer)
* Chief Financial Officer June 27, 1997
- ----------------------
Eileen K. Murray (Principal Financial Officer and Principal
Accounting Officer)
* Vice President June 27, 1997
- -----------------------
Gail P. McDonnell and Director
/s/ David R. Warren Vice President June 27, 1997
- ------------------------
David R. Warren and Director
*By: /s/ David R. Warren
-------------------
David R. Warren
Attorney-in-Fact
</TABLE>
Exhibit 1.1
MORGAN STANLEY ABS CAPITAL II INC.
ASSET BACKED SECURITIES
(Issuable in Series)
FORM OF UNDERWRITING AGREEMENT
New York, New York
____________, 199_
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
[Morgan Stanley ABS Capital II Inc., a Delaware corporation (the
"Company"), proposes to sell to you ("the Underwriter") Asset Backed Notes
(the "Notes") (and
Asset Backed Certificates) (the "Certificates" and, together with the Notes,
the] "Securities") in the classes, and in the respective original
principal amounts [as follows: [ ]. The Notes will be issued
pursuant to an Indenture, dated as of _____________, 199_ between the Trust
and _____________, as Indenture Trustee. (The Certificates will be issued
pursuant to a Trust Agreement dated as of _______________, 199_ between the
Company, as Depositor and __________________, as Owner Trustee.]] [Morgan
tanley ABS Capital II Inc., a Delaware corporation, proposes to sell to you
("the Underwriter") Asset
Backed Certificates in the classes, and in the respective original
principal amounts [as follows: [ ] (the "Securities"). The
Securities will be issued pursuant to a pooling and servicing agreement
dated as of _____________, 199_ (the "Pooling and Servicing Agreement") among
the Company, as Depositor, _______________, as Servicer, and
__________________, as Trustee (the "Trustee").) The Securities will
represent [obligations of] undivided beneficial ownership interests] in a
trust (the "Trust") the assets of which shall consist of (DESCRIBE TRUST
ASSETS).
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, including a prospectus, relating
to the Securities and has filed with, or mailed for filing to, the Commission
a prospectus supplement specifically relating to the Securities pursuant to
Rule 424 under the Securities Act of 1933 (the "Securities Act"). The term
Registration Statement means such registration statement as amended to the
date of the Underwriting Agreement. The term Base Prospectus means the
prospectus included in the Registration Statement. The term Prospectus means
the Base Prospectus together with the prospectus supplement specifically
relating to the Securities, as filed with, or mailed for filing to, the
Commission pursuant to Rule 424. The term preliminary prospectus means a
preliminary prospectus supplement specifically relating to the Securities
together with the Base Prospectus. Terms not otherwise defined in this
Agreement are used herein as defined in the Pooling and Servicing Agreement,
the Sale and Servicing Agreement, dated as of __________, 199__ among the
Trust, the Company, _____________, as servicer and ________, as indenture
trustee, the Trust Agreement or the Indenture (each a "Designated
Agreement").
I.
The Company represents and warrants to and agrees with the
Underwriter that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by
the Commission.
(b) (i) Each part of the Registration Statement, when such part
became effective, did not contain, and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply, and, as amended or
supplemented, if applicable, will comply in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iii) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph I(b)(i) do not apply to
statements or omissions in the Registration Statement or the Prospectus
based upon and in conformity with information relating to the
Underwriter furnished to the Company in writing by the Underwriter
expressly for use or incorporation therein.
(c) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement and the Designated
Agreement(s).
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Designated Agreement(s) has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law.
(f) The direction by the Company to the Trustee to execute,
authenticate and deliver the Securities has been duly authorized by the
Company, and the Securities, when executed and authenticated in the
manner contemplated in the Designated Agreement(s), and delivered to and
paid for by the Underwriter in accordance with the terms of this
Agreement, will be validly issued and outstanding and entitled to the
benefits of the Designated Agreement(s).
(g) Neither the execution and delivery by the Company of, nor the
performance by the Company of its obligations under, this Agreement or
the Designated Agreement(s), will contravene any provision of applicable
law or the certificate of incorporation or by-laws of the Company or any
agreement or other instrument binding upon the Company that is material
to the Company or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement or
Designated Agreement(s), except such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Securities.
(h) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(i) There are no legal or governmental proceedings pending or
threatened to which the Company is a party or to which any of the
properties of the Company are subject that are required to be described
in the Registration Statement or the Prospectus and that are not so
described, nor are there any statutes, regulations, contracts or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(j) Each preliminary prospectus filed as part of the registration
statement as originally filed or as a part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied as to
form, when so filed, in all material respects with the Securities Act
and the rules and regulations of the Commission thereunder.
(k) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.
II.
The Company hereby agrees to sell the Securities to the Underwriter, and
the Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to
purchase the Securities from the Company, for a purchase price of $________,
which price includes accrued interest, if any, from __________, 199_ to the
date of payment and delivery.
III.
The Underwriter proposes to make a public offering of the
Securities as soon as this Agreement is entered into. The terms of the
public offering of the Securities are set forth in the Prospectus.
IV.
Payment for the Securities shall be made by certified or official
bank check or checks payable to the order of the Company in immediately
available funds at the office of the Underwriter, (address), at 10:00 A.M.,
local time, on ______________, 19___ (Insert date 5 business days after date
of this Agreement), or at such other time or place on the same or such other
date, not later than ___________, 199___ (Insert date 10 business days after
date of this Agreement). Payment for the Securities shall be made upon
delivery to the Underwriter of the Securities registered in such names and in
such denominations as the Underwriter shall request in writing not less than
two full business days prior to the date of delivery. The time and date of
such payment and delivery with respect to the Securities are herein referred
to as the "Closing Date."
V.
The obligations of the Underwriter hereunder are subject to the
following conditions:
A. subsequent to the execution and delivery of this
Agreement and prior to the Closing Date
(1) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading, or
any review for a possible change, that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(2) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations, of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus, that in the judgment of the Underwriter, is material and
adverse and that makes it, in the judgment of the Underwriter,
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus; and
(3) the Underwriter shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in clause (i) above and to the
effect that the representations and warranties of the Company contained
in this Agreement are true and correct as of the Closing Date and that
the Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied on or before the
Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his knowledge as to proceedings threatened.
B. The Underwriter shall have received on the Closing Date
an opinion of counsel for the Company, dated the Closing Date, to the
effect set forth in Exhibit A.
C. The Underwriter shall have received on the Closing Date
an opinion of counsel to the Underwriter in form and substance
acceptable to it.
D. The Underwriter shall have received on the Closing Date a
letter of (Name of accounting firm), dated the date of this Agreement in
form and substance satisfactory to the Underwriter, regarding certain
specified procedures performed thereby with respect to information set
forth in the Prospectus.
VI.
In further consideration of the agreements of the Underwriter
contained in this Agreement, the Company covenants as follows:
A. To furnish the Underwriter, without charge, a signed copy
of the Registration Statement and any amendments thereto, including
exhibits, and, during the period mentioned in paragraph (c) below, as
many copies of the Prospectus and any supplements and amendments thereto
as the Underwriter may reasonably request.
B. Before amending or supplementing the Registration
Statement or the Prospectus with respect to the Securities, to furnish
the Underwriter a copy of each such proposed amendment or supplement and
not to file any such proposed amendment or supplement to which the
Underwriter reasonably objects.
C. If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriter the Prospectus is required by law to be delivered in
connection with sales by the Underwriter, any event shall occur or
condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with law, forthwith to prepare and furnish, at
its own expense, to the Underwriter, either amendments or supplements to
the Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law.
D. To endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Underwriter shall reasonably request and to pay all expenses (including
fees and disbursements of counsel) in connection with such qualification
and in connection with the determination of the eligibility of the
Securities for investment under the laws of such jurisdictions as the
Underwriter may designate.
VII.
The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls such Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934 (the "Exchange Act"), from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any preliminary prospectus or the Prospectus (if used within the
period set forth in paragraph (c) of Article VI and as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon and in conformity with
information furnished in writing to the Company by the Underwriter expressly
for use or incorporation therein.
The Underwriter agrees to indemnify and hold harmless the Company
and its directors and officers who sign the Registration Statement and any
person controlling the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriter, but only with
reference to information relating to the Underwriter furnished in writing by
the Underwriter expressly for use or incorporation in the Registration
Statement, any preliminary prospectus or the Prospectus.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related
to such proceeding. In any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Underwriter in the case of parties indemnified
pursuant to the first paragraph of this Article VII and by the Company in the
case of parties indemnified pursuant to the second paragraph of this Article
VII. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the third sentence of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
To the extent the indemnification provided for in this Article VII
is unavailable to an indemnified party under the first or second paragraph of
this Article VII or is insufficient in respect of any losses, claims, damages
or liabilities referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand, and the
Underwriter on the other, from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand, and of 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 the Company on the one
hand, and the Underwriter on the other, in connection with the offering of
the Securities shall be deemed to be in the same proportions that the total
net proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriter in respect thereof respectively, bear to the
aggregate public offering price of the Securities. The relative fault of the
Company on the one hand, and of the Underwriter on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by
the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Article VII were determined by pro
rata allocation or by any other method of allocation which does not take
account of the considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Article VII, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total underwriting discounts and commissions received by
the Underwriter in connection with the Securities underwritten and
distributed to the public by the Underwriter exceeds the amount of any
damages which the Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Article
VII and the representations and warranties of the Company in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Underwriter or any person controlling the Underwriter or by or on behalf
of the Company, its directors or officers or any person controlling the
Company and (iii) acceptance of any payment for any of the Securities.
VIII.
This Agreement shall be subject to termination in the
Underwriter's absolute discretion, by notice given to the Company, if (a)
after the execution and delivery of this Agreement and prior to the Closing
Date (i) trading generally shall have been suspended or materially limited on
or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, the National Association of Securities Dealers, Inc., the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii)
a general moratorium on commercial banking activities in New York shall have
been declared by either Federal or New York State authorities, or (iv) there
shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis that, in the judgment of the
Underwriter, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event singly or together with
any other such event, makes it, in the judgment of the Underwriter,
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
IX.
If this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriter for all out-of-pocket expenses
(including the fees and disbursements of its counsel) reasonably incurred by
the Underwriter in connection with the Securities.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Very truly yours,
MORGAN STANLEY ABS CAPITAL II INC.
By:_____________________________
Name:
Title:
Accepted and agreed to by:
(UNDERWRITER)
By: _____________________________
Name:
Title:
EXHIBIT A
OPINION OF BROWN & WOOD LLP, COUNSEL FOR THE COMPANY
The opinion of Brown & Wood LLP, counsel for the Company, to be
delivered pursuant to Article V, paragraph (b) of the document entitled
Morgan Stanley ABS Capital II Inc. Underwriting Agreement shall be to the
effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has the corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectus;
(ii) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(iii) the Designated Agreement(s) has been duly
authorized, executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject, as to enforceability,
to bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and to general principles of
equity, regardless of whether enforcement is sought in a proceeding in
equity or at law;
(iv) the direction by the Company to the Trustee to execute,
authenticate and deliver the Securities has been duly authorized by the
Company, and the Securities, when executed and authenticated in the
manner contemplated in the Designated Agreement(s), will be validly
issued and outstanding and entitled to the benefits of the Designated
Agreement(s);
(v) the Registration Statement is effective under the
Securities Act, and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued and not withdrawn, and no
proceedings for that purpose have been initiated or threatened by the
Commission and not terminated;
(vi) the Securities and the Designated Agreement(s) conform in
all material respects to the descriptions thereof contained in the
Prospectus;
(vii) the Trust is not required to be registered under the
Investment Company Act of 1940, as amended;
(viii) the Designated Agreement(s) is not required to be
qualified under the Trust Indenture Act of 1939, as amended;
(ix) the statements in the Prospectus under the caption
"Federal Income Tax Consequences", to the extent that they constitute
matters of law or legal conclusions with respect thereto that are
material to the Securities, have been
prepared or reviewed by such counsel and correctly present the opinion
of such counsel;
(x) the execution, delivery and performance by the Company of
the Underwriting Agreement and the Designated Agreement(s) will not
conflict with or constitute a breach of or default under the certificate
of incorporation or bylaws of the Company or any agreement, indenture or
other instrument identified by the Company to such counsel to which the
Company is a party or by which it or any of its properties may be bound,
or any law, administrative regulation or court decree applicable to the
Company and no consent, approval or authorization or order of any court
or governmental agency or body is required for the performance of the
Underwriting Agreement, except such as are specified and have been
obtained;
Nothing has come to the attention of such counsel that would lead them
to believe that (except for the financial statements and other numerical,
financial and statistical data or information contained therein, as to which
such counsel need not express any opinion) 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, on the
date of the Underwriting Agreement and on the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided
that such counsel may state that (i) their opinion and belief are based upon
their participation in the preparation of the Registration Statement and the
Prospectus and any amendments and supplements thereto and review and
discussion of the contents thereof, but is without independent check or
verification except as specified, (ii) they are not passing on the adequacy
or accuracy of the derivation or compilation of the numerical, statistical or
financial data or information included in the Registration Statement and
Prospectus and (iii) they are not passing on the adequacy or accuracy of
information supplied by persons other than the Company for use in the
Registration Statement or the Prospectus.
Terms capitalized herein and not otherwise defined shall have the
meanings assigned to them in the Underwriting Agreement.
Exhibit 1.2
MORGAN STANLEY ABS CAPITAL II INC.
ASSET BACKED SECURITIES
(Issuable in Series)
FORM OF UNDERWRITING AGREEMENT
New York, New York
____________, 199_
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
[Morgan Stanley ABS Capital II Inc., a Delaware corporation (the
"Company"), proposes to sell to you ("the Underwriter") Asset Backed Notes
(the "Notes") (and
Asset Backed Certificates) (the "Certificates" and, together with the Notes,
the] "Securities") in the classes, and in the respective original
principal amounts [as follows: [ ]. The Notes will be issued
pursuant to an Indenture, dated as of _____________, 199_ between the Trust
and _____________, as Indenture Trustee. (The Certificates will be issued
pursuant to a Trust Agreement dated as of _______________, 199_ between the
Company, as Depositor and __________________, as Owner Trustee.]] [Morgan
tanley ABS Capital II Inc., a Delaware corporation, proposes to sell to you
("the Underwriter") Asset
Backed Certificates in the classes, and in the respective original
principal amounts [as follows: [ ] (the "Securities"). The
Securities will be issued pursuant to a pooling and servicing agreement
dated as of _____________, 199_ (the "Pooling and Servicing Agreement") among
the Company, as Depositor, _______________, as Servicer, and
__________________, as Trustee (the "Trustee").) The Securities will
represent [obligations of] undivided beneficial ownership interests] in a
trust (the "Trust") the assets of which shall consist of (DESCRIBE TRUST
ASSETS).
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, including a prospectus, relating
to the Securities and has filed with, or mailed for filing to, the Commission
a prospectus supplement specifically relating to the Securities pursuant to
Rule 424 under the Securities Act of 1933 (the "Securities Act"). The term
Registration Statement means such registration statement as amended to the
date of the Underwriting Agreement. The term Base Prospectus means the
prospectus included in the Registration Statement. The term Prospectus means
the Base Prospectus together with the prospectus supplement specifically
relating to the Securities, as filed with, or mailed for filing to, the
Commission pursuant to Rule 424. The term preliminary prospectus means a
preliminary prospectus supplement specifically relating to the Securities
together with the Base Prospectus. Terms not otherwise defined in this
Agreement are used herein as defined in the Pooling and Servicing Agreement,
the Sale and Servicing Agreement, dated as of __________, 199__ among the
Trust, the Company, _____________, as servicer and ________, as indenture
trustee, the Trust Agreement or the Indenture (each a "Designated
Agreement").
I.
The Company represents and warrants to and agrees with the
Underwriter that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by
the Commission.
(b) (i) Each part of the Registration Statement, when such part
became effective, did not contain, and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply, and, as amended or
supplemented, if applicable, will comply in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iii) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph I(b)(i) do not apply to
statements or omissions in the Registration Statement or the Prospectus
based upon and in conformity with information relating to the
Underwriter furnished to the Company in writing by the Underwriter
expressly for use or incorporation therein.
(c) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement and the Designated
Agreement(s).
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Designated Agreement(s) has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law.
(f) The direction by the Company to the Trustee to execute,
authenticate and deliver the Securities has been duly authorized by the
Company, and the Securities, when executed and authenticated in the
manner contemplated in the Designated Agreement(s), and delivered to and
paid for by the Underwriter in accordance with the terms of this
Agreement, will be validly issued and outstanding and entitled to the
benefits of the Designated Agreement(s).
(g) Neither the execution and delivery by the Company of, nor the
performance by the Company of its obligations under, this Agreement or
the Designated Agreement(s), will contravene any provision of applicable
law or the certificate of incorporation or by-laws of the Company or any
agreement or other instrument binding upon the Company that is material
to the Company or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement or
Designated Agreement(s), except such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Securities.
(h) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(i) There are no legal or governmental proceedings pending or
threatened to which the Company is a party or to which any of the
properties of the Company are subject that are required to be described
in the Registration Statement or the Prospectus and that are not so
described, nor are there any statutes, regulations, contracts or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(j) Each preliminary prospectus filed as part of the registration
statement as originally filed or as a part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied as to
form, when so filed, in all material respects with the Securities Act
and the rules and regulations of the Commission thereunder.
(k) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.
II.
The Company hereby agrees to sell the Securities to the Underwriter, and
the Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to
purchase the Securities from the Company, for a purchase price of $________,
which price includes accrued interest, if any, from __________, 199_ to the
date of payment and delivery.
III.
The Underwriter proposes to make a public offering of the
Securities as soon as this Agreement is entered into. The terms of the
public offering of the Securities are set forth in the Prospectus.
IV.
Payment for the Securities shall be made by certified or official
bank check or checks payable to the order of the Company in immediately
available funds at the office of the Underwriter, (address), at 10:00 A.M.,
local time, on ______________, 19___ (Insert date 5 business days after date
of this Agreement), or at such other time or place on the same or such other
date, not later than ___________, 199___ (Insert date 10 business days after
date of this Agreement). Payment for the Securities shall be made upon
delivery to the Underwriter of the Securities registered in such names and in
such denominations as the Underwriter shall request in writing not less than
two full business days prior to the date of delivery. The time and date of
such payment and delivery with respect to the Securities are herein referred
to as the "Closing Date."
V.
The obligations of the Underwriter hereunder are subject to the
following conditions:
A. subsequent to the execution and delivery of this
Agreement and prior to the Closing Date
(1) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading, or
any review for a possible change, that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(2) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations, of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus, that in the judgment of the Underwriter, is material and
adverse and that makes it, in the judgment of the Underwriter,
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus; and
(3) the Underwriter shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in clause (i) above and to the
effect that the representations and warranties of the Company contained
in this Agreement are true and correct as of the Closing Date and that
the Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied on or before the
Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his knowledge as to proceedings threatened.
B. The Underwriter shall have received on the Closing Date
an opinion of counsel for the Company, dated the Closing Date, to the
effect set forth in Exhibit A.
C. The Underwriter shall have received on the Closing Date
an opinion of counsel to the Underwriter in form and substance
acceptable to it.
D. The Underwriter shall have received on the Closing Date a
letter of (Name of accounting firm), dated the date of this Agreement in
form and substance satisfactory to the Underwriter, regarding certain
specified procedures performed thereby with respect to information set
forth in the Prospectus.
VI.
In further consideration of the agreements of the Underwriter
contained in this Agreement, the Company covenants as follows:
A. To furnish the Underwriter, without charge, a signed copy
of the Registration Statement and any amendments thereto, including
exhibits, and, during the period mentioned in paragraph (c) below, as
many copies of the Prospectus and any supplements and amendments thereto
as the Underwriter may reasonably request.
B. Before amending or supplementing the Registration
Statement or the Prospectus with respect to the Securities, to furnish
the Underwriter a copy of each such proposed amendment or supplement and
not to file any such proposed amendment or supplement to which the
Underwriter reasonably objects.
C. If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriter the Prospectus is required by law to be delivered in
connection with sales by the Underwriter, any event shall occur or
condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with law, forthwith to prepare and furnish, at
its own expense, to the Underwriter, either amendments or supplements to
the Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law.
D. To endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Underwriter shall reasonably request and to pay all expenses (including
fees and disbursements of counsel) in connection with such qualification
and in connection with the determination of the eligibility of the
Securities for investment under the laws of such jurisdictions as the
Underwriter may designate.
VII.
The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls such Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934 (the "Exchange Act"), from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any preliminary prospectus or the Prospectus (if used within the
period set forth in paragraph (c) of Article VI and as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon and in conformity with
information furnished in writing to the Company by the Underwriter expressly
for use or incorporation therein.
The Underwriter agrees to indemnify and hold harmless the Company
and its directors and officers who sign the Registration Statement and any
person controlling the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriter, but only with
reference to information relating to the Underwriter furnished in writing by
the Underwriter expressly for use or incorporation in the Registration
Statement, any preliminary prospectus or the Prospectus.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related
to such proceeding. In any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Underwriter in the case of parties indemnified
pursuant to the first paragraph of this Article VII and by the Company in the
case of parties indemnified pursuant to the second paragraph of this Article
VII. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the third sentence of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
To the extent the indemnification provided for in this Article VII
is unavailable to an indemnified party under the first or second paragraph of
this Article VII or is insufficient in respect of any losses, claims, damages
or liabilities referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand, and the
Underwriter on the other, from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand, and of 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 the Company on the one
hand, and the Underwriter on the other, in connection with the offering of
the Securities shall be deemed to be in the same proportions that the total
net proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriter in respect thereof respectively, bear to the
aggregate public offering price of the Securities. The relative fault of the
Company on the one hand, and of the Underwriter on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by
the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Article VII were determined by pro
rata allocation or by any other method of allocation which does not take
account of the considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Article VII, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total underwriting discounts and commissions received by
the Underwriter in connection with the Securities underwritten and
distributed to the public by the Underwriter exceeds the amount of any
damages which the Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Article
VII and the representations and warranties of the Company in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Underwriter or any person controlling the Underwriter or by or on behalf
of the Company, its directors or officers or any person controlling the
Company and (iii) acceptance of any payment for any of the Securities.
VIII.
This Agreement shall be subject to termination in the
Underwriter's absolute discretion, by notice given to the Company, if (a)
after the execution and delivery of this Agreement and prior to the Closing
Date (i) trading generally shall have been suspended or materially limited on
or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, the National Association of Securities Dealers, Inc., the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii)
a general moratorium on commercial banking activities in New York shall have
been declared by either Federal or New York State authorities, or (iv) there
shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis that, in the judgment of the
Underwriter, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event singly or together with
any other such event, makes it, in the judgment of the Underwriter,
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
IX.
If this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriter for all out-of-pocket expenses
(including the fees and disbursements of its counsel) reasonably incurred by
the Underwriter in connection with the Securities.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Very truly yours,
MORGAN STANLEY ABS CAPITAL II INC.
By:_____________________________
Name:
Title:
Accepted and agreed to by:
(UNDERWRITER)
By: _____________________________
Name:
Title:
EXHIBIT A
OPINION OF BROWN & WOOD LLP, COUNSEL FOR THE COMPANY
The opinion of Brown & Wood LLP, counsel for the Company, to be
delivered pursuant to Article V, paragraph (b) of the document entitled
Morgan Stanley ABS Capital II Inc. Underwriting Agreement shall be to the
effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has the corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectus;
(ii) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(iii) the Designated Agreement(s) has been duly
authorized, executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject, as to enforceability,
to bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and to general principles of
equity, regardless of whether enforcement is sought in a proceeding in
equity or at law;
(iv) the direction by the Company to the Trustee to execute,
authenticate and deliver the Securities has been duly authorized by the
Company, and the Securities, when executed and authenticated in the
manner contemplated in the Designated Agreement(s), will be validly
issued and outstanding and entitled to the benefits of the Designated
Agreement(s);
(v) the Registration Statement is effective under the
Securities Act, and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued and not withdrawn, and no
proceedings for that purpose have been initiated or threatened by the
Commission and not terminated;
(vi) the Securities and the Designated Agreement(s) conform in
all material respects to the descriptions thereof contained in the
Prospectus;
(vii) the Trust is not required to be registered under the
Investment Company Act of 1940, as amended;
(viii) the Designated Agreement(s) is not required to be
qualified under the Trust Indenture Act of 1939, as amended;
(ix) the statements in the Prospectus under the caption
"Federal Income Tax Consequences", to the extent that they constitute
matters of law or legal conclusions with respect thereto that are
material to the Securities, have been
prepared or reviewed by such counsel and correctly present the opinion
of such counsel;
(x) the execution, delivery and performance by the Company of
the Underwriting Agreement and the Designated Agreement(s) will not
conflict with or constitute a breach of or default under the certificate
of incorporation or bylaws of the Company or any agreement, indenture or
other instrument identified by the Company to such counsel to which the
Company is a party or by which it or any of its properties may be bound,
or any law, administrative regulation or court decree applicable to the
Company and no consent, approval or authorization or order of any court
or governmental agency or body is required for the performance of the
Underwriting Agreement, except such as are specified and have been
obtained;
Nothing has come to the attention of such counsel that would lead them
to believe that (except for the financial statements and other numerical,
financial and statistical data or information contained therein, as to which
such counsel need not express any opinion) 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, on the
date of the Underwriting Agreement and on the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided
that such counsel may state that (i) their opinion and belief are based upon
their participation in the preparation of the Registration Statement and the
Prospectus and any amendments and supplements thereto and review and
discussion of the contents thereof, but is without independent check or
verification except as specified, (ii) they are not passing on the adequacy
or accuracy of the derivation or compilation of the numerical, statistical or
financial data or information included in the Registration Statement and
Prospectus and (iii) they are not passing on the adequacy or accuracy of
information supplied by persons other than the Company for use in the
Registration Statement or the Prospectus.
Terms capitalized herein and not otherwise defined shall have the
meanings assigned to them in the Underwriting Agreement.
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
MORGAN STANLEY ABS CAPITAL II INC.
The undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the General Corporation Law of the
State of Delaware (the "GCL"), does hereby certify as follows:
FIRST: The name of the corporation is Morgan Stanley ABS Capital II
Inc. (the "Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County. The name of the Corporation's registered agent at such
address is The Corporation Trust Company.
THIRD: The nature of business or purposes to be conducted or promoted
by the Corporation is to engage solely in the following activities:
a. To acquire, own, hold, sell, transfer, pledge or otherwise
dispose of:
(1) interests in promissory notes, leases, loan agreements,
retail installment sales contracts, installment loans, purchase money
notes or other evidences of indebtedness or payment obligations, any or
all of which may be secured or unsecured, that arise in connection with
one or more of the following: (i) the sale or lease of automobiles,
trucks, light-duty trucks, recreational vehicles or other motor
vehicles, boats or other marine vehicles, equipment, merchandise and
other personal property and financings or re-financings secured thereby,
(ii) credit card purchases or cash advances, (iii) loans to students or
the parents of students extended for the purpose of financing or re-
financing education costs and (iv) any and all other student and
consumer loans and indebtedness (all of the foregoing set forth in this
paragraph (1) being collectively referred to herein as the
"Receivables"); and
(2) participation certificates, pass-through certificates,
collateralized obligations or other asset-backed securities evidencing
beneficial interests in, or that are secured or otherwise backed by,
interests in Receivables;
b. To act as settlor or depositor of trusts formed under a trust
agreement, pooling and servicing agreement or other agreement to issue one or
more series (any of which series may be issued in one or more classes) of
trust certificates ("Certificates") representing interests in a pool of
Receivables and/or to issue pursuant to an indenture or other agreement one
or more series (any of which series may be issued in one or more classes) of
bonds, notes or other evidences of indebtedness ("Debt Obligations")
collateralized by a pool of Receivables and/or other property and to enter
into any other agreement in connection with the authorization, issuance,
financing, sale and delivery of Certificates and/or Debt Obligations
("Securities"), including arrangements for support for any series of
Securities by various forms of credit enhancement.
c. To hold, pledge, transfer or otherwise deal with Securities,
including Securities representing a senior interest in a pool of Receivables
("Senior Interests"), representing a subordinated interest in a pool of
Receivables ("Subordinated Interests") or a residual interest in a pool of
Receivables ("Residual Interests").
d. To loan or invest or otherwise apply proceeds from a pool of
Receivables, funds received in respect of Securities, Senior Interests,
Subordinated Interests or Residual Interests and any other income, as
determined by the Corporation's Board of Directors.
e. To engage in any lawful act or activity to exercise any powers
permitted to corporations organized under the GCL that are incidental to and
necessary or convenient for the accomplishment of the foregoing purposes.
FOURTH: The total number of shares of all classes of capital stock that
the Corporation shall have the authority to issue is 1,000 shares of common
stock, and the par value of such shares shall be $1.00 per share amounting in
the aggregate to $1,000.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
---- ---------------
Susan M. Krause c/o Morgan Stanley & Co. Incorporated
1585 Broadway - 38th Floor
New York, NY 10036
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
1. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
2. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors shall have concurrent power
with the stockholders, subject to Article TWELFTH to make, alter, amend,
change, add to or repeal the bylaws of the Corporation.
3. The number of directors of the Corporation shall
initially be three and thereafter shall be as from time to time fixed
by, or in the manner provided in, the bylaws of the Corporation.
Election of directors need not be by written ballot unless the bylaws so
provide.
4. At least two directors of the Corporation will not be
directors, officers or employees of any direct or indirect parent of the
Corporation or of any affiliate of such parent or any successor thereto.
5. In addition to the powers and authority hereinabove or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation subject nevertheless to the
provisions of the GCL, this Certificate of Incorporation and the bylaws
of the Corporation; provided, however, that no bylaw hereafter adopted
by the stockholders shall invalidate any prior act of the directors that
would have been valid if such bylaw had not been adopted. The
Corporation's Board of Directors will hold appropriate meetings (or act
by unanimous written consent) to duly authorize all of the Corporation's
actions.
6. The Corporation shall maintain itself and act as an
entity separate from any other entity and the Corporation shall, among
other actions or inactions: (a) not commingle its assets with those of
any other entity, (b) maintain separate corporate records and books of
account from those of any other entity and cause its financial
statements to reflect the separate existence of the Corporation and its
assets and liabilities, (c) pay its own liabilities and expenses from
its own funds, including fairly allocating shared office and employee
expenses, (d) act only in its own corporate name and through its own
authorized officers and agents, (e) observe all corporate formalities,
(f) maintain an arm's length relationship with affiliated entities, (g)
not guarantee or become obligated for the debts of any other entity or
hold out its credit as available to others, and (h) maintain adequate
capital in light of its contemplated business operations.
EIGHTH: The Corporation shall not issue, assume or guarantee any debt
securities unless such debt securities are acceptable to the rating agencies
that have rated any outstanding Securities and such issuance, assumption or
guarantee will not result in the downgrade or withdrawal of the rating then
assigned to any outstanding Securities then rated by such rating agency.
NINTH: A director of the Corporation shall not in the absence of fraud
be disqualified by his office from dealing or contracting with the
Corporation either as a vendor, purchaser or otherwise, nor in the absence of
fraud shall a director of the Corporation be liable to account to the
Corporation for any profit realized by him from or through any transaction or
contract of the Corporation by reason of the fact that he, or any firm of
which he is a member, or any corporation of which he is an officer, director
or stockholder, was interested in such transaction or contract if such
transaction or contract has been authorized, approved or ratified in the
manner provided in the GCL for authorization, approval or ratification of
transactions or contracts between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers or have a financial interest.
TENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for the Corporation
under the provisions of Section 291 of the GCL or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of the GCL, order a meeting
of the creditors or class of creditors and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement, and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors and/or on all the stockholders or class of
stockholders of the Corporation, as the case may be, and also on the
Corporation.
ELEVENTH: (a) No director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this Article ELEVENTH by the stockholders of
the Corporation shall not adversely affect any right of protection of a
director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such repeal
or modification.
(b) If the General Corporation Law of the State of Delaware shall
be amended after this Certificate of Incorporation is filed with the
Secretary of State of Delaware to authorize corporate action further
eliminating or limiting the liability of directors, then a director of the
corporation, in addition to the circumstances in which he is not liable
immediately prior to such amendment, shall be free of liability to the
fullest extent permitted by the GCL, as so amended.
TWELFTH: Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation, for so long as any rated Securities remain
outstanding, shall not:
(i) engage in any business or activity other than those set forth
in Article THIRD;
(ii) dissolve or liquidate, in whole or in part; 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:
(A) the entity (if other than the Corporation) formed or
surviving the consolidation or merger or which acquires the
properties and assets of the Corporation, is organized and existing
under the laws of the State of Delaware, expressly assumes the due
and punctual payment of, and all obligations of the Corporation,
and has a Certificate of Incorporation containing provisions
identical to the provisions of the Articles THIRD, SEVENTH, EIGHTH,
TWELFTH and SIXTEENTH of this Certificate of Incorporation;
(B) immediately after giving effect to the transaction, no
default or event of default has occurred and is continuing under
any indebtedness of the Corporation or any agreements relating to
such indebtedness; and
(C) the Corporation receives written confirmation from each
rating agency then rating any outstanding Securities that such
merger or consolidation will not result in the downgrade or
withdrawal of the rating then assigned to any Securities then rated
by such rating agency; and
(iii) without the affirmative vote of 100% of the members of
the Board of Directors of the Corporation, institute proceedings to be
adjudicated bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Corporation or a substantial part of
its property, or make any assignment for the benefit of creditors, or
admit in writing its inability to pay its debts generally as they become
due, or dissolve, liquidate, consolidate, merge or sell all or
substantially all of the assets of the Corporation.
THIRTEENTH: The Board of Directors, by the affirmative vote of a
majority of 100% of the members of the Board, and irrespective of any
personal interest of its members, shall have authority to provide reasonable
compensation to all directors for services, ordinary or extraordinary, to the
Corporation as directors, officers or otherwise.
FOURTEENTH: Meetings of stockholders and directors may be held within
or without the State of Delaware, as the bylaws of the Corporation may
provide. The books and records of the Corporation may be kept (subject to
any provision contained in the GCL) outside the State of Delaware.
FIFTEENTH: Each person who is or was a director or officer of the
Corporation, and each person who serves or served at the request of the
Corporation as a director or officer (or its equivalent) of another
enterprise, shall be indemnified by the Corporation to the fullest extent
authorized by the GCL as it may be in effect from time to time, except as to
any action, suit or proceeding brought by or on behalf of a director or
officer without prior approval of the Board of Directors.
SIXTEENTH: The Corporation reserves the right to amend, alter, change
or repeal any provisions contained in this Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation; provided
that no such amendment of Articles THIRD, SEVENTH, EIGHTH, TWELFTH or
SIXTEENTH shall be effective without the Corporation having received written
confirmation from each rating agency then rating any outstanding Securities
that such amendment will not result in the downgrade or withdrawal of the
rating then assigned to any Securities then rated by such rating agency.
IN WITNESS WHEREOF, I the undersigned, being the sole incorporator
hereinbefore named, do hereby execute this Certificate of Incorporation this
___ day of May, 1997.
-----------------------------------
Susan M. Krause
Sole Incorporator
Exhibit 3.2
BY-LAWS
of
MORGAN STANLEY ABS CAPITAL II INC.
(a Delaware Corporation)
(As Adopted on May 5, 1997)
__________________
ARTICLE I
Offices
SECTION 1.1. Registered Office in Delaware. The registered
-----------------------------
office of Morgan Stanley ABS Capital II Inc. (the "Corporation") in the State
of Delaware shall be in the City of Wilmington, County of New Castle, and the
registered agent in charge thereof shall be The Corporation Trust Company.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. Place of Meetings. All meetings of stockholders
-----------------
shall be held at such place or places, within or without the State of
Delaware, as may from time to time be fixed by the Board of Directors, or as
shall be specified in the respective notices, or waivers of notice, thereof.
SECTION 2.2. Annual Meetings. The annual meeting of stockholders
---------------
shall be held on such date and at such time as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting, at
which meetings the stockholders shall elect a Board of Directors and transact
such other business as may properly be brought before the meeting.
SECTION 2.3. Special Meetings. A special meeting of the
----------------
stockholders may be called at any time and for any purpose or purposes by the
President or the Chairman of the Board or by order of the Board of Directors,
and shall be called by the Secretary upon the written request of the holders
of record of at least 80% of the voting power of the then outstanding shares
of capital stock of the Corporation entitled to vote generally in the
election of directors. Every such request shall state the purpose or
purposes of each meeting.
SECTION 2.4. Notice of Meetings. Except as otherwise expressly
------------------
required by law, written notice of each meeting of stockholders, whether
annual or special, stating the place, date and hour of the meeting shall be
given not less than ten days nor more than fifty days before the date on
which the meeting is to be held, to each stockholder of record entitled to
vote thereat by delivering a notice thereof to him personally or by mailing
such notice in a postage prepaid envelope directed to him at his address as
it appears on the stock ledger of the Corporation, unless he shall have filed
with the Secretary of the Corporation a written request that notices intended
for him be directed to another address, in which case such notice shall be
directed to him at the address designated in such request. If any
stockholder shall, in person or by attorney thereunto authorized, in writing
or by telegraph, cable, telecopy or telex, waive notice of any meeting of the
stockholders, whether prior to or after such meeting, notice thereof need not
be given to him. Every notice of a special meeting of the stockholders,
besides stating the time and place of the meeting, shall state briefly the
purpose or purposes thereof.
SECTION 2.5. List of Stockholders. It shall be the duty of the
--------------------
Secretary or other officer of the Corporation who shall have charge of the
stock ledger to prepare and make, at least ten days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote
thereat, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in his name. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall be kept and produced at the time and place of the meeting during the
whole time thereof and subject to the inspection of any stockholder who may
be present. The original or duplicate stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
such list or the books of the Corporation or to vote in person or by proxy at
such meeting.
SECTION 2.6. Quorum. At each meeting of the stockholders, the
------
holders of record of a majority of the issued and outstanding stock of the
Corporation entitled to vote at such meeting, present in person or by proxy,
shall constitute a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation or these By-Laws.
In the absence of a quorum, any officer entitled to preside at, or act as
Secretary of, such meeting shall have the power to adjourn the meeting from
time to time until a quorum shall be constituted.
SECTION 2.7. Voting. At all meetings of the stockholders, a
------
quorum being present, all matters shall be decided by majority vote of the
shares of stock entitled to vote held by the stockholders present in person
or by proxy, except as otherwise required by the Certificate of Incorporation
or the laws of the State of Delaware. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted after three years from its date, unless the proxy provides for
a longer period.
SECTION 2.8. Action Without Meeting. Unless otherwise provided
----------------------
in the Certificate of Incorporation, any action required to be taken at any
annual or special meeting of stockholders of the Corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. Number, Term of Office and Eligibility. The number
--------------------------------------
of directors shall be fixed from time to time by resolution of the
stockholders or Board of Directors of the Corporation. Each director shall
hold office until his successor is elected and qualified, or until his
earlier resignation or removal.
SECTION 3.2. Quorum and Manner of Acting. At all meetings of the
---------------------------
Board of Directors a majority of the total number of directors shall
constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by the laws of the State of Delaware, the Certificate
of Incorporation or the By-Laws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3.3. Annual Meeting. Immediately after each annual
--------------
meeting of stockholders for the election of directors the Board of Directors
shall meet at the place of the annual meeting of stockholders for the purpose
of organization, the election of officers and the transaction of other
business. Notice of such meeting need not be given. If such meeting is held
at any other time or place, notice thereof must be given or waived as
hereinafter provided for special meetings of the Board of Directors.
SECTION 3.4. Regular Meetings. Regular meetings of the Board of
----------------
Directors may be held at such time and place, within or without the State of
Delaware, as shall from time to time be determined by the Board of Directors.
After there has been such determination, and notice thereof has been once
given to each member of the Board of Directors, regular meetings may be held
without further notice being given.
SECTION 3.5. Special Meetings; Notice. Special meetings of the
------------------------
Board of Directors shall be held whenever called by the Chairman of the Board
or the President. Notice of each such meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at
least two days before the date on which the meeting is to be held, or shall
be sent to him at such place by telegraph, cable, telecopy or telex, or be
delivered personally or by telephone, not later than the day before the d ay
on which such meeting is to be held. Each such notice shall state the time
and place of the meeting and the purposes thereof. If any director shall, in
person or by attorney thereunto authorized, in writing or by telegraph,
cable, telecopy or telex, waive notice of any meeting of the Board of
Directors, whether prior to or after such meeting, notice thereof need not be
given to him. No notice to or waiver by any director with respect to any
special meeting shall be required if such director shall be present at said
meeting.
SECTION 3.6. Resignation. Any director of the Corporation may
-----------
resign at any time by giving written notice to the Chairman of the Board, if
any, the President or the Secretary of the Corporation. The resignation of
any director shall take effect upon receipt of notice thereof or at such
later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
SECTION 3.7. Newly-Created Directorships and Vacancies on the
------------------------------------------------
Board of Directors. Subject to the rights of the holders of any class or
- ------------------
series of stock having preference over the Common Stock as to dividends or
upon liquidation, dissolution or winding up of the Corporation to elect
directors under specified circumstances, if any, and subject to any
limitations regarding eligibility to serve as a director as set forth in the
Corporation's Certificate of Incorporation, newly-created directorships
resulting from any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be
filled by a majority vote of the directors then in office, although less than
a quorum, or by a majority of the votes cast by the holders of the Voting
Stock; and any director so chosen shall hold office for the remaining term of
his predecessor or, if there shall have been no predecessor, until the next
annual election of directors or until his successor shall have been duly
elected and qualified. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
SECTION 3.8. Removal of Directors. Subject to the rights of the
--------------------
holders of any class or series of stock having preference over the Common
Stock as to dividends or upon liquidation, dissolution or winding up of the
Corporation to elect directors under specified circumstances, if any, and
subject to any limitations regarding eligibility to serve as a director as
set forth in the Corporation's Certificate of Incorporation, any director, or
the entire Board of Directors, may be removed from office at any time, with
or without cause, only by the affirmative vote of the holders of at least 80%
of the voting power of the Voting Stock, voting together as a single class.
SECTION 3.9. Compensation of Directors. The Board of Directors
-------------------------
shall have the authority to fix the compensation of directors and of members
of committees of directors.
SECTION 3.10. Action Without Meeting. Any action required or
----------------------
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto
is signed by all members of the Board or of such committee, as the case may
be, and such written consent is filed with the records of the proceedings of
the Board or committee.
SECTION 3.11. Meeting by Conference Telephone. Directors and
-------------------------------
members of any committee designated by the Board of Directors may participate
in a meeting of the Board of Directors or of such committee, as the case may
be, by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section shall constitute
presence in person at such meeting.
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 4.1. Designation of Committees. The Board of Directors
-------------------------
may, by resolution passed by a majority of the whole Board, designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
SECTION 4.2. Vacancies. In the absence or disqualification of
---------
a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
SECTION 4.3. Powers. Any such committee, to the extent provided
------
in the resolution of the Board of Directors, shall have and may exercise all
the powers and authority of the Board of Directors to the extent provided by
Section 141(c) of the General Corporation Law of the State of Delaware as it
exists now or may hereafter be amended.
SECTION 4.4. Minutes of Committee Meetings. Each committee shall
-----------------------------
keep regular minutes of its meetings and report the same to the Board of
Directors when required.
ARTICLE V
OFFICERS
SECTION 5.1. Principal Officers. The Board of Directors shall
------------------
elect a President, a Secretary and a Treasurer, and may in addition elect a
Chairman of the Board, one or more Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers. One person may hold, and
perform the duties of, any two or more of said offices.
SECTION 5.2. Election, Term of Office and Eligibility. The
----------------------------------------
officers of the Corporation referred to in Section 5.1 shall be elected
annually by the Board of Directors at the annual meeting thereof. Each such
officer shall hold office until his successor shall have been duly elected
and shall qualify, or until his death or until he shall resign or shall have
been removed.
SECTION 5.3. Other Officers. The Board of Directors may appoint
--------------
such other officers as it may from time to time determine, each of whom shall
hold office for such period, and perform such duties as the President or the
Board of Directors may from time to time determine. The Board of Directors
may delegate to any officer referred to in Section 5.1 the power to appoint
and to remove any such officers.
SECTION 5.4. Removal. Any officer may be removed, either with
-------
or without cause, at any time, by resolution adopted by the Board of
Directors at any regular meeting of the Board or at any special meeting of
the Board called for that purpose at which a quorum is present.
SECTION 5.5. Resignations. Any officer may resign at any time
------------
by giving written notice to the Board of Directors, to the Chairman of the
Board, if any, the President or the Secretary of the Corporation. The
resignation of any officer shall take effect upon receipt of notice or at
such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
SECTION 5.6. Chairman of the Board. The Chairman of the Board,
---------------------
if any, shall preside at all meetings of stockholders and at all meetings of
the Board of Directors. Subject to the control and the direction of the
Board of Directors, the Chairman of the Board may enter into any contract and
execute and deliver any instrument in the name and on behalf of the
Corporation. The Chairman of the Board shall perform such other duties and
have such other powers as the Board of Directors shall prescribe.
SECTION 5.7. President. In the absence of the Chairman of the
---------
Board, the President shall preside at all meetings of the stockholders and at
all meetings of the Board of Directors. Subject to the control and the
direction of the Board of Directors, the President may enter into any
contract and execute and deliver any instrument in the name and on behalf of
the Corporation. The President shall perform such other duties and have such
other powers as the Board of Directors shall prescribe.
SECTION 5.8. Vice Presidents. The Vice Presidents shall perform
---------------
such duties and have such powers as the President or the Board of Directors
may from time to time prescribe. Subject to the control and the direction of
the Board of Directors, each Vice President may enter into any contract and
execute and deliver any instrument in the name and on behalf of the
Corporation.
SECTION 5.9. Secretary. The Secretary, if present, shall act as
---------
Secretary at all meetings of the Board of Directors and of the stockholders
and keep the minutes thereof in a book or books to be provided for that
purpose; he shall see that all notices required to be given by the
Corporation are duly given and served; he shall have charge of the stock
records of the Corporation; he shall see that all reports, statements and
other documents required by law are properly kept and filed; and, in general,
he shall perform all the duties incident to the office of Secretary.
SECTION 5.10. Assistant Secretary. The Assistant Secretary, if
-------------------
any, or, if there be more than one, the Assistant Secretaries, in the order
determined by the Board of Directors, shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties and have such other powers as the Board
of Directors, the Chairman of the Board or the President may from time to
time prescribe.
SECTION 5.11. Treasurer. The Treasurer shall have charge and
---------
custody of, and be responsible for, all funds and securities of the
Corporation and shall deposit all such funds in the name of the Corporation
in such banks or other depositories as shall be selected by the Board of
Directors or by such officers as shall be designated by the Board of
Directors. He shall exhibit at all reasonable times his books of account and
records to any of the directors of the Corporation upon application during
business hours at the office of the Corporation where such books and records
shall be kept; when requested by the Board of Directors, he shall render a
statement of the condition of the finances of the Corporation at any meeting
of the Board or at the annual meeting of stockholders; he shall receive, and
give receipt for, moneys due and payable to the Corporation from any source
whatsoever; and, in general, he shall perform all the duties incident to the
office of Treasurer. The Treasurer shall give such bond, if any, for the
faithful discharge of his duties as the Board of Directors may require.
SECTION 5.12. Assistant Treasurer. The Assistant Treasurer, if
-------------------
any, or, if there shall be more than one, the Assistant Treasurers, in the
order determined by the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of
the Treasurer and shall perform such other duties and have such other powers
as the Board of Directors, the Chairman of the Board or the President may
from time to time prescribe.
ARTICLE VI
SHARES AND THEIR TRANSFER
SECTION 6.1. Certificates for Stock. The interest of each
----------------------
stockholder in the Corporation shall be evidenced by a certificate or
certificates for shares of stock of the Corporation certifying the number of
shares owned by him, in such form as the Board of Directors may from time to
time prescribe. The certificates for shares of stock of the Corporation
shall be signed by the Chairman of the Board, the President or a Vice
President and by the Secretary or the Treasurer or an Assistant Secretary or
an Assistant Treasurer, and shall be countersigned and registered in such
manner, if any, as the Board of Directors may by resolution prescribe;
provided, however, that in case such certificates are signed by a transfer
agent other than the Corporation or its employee or by a registrar other than
the Corporation or its employee the signatures of the Chairman of the Board,
President, Vice President, Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary may be facsimile; and further provided that in case any
officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on any such certificate or certificates shall
cease to be such officer or officers of the Corporation, whether because of
death, resignation or otherwise, before such certificate or certificates
shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures shall have been used
thereon had not ceased to be such officer or officers of the Corporation.
SECTION 6.2. Stock Ledger. A record shall be kept by the
------------
Secretary, transfer agent or by any other officer, employee or agent
designated by the Board of Directors of the name of each person, firm or
corporation holding capital stock of the Corporation, the number of shares
represented by, and the respective dates of, each certificate for such
capital stock, and in case of cancellation of any such certificate, the
respective dates of cancellation.
SECTION 6.3. Cancellation. Every certificate surrendered to the
------------
Corporation for exchange or registration of transfer shall be canceled, and
no new certificate or certificates shall be issued in exchange for any
existing certificate until such existing certificate shall have been so
canceled, except as provided in Section 6.5 and in cases provided by the
applicable law.
SECTION 6.4. Transfers. Shares of stock shall be transferable
---------
on the books of the Corporation by the holder of record thereof in person or
by his attorney upon surrender of such certificate with an assignment
endorsed thereon or attached thereto duly executed and with such proof of
authenticity of signatures as the Corporation may reasonably require. The
Board of Directors may make such rules and regulations as it may deem
expedient, not inconsistent with the Certificate of Incorporation or these
By-Laws, concerning the issue, transfer and registration of certificates for
shares of the stock of the Corporation. The Board of Directors may appoint,
or authorize any principal officer or officers to appoint, one or more
transfer clerks or one or more transfer agents and one or more registrars,
and may require all certificates of stock to bear the signature or signatures
of any of them.
SECTION 6.5. Lost, Stolen, Destroyed or Mutilated Certificates.
-------------------------------------------------
Before any certificates for stock of the Corporation shall be issued in
exchange for certificates which shall become mutilated or shall be lost,
stolen or destroyed, proper evidence of such loss, theft, mutilation or
destruction shall be procured for the Board of Directors, if it so requires.
When authorizing such issue of a new certificate or certificates, the Board
of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
SECTION 6.6. Record Dates. For the purpose of determining the
------------
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may
fix, in advance, a date as a record date for any such determination of
stockholders. Such record date shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty days prior to
any other action.
ARTICLE VII
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
applicable law, any person who was or is a party or is threatened to be made
a party to, or is involved in any manner in, any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative
or investigative) by reason of the fact that such person (1) is or was a
director or officer of the Corporation or a Subsidiary or (2) is or was
serving at the request of the Corporation or a Subsidiary as a director,
officer, partner, member, employee or agent of another corporation,
partnership, joint venture, trust, committee or other enterprise.
To the extent deemed advisable by the Board of Directors, the
Corporation may indemnify, to the fullest extent permitted by applicable law,
any person who was or is a party or is threatened to be made a party to, or
is involved in any manner in, any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative or investigative)
by reason of the fact that the person is or was an employee or agent (other
than a director or officer) of the Corporation or a Subsidiary.
The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation or a Subsidiary, or is or was serving at the
request of the Corporation or a Subsidiary as a director, officer, partner,
member, employee or agent of another corporation, partnership, joint venture,
trust, committee or other enterprise, against any expense, liability or loss
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation or a Subsidiary would
have the power to indemnify him against such expense, liability or loss under
the provisions of applicable law.
No repeal, modification or amendment of, or adoption of any
provision inconsistent with, this Article VII, nor to the fullest extent
permitted by applicable law, any modification of law shall adversely affect
any right or protection of any person granted pursuant hereto existing at, or
with respect to events that occurred prior to, the time of such repeal,
amendment, adoption or modification.
For purposes of this Article VII the term "Subsidiary" or
"Subsidiaries" shall mean a corporation(s), all of the capital stock of which
is owned directly or indirectly by the Corporation, other than directors'
qualifying shares.
The right to indemnification conferred in this Article VII also
includes, to the fullest extent permitted by applicable law, the right to be
paid the expenses (including attorney's fees) incurred in connection with any
such proceeding in advance of its final disposition. The payment of any
amounts to any director, officer, partner, member, employee or agent pursuant
to this Article VII shall subrogate the Corporation to any right such
director, officer, partner, member, employee or agent may have against any
other person or entity. The rights conferred in this Article VII shall be
contract rights.
ARTICLE VIII
LIABILITY OF DIRECTORS
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any breach by the
director of his duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware or (iv) for any transaction
from which the director derived an improper personal benefit.
No repeal, modification or amendment of, or adoption of any
provision inconsistent with, this Article VIII nor, to the fullest extent
permitted by law, any modification of law shall adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal, amendment, adoption or modification or affect the liability of any
director of the Corporation for any action taken or any omission that
occurred prior to the time of such repeal, amendment, adoption or
modification.
If the General Corporation Law of the State of Delaware shall be
amended, after these By-Laws are amended to include this Article VIII, to
authorize corporate action further eliminating or limiting the liability of
directors, then a director of the Corporation, in addition to the
circumstances in which he is not liable immediately prior to such amendment,
shall be free of liability to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Corporate Seal. The Board of Directors shall
--------------
provide a corporate seal, which shall be in the form of a circle and shall
bear the name of the Corporation and words and figures showing that it was
incorporated in the State of Delaware in the year 1997. The Secretary shall
be the custodian of the seal.
SECTION 9.2. Fiscal Year. The fiscal year of the Corporation
-----------
shall be as specified by the Board of Directors.
SECTION 9.3. Voting of Stocks Owned by the Corporation. The
-----------------------------------------
Board of Directors may authorize any person on behalf of the Corporation to
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except this Corporation) in which the Corporation may hold
stock.
ARTICLE X
AMENDMENT OF BY-LAWS
In furtherance of and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation from time to time may
make, amend or repeal the By-Laws of the Corporation; provided that any By-
Laws may be amended or repealed, and may be made, by the stockholders of the
Corporation. Notwithstanding any other provisions of the Certificate of
Incorporation of the Corporation or these By-Laws (and not withstanding the
fact that a lesser percentage may be specified by law, the Certificate of
Incorporation or these By-Laws), the affirmative vote of the holders of at
least 80% of the voting power of the Voting Stock, voting together as a
single class, shall be required for the stockholders of the Corporation to
amend, repeal or adopt any By-Laws of the Corporation.
EXHIBIT 4.1
FORM OF TRUST AGREEMENT
among
MORGAN STANLEY ABS CAPITAL II INC.,
as Depositor,
and
(_________________________),
as Owner Trustee
Dated as of __________ __, 199__
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Capitalized Terms . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . 3
ARTICLE II
Organization
SECTION 2.01. Name . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Office . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03. Purposes and Powers . . . . . . . . . . . . . . . 4
SECTION 2.04. Appointment of Owner Trustee . . . . . . . . . . . 5
SECTION 2.05. Initial Capital Contribution of Owner Trust
Estate . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06. Declaration of Trust . . . . . . . . . . . . . . . 5
SECTION 2.07. Liability of Owners . . . . . . . . . . . . . . . 6
SECTION 2.08. Title to Trust Property . . . . . . . . . . . . . 6
SECTION 2.09. Situs of Trust . . . . . . . . . . . . . . . . . . 6
SECTION 2.10. Representations and Warranties of Depositor . . . 7
SECTION 2.11. Maintenance of the Demand Note . . . . . . . . . . 7
SECTION 2.12. Federal Income Tax Allocations . . . . . . . . . . 7
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.01. Initial Ownership . . . . . . . . . . . . . . . . 8
SECTION 3.02. The Trust Certificates . . . . . . . . . . . . . . 8
SECTION 3.03. Authentication of Trust Certificates . . . . . . . 9
SECTION 3.04. Registration of Transfer and Exchange of Trust
Certificates . . . . . . . . . . . . . . . . . . . 9
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Trust
Certificates . . . . . . . . . . . . . . . . . . . 10
SECTION 3.06. Persons Deemed Owners . . . . . . . . . . . . . . 10
SECTION 3.07. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.08. Maintenance of Office or Agency . . . . . . . . . 11
SECTION 3.09. Appointment of Paying Agent . . . . . . . . . . . 11
SECTION 3.10. Ownership by Depositor of Trust Certificates . . . 11
SECTION 3.11. Book-Entry Trust Certificates . . . . . . . . . . 12
SECTION 3.12. Notices to Clearing Agency . . . . . . . . . . . . 12
SECTION 3.13. Definitive Trust Certificates . . . . . . . . . . 12
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01. Prior Notice to Owners with Respect to Certain
Matters . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.02. Action by Owners with Respect to Certain
Matters . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.03. Action by Owners with Respect to Bankruptcy . . . 14
SECTION 4.04. Restrictions on Owners' Power . . . . . . . . . . 14
SECTION 4.05. Majority Control . . . . . . . . . . . . . . . . . 14
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01. Establishment of Trust Account . . . . . . . . . . 14
SECTION 5.02. Application of Trust Funds . . . . . . . . . . . . 15
SECTION 5.03. Method of Payment . . . . . . . . . . . . . . . . 15
SECTION 5.04. No Segregation of Moneys; No Interest . . . . . . 15
SECTION 5.05. Accounting and Reports to the Noteholders,
Owners, the Internal Revenue Service and Others . 16
SECTION 5.06. Signature on Returns; Tax Matters Partner . . . . 16
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01. General Authority . . . . . . . . . . . . . . . . 16
SECTION 6.02. General Duties . . . . . . . . . . . . . . . . . . 16
SECTION 6.03. Action upon Instruction . . . . . . . . . . . . . 17
SECTION 6.04. No Duties Except as Specified in this Agreement
or in Instructions . . . . . . . . . . . . . . . . 17
SECTION 6.05. No Action Except Under Specified Documents or
Instructions . . . . . . . . . . . . . . . . . . . 18
SECTION 6.06. Restrictions . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII
Concerning Owner Trustee
SECTION 7.01. Acceptance of Trusts and Duties . . . . . . . . . 18
SECTION 7.02. Furnishing of Documents . . . . . . . . . . . . . 19
SECTION 7.03. Representations and Warranties . . . . . . . . . . 19
SECTION 7.04. Reliance; Advice of Counsel . . . . . . . . . . . 20
SECTION 7.05. Not Acting in Individual Capacity . . . . . . . . 20
SECTION 7.06. Owner Trustee Not Liable for Trust Certificates
or Receivables . . . . . . . . . . . . . . . . . . 21
SECTION 7.07. Owner Trustee May Own Trust Certificates and
Notes . . . . . . . . . . . . . . . . . . . . . . 21
(SECTION 7.08. Pennsylvania Motor Vehicle Sales Finance Act
Licenses . . . . . . . . . . . . . . . . . . . . 21)
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01. Owner Trustee's Fees and Expenses . . . . . . . . 21
SECTION 8.02. Indemnification . . . . . . . . . . . . . . . . . 22
SECTION 8.03. Payments to Owner Trustee . . . . . . . . . . . . 22
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement . . . . . . . . . . 22
SECTION 9.02. Dissolution upon Bankruptcy of Depositor . . . . . 23
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01. Eligibility Requirements for Owner Trustee . . . . 24
SECTION 10.02. Resignation or Removal of Owner Trustee . . . . . 24
SECTION 10.03. Successor Owner Trustee . . . . . . . . . . . . . 25
SECTION 10.04. Merger or Consolidation of OwnerTrustee . . . . . 25
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee . . 25
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments . . . . . . . . . . . . 27
SECTION 11.02. No Legal Title to Owner Trust Estate in Owners . . 28
SECTION 11.03. Limitations on Rights of Others . . . . . . . . . 28
SECTION 11.04. Notices . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.05. Severability . . . . . . . . . . . . . . . . . . . 28
SECTION 11.06. Separate Counterparts . . . . . . . . . . . . . . 28
SECTION 11.07. Successors and Assigns . . . . . . . . . . . . . . 29
SECTION 11.08. Covenants of Depositor . . . . . . . . . . . . . . 29
SECTION 11.09. No Petition . . . . . . . . . . . . . . . . . . . 29
SECTION 11.10. No Recourse . . . . . . . . . . . . . . . . . . . 29
SECTION 11.11. Headings . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . 29
SECTION 11.13. Trust Certificate Transfer Restrictions . . . . . 29
SECTION 11.14. Depositor Payment Obligation . . . . . . . . . . . 30
EXHIBIT A Form of Trust Certificate . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Certificate of Trust of ______________ Trust
199_-_ . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form of Certificate Depository Agreement . . . . . . . C-1
TRUST AGREEMENT dated as of ____________, 199__, between MORGAN STANLEY
ABS CAPITAL II INC., a Delaware corporation, as depositor (the
"Depositor"), and _______________________, a Delaware banking
corporation, as owner trustee (the "Owner Trustee").
ARTICLE I
Definitions
SECTION 1.01. Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Administration Agreement" shall mean the Administration Agreement dated
as of ____________, 199__, among the Trust, the Indenture Trustee and
______________, as Administrator.
"Agreement" shall mean this Trust Agreement, as may be amended and
supplemented from time to time.
"Basic Documents" shall mean the Receivables Purchase Agreement, the
Sale and Servicing Agreement, the Indenture, the Administration Agreement,
the Note Depository Agreement, the Certificate Depository Agreement and the
other documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in
Section 11.13.
"Book-Entry Trust Certificate" shall mean a beneficial interest in the
Trust Certificates, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 3.11.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Certificate Depository Agreement" shall mean the agreement dated
___________, 199__, among the Trust, the Owner Trustee, the Administrator and
The Depository Trust Company, as the initial Clearing Agency, substantially
in the form attached hereto as Exhibit C, relating to the Trust Certificates,
as the same may be amended and supplemented from time to time.
"Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.01.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Owner" shall mean, with respect to a Book-Entry Trust
Certificate, a Person who is the beneficial owner of such Book-Entry Trust
Certificate, as reflected on the books of the Clearing Agency or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned in and the registrar appointed pursuant to Section 3.04.
"Certificateholder" or "Holder" shall mean a Person in whose name a
Trust Certificate is registered.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean 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.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at
_______________________________, or at such other address as the Owner
Trustee may designate by notice to the Owners and the Depositor, or the
principal corporate trust office of any successor Owner Trustee at the
address designated by such successor Owner Trustee by notice to the Owners
and the Depositor.
"Definitive Trust Certificates" shall have the meaning set forth in
Section 3.11.
"Demand Note" shall mean, in the case of the Depositor, the Demand Note
dated ____________, 199__, from _____ to the Depositor.
"Depositor" shall mean Morgan Stanley ABS Capital II Inc. and its
successor in interest.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.02.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" shall mean the Indenture dated as of ________________, 199__
between the Trust and _______________________, as Indenture Trustee.
"Initial Certificate Balance" shall mean $_________________.
"Note Depository Agreement" shall mean the agreement dated
______________, 199__, among the Trust, the Indenture Trustee, the
Administrator and The Depository Trust Company, as the initial Clearing
Agency, relating to the Class A-1 Notes and the Class A-2 Notes, as the same
may be amended and supplemented from time to time.
"Owner" shall mean each Holder of a Trust Certificate.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from
time to time in the Trust Accounts and the Certificate Distribution Account
and all other property of the Trust from time to time, including any rights
of the Owner Trustee and the Trust pursuant to the Sale and Servicing
Agreement and the Administration Agreement.
"Owner Trustee" shall mean ________________________________, a Delaware
banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent appointed
pursuant to Section 3.09 and shall initially be
________________________________.
"Record Date" shall mean, with respect to any Distribution Date, the
close of business on the day immediately preceding such Distribution Date or,
if Definitive Trust Certificates are issued pursuant to Section 3.13, the
_____ day of the month preceding such Distribution Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of ___________, 199__, between the Trust, as issuer, the
Depositor, and _____________________, as servicer as the same may be amended
or supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a certificate evidencing the beneficial
interest of an Owner in the Trust, substantially in the form attached hereto
as Exhibit A.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
used and not otherwise defined herein have the meanings assigned to them in
the Sale and 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. 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 definitions
contained in this Agreement or in any such certificate or other document
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.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
Organization
SECTION 2.01. Name. The Trust created hereby shall be known as
"______________ 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 2.02. Office. The office of the Trust shall be in care of
the Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the Owners
and the Depositor.
SECTION 2.03. 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 Trust
Certificates pursuant to this Agreement and to sell the Notes and the
Trust Certificates;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to purchase the Receivables, to fund the Reserve Account,
to pay the organizational, start-up and transactional expenses of the
Trust and to pay the balance to the Depositor pursuant to the Sale and
Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Owners pursuant to the terms of the Sale and Servicing
Agreement any portion of the Trust Estate released from the Lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the 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 Owner Trust Estate and the making of distributions
to the Owners and the Noteholders. The Trust is hereby authorized to
engage in the foregoing activities. The Trust shall not engage in any
activity other than in connection with the foregoing or other than as
required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.04. Appointment of Owner Trustee. The Depositor 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 2.05. Initial Capital Contribution of Owner Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date
hereof, of the foregoing contribution, which shall constitute the initial
Owner Trust Estate and shall be deposited in the Certificate Distribution
Account. The Depositor 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 2.06. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject
to the conditions set forth herein for the use and benefit of the Owners,
subject to the obligations of the Trust under the Basic Documents. It is the
intention of the parties hereto that the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business 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 (including the
_______________________, in its capacity as recipient of distributions from
the Reserve Account), and the Notes being 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
Owner Trustee shall have all rights, powers and duties set forth herein and
in the Business Trust Statute with respect to accomplishing the purposes of
the Trust.
SECTION 2.07. Liability of Owners. (a) The Depositor shall be
liable directly to and will indemnify any injured party for all losses,
claims, damages, liabilities and expenses of the Trust (including Expenses,
to the extent not paid out of the Owner Trust Estate) to the extent that the
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Depositor were a
general partner; provided, however, that the Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an
investor in the Trust Certificates, or by a Noteholder in the capacity of an
investor in the Notes. In addition, any third party creditors of the Trust
(other than in connection with the obligations described in the preceding
sentence for which the Depositor shall not be liable) shall be deemed third
party beneficiaries of this paragraph and paragraph (c) below. The obligations
of the Depositor under this paragraph and paragraph (c) below shall be
evidenced by the Trust Certificates described in Section 3.10, which for
purposes of the Business Trust Statute shall be deemed to be a separate
class of Trust Certificates from all other Trust Certificates issued by
the Trust; provided that the rights and obligations evidenced by all
Trust Certificates, regardless of class, shall, except as provided in this
Section, be identical.
(b) No Owner, other than to the extent set forth in paragraphs (a) and
(c), shall have any personal liability for any liability or obligation of the
Trust.
(c) The Depositor agrees to be liable directly to and will indemnify
any injured party for all losses, claims, damages, liabilities and expenses
(other than those incurred by a Certificateholder in the capacity of an
investor in the Trust Certificates and a Noteholder in the capacity of an
investor in the Notes, as though such arrangements were partnerships under
the Delaware Revised Uniform Limited Partnership Act in which the Depositor
were a general partner.
SECTION 2.08. Title to Trust Property. Legal title to all the Owner
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 Owner 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 2.09. Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware or the State of ______________. The Trust shall not have any
employees in any state other than Delaware; provided, however, that nothing
herein shall restrict or prohibit the Owner Trustee from having employees
within or without the State of Delaware. Payments will be received by the
Trust only in Delaware or _____________, and payments will be made by the
Trust only from Delaware or ________________. The only office of the Trust
will be at the Corporate Trust Office in Delaware.
SECTION 2.10. Representations and Warranties of Depositor. (a) The
Depositor hereby represents and warrants to the Owner Trustee that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Depositor is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of its property or the conduct of its business shall require such
qualifications.
(iii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trust and the Depositor has 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 have been duly authorized by the Depositor by all
necessary corporate action.
(iv) 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 or bylaws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor 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 Depositor's
knowledge, any order, rule or regulation applicable to the Depositor of
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Depositor or its properties.
(v) To the Depositor's best knowledge, there are no proceedings or
investigations pending or threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (A) asserting the
invalidity of this Agreement, (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 Depositor of its obligations under, or the
validity or enforceability of, this Agreement.
SECTION 2.11. Maintenance of the Demand Note. To the fullest extent
permitted by applicable law, the Depositor agrees that it shall not sell,
convey, pledge, transfer or otherwise dispose of the Demand Note.
SECTION 2.12. Federal Income Tax Allocations. Net income of the
Trust for any month as determined for federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated:
(a) among the Certificate Owners as of the first day following the end
of such month, in proportion to their ownership of principal amount of Trust
Certificates on such date, net income in an amount up to the sum of (i) the
Certificateholders' Monthly Interest Distributable Amount for such month,
(ii) interest on the excess, if any, of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date over the amount in
respect of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, to the extent
permitted by law, at the Pass-Through Rate from such preceding Distribution
Date through the current Distribution Date, (iii) the portion of the market
discount on the Receivables accrued during such month that is allocable to
the excess, if any, of the initial aggregate principal amount of the Trust
Certificates over their initial aggregate issue price, (iv) any amount
expected to be distributed to the Certificateholders pursuant to
Section 5.07(g) of the Sale and Servicing Agreement (to the extent not
previously allocated pursuant to this clause), and (v) any other amounts of
income payable to the Certificateholders for such month; such sum to be
reduced by any amortization by the Trust of premium on Receivables that
corresponds to any excess of the issue price of Certificates over their
principal amount; and
(b) to the Depositor, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent net income shall first
be allocated to make up such shortfall before being allocated as provided in
the preceding sentence. Net losses of the Trust, if any, for any month as
determined for federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation thereof) shall be allocated
to the Depositor to the extent the Depositor is reasonably expected to bear
the economic burden of such net losses, and any remaining net losses shall be
allocated among the Certificate Owners as of the first Record Date following
the end of such month in proportion to their ownership of principal amount of
Trust Certificates on such Record Date. The Depositor is authorized to
modify the allocations in this paragraph if necessary or appropriate, in its
sole discretion, for the allocations to fairly reflect the economic income,
gain or loss to the Depositor or to the Certificate Owners, or as otherwise
required by the Code.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.01. Initial Ownership. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.05 and until the
issuance of the Trust Certificates, the Depositor shall be the sole
beneficiary of the Trust.
SECTION 3.02. The Trust Certificates. The Trust Certificates shall
be issued in minimum denominations of $___________ and in integral multiples
of $_______ in excess thereof; provided, however, that the Trust Certificates
issued to the Depositor pursuant to Section 3.10 may be issued in such
denomination as required to include any residual amount. The Trust
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Trust Certificates
bearing the manual or facsimile signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefit of
this Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the authentication and delivery of
such Trust Certificates or did not hold such offices at the date of
authentication and delivery of such Trust Certificates.
A transferee of a Trust Certificate shall become a Certificateholder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Trust
Certificate duly registered in such transferee's name pursuant to Section
3.04.
SECTION 3.03. Authentication of Trust Certificates. On the Closing
Date, the Owner Trustee shall cause the Trust Certificates in an aggregate
principal amount equal to the Initial Certificate Balance to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order
of the Depositor, signed by its chairman of the board, its president, any
vice president, secretary or any assistant treasurer, without further
corporate action by the Depositor, in authorized denominations. No Trust
Certificate shall entitle its Holder to any benefit under this Agreement or
be valid for any purpose unless there shall appear on such Trust Certificate
a certificate of authentication substantially in the form set forth in
Exhibit A, executed by the Owner Trustee or _______________________, as the
Owner Trustee's authenticating agent, by manual signature; such
authentication shall constitute conclusive evidence that such Trust
Certificate shall have been duly authenticated and delivered hereunder. All
Trust Certificates shall be dated the date of their authentication.
SECTION 3.04. Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at
the office or agency maintained pursuant to Section 3.08, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of Trust
Certificates and of transfers and exchanges of Trust Certificates as herein
provided. ___________________________ shall be the initial Certificate
Registrar.
Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.08, the Owner Trustee
shall execute, authenticate and deliver (or shall cause
__________________________ as its authenticating agent to authenticate and
deliver), in the name of the designated transferee or transferees, one or
more new Trust Certificates in authorized denominations of a like aggregate
amount dated the date of authentication by the Owner Trustee or any
authenticating agent. At the option of a Holder, Trust Certificates may be
exchanged for other Trust Certificates of authorized denominations of a like
aggregate amount upon surrender of the Trust Certificates to be exchanged at
the office or agency maintained pursuant to Section 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Trust Certificate surrendered for registration of transfer or exchange
shall be cancelled and subsequently disposed of by the Owner Trustee in
accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Trust Certificates for a period of 15 days
preceding the due date for any payment with respect to the Trust
Certificates.
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Trust
Certificates. If (a) any mutilated Trust Certificate shall be surrendered to
the Certificate Registrar, or if the Certificate Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Certificate and (b) there shall be delivered to the Certificate Registrar and
the Owner Trustee such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Certificate has been acquired by a bona fide purchaser, the Owner Trustee on
behalf of the Trust shall execute and the Owner Trustee or
(_______________________, as the Owner Trustee's authenticating agent), shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Owner Trustee or the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Trust Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Certificate shall be found
at any time.
SECTION 3.06. Persons Deemed Owners. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar or any Paying Agent may treat the Person in whose name
any Trust Certificate is registered in the Certificate Register as the owner
of such Trust Certificate for the purpose of receiving distributions pursuant
to Section 5.02 and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar or any Paying Agent shall be bound by any
notice to the contrary.
SECTION 3.07. Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Depositor, within 15 days after receipt by the Owner Trustee
of a written request therefor from the Servicer or the Depositor, a list, in
such form as the Servicer or the Depositor may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record
Date. If three or more Certificateholders or one or more Holders of Trust
Certificates evidencing not less than 25% of the Certificate Balance 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 Trust Certificates and such
application is accompanied by a copy of the communication that 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 current list of
Certificateholders. Each Holder, by receiving and holding a Trust
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate Registrar or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 3.08. Maintenance of Office or Agency. The Owner Trustee
shall maintain in the Borough of Manhattan, The City of New York, an office
or offices or agency or agencies where Trust Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Owner Trustee in respect of the Trust Certificates and the Basic
Documents may be served. The Owner Trustee initially designates
______________________________________ as its office for such purposes. The
Owner Trustee shall give prompt written notice to the Depositor and to the
Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.09. Appointment of Paying Agent. The Paying Agent shall
make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.02 and shall report the amounts of such
distributions to the Owner Trustee. Any Paying Agent shall have the
revocable power to withdraw funds from the Certificate Distribution Account
for the purpose of making the distributions referred to above. The Owner
Trustee may revoke such power and remove the Paying Agent if the Owner
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material
respect. The Paying Agent initially shall be ________________, and any co-
paying agent chosen by ___________________ and acceptable to the Owner
Trustee. ___________________ shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Owner Trustee. In the event that
__________________ shall no longer be the Paying Agent, the Owner Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or
trust company). The Owner Trustee shall cause such successor Paying Agent or
any additional Paying Agent appointed by the Owner Trustee to execute and
deliver to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner 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 Certificateholders in
trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to such Certificateholders. The Paying Agent shall return
all unclaimed funds to the Owner Trustee and upon removal of a Paying Agent
such Paying Agent shall also return all funds in its possession to the Owner
Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to
the Owner Trustee also in its role as Paying Agent, for so long as the Owner
Trustee shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 3.10. Ownership by Depositor of Trust Certificates. The
Depositor shall on the Closing Date retain Trust Certificates representing at
least 1% of the Initial Certificate Balance and shall thereafter retain
beneficial and record ownership of Trust Certificates representing at least
1% of the Certificate Balance. Any attempted transfer of the Depositor's
Trust Certificate that would reduce such interest of the Depositor below 1%
of the Certificate Balance shall be void. The Owner Trustee shall cause any
Trust Certificate issued to the Depositor to contain a legend stating "THIS
CERTIFICATE IS NON-TRANSFERABLE EXCEPT UNDER THE LIMITED CIRCUMSTANCES
DESCRIBED IN SECTION 3.10 OF THE TRUST AGREEMENT".
SECTION 3.11. Book-Entry Trust Certificates. The Trust
Certificates, upon original issuance, will be issued in the form of a
typewritten Trust Certificate or Trust Certificates representing Book-Entry
Trust Certificates, to be delivered to The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, the Trust; provided, however,
that one Definitive Trust Certificate may be issued to the Depositor pursuant
to Section 3.10. Such Trust Certificate or Trust Certificates shall
initially be registered on the Certificate Register in the name of Cede
& Co., the nominee of the initial Clearing Agency, and no Certificate Owner
will receive a definitive Trust Certificate representing such Certificate
Owner's interest in such Trust Certificate, except as provided in
Section 3.13. Unless and until definitive, fully registered Trust
Certificates (the "Definitive Trust Certificates") have been issued to
Certificate Owners pursuant to Section 3.13:
(a) The provisions of this Section shall be in full force and effect;
(b) The Certificate Registrar and the Owner Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Agreement
(including the payment of principal of and interest on the Trust Certificates
and the giving of instructions or directions hereunder) as the sole Holder of
the Trust Certificates and shall have no obligation to the Certificate
Owners;
(c) To the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control;
(d) The rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Certificate Depository
Agreement, unless and until Definitive Trust Certificates are issued pursuant
to Section 3.13, 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 Trust Certificates to such Clearing Agency
Participants; and
(e) Whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Trust Certificates
evidencing a specified percentage of the Certificate Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Certificate Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Trust Certificates and
has delivered such instructions to the Owner Trustee.
SECTION 3.12. Notices to Clearing Agency. Whenever a notice or
other communication to the Certificateholders is required under this
Agreement, unless and until Definitive Trust Certificates shall have been
issued to Certificate Owners pursuant to Section 3.13, the Owner Trustee
shall give all such notices and communications specified herein to be given
to Certificateholders to the Clearing Agency, and shall have no obligations
to the Certificate Owners.
SECTION 3.13. Definitive Trust Certificates. If (i) the
Administrator advises the Owner Trustee in writing that the Clearing Agency
is no longer willing or able to properly discharge its responsibilities with
respect to the Trust Certificates and the Administrator is unable to locate a
qualified successor, (ii) the Administrator at its option advises the Owner
Trustee in writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default or a
Servicer Default, Certificate Owners representing beneficial interests
aggregating at least a majority of the Certificate Balance advise the
Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the
Certificate Owners, then the Clearing Agency shall notify all Certificate
Owners and the Owner Trustee of the occurrence of any such event and of the
availability of the Definitive Trust Certificates to Certificate Owners
requesting the same. Upon surrender to the Owner Trustee of the typewritten
Trust Certificate or Trust Certificates representing the Book-Entry Trust
Certificates by the Clearing Agency, accompanied by registration
instructions, the Owner Trustee shall execute and authenticate the Definitive
Trust Certificates in accordance with the instructions of the Clearing
Agency. Neither the Certificate Registrar nor the Owner 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 Trust Certificates, the Owner Trustee shall recognize
the Holders of the Definitive Trust Certificates as Certificateholders. The
Definitive Trust Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the Owner
Trustee, as evidenced by its execution thereof.
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01. Prior Notice to Owners 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 Owners shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such Owners
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 Receivables) 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 the Receivables);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business
Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) 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 interests of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of
a successor Certificate Registrar, or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of
its obligations under the Indenture or this Agreement, as applicable.
SECTION 4.02. Action by Owners with Respect to Certain Matters. The
Owner Trustee shall not have the power, except upon the direction of the
Owners, to (a) remove the Administrator under the Administration Agreement
pursuant to Section 8 thereof, (b) appoint a successor Administrator pursuant
to Section 8 of the Administration Agreement, (c) remove the Servicer under
the Sale and Servicing Agreement pursuant to Section 8.01 thereof or
(d) except as expressly provided in the Basic Documents, sell the Receivables
after the termination of the Indenture. The Owner Trustee shall take the
actions referred to in the preceding sentence only upon written instructions
signed by the Owners.
SECTION 4.03. Action by Owners with Respect to 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
Owners and the delivery to the Owner Trustee by each such Owner of a
certificate certifying that such Owner reasonably believes that the Trust is
insolvent.
SECTION 4.04. Restrictions on Owners' Power. The Owners shall not
direct the Owner Trustee to take or to 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 2.03, nor shall the Owner Trustee be obligated to follow
any such direction, if given.
SECTION 4.05. Majority Control. Except as expressly provided
herein, any action that may be taken by the Owners under this Agreement may
be taken by the Holders of Trust Certificates evidencing not less than a
majority of the Certificate Balance. Except as expressly provided herein,
any written notice of the Owners delivered pursuant to this Agreement shall
be effective if signed by Holders of Trust Certificates evidencing not less
than a majority of the Certificate Balance at the time of the delivery of
such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01. Establishment of Trust Account. The Owner Trustee,
for the benefit of the Certificateholders, shall establish and maintain in
the name of the Trust an Eligible Deposit Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. Except as otherwise expressly provided herein,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholders. If,
at any time, the Certificate Distribution Account ceases to be an Eligible
Deposit Account, the Owner Trustee (or the Depositor on behalf of the Owner
Trustee, if the Certificate Distribution Account is not then held by the
Owner Trustee or an affiliate thereof) shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating Agency
may consent) establish a new Certificate Distribution Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments to such
new Certificate Distribution Account.
SECTION 5.02. Application of Trust Funds. (a) On each Distribution
Date, the Owner Trustee will distribute to Certificateholders, on a pro rata
basis, amounts deposited in the Certificate Distribution Account pursuant to
Sections 5.07 and 5.08 of the Sale and Servicing Agreement with respect to
such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee
by the Servicer pursuant to Section 5.09 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the
amount otherwise distributable to the Owner in accordance with this Section.
The Owner Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Owners sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not
prevent the Owner Trustee from contesting any such tax in appropriate
proceedings and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed
with respect to an Owner shall be treated as cash distributed to such Owner
at the time it is withheld by the Trust and remitted to the appropriate
taxing authority. If there is a possibility that withholding tax is payable
with respect to a distribution (such as a distribution to a non-U.S. Owner),
the Owner Trustee may in its sole discretion withhold such amounts in
accordance with this paragraph (c).
SECTION 5.03. Method of Payment. Subject to Section 9.01(c),
distributions required to be made to Certificateholders on any Distribution
Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Distribution Date and such Holder's Trust Certificates in
the aggregate evidence a denomination of not less than $1,000,000, or, if
not, by check mailed to such Certificateholder at the address of such holder
appearing in the Certificate Register.
SECTION 5.04. No Segregation of Moneys; No Interest. Subject to
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder need
not be segregated in any manner except to the extent required by law or the
Sale and Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
SECTION 5.05. Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain
(or cause to be maintained) the books of the Trust on a calendar year basis
and the accrual method of accounting, (b) deliver to each Owner, as may be
required by the Code and applicable Treasury Regulations, such information as
may be required (including Schedule K-1) to enable each Owner to prepare its
federal and state income tax returns, (c) file such tax returns relating to
the Trust (including a partnership information return, IRS Form 1065) and
make such elections as from time to time may be required or appropriate under
any applicable state or federal statute or any rule or regulation thereunder
so as to maintain the Trust's characterization as a partnership for federal
income tax purposes, (d) cause such tax returns to be signed in the manner
required by law and (e) collect or cause to be collected any withholding tax
as described in and in accordance with Section 5.02(c) with respect to income
or distributions to Owners. The Owner Trustee shall elect under Section 1278
of the Code to include in income currently any market discount that accrues
with respect to the Receivables. The Owner Trustee shall not make the
election provided under Section 754 of the Code.
SECTION 5.06. Signature on Returns; Tax Matters Partner. (a) The
Owner Trustee shall sign on behalf of the Trust the tax returns of the Trust,
unless applicable law requires an Owner to sign such documents, in which case
such documents shall be signed by the Depositor.
((b) The Depositor shall be designated the "tax matters partner" of
the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.)
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01. 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
and, in each case, in such form as the Depositor shall approve, 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. The
Owner Trustee is further authorized from time to time to take such action as
the Administrator recommends with respect to the Basic Documents.
SECTION 6.02. General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) 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 Owners,
subject to the Basic Documents and in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the
Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Basic Document, and the Owner Trustee
shall not be held liable for the default or failure of the Administrator to
carry out its obligations under the Administration Agreement.
SECTION 6.03. Action upon Instruction. (a) Subject to Article IV
and in accordance with the terms of the Basic Documents, the Owners may by
written instruction direct the Owner Trustee in the management of the Trust.
Such direction may be exercised at any time by written instruction of the
Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) 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 Owners
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 Owners 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 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 Owners, and shall have no liability to any Person for such
action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction and, to the extent that the Owner Trustee acts
or refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction 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
Owners, and shall have no liability to any Person for such action or
inaction.
SECTION 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Owner 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 6.03;
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 prepare or
file any Securities and Exchange Commission filing for the Trust or to record
this 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 Trust Estate that
result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
SECTION 6.05. 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 Owner 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 6.03.
SECTION 6.06. Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for federal income
tax purposes. The Owners shall not direct the Owner Trustee to take action
that would violate the provisions of this Section.
ARTICLE VII
Concerning Owner Trustee
SECTION 7.01. 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 terms of this Agreement. The
Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Owner 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 negligence or (ii) in the case
of the inaccuracy of any representation or warranty contained in Section 7.03
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 a Trust Officer of the Owner Trustee;
(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
Administrator or any Owner;
(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;
(e) The Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by
the Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate, or for or in respect of the
validity or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Owner Trustee shall in no
event assume or incur any liability, duty or obligation to any Noteholder or
to any Owner, other than as expressly provided for herein or expressly agreed
to in the Basic Documents;
(f) The Owner Trustee shall not be liable for the default or misconduct
of the Administrator, the Depositor, the Indenture Trustee or the Servicer
under any of the Basic Documents or otherwise, and the Owner Trustee shall
have no obligation or liability to perform the obligations of the Trust under
this Agreement or the Basic Documents that are required to be performed by
the Administrator under the Administration Agreement, the Indenture Trustee
under the Indenture or the Servicer or Morgan Stanley ABS Capital II Inc.
under the Sale and Servicing Agreement; 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
any of the Owners, unless such Owners 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 7.02. Furnishing of Documents. The Owner Trustee shall
furnish to the Owners, promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.
SECTION 7.03. Representations and Warranties. The Owner Trustee
hereby represents and warrants to the Depositor, for the benefit of the
Owners, that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution or the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby, nor
compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware 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 bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party
or by which any of its properties may be bound.
SECTION 7.04. 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 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 officers of the relevant party, as to such
fact or 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.
(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 7.05. Not Acting in Individual Capacity. Except as provided
in this Article VII, in accepting the trusts hereby created
_______________________ acts solely as Owner Trustee hereunder and not in its
individual capacity, and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Basic Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
SECTION 7.06. Owner Trustee Not Liable for Trust Certificates or
Receivables. The recitals contained herein and in the Trust Certificates
(other than the signature and countersignature of the Owner Trustee on the
Trust Certificates) shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of
this Agreement, of any Basic Document or of the Trust Certificates (other
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) or the Notes, or of any Receivable or related documents. The
Owner Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any Receivable
or the perfection and priority of any security interest created by any
Receivable in any Financed Asset or the maintenance of any such perfection
and priority, or for or with respect to the sufficiency of the Owner Trust
Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and
ownership of any Financed Asset; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable on any
computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the
compliance by the Depositor or the Servicer with any warranty or
representation made under any Basic Document or in any related document or
the accuracy of any such warranty or representation, or any action of the
Administrator, the Indenture Trustee or the Servicer or any subservicer taken
in the name of the Owner Trustee.
SECTION 7.07. Owner Trustee May Own Trust Certificates and Notes.
The Owner
Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Administrator, the Indenture Trustee and the Servicer in banking transactions
with the same rights as it would have if it were not Owner Trustee.
(SECTION 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses.
The Owner Trustee, in its individual capacity, shall use its best efforts to
maintain, and the Owner Trustee, as Owner Trustee, shall cause the Trust to
use its best efforts to maintain, the effectiveness of all licenses required
under the Pennsylvania Motor Vehicle Sales Finance Act in connection with
this Agreement and the Basic Documents and the transactions contemplated
hereby and thereby until such time as the Trust shall terminate in accordance
with the terms hereof.)
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have
been separately agreed upon before the date hereof between the Depositor and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed
by the Depositor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder.
SECTION 8.02. Indemnification. The Depositor 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 Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Depositor shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 7.01. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In any 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 Depositor, which approval shall not be unreasonably
withheld.
SECTION 8.03. Payments to Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part
of the Owner Trust Estate immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement. (a) This Agreement
(other than Article VIII) and the Trust shall terminate and be of no further
force or effect (i) upon the final distribution by the Owner Trustee of all
moneys or other property or proceeds of the Owner Trust Estate in accordance
with the terms of the Indenture, the Sale and Servicing Agreement and
Article V or (ii) at the time provided in Section 9.02. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner, other than the
Depositor as described in Section 9.02, shall not (x) operate to terminate
this Agreement or the Trust or (y) entitle such Owner'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 Owner
Trust Estate or (z) otherwise affect the rights, obligations and liabilities
of the parties hereto.
(b) Except as provided in Section 9.01(a), none of the Depositor nor
any Owner shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which Certificateholders shall surrender their Trust Certificates
to the Paying Agent for payment of the final distribution and cancellation,
shall be given by the Owner Trustee by letter to Certificateholders mailed
within five Business Days of receipt of notice of such termination from the
Servicer given pursuant to Section 9.01(c) of the Sale and Servicing
Agreement, stating (i) the Distribution Date upon or with respect to which
final payment of the Trust Certificates shall be made upon presentation and
surrender of the Trust 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 Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Trust
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. Upon presentation and surrender of the Trust
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.02.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give
a second written notice to the remaining Certificateholders to surrender
their Trust Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the
Trust 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 Trust Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement.
Subject to applicable escheat laws, any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Owner Trustee to the
Depositor.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. Dissolution upon Bankruptcy of Depositor. In the
event that an Insolvency Event shall occur with respect to the Depositor,
this Agreement shall be terminated in accordance with Section 9.01 90 days
after the date of such Insolvency Event, unless, before the end of such 90-
day period, the Owner Trustee shall have received written instructions from
(a) Holders of Certificates (other than the Depositor) representing more than
50% of the Certificate Balance (not including the Certificate Balance of the
Trust Certificates held by the Depositor), (b) the (i) Holders (as defined in
the Indenture) of Class A-1 Notes representing more than 50% of the
Outstanding Amount of the Class A-1 Notes, and (ii) Holders (as defined in
the Indenture) of Class A-2 Notes representing more than 50% of the
Outstanding Amount of the Class A-2 Notes, to the effect that each such party
disapproves of the liquidation of the Receivables and termination of the
Trust. Promptly after the occurrence of any Insolvency Event with respect to
the Depositor, (A) the Depositor shall give the Indenture Trustee and the
Owner Trustee written notice of such Insolvency Event, (B) the Owner Trustee
shall, upon the receipt of such written notice from the Depositor, give
prompt written notice to the Certificateholders, and the Indenture Trustee,
of the occurrence of such event and (C) the Indenture Trustee shall, upon
receipt of written notice of such Insolvency Event from the Owner Trustee or
the Depositor, 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 9.02.
Upon a termination pursuant to this Section, the Owner Trustee shall direct
the Indenture Trustee promptly to sell the assets of the Trust (other than
the Trust Accounts and the Certificate Distribution Account) 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 Sale and Servicing Agreement.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities; and having (or having a parent that has) time deposits that are
rated at least A-1 by Standard & Poor's and P-1 by Moody's. If such
corporation shall publish reports of condition at least annually pursuant to
law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Owner Trustee shall resign
immediately in the manner and with the effect specified in Section 10.02.
SECTION 10.02. 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 Administrator. Upon
receiving such notice of resignation, the Administrator shall promptly
appoint a successor Owner Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Owner Trustee
and one copy to the successor Owner Trustee. If no successor Owner Trustee
shall have been so appointed and have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning 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 10.01 and shall fail to resign
after written request therefor by the Administrator, or if at any time the
Owner Trustee shall be legally unable to act, or shall be adjudged 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 Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Administrator shall
promptly appoint a successor Owner Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner Trustee, and
shall pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Administrator shall provide notice
of such resignation or removal of the Owner Trustee to each of the Rating
Agencies.
SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective, and such successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Administrator and the predecessor Owner Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all
such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense
of the Administrator.
SECTION 10.04. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, that such corporation shall be eligible pursuant
to Section 10.01 and, provided, further, that the Owner Trustee shall mail
notice of such merger or consolidation to the Rating Agencies.
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Owner Trust Estate or any Financed Asset may at the time be
located, the Administrator 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 Administrator and Owner Trustee to act as co-
trustee, jointly with the Owner Trustee, or as separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust or any part thereof and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Owner Trustee may
consider necessary or desirable. If the Administrator shall not have joined
in such appointment within 15 days after the 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 Owner Trustee pursuant to
Section 10.01 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) 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 Owner Trust
Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(b) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(c) The Administrator 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 Administrator.
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 Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments. This Agreement may be
amended by the Depositor and the Owner Trustee, with prior written notice to
the Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this
Agreement or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor
and the Owner Trustee, with prior written notice to the Rating Agencies, with
the consent of the Holders (as defined in the Indenture) of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes and the
consent of the Holders of Certificates evidencing not less than a majority of
the Certificate Balance, 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 Noteholders or 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 Receivables or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance required to consent to any
such amendment, without the consent of the holders of all the outstanding
Notes and Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee and each of the
Rating Agencies.
It shall not be necessary for the consent of Certificateholders,
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner
of obtaining such consents (and any other consents of Certificateholders
provided for in this Agreement or in any other Basic Document) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
In connection with the execution of any amendment to this Trust
Agreement or any amendment of any other agreement to which the Issuer is a
party, the Owner Trustee shall be entitled to receive and conclusively rely
upon an Opinion of Counsel to the effect that such amendment is authorized or
permitted by the Basic Documents and that all conditions precedent in the
Basic Documents for the execution and delivery thereof by the Issuer or the
Owner Trustee, as the case may be, have been satisfied.
SECTION 11.02. No Legal Title to Owner Trust Estate in Owners. The
Owners shall not have legal title to any part of the Owner Trust Estate. The
Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and
IX. No transfer, by operation of law or otherwise, of any right, title or
interest of the Owners to and in their ownership interest in the Owner 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 Owner Trust Estate.
SECTION 11.03. Limitations on Rights of Others. Except for
Section 2.07, the provisions of this Agreement are solely for the benefit of
the Owner Trustee, the Depositor, the Owners, the Administrator and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders,
and nothing in this Agreement (other than Section 2.07 hereof), whether
express or implied, shall be construed to give to any other Person any legal
or equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 11.04. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days
after mailing if mailed by certified mail, postage prepaid (except that
notice to the Owner Trustee shall be deemed given only upon actual receipt by
the Owner Trustee), if to the Owner Trustee, addressed to the
_______________; if to the Depositor, addressed to Morgan Stanley ABS Capital
II Inc., 1585 Broadway, New York, New York 10036, Attention:
_____________________; or, as to each party, at such other address as shall
be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 11.05. 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, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 11.06. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor and the Owner Trustee and its successors and each Owner and its
successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by an Owner
shall bind the successors and assigns of such Owner.
SECTION 11.08. Covenants of Depositor. In the event that (a) the
Certificate Balance shall be reduced by Realized Losses and (b) any
litigation with claims in excess of $1,000,000 to which the Depositor is a
party which shall be reasonably likely to result in a material judgment
against the Depositor that the Depositor will not be able to satisfy shall be
commenced by an Owner, during the period beginning nine months following the
commencement of such litigation and continuing until such litigation is
dismissed or otherwise terminated (and, if such litigation has resulted in a
final judgment against the Depositor, such judgment has been satisfied), the
Depositor shall not make any distribution on or in respect of its membership
interests to any of its members, or repay the principal amount of any
indebtedness of the Depositor held by _____________, unless (i) after giving
effect to such distribution or repayment, the Depositor's liquid assets shall
not be less than the amount of actual damages claimed in such litigation or
(ii) the Rating Agency Condition shall have been satisfied with respect to
any such distribution or repayment. The Depositor will not at any time
institute against the Trust any bankruptcy proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Notes, the Trust
Agreement or any of the Basic Documents.
SECTION 11.09. No Petition. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Trust 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 Depositor or the Trust, or join in any institution against the
Depositor or the Trust of, any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, this Agreement or any of the
Basic Documents.
SECTION 11.10. No Recourse. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust
Certificates represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Depositor, the Servicer, the
Administrator, the Owner Trustee, the Indenture 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
Trust Certificates or the Basic Documents.
SECTION 11.11. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. Trust Certificate Transfer Restrictions. The Trust
Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Code or (iii) any entity whose underlying assets include plan assets
by reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding a Trust Certificate, the Holder thereof shall be deemed
to have represented and warranted that it is not a Benefit Plan.
SECTION 11.14. Depositor Payment Obligation. The Depositor shall be
responsible for payment of the Administrator's fees under the Administration
Agreement and shall reimburse the Administrator for all expenses and
liabilities of the Administrator incurred thereunder. In addition, the
Depositor shall be responsible for the payment of all fees and expenses of
the Trust, the Owner Trustee and the Indenture Trustee paid by any of them in
connection with any of their obligations under the Basic Documents to obtain
(or maintain any required license under the Pennsylvania Motor Vehicle Sales
Finance Act).
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
MORGAN STANLEY ABS CAPITAL II INC., as Depositor
By:_________________________________
Name:
Title:
(_____________________________),
not in its individual capacity but solely as
Owner Trustee
By:________________________________
Name:
Title:
EXHIBIT A
Form of Trust Certificate
(UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS 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.)
(THIS CERTIFICATE IS NON-TRANSFERABLE
EXCEPT UNDER THE LIMITED CIRCUMSTANCES
DESCRIBED IN SECTION 3.10 OF THE TRUST AGREEMENT.)
NUMBER $___________
R-__ CUSIP NO. ___________
(____________) TRUST 199_-_
______% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of retail installment sale
contracts secured by new and used automobiles, light duty trucks,
recreational vehicles, boats, boat motors and any accompanying traveller.
(This Trust Certificate does not represent an interest in or obligation of
the Depositor or any of its affiliates, except to the extent described
below.)
THIS CERTIFIES THAT _________________ is the registered owner of
_________________________ DOLLARS nonassessable, fully-paid, fractional
undivided interest in Trust 199_-_ (the "Trust"), formed by
Morgan Stanley ABS Capital II Inc., a Delaware corporation (the "Depositor").
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
(__________________________),(_________________________________),
as Owner Trustee or as Owner Trustee
by: (________________________________),
as Authenticating Agent
by:_______________________________________
Authorized Signatory
by:___________________________
Authorized Signatory
The Trust was created pursuant to a Trust Agreement dated as of
____________, 199__, (as may be amended or supplemented from time to time,
the "Trust Agreement"), among the Depositor and ____________________, as
owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them
in the Trust Agreement or the Sale and Servicing Agreement dated as of
___________, 199___, (as amended and supplemented from time to time, the
"Sale and Servicing Agreement"), between the Trust, the Depositor and the
Servicer, as applicable.
This Certificate is one of the duly authorized Certificates designated
as "_____% Asset Backed Certificates" (herein called the "Trust
Certificates"). Also issued under an Indenture dated as of ___________,
199__ (the "Indenture"), between the Trust and __________________, as
indenture trustee, are the two classes of Notes designated as "Class A-1
Floating Rate Asset Backed Notes" and "Class A-2 Floating Rate Asset Backed
Notes" (collectively, the "Notes"). This Trust Certificate is issued under
and is subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the Holder of this Trust Certificate by
virtue of its acceptance hereof assents and by which such Holder is bound.
The property of the Trust consists of a pool of retail installment sale
contracts for new and used automobiles and light duty trucks, recreational
vehicles, boats, boat motors and accompanying travellers (collectively, the
"Receivables"), all monies due under such Receivables on or after
_____________, 199__ (including payments due on or after ___________, 199_
and collected after _____________, 199__, and before ___________, 199__), in
the case of Precomputed Receivables, or received on or after _____________,
199__, in the case of Simple Interest Receivables, security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof,
proceeds from claims on certain insurance policies and certain other rights
under the Trust Agreement and the Sale and Servicing Agreement and all
proceeds of the foregoing. The rights of the Holders of the Trust
Certificates are subordinated to the rights of the Holders of the Notes, as
set forth in the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed on the sixth day of
each month or, if such sixth day is not a Business Day, the next Business Day
(each, a "Distribution Date"), commencing on ______________, 199__, to the
Person in whose name this Trust Certificate is registered at the close of
business on the day immediately preceding such Distribution Date, or if
Definitive Certificates are issued, the fifteenth day of the immediately
preceding month (the "Record Date"), such Certificateholder's fractional
undivided interest in the amount to be distributed to Certificateholders on
such Distribution Date. No distributions of principal will be made on any
Certificate until all of the Notes have been paid in full.
The Holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
income and single business tax and any other income taxes, the Trust will be
treated as a partnership and the Certificateholders (including the Depositor)
will be treated as partners in that partnership. The Depositor and the other
Certificateholders, by acceptance of a Trust Certificate, agree to treat, and
to take no action inconsistent with the treatment of, the Trust Certificates
for such tax purposes as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a Certificate Owner, a beneficial
interest in a Trust Certificate, covenants and agrees that such
Certificateholder or Certificate Owner, as the case may be, 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, or other proceedings under any United States federal
or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, the Trust Agreement or any of
the Basic Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the
presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates 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 transfer in
immediately available funds to the account designated by such nominee.
Except as otherwise provided in the Trust Agreement and notwithstanding the
above, the final distribution on this Trust 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 Trust Certificate at the office or
agency maintained for that purpose by the Owner Trustee in the Borough of
Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this
Trust Certificate shall not entitle the Holder hereof to any benefit under
the Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Trust Certificate to be duly
executed.
(__________________) TRUST 199_-_
by: (__________________________),
not in its individual capacity but
solely as Owner Trustee
on behalf of the Trust
Dated: by:______________________________
Authorized Signatory
(REVERSE OF TRUST CERTIFICATE)
The Trust Certificates do not represent an obligation of, or an interest
in, the Depositor, the Servicer, the Owner Trustee or any affiliates of any
of them and no recourse may be had against such parties or their assets,
except as expressly set forth or contemplated herein or in the Trust
Agreement or the Basic Documents. In addition, this Trust Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in
right of payment to certain collections and recoveries with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. A copy of each of the Sale
and Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Depositor and at such other places, if any,
designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Depositor and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee with the consent
of the Holders of the Trust Certificates and the Notes, each voting as a
class, evidencing not less than a majority of the Certificate Balance and the
outstanding principal balance of the Notes of each such class. Any such
consent by the Holder of this Trust Certificate shall be conclusive and
binding on such Holder and on all future Holders of this Trust Certificate
and of any Trust 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 Trust Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders
of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in
the Certificate Register upon surrender of this Trust Certificate for
registration of transfer at the offices or agencies of the Certificate
Registrar maintained by the Owner Trustee in the Borough of Manhattan, The
City of New York, accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed
by the Holder hereof or such Holder's attorney duly authorized in writing,
and thereupon one or more new Trust Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee. The initial Certificate Registrar appointed under the
Trust Agreement is _____________________________________.
Except as provided in the Trust Agreement, the Trust Certificates are
issuable only as registered Trust Certificates without coupons in
denominations of $_______ and in integral multiples of $______ in excess
thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Trust Certificates are exchangeable for new
Trust Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but
the Owner Trustee or the Certificate Registrar may require payment of a sum
sufficientto coverany taxorgovernmental chargepayable inconnection therewith.
The Owner Trustee, 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 none of
the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of
all property held as part of the Owner Trust Estate. The Servicer of the
Receivables may at its option purchase the Owner Trust Estate at a price
specified in the Sale and Servicing Agreement, and such purchase of the
Receivables and other property of the Trust will effect early retirement of
the Trust Certificates; provided, however, such right of purchase is
exercisable only as of the last day of any Collection Period as of which the
Pool Balance is less than or equal to 10% of the Original Pool Balance.
The Trust 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 or which uses plan assets to acquire Trust
Certificates (each, a "Benefit Plan"). By accepting and holding this Trust
Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________________________________________________________
(Please print or type name and address, including postal zip code, of
assignee)
the within Trust Certificate, and all rights thereunder, and hereby
irrevocably constitutes and appoints _____________________________, attorney,
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
___________________________________________*/
Signature Guaranteed:
____________________________*/
_________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the
within Trust Certificate in every particular, without alteration,
enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements
include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the
Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.
EXHIBIT B
Form of Certificate of Trust of (______________) Trust 199_-_
THIS Certificate of Trust of (______________) Trust 199_-_ (the
"Trust"), dated August ___, 1996, is being duly executed and filed by
_______________________, a Delaware banking corporation, as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code, Section
3801 et seq.).
1. Name. The name of the business trust formed hereby is (_______
___) TRUST 199_-_.
2. Delaware Trustee. The name and business address of the trustee
of the Trust in the State of Delaware is
____________________________________, Attention: _______________________.
3. Effective Date. This Certificate of Trust shall be effective
upon its filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
(_________________________________),
not in its individual capacity but solely as
owner trustee under the Trust Agreement dated as
of _________ ___, 199__
By:________________________
Name:
Title:
EXHIBIT C
Form of Certificate Depository Agreement
Letter of Representations
(To be Completed by Issuer and Trustee)
________________________________
(Name of Issuer)
________________________________
(Name of Trustee)
(Date)
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: ____________________________________________________________
____________________________________________________________
____________________________________________________________
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Trustee will act
as trustee with respect to the Securities pursuant to a trust indenture dated
____________________, 199_ (the "Document"). _______________________________
______________________ (the "Underwriter") is distributing the Securities
through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities,
Issuer and Trustee make the following representations to DTC:
1. Prior to closing on the Securities on _____________________, 199_,
there shall be deposited with DTC one Security certificate registered in the
name of DTC's nominee, Cede & Co., for each stated maturity of the Securities
in the face amounts set forth on Schedule A hereto, the total of which
represents 100% of the principal amount of such Securities. If, however, the
aggregate principal amount of any maturity exceeds $200 million, one
certificate will be issued with respect to each $200 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount. Each Security certificate shall bear the
following legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to Issuer or its agent for registration of transfer, exchange,
or payment, and any certificate issued is registered in the name of Cede
& Co. or in such other name as 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.
2. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer or Trustee shall establish a record date
for such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 15 calendar days in advance of such record
date. Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212) 709-6897, and
receipt of such notices shall be confirmed by telephoning (212) 709-6870.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to DTC's Reorganization Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Trustee
shall send a notice to DTC specifying: (a) the amount of the redemption or
refunding; (b) in the case of a refunding, the maturity date(s) established
under the refunding; and (c) the date such notice is to be mailed to Security
holders or published (the "Publication Date"). Such notice shall be sent to
DTC by a secure means (e.g., legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such notice is
in DTC's possession no later than the close of business on the business day
before or, if possible, two business days before the Publication Date.
Issuer or Trustee shall forward such notice either in a separate secure
transmission for each CUSIP number or in a secure transmission for multiple
CUSIP numbers (if applicable) which includes a manifest or list of each CUSIP
number submitted in that transmission. (The party sending such notice shall
have a method to verify subsequently the use of such means and the timeliness
of such notice.) The Publication Date shall be not less than 30 days nor more
than 60 days prior to the redemption date or, in the case of an advance
refunding, the date that the proceeds are deposited in escrow. Notices to
DTC pursuant to this Paragraph by telecopy shall be sent to DTC's Call
Notification Department at (516) 227-4039 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC confirming
that the notice has been received, such party shall telephone (516) 227-4070.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or
Trustee to Security holders specifying the terms of the tender and the
Publication Date of such notice shall be sent to DTC by a secure means in the
manner set forth in the preceding Paragraph. Notices to DTC pursuant to this
Paragraph and notices of other corporate actions by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094, and
receipt of such notices shall be confirmed by telephoning (212) 709-6884.
Notices to DTC pursuant to the above by mail or by any other means shall be
sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
5. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
6. Trustee shall send DTC written notice with respect to the dollar
amount per $1,000 original face value (or other minimum authorized
denomination if less than $1,000 face value) payable on each payment date
allocated as to the interest and principal portions thereof preferably 5, but
not less than 2, business days prior to such payment date. Such notices,
which shall also contain the current pool factor, and special adjustments to
principal/interest rates (e.g., adjustments due to deferred interest or
shortfall), and Trustee contact's name and telephone number, shall be sent by
telecopy to DTC's Dividend Department at (212) 709-1723, or if by mail or by
any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
7. (NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT
THE OTHER:) (The interest accrual period is record date to record date.) (The
interest accrual period is payment date to payment date.)
8. Trustee must provide DTC, no later than noon (Eastern Time) on the
payment date, CUSIP numbers for each issue for which payment is being sent,
as well as the dollar amount of the payment for each issue. Notification of
payment details should be sent using automated communications.
9. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee
of DTC, or its registered assigns in same-day funds, no later than 2:30 p.m.
(Eastern Time) on each payment date (in accordance with existing arrangements
between Issuer or Trustee and DTC). Absent any other arrangements between
Issuer or Trustee and DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
Issuer or Trustee shall provide interest payment information to a standard
announcement service subscribed to by DTC. In the unlikely event that no
such service exists, Issuer or Trustee shall provide interest payment
information directly to DTC in advance of the interest payment date as soon
as the information is available. This information should be conveyed
directly to DTC electronically. If electronic transmission is not available,
absent any other arrangements between Trustee and DTC, such information
should be sent by telecopy to DTC's Dividend Department at (212) 709-1723 or
(212) 709-1686, and receipt of such notices shall be confirmed by telephoning
(212) 709-1270. Notices to DTC pursuant to the above by mail or by any other
means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
10. DTC shall receive maturity and redemption payments allocated with
respect to each CUSIP number on the payable date in same-day funds by 2:30
p.m. (Eastern Time). Absent any other arrangements between Trustee and DTC,
such payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth
in DTC's SDFS Paying Agent Operating Procedures, a copy of which has
previously been furnished to Trustee.
11. DTC shall receive all reorganization payments and CUSIP-level
detail resulting from corporate actions (such as tender offers, remarketings,
or mergers) on the first payable date in same-day funds by 2:30 p.m. (Eastern
Time). Absent any other arrangements between Trustee and DTC, such payments
shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Reorganization Account 066-027608
12. DTC may direct Issuer or Trustee to use any other number or address
as the number or address to which notices or payments of interest or
principal may be sent.
13. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or
Trustee's invitation) necessitating a reduction in the aggregate principal
amount of Securities outstanding or an advance refunding of part of the
Securities outstanding, DTC, in its discretion: (a) may request Issuer or
Trustee to issue and authenticate a new Security certificate; or (b) may make
an appropriate notation on the Security certificate indicating the date and
amount of such reduction in principal except in the case of final maturity,
in which case the certificate will be presented to Issuer or Trustee prior to
payment, if required.
14. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trustee
shall notify DTC of the availability of certificates. In such event, Issuer
or Trustee shall issue, transfer, and exchange certificates in appropriate
amounts, as required by DTC and others.
15. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Trustee (at which time DTC will confirm with Issuer or Trustee the
aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Trustee shall cooperate fully with
DTC by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.
16. Issuer: (a) understands that DTC has no obligation to, and will
not, communicate to its Participants or to any person having an interest in
the Securities any information contained in the Security certificate(s); and
(b) acknowledges that neither DTC's Participants nor any person having an
interest in the Securities shall be deemed to have notice of the provisions
of the Security certificates by virtue of submission of such certificate(s)
to DTC.
17. Nothing herein shall be deemed to require Trustee to advance funds
on behalf of Issuer.
Notes: Very truly yours,
A. If there is a Trustee (as
defined in this Letter of __________________________________
Representations), Trustee as well (Issuer)
as Issuer must sign this Letter.
If there is no Trustee, in signing By: ______________________________
this Letter Issuer itself (Authorized Officer's Signature)
undertakes to perform all of the
obligations set forth herein. _________________________________
(Trustee)
B. Schedule B contains statements
that DTC believes accurately By: ______________________________
describe DTC, the method of (Authorized Officer's Signature)
effecting book-entry transfers of
securities distributed through DTC,
and certain related matters.
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:_______________________________
cc: Underwriter
Underwriter's Counsel
SCHEDULE A
_____________________________________________________________
_____________________________________________________________
(Describe Issue)
CUSIP Principal Amount Maturity Date Interest Rate
- ----- ---------------- ------------- -------------
SCHEDULE B
SAMPLE OFFICIAL STATEMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(PREPARED BY DTC--BRACKETED MATERIAL MAY BE APPLICABLE ONLY TO CERTAIN
ISSUES)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities
will be issued as fully-registered securities registered pin the name of Cede
& Co. (DTC's partnership nominee). One fully-registered Security certificate
will be issued for (each issue of the Securities, (each) in the aggregate
principal amount of such issue, and will be deposited with DTC. (If,
however, the aggregate principal amount of (any) issue exceeds $200 million,
one certificate will be issued with respect to each $200 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount of such issue.)
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities
on DTC's records. The ownership interest of each actual purchaser of each
Security ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Securities, except in the event that use of the
book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
(6. Redemption notices shall be sent to Cede & Co. If less than all of
the Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.)
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Securities are credited on the record date (identified in
a listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on payable
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on payable
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC,
Trustee, or Issuer, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to DTC
is the responsibility of the Issuer or Trustee, disbursement of such payments
to Direct Participants shall be the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners shall be the responsibility of
Direct and Indirect Participants.
(9. A Beneficial Owner shall give notice to elect to have its
Securities purchased or tendered, through its Participant, to Trustee (or
Tender/Remarketing Agent), and shall effect delivery of such Securities by
causing the Direct Participant to transfer the Participant's interest in the
Securities, on DTC's records, to Trustee (or Tender/Remarketing Agent). The
requirement for physical delivery of Securities in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the
ownership rights in the Securities are transferred by Direct Participants on
DTC's records and followed by a book-entry credit of tendered Securities to
Trustee (or Tender/Remarketing Agent's) DTC account.)
10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Agent. Under such circumstances, in the event that a successor
securities depository is not obtained, Security certificates are required to
be printed and delivered.
11. The Issuer may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In
that event, Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable,
but Issuer takes no responsibility for the accuracy thereof.
EXHIBIT 4.2
Form of Pooling and Servicing Agreement
MORGAN STANLEY ABS CAPITAL II INC.
as Depositor
__________________________
as Trustee
and
(____________________________________)
as Servicer
Dated as of __________________________
__________________ TRUST 199__-__
___% Asset Backed Certificates, Class A
___% Asset Backed Certificates, Class B
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . . 19
ARTICLE II
Establishment of Trust
SECTION 2.01. Creation of Trust . . . . . . . . . . . . . . . . . . 20
SECTION 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . 20
SECTION 2.03. Conveyance of Receivables . . . . . . . . . . . . . . 20
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of
Seller . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.02 Representations and Warranties of the
Depositor . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.03. Repurchase Upon Breach . . . . . . . . . . . . . . . 29
SECTION 3.04. Custody of Receivable Files . . . . . . . . . . . . . 29
SECTION 3.05. Duties of Servicer as Custodian . . . . . . . . . . . 30
SECTION 3.06. Instructions; Authority to Act . . . . . . . . . . . 30
SECTION 3.07. Custodian's Indemnification . . . . . . . . . . . . . 30
SECTION 3.08. Effective Period and Termination . . . . . . . . . . 31
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer . . . . . . . . . . . . . . . . . 31
SECTION 4.02. Collection and Allocation of Receivable
Payments . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.03. Realization Upon Receivables . . . . . . . . . . . . 32
SECTION 4.04. Physical Damage Insurance . . . . . . . . . . . . . . 33
SECTION 4.05. Maintenance of Security Interests in
Financed Assets . . . . . . . . . . . . . . . . . . 33
SECTION 4.06. Covenants of Servicer . . . . . . . . . . . . . . . . 33
SECTION 4.07. Purchase of Receivables Upon Breach . . . . . . . . . 33
SECTION 4.08. Servicing Fee . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.09. Servicer's Certificate . . . . . . . . . . . . . . . 34
SECTION 4.10. Annual Statement as to Compliance;
Notice of Default . . . . . . . . . . . . . . . . . 34
SECTION 4.11. Annual Independent Certified Public
Accountant's Report . . . . . . . . . . . . . . . . 35
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables . . . . . . . . . 35
SECTION 4.13. Servicer Expenses . . . . . . . . . . . . . . . . . . 36
SECTION 4.14. Appointment of Subservicer . . . . . . . . . . . . . 36
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders
SECTION 5.01. Establishment of Trust Accounts . . . . . . . . . . . 36
SECTION 5.02. Collections . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.03. Application of Collections . . . . . . . . . . . . . 38
SECTION 5.04. Advances . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.05. Additional Deposits . . . . . . . . . . . . . . . . . 40
SECTION 5.06. Distributions . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.07. Reserve Account . . . . . . . . . . . . . . . . . . . 43
SECTION 5.08. Statements to Certificateholders . . . . . . . . . . 48
SECTION 5.09. Tax Returns . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.10. Net Deposits . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI
The Certificates
SECTION 6.01. The Certificates . . . . . . . . . . . . . . . . . . 50
SECTION 6.02. Authentication of Certificates . . . . . . . . . . . 50
SECTION 6.03. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . 50
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . . . 51
SECTION 6.05. Persons Deemed Owners . . . . . . . . . . . . . . . . 51
SECTION 6.06. Access to List of Certificateholders'
Names and Addresses . . . . . . . . . . . . . . . . 52
SECTION 6.07. Maintenance of Office or Agency . . . . . . . . . . . 52
SECTION 6.08. Book-Entry Certificates . . . . . . . . . . . . . . . 52
SECTION 6.09. Notices to Clearing Agency . . . . . . . . . . . . . 53
SECTION 6.10. Definitive Certificates . . . . . . . . . . . . . . . 53
ARTICLE VII
The Depositor
SECTION 7.01. Representations of Depositor . . . . . . . . . . . . 54
SECTION 7.02. Corporate Existence . . . . . . . . . . . . . . . . . 56
SECTION 7.03. Liabilities of Depositor; Indemnities . . . . . . . . 56
SECTION 7.04. Merger or Consolidation of, or
Assumption of the Obligations of,
Depositor . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.05. Limitation on Liability of Depositor and
Others . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.06. Depositor May Own Certificates . . . . . . . . . . . 58
SECTION 7.07. No Transfer of Excess Amounts . . . . . . . . . . . . 58
ARTICLE VIII
The Servicer
SECTION 8.01. Representations of Servicer . . . . . . . . . . . . . 58
SECTION 8.02. Indemnities of Servicer . . . . . . . . . . . . . . . 60
SECTION 8.03. Merger or Consolidation of, or
Assumption of the Obligations of,
Servicer . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.04. Limitation on Liability of Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
Default
SECTION 9.01. Events of Default . . . . . . . . . . . . . . . . . . 62
SECTION 9.02. Appointment of Successor . . . . . . . . . . . . . . 63
SECTION 9.03. Repayment of Advances . . . . . . . . . . . . . . . . 64
SECTION 9.04. Notification to Certificateholders . . . . . . . . . 64
SECTION 9.05. Waiver of Past Defaults . . . . . . . . . . . . . . . 64
ARTICLE X
The Trustee
SECTION 10.01. Duties of Trustee . . . . . . . . . . . . . . . . . . 64
SECTION 10.02. Certain Matters Affecting Trustee . . . . . . . . . . 66
SECTION 10.03. Trustee Not Liable for Certificates or
Receivables . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.04. Trustee May Own Certificates . . . . . . . . . . . . 67
SECTION 10.05. Trustee's Fees and Expenses . . . . . . . . . . . . . 67
SECTION 10.06. Eligibility Requirements for Trustee . . . . . . . . 68
SECTION 10.07. Resignation or Removal of Trustee . . . . . . . . . . 68
SECTION 10.08. Successor Trustee . . . . . . . . . . . . . . . . . . 69
SECTION 10.09. Merger or Consolidation of Trustee . . . . . . . . . 69
SECTION 10.10. Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.11. Representations and Warranties of
Trustee . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.12. No Bankruptcy Petition . . . . . . . . . . . . . . . 71
SECTION 10.13. Trustee's Certificate . . . . . . . . . . . . . . . . 71
SECTION 10.14. Trustee's Assignment of Repurchased
Receivables . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XI
Termination
SECTION 11.01. Termination of the Trust . . . . . . . . . . . . . . 72
SECTION 11.02. Optional Purchase of All Receivables . . . . . . . . 73
ARTICLE XII
Miscellaneous Provisions
SECTION 12.01. Amendment . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.02. Protection of Title to Trust . . . . . . . . . . . . 75
SECTION 12.03. Separate Counterparts . . . . . . . . . . . . . . . . 76
SECTION 12.04. Limitation on Rights of
Certificateholders . . . . . . . . . . . . . . . . 76
SECTION 12.05. Governing Law . . . . . . . . . . . . . . . . . . . . 77
SECTION 12.06. Notices . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 12.07. Severability of Provisions . . . . . . . . . . . . . 78
SECTION 12.08. Assignment . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.09. Certificates Nonassessable and Fully
Paid . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.10. Limitations on Rights of Others . . . . . . . . . . . 78
SECTION 12.11. Headings . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.12. Nonpetition Covenants . . . . . . . . . . . . . . . . 79
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Form of Depository Agreement
Exhibit D Form of Servicer's Certificate
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
POOLING AND SERVICING AGREEMENT dated as of __________, among MORGAN
STANLEY ABS CAPITAL II INC., a Delaware corporation, as depositor (the
"Depositor"),______________, ________________________, as servicer (the
"Servicer"), and ____________________, a ______________________ banking
corporation, as trustee (the "Trustee").
WHEREAS, the Depositor ________________________ has purchased a
portfolio of receivables arising in connection with a pool of (automotive)
(marine) (recreational vehicle) retail installment sale contracts or
installment loans (the "Contracts") originated or acquired by the Seller in
the ordinary course of their respective businesses; and
WHEREAS, the Depositor, the Servicer and the Trustee wish to set forth
the terms and conditions pursuant to which the Trust (as hereinafter defined)
will acquire the Contracts from the Depositor, and the Servicer will service
the Contracts on behalf of the Trust;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the Depositor, the Servicer and the Trustee
agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in this Agreement, the
-----------
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Advance" means either a Precomputed Advance or a Simple Interest
-------
Advance or both, as applicable.
"Agreement" means this Pooling and Servicing Agreement.
---------
"Amount Financed" means with respect to a Receivable, the amount
---------------
advanced under such Receivable toward the purchase price of the Financed
Asset and any related costs, exclusive of any amount allocable to the premium
of force-placed physical damage insurance covering the Financed Asset.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
---------------------- ---
of finance charges stated in the related Contract.
"Book-Entry Certificates" means, unless otherwise specified in this
-----------------------
Agreement, a beneficial interest in the Class A or Class B Certificates,
ownership and transfers of which shall be registered through book entries by
a Clearing Agency as described in Section 6.08.
"Business Day" means any day other than a Saturday, a Sunday or a day
------------
on which banking institutions or trust companies in Portland, Oregon or the
city in which the Corporate Trust Office is located, are authorized or
obligated by law, regulation or executive order to be closed.
"Certificate Balance" means, as of any date, the aggregate outstanding
-------------------
principal amount of the Certificates at such date.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
-----------------
Person who is the beneficial owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" mean the register
-------------------- ---------------------
maintained and the registrar appointed pursuant to Section 6.03.
"Certificateholder" or "Holder" means a Person in whose name a
----------------- ------
Certificate is registered in the Certificate Register.
"Class A Certificate" means a ___% Asset Backed Certificate, Class A,
-------------------
evidencing a beneficial interest in the Trust, substantially in the form of
Exhibit A hereto.
"Class A Certificate Balance" means, as of any date of determination,
---------------------------
the Initial Class A Certificate Balance reduced by all amounts previously
distributed to Holders of Class A Certificates and allocable to principal.
"Class A Distributable Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the Class A Principal Distributable Amount and the Class A
Interest Distributable Amount for such date.
"Class A Interest Carryover Shortfall" means, with respect to any
------------------------------------
Distribution Date, the excess of the sum of the Class A Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Class A Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that Holders of the Class A
Certificates actually received on such preceding Distribution Date, plus 30
days' interest on such excess, to the extent permitted by law, at the Class A
Pass-Through Rate.
"Class A Interest Distributable Amount" means, with respect to any
-------------------------------------
Distribution Date, 30 days of interest at the Class A Pass-Through Rate on
the Class A Certificate Balance on the last day of the preceding Collection
Period.
"Class A Pass-Through Rate" means _____% per annum.
-------------------------
"Class A Percentage" means _____%.
------------------
"Class A Pool Factor" means, as of the close of business on the last day
-------------------
of any Collection Period, a seven-digit decimal figure equal to the Class A
Certificate Balance as of such Record Date divided by the Initial Class A
Certificate Balance.
"Class A Principal Carryover Shortfall" means, as of the close of any
-------------------------------------
Distribution Date, the excess of the Class A Monthly Principal Distributable
Amount and any outstanding Class A Principal Carryover Shortfall from the
preceding Distribution Date, over the amount in respect of principal that is
actually distributed to Holders of the Class A Certificates on such current
Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date, the Class A Percentage of the Principal Distribution
Amount. In addition, on the Final Scheduled Distribution Date, the principal
required to be included in the Class A Principal Distributable Amount will
include the lesser of (a) the Class A Percentage of (i) any Scheduled
Payments of principal due and remaining unpaid on each Precomputed Receivable
and (ii) any principal due and remaining unpaid on each Simple Interest
Receivable, in each case, in the Trust as of the Final Scheduled Maturity
Date or (b) the amount that is necessary (after giving effect to the other
amounts to be deposited in the Distribution Account on such Distribution Date
and allocable to principal) to reduce the Class A Certificate Balance to
zero.
"Class B Certificate" means a ___% Asset Backed Certificate, Class B,
-------------------
evidencing a beneficial interest in the Trust, substantially in the form of
Exhibit B hereto.
"Class B Certificate Balance" means, as of any date of determination,
---------------------------
the Initial Class B Certificate Balance reduced by all amounts previously
distributed to Holders of Class B Certificates (or deposited in the Reserve
Account, exclusive of the Reserve Account Initial Deposit) and allocable to
principal and by Realized Losses to the extent of the amount of such Realized
Loses paid from the Class B Percentage of the Principal Distribution Amount.
"Class B Distributable Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the Class B Principal Distributable Amount and the Class B
Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, with respect to any
------------------------------------
Distribution Date, the excess of the sum of the Class B Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Class B Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that Holders of the Class B
Certificates actually received on such preceding Distribution Date, plus 30
days' interest on such excess, to the extent permitted by law, at the Class B
Pass-Through Rate.
"Class B Interest Distributable Amount" means, with respect to any
-------------------------------------
Distribution Date, the sum of the Class B Monthly Interest Distributable
Amount for such Distribution Date and the Class B Interest Carryover
Shortfall for such Distribution Date. Unless otherwise specified in this
Agreement, interest with respect to the Class B Certificates shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
"Class B Monthly Interest Distributable Amount" means, with respect to
---------------------------------------------
any Distribution Date, 30 days of interest at the Class B Pass-Through Rate
on the Class B Certificate Balance on the last day of the preceding
Collection Period.
"Class B Pass-Through Rate" means ___% per annum.
-------------------------
"Class B Percentage" means ___%.
------------------
"Class B Pool Factor" means, as of the close of business on the last day
-------------------
of any Collection Period, a seven-digit decimal figure equal to the Class B
Certificate Balance as of such Record Date divided by the Initial Class B
Certificate Balance.
"Class B Principal Carryover Shortfall" means, as of the close of any
-------------------------------------
Distribution Date, the excess of the Class B Monthly Principal Distributable
Amount and any outstanding Class B Principal Carryover Shortfall from the
preceding Distribution Date, over the amount in respect of principal that is
actually distributed to Holders of the Class B Certificates on such current
Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date, the Class B Percentage of the Principal Distribution
Amount. In addition, on the Final Scheduled Distribution Date, the principal
required to be included in the Class B Principal Distributable Amount will
include the lesser of (a) the Class B Percentage of (i) any Scheduled
Payments of principal due and remaining unpaid on each Precomputed Receivable
and (ii) any principal due and remaining unpaid on each Simple Interest
Receivable, in each case, in the Trust as of the Final Scheduled Maturity
Date or (b) the amount that is necessary (after giving effect to the other
amounts to be deposited in the Distribution Account on such Distribution Date
and allocable to principal) to reduce the Class B Certificate Balance to
zero.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means ______________________.
------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Collection Account" means the account designated as such, established
------------------
and maintained pursuant to Section 5.01(a)(i).
"Collection Period" means a calendar month (or in the case of the first
-----------------
Distribution Date, the period from and including the Cutoff Date to and
including the last day of the calendar month in which the Closing Date
occurs). Any amount stated as of the last day of a Collection Period or as
of the first day of a Collection Period shall give effect to the following
calculations as determined as of the close of business on such last day: (1)
all applications of collections, (2) all current and previous Payaheads, (3)
all applications of Payahead Balances, (4) all Advances and reductions of
Advances and (5) all distributions to be made on the following Distribution
Date.
"Contract" means a (automotive) (marine) (recreational vehicle) retail
--------
installment sale contract or installment loan.
"Corporate Trust Office" means the principal corporate trust office of
----------------------
the Trustee, which at the time of execution of this agreement is
______________________, Attention: ____________.
"Cutoff Date" means, with respect to any Receivable, the date as of
-----------
which collections on such Receivable will be included in a Trust or the
related Trust Account pursuant to the related Agreement.
"Dealer" means the dealer who sold a Financed Asset to an Obligor and
------
who originated and assigned the related Receivable to an Originator.
"Definitive Certificates" shall have the meaning specified in Section
-----------------------
6.10.
"Delivery" when means:
--------
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or its nominee or
custodian by physical delivery to the Trustee or its nominee or custodian
endorsed to, or registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated security
(as defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of
such certificated security endorsed to, or registered in the name of, the
Trustee or its nominee or custodian or endorsed in blank to a financial
intermediary (as defined in Section 8-313 of the UCC) and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Trustee or its nominee or
custodian and the sending by such financial intermediary of a confirmation of
the purchase of such certificated security by the Trustee or its nominee or
custodian, or (ii) by delivery thereof to a "clearing corporation" (as
defined in Section 8-102(3) of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section 8-102(4) of
the UCC) or the nominee of either, subject to the clearing corporation's
exclusive control, the sending of a confirmation by the financial
intermediary of the purchase by the Trustee or its nominee or custodian of
such securities and the making by such financial intermediary of entries on
its books and records identifying such certificated securities as belonging
to the Trustee or its nominee or custodian (all of the foregoing, "Physical
Property"), and, in any event, any such Physical Property in registered form
shall be in the name of the Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Trust Account Property
to the Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry securities held through the Federal Reserve
System pursuant to federal book-entry regulations, the following procedures,
all in accordance with applicable law, including applicable federal
regulations and Articles 8 and 9 of the UCC: book-entry registration of such
Trust Account Property to an appropriate book-entry account maintained with a
Federal Reserve Bank by a financial intermediary that is also a "depository"
pursuant to applicable federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Trustee or its nominee or custodian of the
purchase by the Trustee or its nominee or custodian of such book-entry
securities; the identification by the Federal Reserve Bank of such book-entry
securities on its record being credited to the financial intermediary's
participant's securities account; the making by such financial intermediary
of entries in its books and records identifying such book-entry security held
through the Federal Reserve System pursuant to federal book-entry regulations
as being credited to the Trustee's securities account or custodian's
securities account and indicating that such custodian holds such Trust
Account Property solely as agent for the Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust
Account Property to the Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer
thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Trustee or
its nominee or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records identifying such
uncertificated certificates as belonging to the Trustee or its nominee or
custodian.
"Depositor" means Morgan Stanley ABS Capital II Inc., a Delaware
---------
Corporation, and its successors in interest to the extent permitted
hereunder.
"Depository Agreement" means the agreement dated _____________, among
--------------------
the Trustee and The Depository Trust Company, as the initial Clearing Agency,
substantially in the form attached as Exhibit C hereto.
"Determination Date" means, unless otherwise specified in this
------------------
Agreement, the ______ Business Day of each calendar month.
"Distribution Account" means the account designated as such, established
--------------------
and maintained pursuant to Section 5.01(a)(iii).
"Distribution Date" means, with respect to each Collection Period, the
-----------------
_______ day of the following calendar month or, if such day is not a Business
Day, the immediately following Business Day, commencing on _________________.
"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
Colombia (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 shall have a credit
rating from each Rating Agency in one of its generic rating categories that
signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
--------------------
Trustee or any other entity specified in this Agreement 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) has either (A) a long-term unsecured debt
rating of AAA or better by Standard & Poor's and A1 or better by Moody's or
(B) a certificate of deposit rating of A-1+ by Standard & Poor's and P-1 or
better by Moody's or any other long-term, short-term or certificate of
deposit rating acceptable to the Rating Agencies and (ii) whose deposits are
insured by the FDIC. If so qualified, the Trustee or any such other entity
specified in this Agreement may be considered an Eligible Institution for the
purposes of clause (b) of this definition.
"Eligible Investments" mean book-entry securities, negotiable
--------------------
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (of any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than
such obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) thereof shall have a
credit rating from each of the Rating Agencies in the highest applicable
rating category granted thereby;
(c) commercial paper, variable amount notes or other short term debt
obligations, having, at the time of the investment or contractual commitment
to invest therein, a rating from each of the Rating Agencies in the highest
applicable rating category granted thereby;
(d) investments in money market or common trust funds having a rating
from each of the Rating Agencies in the highest applicable rating category
granted thereby (including funds for which the Trustee or any of its
Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company (acting as
principal) described in clause (b);
(g) any other investment with respect to which the Trustee or the
Servicer has received written notification from the Rating Agencies that the
acquisition of such investment as an Eligible Investment will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Event of Default" means an event specified in Section 9.01.
----------------
"FDIC" means the Federal Deposit Insurance Corporation.
----
"Final Scheduled Distribution Date" means ______________________.
---------------------------------
"Final Scheduled Maturity Date" means ______________________.
-----------------------------
"Financed Asset" means an (automobile, light-duty truck), (recreational
--------------
vehicle), (boat, boat motor, and accompanying travellers) together with all
accessions thereto, securing an Obligor's indebtedness under the respective
Receivable.
"Initial Certificate Balance" means $______________________.
---------------------------
"Initial Class A Balance" means $______________________.
-----------------------
"Initial Class B Balance" means $______________________.
-----------------------
"Initial Collection Period" means the period beginning on, and
-------------------------
including, _______________ to and including ______________________.
"Insolvency Event" means, with respect to a specified Person, (a) the
----------------
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property 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 such Person or for any substantial part of its property, or
ordering the winding-up or liquidation or such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person 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 such Person to the entry of
an order for relief in an involuntary case under any such law, or the consent
by such Person to the appointment of or taking possession by, a receiver,
liquidator, assignee, custodian, trustee, sequestrator, or similar official
for such Person or for any substantial part of its property, or the making by
such Person of any general assignment for the benefit of creditors, or the
failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the
foregoing.
"Interest Distribution Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the following amounts in respect of the Receivables and the
preceding Collection Period: (i) that portion of all collections on
Receivables (including Payaheads that have become due during such Collection
Period) allocable to interest, (ii) Liquidation Proceeds with respect to the
Receivables to the extent allocable to interest due thereon in accordance
with the Servicer's customary servicing procedures; (iii) all Advances made
by the Servicer of interest due on Receivables, (iv) the Purchase Amount of
each Receivable that became a Purchased Receivable during the related
Collection Period to the extent attributable to accrued interest on such
Receivable and (v) Recoveries for such Collection Period; provided, however,
that in calculating the Interest Distribution Amount the following will be
excluded: (i) amounts received on Precomputed Receivables to the extent that
the Servicer has previously made an unreimbursed Precomputed Advance of
interest; (ii) Liquidation Proceeds with respect to a particular Precomputed
Receivable to the extent of any unreimbursed Precomputed Advances of
interest; (iii) all payments and proceeds (including Liquidation Proceeds) of
any Purchased Receivables the Purchase Amount of which has been included in
the Interest Distribution Amount in a prior Collection Period; (v) the sum
for all Simple Interest Receivables of collections on each such Simple
Interest Receivable received during the preceding Collection Period in excess
of the amount of interest that would be due on the aggregate Principal
Balance of the Simple Interest Receivables during such Collection Period at
their respective APRs if a payment were received on each Simple Interest
Receivable during such Collection Period on the date payment is due under the
terms of the related Contract; (vi) Liquidation Proceeds with respect to a
Simple Interest Receivable attributable to accrued and unpaid interest
thereon (but not including interest for the then current Collection Period)
but only to the extent of any unreimbursed Simple Interest Advances; and
(vii) amounts released from the Pre-Funding Account.
"Investment Earnings" means, with respect to any Distribution Date, the
-------------------
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited to the Distribution Account on
such Distribution Date pursuant to Section 5.01(b).
"Lien" means a security interest, lien, charge, pledge, equity, or
----
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable or Financed Asset, as applicable, by
operation of law as a result of any act or omission by the related Obligor.
"Liquidated Receivable" means any Receivable liquidated by the Servicer
---------------------
through sale of a Financed Asset or otherwise.
"Liquidation Proceeds" means, with respect to a Liquidated Receivable,
--------------------
the monies collected in respect thereof, from whatever source, during the
Collection Period in which such Receivable became a Liquidated Receivable,
net of the sum of any amounts expended by the Servicer in connection with
such liquidation, plus any amounts required by law to be remitted to the
Obligor.
"Moody's" means Moody's Investors Service, Inc., or its successor.
-------
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
Financed Asset and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by the (a) chairman
---------------------
of the board, the president, any executive vice president or any vice
president and (b) any treasurer, assistant treasurer, secretary or assistant
secretary of the Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who
------------------
may be an employee of or counsel to the Depositor or the Servicer, which
counsel shall be acceptable to the Trustee or Rating Agencies, as applicable.
"Original Pool Balance" means the sum, as of any date, of the Pool
---------------------
Balance as of the Cutoff Date.
"Originator" means ____________________________ which purchased a
----------
Contract from a Dealer and sold such Contract to the Seller.
"Outstanding Precomputed Advances" on the Precomputed Receivables means
--------------------------------
the sum, as of the close of business on the last day of a Collection Period,
of all Precomputed Advances, reduced as provided by Section 5.04(a).
"Outstanding Simple Interest Advances" on the Simple Interest
------------------------------------
Receivables means the sum, as of the close of business on the last day of a
Collection Period, of all Simple Interest Advances, reduced as provided in
Section 5.04(b).
"Payahead" on a Receivable that is a Precomputed Receivable means the
--------
amount, as of the close of business on the last day of a Collection Period,
computed in accordance with Section 5.03 with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
----------------
maintained pursuant to Section 5.01(c)(i).
"Payahead Balance" on a Precomputed Receivable means the sum, as of the
----------------
close of business on the last day of a Collection Period, of all Payaheads
made by or on behalf of the Obligor with respect to such Precomputed
Receivable, as reduced by applications of previous Payaheads with respect to
such Precomputed Receivable, pursuant to Sections 5.03 and 5.04.
"Person" means any individual, corporation, estate, partnership, joint
------
venture, association, joint stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the
-----------------
definition of "Delivery" above.
"Pool Balance" means, as of the close of business on the last day of a
------------
Collection Period, the aggregate Principal Balance of the Receivables as of
such date (excluding Purchased Receivables and Liquidated Receivables).
"Precomputed Advance" means the amount, as of the close of business on
-------------------
the last day of a Collection Period, which the Servicer is required to
advance on any Precomputed Receivable pursuant to Section 5.04(a).
"Precomputed Receivable" means any Receivable under which the portion
----------------------
of each payment allocable to earned interest (which may be referred to in the
Receivable as an add-on finance charge) and the portion allocable to the
Amount Financed are determined according to the sum of periodic balances or
the sum of monthly balances or any equivalent method, or which is a monthly
actuarial receivable.
"Principal Balance" means the Amount Financed minus the sum, as of the
-----------------
close of business on the last day of a Collection Period, of (a) with respect
to a Precomputed Receivable (i) that portion of all Scheduled Payments due on
or prior to such day allocable to principal using the actuarial or constant
yield method, (ii) any refunded portion of extended warranty protection plan
costs or of physical damage, credit life or disability insurance premiums
included in the Amount Financed, (iii) any payment of the Purchase Amount
allocable to principal and (iv) any prepayment in full or any partial
prepayments applied to reduce the Principal Balance and (b) with respect to a
Simple Interest Receivable (i) the portion of all payments made by or on
behalf of the related Obligor on or prior to such day and allocable to
principal using the Simple Interest Method and (ii) any payment of the
Purchase Amount allocable to principal.
"Principal Distribution Amount" means, for any Distribution Date, the
-----------------------------
sum of the following amounts with respect to the preceding Collection Period:
(i) that portion of all collections on Receivables (including amounts
withdrawn from the Payahead Account but excluding amounts deposited into the
Payahead Account) allocable to principal; (ii) all Liquidation Proceeds
attributable to the principal amount of Receivables that became Liquidated
Receivables during the Collection Period in accordance with the Servicer's
customary servicing procedures, plus the amount of Realized Losses with
respect to such Liquidated Receivables; (iii) all Precomputed Advances made
by the Servicer of principal due on the Precomputed Receivables; (iv) to the
extent attributable to principal, the Purchase Amount received with respect
to each Receivable that became a Purchased Receivable during the related
Collection Period; (v) partial prepayments relating to refunds of extended
warranty protection plan costs or of physical damage, credit life or
disability insurance policy premiums, but only if such costs or premiums were
financed by the respective Obligor as of the date of the original Contract;
and (vi) on the Final Scheduled Distribution Date, any amounts advanced by
the Servicer on such Final Scheduled Distribution Date with respect to
principal on the Receivables; provided, however, that in calculating the
Principal Distribution Amount the following will be excluded: (i) amounts
received on Precomputed Receivables to the extent that the Servicer has
previously made an unreimbursed Precomputed Advance of principal, (ii)
Liquidation Proceeds with respect to a particular Precomputed Receivable to
the extent of any unreimbursed Precomputed Advances of principal, (iii) all
payments and proceeds (including Liquidation Proceeds) of any Purchased
Receivables the Purchase Amount of which has been included in the Principal
Distribution Amount in a prior Collection Period, and (iv) Recoveries.
"Purchase Amount" means the amount, as of the close of business on the
---------------
last day of a Collection Period, required to prepay in full a Receivable
under the terms thereof including interest to the end of the month of
purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 by the Depositor pursuant to Section 3.02 or by the Seller
pursuant to Section 3.01.
"Rating Agency" means Moody's and Standard & Poor's. If no such
-------------
organization or successor is any longer in existence, "Rating Agency" shall
mean any nationally recognized statistical rating organization or other
comparable Person designated by the Depositor, notice of which designation
shall be given to the Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency shall have been given 10 days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Depositor, the Servicer and the
Trustee in writing that such action will not result in a reduction or
withdrawal of the then current rating of the Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
---------------
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Contract transfer to the Trust on the Closing
----------
Date that is listed on Schedule A to this Agreement (which schedule may be in
the form of microfiche).
"Receivable Files" means the documents specified in Section 3.04.
----------------
"Receivables Purchase Agreement" means the purchase agreement dated as
------------------------------
of ___________________ between the Seller, as seller and the Depositor, as
purchaser.
"Record Date" with respect to each Distribution Date means the first day
-----------
of the calendar month in which such Distribution Date occurs, unless
otherwise specified in this Agreement.
"Recoveries" means, with respect to any Receivable that becomes a
----------
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts
required by law to be remitted to the Obligor.
"Reserve Account" means the account designated as such, established and
---------------
maintained pursuant to Section 5.07.
"Reserve Account Initial Deposit" means, with respect to the Closing
-------------------------------
Date and taking into account any transfer of Subsequent Receivables on such
date, an amount equal to the Specified Reserve Account Balance on the Closing
Date (which is equal to $________________) and, with respect to each
Subsequent Transfer Date after the Closing Date, an amount equal to ___% of
the Principal Balance of the Subsequent Receivables transferred to the Trust
on such Subsequent Transfer Date.
"Reserve Account Property" has the meaning assigned thereto in Section
------------------------
5.07(b).
"Scheduled Payment" on a Precomputed Receivable means that portion of
-----------------
the payment required to be made by the Obligor during each Collection Period
sufficient to amortize the Principal Balance thereof under the actuarial
method over the term of the Receivable and to provide interest at the APR.
"Seller" means _____________________________, an corporation, and its
------
successors in interest.
"Servicer" means _________, as the servicer of the Receivables, and each
--------
successor Servicer pursuant to Section 8.03 or 9.02.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
----------------------
delivered pursuant to Section 4.09, substantially in the form of Exhibit D.
"Servicing Fee" means the fee payable to the Servicer for services
-------------
rendered during each Collection Period, determined pursuant to Section 4.08.
"Servicing Rate" means ___% per annum.
--------------
"Simple Interest Advance" means the amount of interest, as of the close
-----------------------
of business on the last day of a Collection Period, which the Servicer is
required to advance on the Simple Interest Receivables pursuant to Section
5.04(b).
"Simple Interest Method" means the method of allocating a fixed level
----------------------
payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by the
period of time elapsed since the preceding payment of interest was made and
the remainder of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable 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.
"Specified Reserve Account Balance" means (STATE FORMULA).
---------------------------------
"Standard & Poor's" means Standard & Poor's Ratings Services, a Division
-----------------
of The McGraw-Hill Companies, Inc. or its successor.
"Total Distribution Amount" means, for each Distribution Date, the sum
-------------------------
of the Interest Distribution Amount and the Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses).
"Trust" shall have the meaning set forth in this Agreement.
-----
"Trustee" means ______________________, a ___________________ banking
-------
corporation, its successors in interest and any successor Trustee hereunder.
"Trustee Officer" means the chairman or vice-chairman of the board of
---------------
directors, the chairman or vice-chairman of the executive committee of the
board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the
controller and any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"UCC" means the Uniform Commercial Code as in effect in the relevant
---
jurisdiction on the date thereof.
SECTION 1.02. Other Definitional Provisions. (a) All terms defined
-----------------------------
in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto or thereto
unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms not defined herein or in any such
certificate or other document, and accounting terms partly defined herein 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. To the extent that the definitions of accounting
terms herein or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained herein, or in any such certificate or
other document shall control.
(c) The words "hereof," "herein," "hereunder" and word of similar
import when used herein shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Article, Section, Schedule and
Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement, respectively; and
the term "including" and its variations shall mean "including without
limitation".
(d) 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.
(e) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
ESTABLISHMENT OF TRUST
SECTION 2.01. Creation of Trust. Upon the execution of this Agreement
-----------------
by the parties hereto, there is hereby created a separate trust, which shall
be known as (_______________) Trust 199__-__ (the "Trust"). The Trust shall
be administered pursuant to the provisions of this Agreement for the benefit
of the Certificateholders.
SECTION 2.02. Acceptance by Trustee. The Trustee hereby accepts all
---------------------
consideration conveyed by the Depositor pursuant to Section 2.03 and declares
that it will hold such consideration upon the trusts set forth herein for the
benefit of the Certificateholders, subject to the terms and provisions of
this Agreement.
SECTION 2.03. Conveyance of Receivables. In consideration of the
-------------------------
Trustee's delivery on the Closing Date to or upon the order of the Depositor
of Class A Certificates in an initial aggregate principal amount equal to the
Initial Class A Balance and Class B Certificates in an initial aggregate
principal amount equal to the Initial Class B Balance, the Depositor does
hereby sell, transfer, assign, set over and otherwise convey to the Trustee
for the benefit of the Certificateholders, without recourse (subject to the
obligations set forth herein), all right, title and interest of the Depositor
in and to:
(1) the Receivables, and all moneys due thereon on or after
__________, in the case of Precomputed Receivables, and all
moneys received thereon on and after __________, in the case of Simple
Interest Receivables;
(2) the security interests in the Financed Assets granted by
Obligors pursuant to the Receivables and any other interest of the
Seller or the Depositor in such Financed Assets;
(3) any proceeds with respect to the Receivables from claims on
any physical damage, credit life or disability insurance policies
covering Financed Assets or Obligors;
(4) any proceeds from recourse to Dealers on Receivables with
respect to which the Servicer has determined in accordance with its
customary servicing procedures that eventual payment in full is
unlikely;
(5) any Financed Asset that shall have secured any such Receivable
and shall have been acquired by or on behalf of the Seller, the
Depositor, the Servicer or the Trust;
(6) all right, title and interest of the Depositor under the
Receivables Purchase Agreement, including, without limitation, the right
of the Depositor to cause the Seller to purchase Receivables under
certain circumstances.
(7) the proceeds of any and all of the foregoing.
ARTICLE III
The Receivables
---------------
SECTION 3.01. Representations and Warranties of the Seller. (a) The
--------------------------------------------
Seller has made each of the representations and warranties set forth in
Exhibit D hereto under the Receivables Purchase Agreement and has consented
to the assignment by the Depositor to the Trust of the Depositor's rights
with respect thereto. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Receivables to the
Trust. Pursuant to Section 2.03 of this Agreement, the Depositor has sold,
assigned, transferred and conveyed to the Trust, as part of the assets of the
Trust, its rights under the Receivables Purchase Agreement, including the
representations and warranties of the Seller therein as set forth in Exhibit
D, upon which the Trustee relies in accepting the Receivables and delivering
the Certificates, together with all rights of the Depositor with respect to
any breach thereof, including the right to require the Seller to repurchase
Receivables in accordance with the Receivables Purchase Agreement. It is
understood and agreed that the representations and warranties referred to in
this Section shall survive the delivery of the Receivable Files to the
Trustee or any custodian.
(b) the Seller hereby agrees that the Trustee shall have the right, on
behalf of the Trust and the Certificateholders, to enforce any and all rights
under the Receivables Purchase Agreement assigned to the Trust herein,
including the right to cause the Sellers to repurchase any Receivable with
respect to which it is in breach of any of its representations and warranties
set forth in Exhibit D, directly against the Sellers as though the Trustee,
as trustee of the Trust, were a party to the Receivables Purchase Agreement,
and the Trustee shall not be obligated to exercise any such rights indirectly
through the Depositor.
Section 3.02. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor makes the following representations and warranties as to the
Receivables on which the Trustee relies in accepting the Receivables and
delivering the Certificates and the Security Insurer relies in issuing the
Policy. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables by the Depositor to the
Trust.
(a) Title. It is the intention of the Depositor that (i) the transfer
-----
and assignment herein contemplated constitute a sale of the Receivables from
the Depositor to the Trust, conveying good title thereto, free and clear of
any Liens or rights of other Persons and (ii) the beneficial interest in and
title to the Receivables not be part of the debtor's estate in the event of
the filing of a bankruptcy petition by or against the Depositor under any
bankruptcy law. No Receivable has been sold, transferred, assigned or
pledged by the Depositor to any Person other than the Trust. Immediately
prior to the transfer and assignment herein contemplated, the Depositor had
good and marketable title to each Receivable, free and clear of all Liens and
rights of others and, immediately upon the transfer thereof, the Trust shall
have good and marketable title to each such Receivable, free and clear of all
Liens and rights of others; and the transfer has been perfected under the
UCC.
(b) All Filings Made. All filings (including UCC filings) necessary
----------------
in any jurisdiction to give the Trust a first perfected ownership interest in
the Receivables shall have been made.
SECTION 3.03. Repurchase Upon Breach. The Depositor, the Servicer or
----------------------
the Trustee, as the case may be, shall inform the other parties to this
Agreement promptly, in writing, upon the discovery of any breach of the
Depositor's representations and warranties made pursuant to Section 3.01 of
this Agreement or Section ___ of the Receivable Purchase Agreement or of the
Depositor's representations and warranties made pursuant to Section 3.02
above. Unless any such breach shall have been cured by the last day of the
second Collection Period following the discovery thereof by the Trustee or
receipt by the Trustee of notice from the Depositor or the Servicer of such
breach, the Depositor shall be obligated to repurchase any Receivable
materially and adversely affected by any such breach as of such last day (or,
at the Depositor's option, the last day of the first Collection Period
following such discovery or notice). In consideration of the repurchase of
any Receivable, the Depositor shall remit the Purchase Amount, in the manner
specified in Section 5.05 provided, however, that the obligation of the
-------- -------
Depositor to repurchase any receivable arising solely as a result of a breach
of the Seller's representations and warranties under Section 3.02 of the
Receivables Purchase Agreement is subject to the receipt by the Depositor of
the Purchase Amount from the Seller. Subject to the provisions of Section
7.03, the sole remedy of the Trustee, the Trust or the Certificateholders
with respect to a breach of representations and warranties pursuant to
Section 3.01 and 3.02 and the agreement contained in this Section shall be to
require the Depositor to repurchase Receivables pursuant to this Section,
subject to the conditions contained herein or to enforce the Seller's
obligation to the Depositor to repurchase such Receivables pursuant to the
Receivables Purchase Agreement.
SECTION 3.04. Custody of Receivable Files. To assure uniform quality
---------------------------
in servicing the Receivables and to reduce administrative costs, the Trustee,
upon the execution and delivery of this Agreement, hereby revocably appoints
the Servicer, and the Servicer hereby accepts such appointment, to act as the
agent of the Trustee as custodian of the following documents or instruments
which are hereby constructively delivered to the Trustee as of the Cutoff
Date with respect to each Receivable:
(i) the original of the Receivable;
(ii) the original credit application fully executed by the
Obligor;
(iii) the original certificate of title or such documents that the
Servicer or the Depositor shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Depositor
in the Financed Asset; and
(iv) any and all other documents that the Servicer or the
Depositor shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor or a Financed Asset.
SECTION 3.05. Duties of Servicer as Custodian. (a) Safekeeping. The
------------------------------- -----------
Servicer shall hold the Receivable Files as custodian on behalf of the
Trustee for the benefit of all present and future Certificateholders, and
shall maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as shall enable the Trustee to
comply with this Agreement. In performing its duties as custodian the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable (automotive) (marine) (recreational vehicle)
receivables that the Servicer services for itself or others. The Servicer
shall conduct, or cause to be conducted, periodic audits of the Receivable
Files held by it under this Agreement, and of the related accounts, records
and computer systems, in such a manner as shall enable the Trustee to verify
the accuracy of the Servicer's record keeping. The Servicer shall promptly
report to the Trustee any failure on its part to hold the Receivable Files
and maintain its accounts, records and computer systems as herein provided
and shall promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain
------------------------------------
each Receivable File at one of its offices specified in Schedule B to this
Agreement or at such other office as shall be specified to the Trustee by
written notice not later than 30 days after any change in location. The
Servicer shall make available to the Trustee or its duly authorized
representatives, attorneys or auditors a list of locations of the Receivable
Files and the related accounts, records and computer systems maintained by
the Servicer at such times during normal business hours as the Trustee shall
instruct.
(c) Release of Documents. Upon instruction from the Trustee, the
--------------------
Servicer shall release any Receivable File to the Trustee, the Trustee's
agent or the Trustee's designee, as the case may be, at such place or places
as the Trustee may designate, as soon as practicable.
SECTION 3.06. Instructions; Authority to Act. The Servicer shall be
------------------------------
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by a Trustee Officer.
SECTION 3.07. Custodian's Indemnification. The Servicer as custodian
---------------------------
shall indemnify the Trustee and each of its officers, directors, employees
and agents for any and all liabilities, obligations, losses, compensatory
damages, payments, costs, or expenses of any kind whatsoever that may be
imposed on, incurred by or asserted against the Trustee or any of its
officers, directors, employees or agents as the result of any improper act or
omission in any way relating to the maintenance and custody by the Servicer
as custodian of the Receivable Files; provided, however, that the Servicer
shall not be liable to the Trustee or any such officers, director, employee
or agent of the Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Trustee or any such
officer, director, employee or agent of the Trustee.
SECTION 3.08. Effective Period and Termination. The Servicer's
--------------------------------
appointment as custodian shall become effective as of the Cutoff Date and
shall continue in full force and effect until terminated pursuant to this
Section. If __________ shall resign as Servicer in accordance with the
provisions hereof, or if all of the rights and obligations of any Servicer
shall have been terminated under Section 9.01, the appointment of such
Servicer as custodian shall be terminated by the Trustee or by Holders of the
Class A Certificates evidencing not less than 25% of the Class A Certificate
Balance, in the same manner as the Trustee or such Holders may terminate the
rights and obligations of the Servicer under Section 9.01. The Trustee may
terminate the Servicer's appointment as custodian, with cause, at any time
upon written notification to the Servicer, and without cause upon 30 days'
prior written notification. As soon as practicable after any termination of
such appointment, the Servicer shall deliver the Receivable Files to the
Trustee or the Trustee's agent at such place or places as the Trustee may
reasonably designate.
ARTICLE IV
Administration and Servicing of Receivables
-------------------------------------------
SECTION 4.01. Duties of Servicer. The Servicer, as agent for the
------------------
Trustee (to the extent provided herein), shall manage, service, administer
and make collections on the Receivables (other than Purchased Receivables)
with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to all comparable receivables that it
services for itself or others. The Servicer's duties shall include
collection and posting of all payments, responding to inquiries of Obligors
on such Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors, accounting for collections,
furnishing monthly and annual statements to the Trustee with respect to
distributions, and making Advances pursuant to Section 5.04. Subject to the
provisions of Section 4.02, the Servicer shall follow its customary
standards, policies and procedures in performing its duties as Servicer.
Without limiting the generality of the foregoing, the Servicer is authorized
and empowered by the Trustee to execute and deliver, on behalf of itself, the
Trust, the Certificateholders, the Trustee, or any of them, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such
Receivables or to the Financed Assets securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the
Trustee (in the case of any Receivable other than a Purchased Receivable)
shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection, such Receivable to the Servicer. If in any
enforcement suit or legal proceeding it shall be held that the Servicer may
not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce such Receivable, the Trustee shall,
at the Servicer's expense and direction, take steps to enforce such
Receivable, including bringing suit in its name or the name of the
Certificateholders. The Trustee shall, upon written request of the Servicer,
furnish the Servicer with any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 4.02. Collection and Allocation of Receivable Payments. The
------------------------------------------------
Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable (automotive) (marine) (recreational vehicle)
receivables that it services for itself or others. The Servicer shall
allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
(automotive) (marine) (recreational vehicle) receivables that it services for
itself or others. The Servicer may grant extensions, rebates or adjustments
on a Receivable, which shall not, for the purposes of this Agreement, modify
the original due dates or amounts of the Scheduled Payments on a Precomputed
Receivable or the original due dates or amounts of the originally scheduled
payments of interest on Simple Interest Receivables; provided, however, that
if the Servicer extends the date for final payment by the Obligor of any
Receivable beyond the Final Scheduled Maturity Date, it shall promptly
repurchase such Receivable from the Trust in accordance with the terms of
Section 4.07. The Servicer may in its discretion waive any late payment
charge or any other fees that may be collected in the ordinary course of
servicing a Receivable. The Servicer shall not agree to any alteration of
the interest rate on any Receivable or of the amount of any Scheduled Payment
on Precomputed Receivables or the originally scheduled payments on Simple
Interest Receivables.
SECTION 4.03. Realization Upon Receivables. On behalf of the Trust,
----------------------------
the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Asset securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. The Servicer shall follow
such customary and usual practices and procedures as it shall deem necessary
or advisable in its servicing of such receivables, which shall include
reasonable efforts to realize upon any recourse, if any, to Dealers and
selling the Financed Asset at public or private sale. The foregoing shall be
subject to the provision that, in any case in which the Financed Asset shall
have suffered damage, the Servicer shall not expend funds in connection with
the repair or the repossession of such Financed Asset unless it shall
determine in its discretion that such repair and/or repossession will
increase the Liquidation Proceeds by an amount greater than the amount of
such expenses.
SECTION 4.04. Physical Damage Insurance. The Servicer, in accordance
-------------------------
with its customary servicing procedures, shall require that each Obligor
shall have obtained physical damage insurance covering the Financed Asset as
of the execution of the Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed Assets.
----------------------------------------------------
The Servicer shall, in accordance with its customary servicing procedures,
take such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the related Financed Asset. The
Trustee hereby authorizes the Servicer to take such steps as are necessary to
re-perfect such security interest on behalf of the Trust in the event of the
relocation of a Financed Asset or for any other reason.
SECTION 4.06. Covenants of Servicer. The Servicer shall not release
---------------------
the Financed Asset securing any Receivable from the security interest granted
by such Receivable in whole or in part except in the event of payment in full
by the Obligor thereunder or repossession, nor shall the Servicer impair the
rights of the Trust or the Certificateholders in such Receivables, nor shall
the Servicer increase the number of scheduled payments due under a
Receivable.
SECTION 4.07. Purchase of Receivables Upon Breach. The Servicer or the
-----------------------------------
Trustee shall inform the other party and the Depositor promptly, in writing,
upon the discovery of any breach pursuant to Section 4.02, 4.05 or 4.06.
Unless the breach shall have been cured by the last day of the second
Collection Period following such discovery (or, at the Servicer's election,
the last day of the first following Collection Period), the Servicer shall
purchase any Receivable materially and adversely affected by such breach as
of such last day. If the Servicer takes any action in any Collection Period
pursuant to Section 4.02 that impairs the right of the Trustee, the Trust or
the Certificateholders in any Receivable or as otherwise provided in Section
4.02, the Servicer shall purchase such Receivable as of the last day of such
Collection Period. In consideration of the purchase of any such Receivable
pursuant to either of the two preceding sentences, the Servicer shall remit
the Purchase Amount in the manner specified in Section 5.05. For purposes of
this Section, the Purchase Amount shall consist in part of a release by the
Servicer of all rights of reimbursement with respect to Outstanding
Precomputed Advances or Outstanding Simple Interest Advances on the
Receivable. Subject to Section 8.02, the sole remedy of the Trustee, the
Trust or the Certificateholders with respect to a breach pursuant to Section
4.02, 4.05 or 4.06 shall be to require the Servicer to repurchase Receivables
pursuant to this Section. The Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section.
SECTION 4.08. Servicing Fee. The Servicing Fee for a Distribution
-------------
Date shall equal the product of (a) one twelfth, (b) the Servicing Rate and
(c) the Pool Balance as of the first day of the preceding Collection Period.
The Servicer shall also be entitled to all late fees, prepayment charges
(including, in the case of a Receivable that provides for payments according
to the "Rule of 78s" and that is prepaid in full, the difference between the
Principal Balance of such Receivable (plus accrued interest to the date of
prepayment) and the principal balance of such Receivable computed according
to the "Rule of 78s") and other administrative fees or similar charges
allowed by applicable law with respect to the Receivables, collected (from
whatever source) on the Receivables, plus any reimbursement pursuant to
Section 8.02.
SECTION 4.09. Servicer's Certificate. Not later than (11:00 a.m. (New
----------------------
York time)) on each Determination Date, the Servicer shall deliver to the
Trustee, the Rating Agencies and the Depositor, a Servicer's Certificate
containing all information necessary to make the distributions on the related
Distribution Date pursuant to Section 5.06 (including, if required,
withdrawals from any Reserve Account, withdrawals from or deposits to the
Payahead Account and Precomputed Advances by the Servicer pursuant to Section
5.04) for the related Collection Period. Receivables to be purchased by the
Servicer or to be repurchased by the Depositor or the Seller shall be
identified by the Servicer by account number with respect to such Receivable
(as specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
----------------------------------------------------
(a) The Servicer shall deliver to the Trustee, on or before ___________ of
each year, an Officers' Certificate, dated as of _____________ of the
preceding year, stating that (A) a review of the activities of the Servicer
during the preceding 12-month period (or such shorter period as shall have
elapsed since the Closing Date) and of its performance hereunder and under
this Agreement has been made under such officers' supervision and (B) to the
best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof. The Trustee shall send a copy of such certificate and the report
referred to in Section 4.11 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 4.11 may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee and to the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than 5 Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 9.01, clause (a) or (b).
SECTION 4.11. Annual Independent Certified Public Accountant's Report.
-------------------------------------------------------
. The Servicer shall cause a firm of independent certified public
accountants, which may also render other services to the Servicer, the
Depositor or their Affiliates, to deliver to the Owner Trustee and the
Indenture Trustee on or before __________ of each year beginning ________ ,
199__, a report addressed to the Board of Directors of the Servicer, to the
effect that such firm has examined the financial statements of the Servicer
and issued its report thereon and that such examination (1) was made in
accordance with generally accepted auditing standards and accordingly
included such tests of the accounting records and such other auditing
procedures as such firm considered necessary in the circumstances;
(2) included tests relating to (automotive) (marine) (recreation vehicle)
loans serviced for others in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers (the "Program"), to the
extent the procedures in such Program are applicable to the servicing
obligations set forth in this Agreement; and (3) except as described in the
report, disclosed no exceptions or errors in the records relating to
(automobile and light-duty truck) (boat) (recreational vehicle) loans
serviced for others that, in the firm's opinion, paragraph four of such
Program requires such firm to report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
Receivables. The Servicer shall provide to the Certificateholders access
- -----------
to the Receivable Files in such cases where the Certificateholder shall be
required by applicable statutes or regulations to review such documentation.
Access shall be afforded without charge, but only upon reasonable request and
during the normal business hours at the offices of the Servicer. Nothing in
this Section shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors,
and the failure of the Servicer to provide access to information as a result
of such obligation shall not constitute a breach of this Section.
SECTION 4.13. Servicer Expenses. The Servicer shall be required to
-----------------
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and
reports to Certificateholders.
SECTION 4.14. Appointment of Subservicer. The Servicer may at any
--------------------------
time appoint a subservicer to perform all or any portion of its obligations
as Servicer hereunder; provided that the Rating Agency Condition shall have
been satisfied in connection therewith; and, provided, further, that the
Servicer shall remain obligated and shall be liable to the Trustee and the
Certificateholders for the servicing and administering of the Receivables in
accordance with the provisions hereof without diminution of such obligation
and liability by virtue of the appointment of such subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Receivables. The fees and expenses of
the subservicer shall be as agreed between the Servicer and its subservicer
from time to time, and none of the Trust, the Trustee or the
Certificateholders shall have any responsibility therefor.
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders
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SECTION 5.01. Establishment of Trust Accounts. (a) (i) The Servicer,
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for the benefit of the Certificateholders, shall establish and maintain in
the name of the Trustee an Eligible Deposit Account (the "Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. Investment
earnings on funds in the Collection Account shall be paid to the Servicer as
additional servicing compensation.
(ii) The Servicer, for the benefit of the Certificateholders,
shall establish and maintain in the name of the Trustee a non-interest
bearing account (the "Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders.
(b) Funds on deposit in the Collection Account shall be invested by the
Trustee in Eligible Investments selected in writing by the Servicer or an
investment manager selected by the Servicer, which investment manager shall
have agreed to comply with the terms of this Agreement as they relate to
investing such funds; provided, however, that it is understood and agreed
that the Trustee shall not be liable for any loss arising from such
investment in Eligible Investments. All such Eligible Investments shall be
held by the Trustee for the benefit of the Servicer, and on each Distribution
Date all interest and other investment income (net of losses and investment
expenses) on funds on deposit therein shall be paid to the Servicer. Other
than as permitted by the Rating Agencies, funds on deposit in the Collection
Account shall be invested in Eligible Investments that will mature (A) not
later than the Business Day immediately preceding the next Distribution Date
or (B) on such next Distribution Date if either (x) such investment is held
in the corporate trust department of the institution with which the
Collection Account is then maintained and is invested in a time deposit of
(the Trustee) rated at least A-1 by Standard & Poor's and P-1 by Moody's
(such account being maintained within the corporate trust department of the
Trustee) or (y) the Trustee (so long as the short-term unsecured debt
obligations of the Trustee are either (1) rated at least P-1 by Moody's and
A-1 by Standard & Poor's on the date such investment is made or (2)
guaranteed by an entity whose short-term unsecured debt obligations are rated
at least P-1 by Moody's and A-1 by Standard & Poor's on the date such
investment is made) has agreed to advance funds on such Distribution Date to
the Distribution Account in the amount payable on such investment on such
Distribution Date pending receipt thereof to the extent necessary to make
distributions on such Distribution Date. The guarantee referred to in clause
(y) of the preceding sentence shall be subject to the Rating Agency
Condition. For the purpose of the foregoing, unless the Trustee
affirmatively agrees in writing to make such advance with respect to such
investment prior to the time an investment is made, it shall not be deemed to
have agreed to make such advance. Funds deposited in the Collection Account
upon the maturity of any Eligible Investments on the day immediately
preceding a Distribution Date are not required to be invested overnight. If,
at any time, the Collection Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Collection Account as an Eligible Deposit
Account and shall transfer any cash and/or any investments to such new
account.
(c) (i) The Servicer shall establish and maintain with the Trustee an
Eligible Deposit Account (the "Payahead Account"). The Payahead Account
shall not be property of the Trust.
(ii) The Servicer shall on or prior to each Distribution Date
(and prior to deposits to the Distribution Account) transfer from the
Collection Account to the Payahead Account all Payaheads as described in
Section 5.03 received by the Servicer during the Collection Period.
Notwithstanding the foregoing and the first sentence of Section 5.02,
for so long as the Servicer is permitted to make monthly remittances to
the Collection Account pursuant to Section 5.02, Payaheads need not be
remitted to and deposited in the Payahead Account but instead may be
remitted to and held by the Servicer. So long as such condition is met,
the Servicer shall not be required to segregate or otherwise hold
separate any Payaheads remitted to the Servicer as aforesaid but shall
be required to remit Payaheads to the Collection Account in accordance
with Section 5.06(a).
SECTION 5.02. Collections. The Servicer shall remit within two
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Business Days of receipt thereof to the Collection Account all payments by or
on behalf of the Obligors with respect to the Receivables (other than
Purchased Receivables) and all Liquidation Proceeds, both as collected during
the Collection Period. Notwithstanding the foregoing, for so long as (i)
________ remains the Servicer, (ii) no Event of Default shall have occurred
and be continuing and (iii)(x) ______________ maintains a short-term rating
of at least A-1 by Standard & Poor's and P-1 by Moody's (and for five
Business Days following a reduction in either such rating) or (y) prior to
ceasing daily remittances, the Rating Agency Condition shall have been
satisfied (and any conditions or limitations imposed by the Rating Agencies
in connection therewith are complied with), the Servicer shall remit such
collections with respect to the preceding calendar month to the Collection
Account on the Determination Date immediately preceding the related
Distribution Date. For purposes of this Article V the phrase "payments by or
on behalf of Obligors" shall mean payments made with respect to the
Receivables by Persons other than the Servicer or the Depositor.
SECTION 5.03. Application of Collections. All collections for the
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Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be applied
first, in the case of Precomputed Receivables, to reduce Outstanding
Precomputed Advances as described in Section 5.04(a) and, in the case of
Simple Interest Receivables, to reduce Outstanding Simple Interest
Advances to the extent described in Section 5.04(b). Next, any excess
shall be applied, in the case of Precomputed Receivables, to the
Scheduled Payment and, in the case of Simple Interest Receivables, to
interest and principal in accordance with the Simple Interest Method.
With respect to Precomputed Receivables, any remaining excess shall be
added to the Payahead Balance, and shall be applied to prepay the
Precomputed Receivable, but only if the sum of such excess and the
previous Payahead Balance shall be sufficient to prepay the Receivable
in full. Otherwise, any such remaining excess payments shall constitute
a Payahead and shall increase the Payahead Balance.
SECTION 5.04. Advances. (a) As of the close of business on the last
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day of each Collection Period, if the payments by or on behalf of the Obligor
on a Precomputed Receivable (other than a Purchased Receivable) shall be less
than the Scheduled Payment, the Payahead Balance shall be applied by the
Servicer to the extent of the shortfall and such Payahead Balance shall be
reduced accordingly. Next, the Servicer shall advance any remaining
shortfall (such amount a "Precomputed Advance"), to the extent that the
Servicer, at its sole discretion, shall determine that the Precomputed
Advance shall be recoverable from the Obligor, the Purchase Amount,
Liquidation Proceeds or proceeds of any other Precomputed Receivables. With
respect to each Precomputed Receivable, the Precomputed Advance shall
increase Outstanding Precomputed Advances. Outstanding Precomputed Advances
shall be reduced by subsequent payments by or on behalf of the Obligor,
collections of Liquidation Proceeds in respect of Precomputed Receivables, or
payments of the Purchase Amount in respect of Precomputed Receivables.
If the Servicer shall determine that an Outstanding Precomputed Advance
with respect to any Precomputed Receivable shall not be recoverable as
aforesaid, the Servicer shall be reimbursed from any collections made on
other Precomputed Receivables in the Trust, and Outstanding Precomputed
Advances with respect to such Precomputed Receivable shall be reduced
accordingly.
(b) As of the close of business on the last day of each Collection
Period, the Servicer shall advance an amount equal to the amount of interest
due on the Simple Interest Receivables at their respective APR's for the
related Collection Period (assuming the Simple Interest Receivables pay on
their respective due dates) minus the amount of interest actually received on
the Simple Interest Receivables during the related Collection Period (such
amount, a "Simple Interest Advance"). With respect to each Simple Interest
Receivable, the Simple Interest Advance shall increase Outstanding Simple
Interest Advances. If such calculation results in a negative number, an
amount equal to the absolute value of such negative number shall be paid to
the Servicer and the amount of Outstanding Simple Interest Advances shall be
reduced by such amount. In addition, in the event that a Simple Interest
Receivable becomes a Liquidated Receivable, Liquidation Proceeds with respect
to such Simple Interest Receivable attributable to accrued and unpaid
interest thereon (but not including interest for the then current Collection
Period) shall be paid to the Servicer to reduce Outstanding Simple Interest
Advances, but only to the extent of any Outstanding Simple Interest Advances.
The Servicer shall not make any advance with respect to principal of Simple
Interest Receivables.
SECTION 5.05. Additional Deposits. The Servicer shall deposit in the
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Collection Account the aggregate Advances pursuant to Section 5.04. To the
extent that the Servicer fails to make a Simple Interest Advance pursuant to
Section 5.04(b) on the date required, the Trustee shall withdraw such amount
(or, if determinable, such portion of such amount as does not represent
advances for delinquent interest) from the Reserve Account and deposit such
amount in the Collection Account. The Servicer and the Depositor shall
deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables, and the Servicer shall
deposit therein all amounts to be paid under Section 11.02. The Servicer
shall deposit the aggregate Purchase Amount with respect to Purchased
Receivables when such obligations are due, unless the Servicer shall not be
required to make daily deposits pursuant to Section 5.02.
SECTION 5.06. Distributions. (a) On each Distribution Date, the
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Trustee shall cause to be transferred:
(i) From the Payahead Account, or from the Servicer in the event
that the second and third sentences of Section 5.01(c)(ii) are
applicable, to the Collection Account, in immediately available funds,
the aggregate previous Payaheads to be applied to Scheduled Payments for
the related Collection Period on, or as prepayments in full of,
Precomputed Receivables or prepayments for the related Collection
Period, pursuant to Sections 5.03 and 5.04, in the amounts set forth in
the Servicer's Certificate delivered on the related Determination Date.
A single, net transfer may be made.
(ii) From the Collection Account to the Distribution Account, in
immediately available funds, the entire amount then on deposit in the
Collection Account; provided, however, that in the event that the
Servicer is required to make deposits to the Collection Account on a
daily basis pursuant to Section 5.02, the amount of the funds
transferred from the Collection Account to the Distribution Account will
include only those funds that were deposited in the Collection Account
for the Collection Period related to such Distribution Date.
(b) On or prior to each Determination Date, the Servicer shall
calculate the Total Distribution Amount, the Interest Distribution Amount,
the Principal Distribution Amount, the Class A Distributable Amount, and the
Class B Distributable Amount, and, based on the Total Distribution Amount and
the other amounts to be distributed on the related Distribution Date,
determine the amount distributable to Holders of each class of Certificates.
(c) On each Distribution Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 5.09) shall distribute amounts on
deposit in the Distribution Account and, if applicable, the Reserve Account,
in the manner and priority set forth below:
(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
(ii) to the Class A Certificateholders:
(A) from the Class A Percentage of the Interest Distribution
Amount (as such Interest Distribution Amount has been reduced by
Servicing Fee payments), the sum of the Class A Interest
Distributable Amount and the Class A Interest Carryover Shortfall
as of the close of the preceding Distribution Date;
(B) from the Class A Percentage of the Principal Distribution
Amount (other than the portion thereof attributable to Realized
Losses), the sum of the Class A Principal Distributable Amount and
the Class A Principal Carryover Shortfall as of the close of the
preceding Distribution Date;
(iii) to the Class B Certificateholders:
(A) from the Class B Percentage of the Interest Distribution
Amount (as such Interest Distribution Amount has been reduced by
Servicing Fee payments), the sum of the Class B Interest
Distributable Amount and the Class B Interest Carryover Shortfall
as of the close of the preceding Distribution Date; and
(B) from the Class B Percentage of the Principal Distribution
Amount, the sum of the Class B Principal Distributable Amount and
the Class B Principal Carryover Shortfall as of the close of the
preceding Distribution Date.
(d) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates shall be and hereby are
subordinated to the rights of the Class A Certificateholders to receive
distributions in respect of the Class A Certificates and the rights of the
Servicer to receive the Servicing Fee (and any accrued and unpaid Servicing
Fees from prior Collection Periods) in the event of delinquency or defaults
on the Receivables. In addition, the Class A Certificateholders and the
Class B Certificateholders shall have the respective rights to receive funds
from the Reserve Account in the order of priority set forth below. Such
subordination and withdrawals from the Reserve Account shall be effected as
follows, and all payments shall be effected by applying funds in the
following order:
(i) If the Class A Percentage of the Interest Distribution
Amount (as such Interest Distribution Amount has been reduced by
Servicing Fee payments) is less than the sum of the Class A Interest
Distributable Amount and any Class A Interest Carryover Shortfall from
the preceding Distribution Date, the Class A Certificateholders shall be
entitled to receive distributions in respect of such deficiency first,
from the Class B Percentage of the Interest Distribution Amount; second,
if such amounts are insufficient, from amounts on deposit in the Reserve
Account; and third, if such amounts are insufficient, from the Class B
Percentage of the Principal Distribution Amount (other than the portion
thereof attributable to Realized Losses).
(ii) If the Class A Percentage of the Principal Distribution
Amount (other than the portion thereof attributable to Realized Losses)
is less than the sum of the Class A Principal Distributable Amount and
the Class A Principal Carryover Shortfall from the preceding
Distribution Date, the Class A Certificateholders shall be entitled to
receive distributions in respect of such deficiency first, from the
Class B Percentage of the Principal Distribution Amount (other than the
portion thereof attributable to Realized Losses); second, if such
amounts are insufficient, from amounts on deposit in the Reserve
Account; and third, if such amounts are insufficient, from the Class B
Percentage of the Interest Distribution Amount.
(iii) If the Class B Percentage of the Interest Distribution
Amount, less the portion thereof, if any, distributed to the Class A
Certificateholders pursuant to clause (i) above, is less than the Class
B Interest Distributable Amount, the Class B Certificateholders shall be
entitled to receive such deficiency from amounts on deposit in the
Reserve Account (after giving effect to any withdrawals therefrom
pursuant to clauses (i) and (ii) above).
(iv) If the Class B Percentage of the Principal Distribution
Amount (other than the portion thereof attributable to Realized Losses),
less the portion thereof, if any, distributed to the Class A
Certificateholders pursuant to clause (ii) above, is less than the Class
B Principal Distributable Amount, the Class B Certificateholders shall
be entitled to receive such deficiency from amounts on deposit in the
Reserve Account (after giving effect to any withdrawals therefrom
pursuant to clauses (i), (ii) and (iii) above).
(e) On each Distribution Date, the Trustee shall distribute any amounts
remaining in the Distribution Account after making the distributions
described in Sections 5.06(c) and (d) above in the following amounts and in
the following order of priority: (i) into the Reserve Account until the
amount on deposit therein equals the Specified Reserve Account Balance and
(ii) to the Depositor.
(f) Subject to Section 11.01 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of record on the
preceding Record Date either by wire transfer in immediately available funds
to the account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Servicer appropriate instructions prior to such Distribution Date and such
Holder's Certificates of either Class in the aggregate evidence a
denomination of not less than $1,000,000, or, if not, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register, the amounts to be distributed to such Certificateholder pursuant to
such Holder's Certificates.
SECTION 5.07. Reserve Account. (a) In order to effectuate the
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subordination provided for herein and to assure that sufficient amounts to
make required distributions to Certificateholders will be available, the
Servicer shall establish and maintain an Eligible Deposit Account (the
"Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held in trust for the benefit of the
Certificateholders. The Reserve Account will include the money and other
property deposited and held therein pursuant to Section 5.06(e), 5.08(a) and
this Section.
On or prior to the Closing Date, the (Seller) shall deposit an amount
equal to the Reserve Account Initial Deposit into the Reserve Account. The
Reserve Account and the Reserve Account Property shall not be part of the
Trust, but instead will be held by the Trustee, as collateral agent, for the
benefit of the Holders of the Certificates. The (Seller) hereby acknowledges
that the Reserve Account Initial Deposit (and any investment earnings
thereon) is owned directly by it, and the (Seller) hereby agrees to treat the
same as its assets (and earnings) for federal income tax and all other
purposes.
(b) In order to give effect to the subordination provided for herein
and to assure the availability of the amounts maintained in the Reserve
Account, the (Seller) hereby sells, conveys and transfers to the Trustee, as
collateral agent, and its successors and assigns, the Reserve Account Initial
Deposit and all proceeds thereof and hereby pledges to the Trustee as
collateral agent, and its successors and assigns, all other amounts deposited
in or credited to the Reserve Account from time to time under this Agreement,
all Eligible Investments made with amounts on deposit therein, all earnings
and distributions thereon and proceeds thereof (other than proceeds
constituting net investment earnings attributable to the Reserve Account
Property) subject, however, to the limitations set forth below, and solely
for the purpose of securing and providing for payment of the Class A
Distributable Amount and the Class B Distributable Amount in accordance with
Section 5.06 and this Section (all the foregoing, subject to the limitations
set forth below, the "Reserve Account Property"), to have and to hold all the
aforesaid property, rights and privileges unto the Trustee, its successors
and assigns, in trust for the uses and purposes, and subject to the terms and
provisions, set forth in this Section. The Trustee hereby acknowledges such
transfer and accepts the trusts hereunder and shall hold and distribute the
Reserve Account Property in accordance with the terms and provisions of this
Section.
(c) Consistent with the limited purposes for which such trust is
granted, the amounts on deposit in the Reserve Account on each Distribution
Date shall be available for distribution as provided in Section 5.06, in
accordance with and subject to the following: if the amount on deposit in
the Reserve Account (after giving effect to all deposits thereto and
withdrawals therefrom on such Distribution Date) is greater than the
Specified Reserve Account Balance, the Trustee shall release and distribute
all such amounts to the (Seller). Upon any such distribution to the (Seller),
the Certificateholders will have no further rights in, or claims to, such
amounts.
(d) Funds on deposit in the Reserve Account shall be invested by the
Trustee, as collateral agent, in Eligible Investments selected in writing by
the (Seller) or an investment manager selected by the Servicer, which
investment manager shall have agreed to comply with the terms of this
Agreement as they relate to investing such funds; provided, however, that it
is understood and agreed that the Trustee shall not be liable for any loss
arising from such investment in Eligible Investments. Other than as
permitted by the Rating Agencies, funds on deposit in the Reserve Account
shall be invested in Eligible Investments that will mature (A) not later than
the Business Day immediately preceding the next Distribution Date or (B) on
such next Distribution Date if either (x) such investment is held in the
corporate trust department of the institution with which the Reserve Account
is then maintained and is invested in a time deposit of (the Trustee) rated
at least A-1 by Standard & Poor's and P-1 by Moody's (such account being
maintained within the corporate trust department of the Trustee) or (y) the
Trustee (so long as the short-term unsecured debt obligations of the Trustee
are either (1) rated at least P-1 by Moody's and A-1 by Standard & Poor's on
the date such investment is made or (2) guaranteed by an entity whose
short-term unsecured debt obligations are rated at least P-1 by Moody's and
A-1 by Standard & Poor's on the date such investment is made) has agreed to
advance funds on such Distribution Date to the Distribution Account in the
amount payable on such investment on such Distribution Date pending receipt
thereof to the extent necessary to make distributions on such Distribution
Date. The guarantee referred to in clause (y) of the preceding sentence
shall be subject to the Rating Agency Condition. For the purpose of the
foregoing, unless the Trustee affirmatively agrees in writing to make such
advance with respect to such investment prior to the time an investment is
made, it shall not be deemed to have agreed to make such advance. Funds
deposited in the Reserve Account upon the maturity of any Eligible
Investments on the day immediately preceding a Distribution Date are not
required to be invested overnight. If, at any time, the Reserve Account
ceases to be an Eligible Deposit Account, the Trustee as collateral agent (or
the Servicer on its behalf) shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Reserve Account as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new account.
Investment earnings attributable to the Reserve Account Property shall
not be available to satisfy the subordination provisions of this Agreement
and shall not otherwise be subject to any claims or rights of the
Certificateholders or the Servicer. All such investments shall be made in
the name of the Trustee or its nominee, as collateral agent, and all net
income and gain realized thereon shall be solely for the benefit of the
(Seller) and shall be payable by the Trustee to the (Seller) on each
Distribution Date. Realized losses, if any, on investments of the Reserve
Account Property shall be charged first against undistributed investment
earnings attributable to the Reserve Account Property and then against the
Reserve Account Property.
(e) With respect to the Reserve Account Property, the Seller, on behalf
of itself, its successors and assigns, and the Trustee agree that:
(i) Any Reserve Account Property that is held in deposit
accounts shall be held solely in the name of the Trustee, as collateral
agent, at an Eligible Institution. Each such deposit account shall be
subject to the exclusive custody and control of the Trustee, and the
Trustee shall have sole signature authority with respect thereto.
(ii) Any Reserve Account Property that constitutes Physical
Property shall be delivered to the Trustee, as collateral agent, in
accordance with paragraph (a) of the definition of "Delivery" and shall
be held, pending maturity or disposition, solely by the Trustee, as
collateral agent, or a financial intermediary (as such term is defined
in Section 8- 313(4) of the UCC) acting solely for the Trustee, as
collateral agent.
(iii) Any Reserve Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Trustee, as
collateral agent, pending maturity or disposition, through continued
book-entry registration of such Reserve Account Property as described
in such paragraph.
(iv) Any Reserve Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(C) above shall be delivered to the Trustee, as collateral agent, in
accordance with paragraph (c) of the definition of "Delivery" and shall
be maintained by the Trustee, as collateral agent, pending maturity or
disposition, through continued registration of the Trustee's (or its
custodian's or it nominee's) ownership of such security, in its capacity
as collateral agent.
Effective upon Delivery of any Reserve Account Property in the form of
Physical Property, book-entry securities or uncertificated securities, the
Trustee shall be deemed to have purchased such Reserve Account Property for
value, in good faith and without notice of any adverse claim thereto.
(f) Each of the Seller and the Servicer agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments
(including any UCC financing statements or this Agreement) as may be
determined to be necessary in an Opinion of Counsel to the Seller delivered
to the Trustee in order to perfect the interests created by this Section and
otherwise fully to effectuate the purposes, terms and conditions of this
Section. The Seller shall:
(i) promptly execute, deliver and file any financing statements,
amendments, continuation statements, assignments, certificates, and
other documents with respect to such interests and perform all such
other acts as may be necessary in order to perfect or to maintain the
perfection of the Trustee's security interest; and
(ii) file the necessary financing statements or amendments
thereto within five days, and promptly notify the Trustee of any such
filing, after the occurrence of any of the following: (1) any change in
its corporate name or any trade name; (2) any change in the location of
its chief executive office or principal place of business; and (3) any
merger or consolidation or other change in its identity or corporate
structure and promptly notify the Trustee of any such filings.
(g) The Trustee shall not enter into any subordination or inter-
creditor agreement with respect to the Reserve Account Property.
(h) Following the payment in full of the Certificate Balance and of all
other amounts owing or to be distributed under this Agreement to
Certificateholders and the termination of the Trust, any amount remaining on
deposit in the Reserve Account shall be distributed to the Seller.
SECTION 5.08. Statements to Certificateholders. On each Distribution
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Date, the Servicer shall provide to the Trustee for the Trustee to forward to
each Certificateholder of record as of the most recent Record Date, a
statement substantially in the form of Exhibit E setting forth at least the
following information as to each Class of Certificates to the extent
applicable:
(i) the amount of such distribution allocable to principal of
each class of Certificates;
(ii) the amount of such distribution allocable to interest of
each class of Certificates;
(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the Class A Certificate Balance and Class B Certificate
Balance and the Class A Pool Factor and Class B Pool Factor after giving
effect to all payments reported under clause (i) above on such date;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods, as the
case may be;
(vi) the amount of the Class A Principal Carryover Shortfall and
Class A Interest Carryover Shortfall and Class B Principal Carryover
Shortfall and Class B Interest Carryover Shortfall, as applicable, if
any, on such Distribution Date and the change in the Class A Principal
Carryover Shortfall and Class A Interest Carryover Shortfall and Class B
Principal Carryover Shortfall and Class B Interest Carryover Shortfall,
as applicable, from the preceding Distribution Date;
(vii) the amount of aggregate Realized Losses, if any, for the
second preceding Collection Period;
(viii) the aggregate Purchase Amounts for Receivables, if any, that
were repurchased in such period;
(ix) the amount otherwise distributable to the Class B
Certificateholders that is distributed to Class A Certificateholders on
such Distribution Date;
(x) the balance of the Reserve Account on such Distribution
Date, after giving effect to deposits and withdrawals made on such
Distribution Date;
(xi) the aggregate Payahead Balance and the change in such
balance from the preceding Distribution Date;
(xii) for Distribution Dates during the Funding Period (if any),
the remaining Pre-Funded Amount; and
(xiii) for the first Distribution Date that is on or immediately
following the end of the Funding Period (if any), the amount of any
remaining Pre-Funded Amount that has not been used to fund the purchase
of Subsequent Receivables and is passed through as payments of principal
of the Certificates.
Each amount set forth pursuant to subclauses (i), (ii), (v) or (vi) above
shall be expressed as a dollar amount per $1,000 of original principal
balance of a Class A or Class B Certificate, as applicable.
SECTION 5.9. Tax Returns. The Trustee shall deliver to each Holder
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of a Certificate, as may be required by the Code and applicable Treasury
Regulations, such information as may be required to enable each Holder to
prepare its federal and state income tax returns.
SECTION 5.10. Net Deposits. As an administrative convenience, unless
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the Servicer is required to remit collections daily, the Servicer will be
permitted to make the deposit of collections on the Receivables, aggregate
Advances and Purchase Amounts for or with respect to each Collection Period
net of distributions to be made to the Servicer with respect to such
Collection Period. The Servicer, however, will account to the Trustee and to
the Certificateholders as if all deposits, distributions and transfers were
made individually.
ARTICLE VI
The Certificates
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SECTION 6.01. The Certificates. Unless otherwise specified in this
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Agreement, the Certificates shall be issued in fully registered form in
minimum denominations of $1,000. The Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of an authorized officer
of the Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trust, shall be validly issued
and entitled to the benefit of this Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices
at the date of authentication and delivery of such Certificates.
A transferee of a Certificate shall become a Certificateholder and shall
be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a
Certificate duly registered in such transferee's name pursuant to Section
6.03.
SECTION 6.02. Authentication of Certificates. The Trustee shall cause
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the Certificates to be executed on behalf of the Trust, authenticated and
delivered to or upon the written order of the Depositor, signed by its
chairman of the board, its president, any vice president, secretary, or
assistant treasurer, without further corporate action by the Depositor, in
authorized denominations, pursuant to this Agreement. No Certificate shall
entitle its Holder to any benefit under this Agreement or shall be valid for
any purpose unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A or
Exhibit B, as appropriate, executed by the Trustee by manual signature. Such
authentication shall constitute conclusive evidence that such Certificate
shall have been duly authenticated and delivered hereunder. All Certificates
shall be dated the date of their authentication.
SECTION 6.03. Registration of Transfer and Exchange of
----------------------------------------
Certificates. The Certificate Registrar shall keep or cause to be kept, at
- ------------
the office or agency maintained pursuant to Section 6.08, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and
of transfers and exchanges of Certificates as herein provided. Unless
otherwise specified in this Agreement, the Trustee shall be the initial
Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Trustee. At the option of a Holder,
Certificates may be exchanged for other Certificates of authorized
denominations of a like aggregate amount upon surrender at the Corporate
Trust Office of the Certificates to be exchanged.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer and exchange shall be
cancelled and subsequently disposed of by the Trustee.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar and the Trustee such
security or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Certificate has been
acquired by a bona fide purchaser, the Trustee on behalf of the Trust shall
execute, and the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and denomination. In connection with the issuance
of any new Certificate under this Section, the Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at
any time.
SECTION 6.05. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.06 and for all other purposes whatsoever,
and neither the Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.
SECTION 6.06. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Trustee shall furnish or cause to be furnished to the
- ---------
Servicer, within 15 days after receipt by the Trustee of a request therefor
from the Servicer in writing, a list, in such form as the Servicer may
reasonably require, of the names and addresses of the Certificateholders as
of the most recent Record Date. If three or more Certificateholders, or one
or more Holders of Class A Certificates evidencing not less than 25% of the
Certificate Balance apply in writing to the Trustee, and such application
states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application shall be accompanied by a copy of the
communication that such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt for such application,
afford such applicants access during normal business hours to the current
list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold neither the Servicer nor
the Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 6.07. Maintenance of Office or Agency. The Trustee shall
-------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served.
The Trustee initially designates the Corporate Trust Office as specified in
this Agreement as its office for such purposes. The Trustee shall give
prompt written notice to the Servicer and to Certificateholders of any change
in the location of the Certificate Register or any such office or agency.
SECTION 6.08. Book-Entry Certificates. The Class A Certificates and,
-----------------------
if so specified in this Agreement, the Class B Certificates may be issued in
the form of one or more typewritten Certificates representing Book-Entry
Certificates, to be delivered by, or on behalf of, the Depositor to the
initial Clearing Agency, which, unless otherwise specified in this Agreement,
shall be The Depository Trust Company. In such case, the Certificates
delivered to the Depository Trust Company shall initially be registered on
the Certificate Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the
Certificates, except as provided in Section 6.10. Unless and until
definitive, fully registered Certificates (the "Definitive Certificates")
have been issued to such Certificate Owners pursuant to Section 6.10:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Depositor, the Servicer, the Certificate Registrar and
the Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on such Certificates) as the sole
Holder of such Certificates and shall have no obligation to the related
Certificate Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of such Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and agreements between such Certificate Owners and
the Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Depository Agreement, unless and until Definitive Certificates
are issued pursuant to Section 6.10, the initial Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest on such
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Certificate Balance, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Certificate
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
such Certificates and has delivered such instructions to the Trustee.
SECTION 6.09. Notices to Clearing Agency. Whenever notice or other
--------------------------
communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 6.10, the Trustee and the Servicer
shall give all such notices and communications specified herein to be given
to Certificate Owners to the Clearing Agency.
SECTION 6.10. Definitive Certificates. If (i) the Servicer advises the
-----------------------
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement and
the Trustee or the Depositor is unable to locate a qualified successor, (ii)
the Depositor at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Default, Certificate Owners representing
beneficial interests aggregating not less than a majority of the aggregate
outstanding principal amount of the Book-Entry Certificates advise the
Trustee and the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best
interests of the Certificate Owners, then the Clearing Agency shall notify
all Certificate Owners and the Trustee of the occurrence of such event and of
the availability of Definitive Certificates to Certificate Owners requesting
the same. Upon surrender to the Trustee of the typewritten Certificates
representing the Book-Entry Certificates by the Clearing Agency, accompanied
by registration instructions, the Trustee shall execute and authenticate the
Definitive Certificates in accordance with the instructions of the Clearing
Agency. None of the Depositor, the Certificate Registrar or 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, the Trustee
shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder. The Definitive Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Trustee, as evidenced by its execution thereof.
ARTICLE VII
The Depositor
-------------
SECTION 7.01. Representations of Depositor. The Depositor makes the
----------------------------
following representations on which the Trustee shall be deemed to have relied
in accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of Initial Receivables
and as of the applicable Subsequent Transfer Date, in the case of Subsequent
Receivables, if any, and shall survive the sale of the Receivables to the
Trustee.
(i) Organization and Good Standing. The Depositor is duly
------------------------------
organized and validly existing as a corporation in good standing under the
laws of the State of Oregon, 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 has, the
corporate power, authority and legal right to acquire and own the
Receivables.
(ii) Due Qualification. The Depositor is duly qualified to do
-----------------
business as a foreign corporation 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 Depositor has the corporate power
-------------------
and authority to execute and deliver this Agreement and to carry out its
respective terms; the Depositor has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the Trustee
as part of the Trust, and the Depositor shall have duly authorized such sale
and assignment to the Trustee, as applicable, by all necessary corporate
action; and the execution, delivery and performance of this Agreement and of
each Subsequent Transfer Assignment or Eligible Investment Transfer
Assignment, as applicable, shall have been duly authorized by the Depositor
by all necessary corporate action.
(iv) Binding Obligation. This Agreement, each Subsequent
------------------
Transfer Assignment and Eligible Investment Transfer Assignment, when
executed and delivered by the Depositor, shall constitute legal, valid and
binding obligations of the Depositor enforceable in accordance with their
respective terms.
(v) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof and
thereof 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 or bylaws of the Depositor, or
any indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; or 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 this Agreement); or
violate any law or, to the best of the Depositor's knowledge, any order, rule
or regulation applicable to the Depositor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(vi) No Proceedings. To the Depositor's best knowledge, there
--------------
are no proceedings or investigations pending, or threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties:
(i) asserting the invalidity of this Agreement or the Certificates; (ii)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement; (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates, or (iv) that might
adversely affect the federal income tax attributes of the Certificates.
SECTION 7.02. Corporate Existence. During the term of this Agreement,
-------------------
the Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation 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 Agreement and each other
instrument or agreement necessary or appropriate to the proper administration
of this Agreement and the transactions contemplated hereby and thereby.
SECTION 7.03. Liabilities of Depositor; Indemnities. The Depositor
-------------------------------------
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement.
(i) The Depositor shall indemnify, defend and hold harmless the
Trustee and the Trust from and against any taxes that may at any time be
asserted against the Trustee or the Trust with respect to the
transactions contemplated in this Agreement, including any sales, gross
receipts, general corporation, tangible personal property, privilege, or
license taxes (but, in the case of the Trust, not including any taxes
asserted with respect to, and as the date of, the sale of the
Receivables to the Trust or the issuance and original sale of the
Certificates, or asserted with respect to ownership of the Receivables,
or federal or other income taxes arising out of the distributions on the
Certificates) and costs and expenses in defending against the same.
(ii) The Depositor shall indemnify, defend and hold harmless the
Trustee and the Certificateholders from and against any loss, liability
or expense incurred by reason of (a) the Depositor's willful
misfeasance, bad faith or negligence in the performance of its duties
under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement, and (b) the Depositor's or
Trust's violation of federal or state securities laws in connection with
the offering and sale of the Certificates.
(iii) The Depositor shall indemnify, defend and hold harmless the
Trustee and its officers, directors, employees and agents from and
against all costs, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection with the acceptance or
performance of the trusts and duties in this Agreement contained, except
to the extent that such cost, expense, loss, claim, damage or
liabilities shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of the Trustee.
Indemnification under this Section shall survive the resignation or
removal of the Trustee and the termination of this Agreement and shall
include reasonable fees and expenses of counsel and expenses of litigation.
If the Depositor shall have made any indemnity payments to the Trustee
pursuant to this Section and the Trustee thereafter shall collect any of such
amounts from others, the Trustee shall promptly repay such amounts to the
Depositor, without interest.
SECTION 7.04. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Depositor. Any Person (a) into which the Depositor may be
- -------------------------
merged or consolidated, (b) which may result from any merger or consolidation
to which the Depositor shall be a party or (c) which may succeed to the
properties and assets of the Depositor substantially as a whole, which Person
in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Depositor under this Agreement, shall be the
successor to the Depositor hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement;
provided, however, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.01
shall have been breached and no Event of Default, and no event which, after
notice or lapse of time, or both, would become an Event of Default shall have
happened and be continuing, (ii) the Depositor shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with,
(iii) the Rating Agency Requirement shall have been satisfied with respect to
such transaction and (iv) the Depositor shall have delivered to the Trustee
an Opinion of Counsel stating that, in the opinion of such Counsel, either
(A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee in the Receivables and reciting the
details of such filings or (B) no such action shall be necessary to preserve
and protect such interest. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement of assumption and compliance with
clauses (i), (ii), (iii) and (iv) above shall be conditions to the
consummation of the transactions referred to in clauses (a), (b) or (c)
above.
SECTION 7.05. Limitation on Liability of Depositor and Others. The
-----------------------------------------------
Depositor and any director, officer, employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor shall not be under any obligation
to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement and that in its opinion
may involve it in any expense or liability.
SECTION 7.06. Depositor May Own Certificates. The Depositor and any
------------------------------
Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Depositor or an Affiliate thereof, except as otherwise provided
herein.
SECTION 7.07. No Transfer of Excess Amounts. The Depositor hereby
-----------------------------
covenants that, except as otherwise provided in this Agreement, it will not
transfer, pledge or assign to any Person any part of its right to receive any
amounts in excess of the Reserve Account Specified Amount pursuant to Section
5.07(c) and (h) unless it has first delivered to the Trustee and each Rating
Agency an Opinion of Counsel in form and substance satisfactory to the
Trustee stating that such transfer will not (i) adversely affect the status
of the Trust as a grantor trust pursuant to subpart E, part I of subchapter J
of the Code or (ii) cause the Reserve Account to be taxable as a corporation
under the Code. The Depositor shall give written notice to each Rating
Agency of any proposed transfer, pledge or assignment to any Person of all or
any part of its right to receive such excess amounts.
ARTICLE VIII
The Servicer
------------
SECTION 8.01. Representations of Servicer. The Servicer makes the
---------------------------
following representations on which the Trustee shall be deemed to have relied
in accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of the Initial
Receivables and as of the applicable Subsequent Transfer Date, in the case of
the Subsequent Receivables, if any, and shall survive the sale of the
Receivables to the Trustee.
(a) Organization and Good Standing. The Servicer is duly organized and
------------------------------
validly existing as a corporation in good standing under the laws of the
state of its incorporation, 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 has, the
corporate power, authority and legal right to acquire, own, sell and service
the Receivables and to hold the Receivable Files as custodian.
(b) Due Qualification. The Servicer is duly qualified to do business
-----------------
as a foreign corporation 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 (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications.
(c) Power and Authority. The Servicer has the power and authority to
-------------------
execute and deliver this Agreement and to carry out their respective terms;
and the execution, delivery and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes the legal, valid
------------------
and binding obligations of the Servicer enforceable in accordance with their
respective terms.
(e) No Violation. The consummation of the transactions contemplated
------------
by this Agreement and the fulfillment of the terms hereof and thereof shall
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 or bylaws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which it
is bound; or 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); or violate any law or, to the best of
the Servicer's knowledge, any order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(f) No Proceedings. To the Servicer's best knowledge, there are no
--------------
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement or the Certificates, (ii) seeking to prevent the
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of, this Agreement
or the Certificates, or (iv) relating to the Servicer and which might
adversely affect the federal income tax attributes of the Certificates.
(g) No Insolvent Obligors. As of the related Cutoff Date, no Obligor
---------------------
on a Receivable shall be shown on the Receivable Files as the subject of a
bankruptcy proceeding.
SECTION 8.02. Indemnities of Servicer. The Servicer shall be liable
-----------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(a) The Servicer shall defend, indemnify and hold harmless the Trustee,
the Trust, the Certificateholders and the Depositor from and against any and
all costs, expenses, losses, damages, claims, and liabilities, arising out of
or resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Asset.
(b) The Servicer shall indemnify, defend and hold harmless the Trustee,
the Depositor, the Trust and the Certificateholders from and against any and
all costs, expenses, losses, claims, damages, and liabilities to the extent
that such cost, expense, loss, claim, damage, or liability arose out of, or
was imposed upon any such Person through, the negligence, willful misfeasance
or bad faith of the Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and duties
under this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of U.S. Bank (or any successor thereto pursuant to
Section 8.03) as Servicer pursuant to Section 9.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the Trustee)
pursuant to Section 9.02.
Indemnification under this Section shall survive the resignation or
removal of the Trustee or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section and
the recipient thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Servicer, without interest.
SECTION 8.03. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer. Any Person (a) into which the Servicer may be
- ------------------------
merged or consolidated, (b) which may result from any merger or consolidation
to which the Servicer shall be a party, (c) which may succeed to the
properties and assets of the Servicer substantially as a whole or (d) with
respect to the Servicer's obligations hereunder, which is a corporation 50%
or more of the voting stock of which is owned, directly or indirectly, by
___________ which Person executed an agreement of assumption to perform every
obligation of the Servicer hereunder shall be the successor to the Servicer
under this Agreement without further act on the part of any of the parties to
this Agreement; provided, however, that (i) immediately after giving effect
to such transaction, no Event of Default and no event which, after notice or
lapse of time, or both, would become an Event of Default shall have happened
and be continuing, (ii) the Servicer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent provided for in this
Agreement relating to such transaction have been complied with, (iii) the
Rating Agency Condition shall have been satisfied with respect to such
transaction and (iv) the Servicer shall have delivered to the Trustee an
Opinion of Counsel stating that, in the opinion of such counsel, either (A)
all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Receivables and reciting the details of
such filings or (B) no such action shall be necessary to preserve and protect
such interest. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with
clauses (i), (ii), (iii) and (iv) above shall be conditions to the
consummation of the transactions referred to in clauses (a), (b) or (c)
above.
SECTION 8.04. Limitation on Liability of Servicer and Others. Neither
----------------------------------------------
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for
refraining from the taking of any action pursuant to this Agreement or for
errors in judgment; provided, however, that this provision shall not protect
the Servicer or any such Person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement
and the rights and duties of the parties to this Agreement and the interests
of the Certificateholders under this Agreement.
ARTICLE IX
Default
-------
SECTION 9.01. Events of Default. If any one of the following events
-----------------
("Events of Default") shall occur and be continuing:
(a) Any failure by the Servicer to deliver to the Trustee for deposit
to the Collection Account or the Distribution Account any proceeds or payment
required to be so delivered under the terms of the Certificates and this
Agreement that shall continue unremedied for a period of three Business Days
after written notice of such failure is received by the Servicer from the
Trustee or after discovery of such failure by an officer of the Servicer; or
(b) Failure by the Servicer or the Depositor, as the case may be, duly
to observe or to perform in any material respect any other covenants or
agreements of the Servicer or the Depositor (as the case may be) set forth in
the Certificates or in this Agreement, which failure shall (a) materially and
adversely affect the rights of Certificateholders and (b) continue unremedied
for a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given (1) to the
Servicer or the Depositor (as the case may be) by the Trustee or (2) to the
Servicer or the Depositor (as the case may be) and to the Trustee by the
Holders of Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance; or
(c) The occurrence of an Insolvency Event with respect to the Servicer
or the Depositor;
then, and in each and every case, so long as the Event of Default shall not
have been remedied, either the Trustee or the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance, by notice
then given in writing to the Servicer (and to the Trustee if given by
Certificateholders) may terminate all of the rights and obligations (other
than the obligations set forth in Section 8.02) of the Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in the Trustee or such successor
Servicer as may be appointed under Section 9.02; and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the
Receivables and related documents, or otherwise. The predecessor Servicer
shall cooperate with the successor Servicer and the Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer
under this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for deposit, or shall thereafter be received with
respect to any Receivable. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable
Files to the successor Servicer and amending this Agreement to reflect such
succession as Servicer pursuant to this Section shall be paid by the
predecessor Servicer upon presentation of reasonable documentation of such
costs and expenses. Upon receipt of notice of the occurrence of an Event of
Default, the Trustee shall give notice thereof to the Rating Agencies.
SECTION 9.02. Appointment of Successor. (a) Upon the Servicer's
------------------------
receipt of notice of termination pursuant to Section 9.01 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the later of (x) the date 45 days from the delivery to the Trustee of
written notice of such resignation (or written confirmation of such notice)
in accordance with the terms of this Agreement and (y) the date upon which
the predecessor Servicer shall become unable to act as Servicer, as specified
in the notice of resignation and accompanying Opinion of Counsel. In the
event of the Servicer's termination hereunder, the Trustee shall appoint a
successor Servicer, and the successor Servicer shall accept its appointment
by a written assumption in form acceptable to the Trustee. In the event
that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section, the Trustee without further action shall automatically be appointed
the successor Servicer and shall be entitled to the Servicing Fee.
Notwithstanding the above, the Trustee shall, if it shall be legally unable
so to act, appoint, or petition a court of competent jurisdiction to appoint,
any established institution having a net worth of not less than $100,000,000
and whose regular business shall include the servicing of (automotive)
(marine) (recreational vehicle) receivables as the successor to the Servicer
under this Agreement.
(b) Upon appointment, the successor Servicer (including the Trustee
acting as successor Servicer) shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the predecessor
Servicer and shall be entitled to the Servicing Fee and all of the rights
granted to the predecessor Servicer by the terms and provisions of this
Agreement.
(c) The Servicer may not resign unless it is prohibited from serving as
such by law.
SECTION 9.03. Repayment of Advances. If the Servicer shall change, the
---------------------
predecessor Servicer shall be entitled to receive reimbursement for
Outstanding Advances pursuant to Sections 5.03 and 5.04 with respect to all
Advances made by the predecessor Servicer.
SECTION 9.04. Notification to Certificateholders. Upon any termination
----------------------------------
of, or appointment of a successor to, the Servicer pursuant to this Article
XVIII, the Trustee shall give prompt written notice thereof to
Certificateholders and to the Rating Agencies.
SECTION 9.05. Waiver of Past Defaults. The Holders of Class A
-----------------------
Certificates evidencing not less than a majority of the Class A Certificate
Balance may, on behalf of all Holders of Certificates, waive any default by
the Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from the Trust Accounts in accordance with this Agreement. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
ARTICLE X
The Trustee
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SECTION 10.01. Duties of Trustee. (a) If an Event of Default has
-----------------
occurred and is continuing, the Trustee shall exercise 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 if the Trustee shall assume the duties of the Servicer pursuant to
Section 9.02, the Trustee in performing such duties shall use the degree of
skill and attention customarily exercised by a servicer with respect to
automobile receivables that it services for itself or others.
(b) Except during the continuance of an Event of Default:
(i) 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; and
(ii) 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; provided, however, that the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Agreement.
(c) The Trustee shall take and maintain custody of the Schedule of
Receivables included as an exhibit to this Agreement and shall retain all
Servicer's Certificates identifying Receivables that become Purchased
Receivables and Liquidated Receivables.
(d) The Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken in good faith in accordance with this
Agreement or at the direction of the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee under this Agreement;
(e) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of clause (d) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trustee Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the 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 this Agreement.
(f) No provision of this Agreement shall require the 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
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
SECTION 10.02. Certain Matters Affecting Trustee. Except as otherwise
---------------------------------
provided in Section 10.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in any such
document.
(b) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters or relating to this
Agreement or the Certificates shall be full and complete authorization
and protection from liability in respect of any action taken, suffered
or omitted by it under this Agreement in good faith and in accordance
with such advice or opinion of such counsel.
(c) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement at the request,
order or direction of any of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby.
(d) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Agreement;
provided, that such conduct does not constitute willful misconduct, bad
faith or negligence on the part of the Trustee.
(e) The Trustee may execute any of the trusts or powers or perform
any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for
any misconduct or negligence of any such agent, attorney or custodian
appointed with due care by it hereunder.
SECTION 10.03. Trustee Not Liable for Certificates or Receivables. The
--------------------------------------------------
recitals contained herein and in the Certificates (other than the certificate
of authentication on the Certificates) shall be taken as the statements of
the Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates), or of any Receivable or related document. The Trustee shall
at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Receivable, or the perfection
and priority of any security interest created by any Receivable in any
Financed Asset or the maintenance of any such perfection and priority, or for
or with respect to the efficacy of the Trust or its ability to generate the
payments to be distributed to Certificateholders under this Agreement,
including, without limitation: the existence, condition and ownership of any
Financed Asset; the existence and enforceability of any insurance thereon;
the existence and contents of any Receivable or any computer or other record
thereof; the validity of the assignment of any Receivable to the Trust or of
any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the Depositor
or the Servicer with any warranty or representation made under this Agreement
or in any related document and the accuracy of any such warranty or
representation or any action of the Servicer taken in the name of the
Trustee.
SECTION 10.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of
Certificates and may deal with the Depositor and the Servicer in banking
transactions with the same rights as it would have if it were not Trustee.
SECTION 10.05. Trustee's Fees and Expenses. The Servicer shall pay to
---------------------------
the Trustee, and the Trustee shall be entitled to receive, reasonable
compensation as shall have been separately agreed upon before the date of
this Agreement between the Depositor and the Trustee (which shall not be
limited by any provision of law regarding the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the trusts
created by this Agreement and in the exercise and performance of any of the
Trustee's powers and duties under this Agreement. The Trustee shall be
entitled to be reimbursed by the Depositor for its reasonable expenses under
this Agreement, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the
Trustee may employ in connection with the exercise and performance of its
rights and duties under this Agreement.
SECTION 10.06. Eligibility Requirements for Trustee. The Trustee shall
------------------------------------
at all times be a corporation having an office in the same state as the
location of the Corporate Trust Office; organized and doing business under
the laws of such state or the United States of America; authorized under such
laws to exercise corporate trust powers; having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authorities; and having (or having a parent that has) a
rating of at least Baa3 by Moody's. If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified
in Section 10.07.
SECTION 10.07. Resignation or Removal of Trustee. The Trustee may at
---------------------------------
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 10.06 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Servicer may remove the Trustee. If the Servicer shall remove the
Trustee under the authority of the immediately preceding sentence, the
Servicer shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing
Trustee so removed and one copy to the successor Trustee, and shall pay all
fees owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant
to Section 10.08 and payment of all fees and expenses owed to the outgoing
Trustee. The Servicer shall provide notice of such resignation or removal of
the Trustee to each of the Rating Agencies.
SECTION 10.08. Successor Trustee. Any successor Trustee appointed
-----------------
pursuant to Section 10.07 shall execute, acknowledge and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor under this
Agreement, with like effect as if originally named as Trustee. The
predecessor Trustee shall upon payment of its fees and expenses deliver to
the successor Trustee all documents and statements and monies held by it
under this Agreement; and the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 10.06.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section, the Servicer shall mail notice thereof to all Certificateholders and
to the Rating Agencies. If the Servicer shall fail to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
SECTION 10.09. Merger or Consolidation of Trustee. Any corporation into
----------------------------------
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 10.06, without the
execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding. The
Trustee shall mail notice of any such merger or consolidation to the Rating
Agencies
SECTION 10.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Financed Asset may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved
by the Trustee to act as co-trustee, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person, in such capacity and for the benefit of the Certificateholders,
such title to the Trust or any part thereof and, subject to the other
provisions of this Section, such powers, duties, obligations, rights, and
trusts as the Servicer and the Trustee may consider necessary or desirable.
If the Servicer shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, the Trustee alone shall have
the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a
successor Trustee pursuant to Section 10.06 and no notice of the appointment
of any co-trustee or separate trustee shall be required pursuant to Section
10.08.
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 any such separate trustee or co- trustee shall be
conferred upon and exercised or performed by the Trustee and such
separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately
without the Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed, the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) No trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) The Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Each such instrument shall be filed
with the Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee
its agent or attorney-in-fact with full power and authority, to the extent
not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
SECTION 10.11. Representations and Warranties of Trustee. The Trustee
-----------------------------------------
shall make the following representations and warranties on which the
Depositor and Certificateholders shall be deemed to rely:
(i) The Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of its place of
incorporation.
(ii) The Trustee has full corporate power, authority and legal
right to execute and deliver, and to perform its obligations under, this
Agreement, and shall have taken all necessary action to authorize the
execution and delivery of, and the performance of its obligations under,
this Agreement.
(iii) This Agreement shall have been duly executed and delivered
by the Trustee.
SECTION 10.12. No Bankruptcy Petition. The Trustee, by entering into
----------------------
this Agreement, and each Certificateholder, by accepting a Certificate,
hereby covenant and agree that they will not at any time institute against,
or join any other Person in instituting against, the Depositor or the Trust
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other similar proceedings under any federal or state
bankruptcy or similar law in connection with the Certificates or this
Agreement.
SECTION 10.13. Trustee's Certificate. On or as soon as practicable
---------------------
after each Record Date as of which Receivables shall be assigned to the
Depositor or the Servicer pursuant to Section 10.14, the Trustee shall
execute a Trustee's Certificate (in the form of Exhibit H-1 or Exhibit H-2,
as applicable), based on the information contained in the Servicer's
Certificate for the related Collection Period, amounts deposited to the
Collection Account and notices received pursuant to this Agreement,
identifying the Receivables repurchased by the Depositor pursuant to Section
3.02 or purchased by the Servicer pursuant to Section 4.07 or Section 11.02
during such Collection Period, and shall deliver such Trustee's Certificate,
accompanied by a copy of the Servicer's Certificate for such Collection
Period, to the Depositor or the Servicer, as applicable. The Trustee's
Certificate submitted with respect to such Distribution Date shall operate,
as of such Distribution Date, as an assignment, without recourse,
representation or warranty, to the Depositor or the Servicer, as applicable,
of all the Trustee's right, title and interest in and to any such Repurchased
Receivable and to the other property conveyed to the Trust with respect
thereto, and all security and documents relating thereto, such assignment
being an assignment outright and not for security.
SECTION 10.14. Trustee's Assignment of Repurchased Receivables. With
-----------------------------------------------
respect to all Receivables repurchased by the Depositor pursuant to Section
3.02 or purchased by the Servicer pursuant to Section 4.07 or Section 11.02,
the Trustee shall by a Trustee's Certificate (in the form of Exhibit H-1 or
Exhibit H-2, as applicable) assign, without recourse, representation or
warranty, to the Depositor or the Servicer, as applicable, all the Trustee's
right, title and interest in and to any such Receivable and the other
property conveyed to the Trust with respect thereto, and all security and
documents relating thereto, such assignment being an assignment outright and
not for security.
ARTICLE XI
Termination
-----------
SECTION 11.01. Termination of the Trust. (a) The respective
------------------------
obligations and responsibilities of the Depositor, the Servicer and the
Trustee created hereby and the Trust created by this Agreement shall
terminate (i) upon the payment to Certificateholders of all amounts required
to be paid to them pursuant to this Agreement and the disposition of all
property held as part of the Trust and (ii) at the time provided in Section
11.02; provided, however, that in no event shall the trust created by this
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James's, living on the date of this
Agreement. The Servicer shall promptly notify the Trustee of any prospective
termination pursuant to this Section.
(b) Except as provided in Section 11.01(a), neither the Depositor nor
any Owner shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which Certificateholders shall surrender their Certificates to the
Trustee for payment of the final distribution and cancellation of the
Certificates, shall be given by the Trustee by letter to Certificateholders
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the specified Distribution Date stating (A) the
Distribution Date upon which final payment of the Certificates shall be made
upon presentation and surrender of the Certificates at the office of the
Trustee therein designated, (B) the amount of such final payment and (C) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Trustee
shall give such notice to the Certificate Registrar (if other than the
Trustee) at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Trustee shall cause to be
distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 5.06.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after such second notice all of the Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in
the Trust after exhaustion of such remedies shall be distributed by the
Trustee to the Depositor.
SECTION 11.02. Optional Purchase of All Receivables. On the last day
------------------------------------
of any Collection Period as of which the Pool Balance shall be less than or
equal to 10% of the Original Pool Balance, the Servicer shall have the option
to purchase the corpus of the Trust; provided, however, that the Servicer may
not effect any such purchase if at such time the rating of ______________'s
long-term debt obligations is less than Baa3 by Moody's, unless the Trustee
shall have received an Opinion of Counsel to the effect that such purchase
would not constitute a fraudulent conveyance. To exercise such option, the
Servicer shall deposit an amount into the Collection Account pursuant to
Section 5.05 equal to the aggregate Purchase Amount for the Receivables
(including defaulted Receivables), plus the appraised value of any other
property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer and the Trustee. The Servicer
thereafter shall succeed to all interests in and to the Trust.
ARTICLE XII
Miscellaneous Provisions
------------------------
SECTION 12.01. Amendment. This Agreement may be amended by the
---------
Depositor, the Servicer and the Trustee, without the consent of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any provision in this Agreement or
of modifying in any manner the rights of the Certificateholders; 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.
This Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee with the consent of the Holders of Class A
Certificates and Class B Certificates (which consent shall be conclusive and
binding on such Holders and on all future Holders of such Certificates and of
any Certificates issued upon the transfer therefor or in exchange thereof or
in lieu thereof, whether or not notation of such consent is made upon the
Certificates), each voting as a class, evidencing not less than a majority of
the Class A Certificate Balance and Class B Certificate Balance,
respectively, 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) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments
on Receivables or distributions that shall be required to be made on any
Certificate or (b) reduce the aforesaid percentage of the Class A Certificate
Balance and Class B Certificate Balance required to consent to any such
amendment without the consent of the Holders of all Certificates then
outstanding.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Agreement) and of
evidencing the authorization of any action by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement
and the Opinion of Counsel referred to in Section (12.02(i)(1)). The Trustee
may, but shall not be obligated to, enter into any such amendment that
affects the Trustee's own rights, duties or immunities under this Agreement
or otherwise.
SECTION 12.02. Protection of Title to Trust. (a) The Depositor shall
----------------------------
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Certificateholders and the Trustee in the Receivables and in the proceeds
thereof. The Depositor shall deliver (or cause to be delivered) to the
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Trustee at least five
days' prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Trustee at least 60 days' prior written notice of any relocation of
its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new
financing statement, and shall promptly file any such amendment or new
financing statement. The Servicer shall at all times maintain its principal
executive office and each office from which it shall service Receivables
within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Distribution
Account and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the
Trustee, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of
the Trust, in such Receivable, and that such Receivable is owned by the
Trustee. Indication of the Trustee's ownership of a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, such Receivable shall have been paid in full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in
automotive receivables to, any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or print-outs (including any
restored from back-up archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable has
been sold and is owned by the Trustee.
(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, within
five Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of
such list to the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust.
SECTION 12.03. Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 12.04. Limitation on Rights of Certificateholders. (a) The
------------------------------------------
death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except as
provided in Section 12.01 or 9.05) or in any manner otherwise control the
operation and management of the Trust or the obligations of the parties to
this Agreement; nor shall any provision in this Agreement or contained in the
Certificates be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken pursuant to any provision of this Agreement.
(c) No Certificateholder shall have any right to institute any suit,
action or proceeding in equity or at law upon or under or with respect to
this Agreement, unless: (i) such Holder previously shall have given to the
Trustee written notice of a continuing Event of Default; (ii) the Holders of
Certificates evidencing not less than 25% of the Certificate Balance shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under this Agreement and shall have
offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby; (iii)
the Trustee, for 60 days after its receipt of such notice, request and offer
of indemnity shall have neglected or refused to institute any such action,
suit or proceeding; and (iv) during such 60-day period no request or waiver
inconsistent with such written request shall have been given to the Trustee
by Holders representing a majority of the Certificate Balance. It is
understood and intended that no one or more Holders of Certificates shall
have any right in any manner whatever by virtue of, or by availing of, any
provisions of this Agreement to affect, disturb or prejudice the rights of
any other Holders of Certificates, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right under
this Agreement, except in the manner provided in this Agreement.
SECTION 12.05. Governing Law. This Agreement 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 UNDER This Agreement SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 12.06. Notices. All demands, notices and communications upon
-------
or to the Depositor, the Servicer, the Trustee or the Rating Agencies under
this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, and shall be deemed to have been
duly given upon receipt (a) in the case of the Depositor, to Morgan Stanley
ABS Capital II Inc., 1585 Broadway, New York, New York 10036 Attention
of __________________, ((212) - ); (b) in the case of the Servicer, to
____________________________________________________________________________,
_______________________________________________, Attention of _______________
(( ) - ); (c) in the case of the Trustee, at the Corporate Trust
Office; (d) in the case of Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007; and (e) in
the case of Standard & Poor's, to Standard & Poor's Ratings Services, 25
Broadway - - 15th Floor, New York, New York 10004, Attention: Asset Backed
Surveillance Department. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder shall
receive such notice.
SECTION 12.07. Severability of Provisions. 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 of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 12.08. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 7.04 and 8.03 and as
provided in the provisions of this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Depositor or the
Servicer without the prior written consent of the Trustee and the Holders of
Certificates evidencing not less than 66% of the Certificate Balance.
SECTION 12.09. Certificates Nonassessable and Fully Paid.
-----------------------------------------
Certificateholders shall not be personally liable for obligations of the
Trust. The interests represented by the Certificates shall be nonassessable
for any losses or expenses of the Trust or for any reason whatsoever.
SECTION 12.10. Limitations on Rights of Others. The provisions of this
-------------------------------
Agreement are solely for the benefit of the Depositor, the Servicer, the
Trustee and the Certificateholders, and nothing in this Agreement, whether
express or implied, shall be construed to give any other Person any legal or
equitable right, remedy or claim in respect of the Trust or under or in
respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 12.11. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 12.12. Nonpetition Covenants. (a) Notwithstanding any prior
---------------------
termination of this Agreement, the Servicer and the Depositor shall not,
prior to the date that is one year and one day after the termination of this
Agreement with respect to the Trust, acquiesce to, petition or otherwise
invoke or cause the Trust to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Trust under any federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of the Trust or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of
the Trust.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date that is one year and one day after the
termination of this Agreement with respect to the Depositor, acquiesce to,
petition or otherwise invoke or cause the Depositor to invoke the process of
any court or government authority for the purpose of commencing or sustaining
a case against the Depositor under any federal or state bankruptcy,
insolvency or similar law, appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator,
or other similar official of the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Depositor.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
(_________________) TRUST 199_-_
By: ____________________
Name:
Title:
MORGAN STANLEY ABS CAPITAL II INC.,
as Depositor
By: ____________________
Name:
Title:
(_______________________),
as Servicer
By: ____________________
Name:
Title:
EXHIBIT A
FORM OF CLASS A CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS 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.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CLASS A
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B CERTIFICATE AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NUMBER $
R- CUSIP NO.
(______________) TRUST 199_-_
____% ASSET BACKED CERTIFICATE, CLASS A
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of (automotive) (marine) (recreational
vehicle) retail installment sale contracts or installment loans (as defined
herein) secured by new and used (automobiles and light duty trucks) (boats,
boat motors and accompanying travellers) (recreational vehicles).
(This Class A Certificate does not represent an interest in or obligation of
Morgan Stanley ABS Capital II Inc., except to the extent described below.)
THIS CERTIFIES THAT _______________________________________ is the
registered owner of ______________________________________ DOLLARS
nonassessable, fully-paid, fractional undivided interest in
(___________________) Trust 199_-_ (the "Trust") formed pursuant to the
Pooling and Servicing Agreement (the "Agreement") dated as of
_________________, among Morgan Stanley ABS Capital II Inc, a Delaware
corporation, as depositor (the "Depositor"), _______________________, as
servicer (the "Servicer") and ______________________, a
________________________________ banking association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement.
This Certificate is one of a duly authorized series of Certificates,
designated as the _____% Asset Backed Certificates, Class A (herein called
the "Class A Certificates"), all issued under the Agreement, to which
Agreement reference is hereby made for a statement of the respective rights
and obligations thereunder of the Depositor, the Servicer, the Trustee and
Holders of the Certificates. The Class A Certificates are subject to all
terms of the Agreement.
The property of the Trust includes a pool of retail installment sale
contracts and installment loans for new and used (automobiles and light duty
trucks) (boats, boat motors and accompanying travellers) (recreational
vehicles) (the "Receivables"), all monies due under such Receivables on or
after the related Cutoff Date, in the case of Precomputed Receivables, or
received on or after the related Cutoff Date, in the case of Simple Interest
Receivables, security interests in the assets financed thereby, certain bank
accounts and the proceeds thereof, proceeds from claims on certain insurance
policies and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the ______ day of each
month or, if such ______ day is not a Business Day, the next Business Day
(each, a "Distribution Date"), commencing on ______________________, to the
Person in whose name this Class A Certificate is registered at the close of
business on the first day of the month in which such Distribution Date occurs
(the "Record Date"), such Certificateholder's fractional undivided interest
in the amount to be distributed to Class A Certificateholders on such
Distribution Date.
It is the intent of the Depositor, the Servicer, the Trustee and the
Certificateholders that, for purposes of federal income, state and local
income and single business tax and any other income taxes, the Trust will be
treated as a grantor trust and the Certificates will be treated as interests
in a grantor trust. The Depositor, the Servicer, the Trustee and the
Certificateholders, by acceptance of a Certificate or of a beneficial
interest in a Certificate, as the case may be, agree to treat, and to take no
action inconsistent with the treatment of, the Certificates for such tax
purposes as interests in a grantor trust.
Distributions on this Class A Certificate will be made as provided in
the Agreement by the Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation hereon, except that with respect to Class A Certificates 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
transfer in immediately available funds to the account designated by such
nominee. Except as otherwise provided in the Agreement and notwithstanding
the above, the final distribution on this Class A Certificate will be made
after due notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Class A Certificate at the office or
agency maintained for that purpose by the Trustee in the Borough of
Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class A
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
THIS TRUST CERTIFICATE 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
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Class A Certificate to be duly
executed.
Date: (_________________) TRUST 199 __-__
By: ______________________________,
not in its individual capacity but solely as
Trustee
By: ______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Agreement.
Date:
__________________________________
as Trustee
By: ______________________________
Authorized Signatory
(REVERSE OF CLASS A CERTIFICATE)
The Class A Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Trustee or any affiliates of
any of them, and no recourse may be had against such parties or their assets
except as expressly set forth or contemplated herein or in the Agreement. In
addition, this Class A Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections and recoveries with respect to the Receivables (and certain other
amounts), all as more specifically set forth herein and in the Agreement. A
copy of the Agreement may be examined by any Certificateholder upon written
request during normal business hours at the principal office of the Depositor
and at such other places, if any, designated by the Depositor.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer and the Trustee and the rights of the
Certificateholders at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates evidencing not less than a
majority of the Certificate Balance. Any such consent by the Holder of this
Class A Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Certificate and of any Class A 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 Class A Certificate. The
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A Certificate is registerable in the
Certificate Register upon surrender of this Class A Certificate for
registration of transfer at the offices or agencies of the Certificate
Registrar maintained by the Trustee in the Borough of Manhattan, The City of
New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Class A Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee. The initial Certificate Registrar appointed under the
Agreement is ________________________________.
Except as provided in the Agreement, the Class A Certificates are
issuable only as registered certificates without coupons in a minimum
denomination of $________. As provided in the Agreement and subject to
certain limitations therein set forth, Class A Certificates are exchangeable
for new Class A Certificates of authorized denominations evidencing the same
aggregate denomination, as requested by the Holder surrendering the same. No
service charge will be made for any such registration of transfer or
exchange, but the Trustee or the Certificate Registrar may require payment of
a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar may treat the Person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and none of
the Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held by the Trust. The Servicer of the
Receivables may at its option purchase the Trust property at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only as of the last day of any
Collection Period as of which the Pool Balance is less than or equal to ___%
of the Original Pool Balance.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________
(Please print or type name and address, including postal zip code, of
assignee)
_________________________________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing _________________________ to transfer said Class
A Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
____________________________________
Signature Guaranteed:
____________________________________/*//
_______________________
EXHIBIT B
FORM OF CLASS B CERTIFICATE
THIS CLASS B CERTIFICATE IS SUBORDINATE TO THE PRIOR RIGHTS OF THE CLASS A
CERTIFICATES IN ACCORDANCE WITH THE POOLING AND SERVICING AGREEMENT REFERRED
TO BELOW.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT
IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1074, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1086, AS AMENDED
(THE "CODE"), OR ANY GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA,
SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS, TO A MATERIAL EXTENT,
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A
"PLAN") OR ANY PERSON INVESTING THE ASSETS OF A PLAN EXCEPT AS PROVIDED IN
THE AGREEMENT REFERRED TO HEREIN.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CLASS B
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B CERTIFICATE AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NUMBER $
R- CUSIP NO.
(__________________) TRUST 199_-_
____% ASSET BACKED CERTIFICATE, CLASS B
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of (automotive) (marine) (recreational
vehicle) retail installment sale contracts (as defined herein) secured by new
and used (automobiles and light duty trucks) (boats, boat motors and
accompanying travellers) (recreational vehicles).
(This Class B Certificate does not represent an interest in or obligation of
Morgan Stanley ABS Capital II Inc., except to the extent described below.)
THIS CERTIFIES THAT ____________________________________ is the
registered owner of ____________________________ DOLLARS nonassessable,
fully-paid, fractional undivided interest in (___________) Trust 199_-_ (the
"Trust") formed pursuant to a Pooling and Servicing Agreement (the
"Agreement") dated as of _________________, among Morgan Stanley ABS Capital
Inc., a Delaware corporation, as depositor (the "Depositor"),
___________________, as servicer (the "Servicer") and _____________, a
_______________ banking association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement .
This Certificate is one of a duly authorized series of Certificates,
designated as the ____% Asset Backed Certificates, Class B (herein called the
"Class B Certificates") all, issued under the Agreement, to which Agreement
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Depositor, the Servicer, the Trustee and
HolderS of the Certificates. The Class B Certificates are subject to all
terms of the Agreement.
The property of the Trust includes a pool of (automotive) (marine)
(recreational vehicle) retail installment sale contracts for new and used
(automobiles and light duty trucks) (boats, boat motors and accompanying
travellers) (the "Receivables"), all monies due under such Receivables on or
after ___________________, in the case of Precomputed Receivables, or
received on or after __________________, in the case of Simple Interest
Receivables, security interests in the vehicles financed thereby, certain
bank accounts and the proceeds thereof, proceeds from claims on certain
insurance policies and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the ________ day of
each month or, if such _______ day is not a Business Day, the next Business
Day (each, a "Distribution Date"), commencing on ______________________, to
the Person in whose name this Class B Certificate is registered at the close
of business on the first day of the month in which such Distribution Date
occurs (the "Record Date"), subject to the prior rights of the Class A
Certificateholders, such Certificateholder's fractional undivided interest in
the amount to be distributed to Class B Certificateholders on such
Distribution Date.
It is the intent of the Depositor, the Servicer, the Trustee and the
Certificateholders that, for purposes of federal income, state and local
income and single business tax and any other income taxes, the Trust will be
treated as a grantor trust and the Certificates will be treated as interests
in a grantor trust. The Depositor, the Servicer, the Trustee and the
Certificateholders, by acceptance of a Certificate or of a beneficial
interest in a Certificate, as the case may be, agree to treat, and to take no
action inconsistent with the treatment of, the Certificates for such tax
purposes as interests in a grantor trust.
Distributions on this Class B Certificate will be made as provided in
the Agreement by the Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation hereon, except that with respect to Class B Certificates 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
transfer in immediately available funds to the account designated by such
nominee. Except as otherwise provided in the Agreement and notwithstanding
the above, the final distribution on this Class B Certificate will be made
after due notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Class B Certificate at the office or
agency maintained for that purpose by the Trustee in the Borough of
Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class B
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
THIS CLASS B CERTIFICATE 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
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Class B Certificate to be duly executed.
(__________________) TRUST 199_-_
by: ______________________________,
not in its individual capacity but solely as
Trustee
Date: by: _______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the within-mentioned
Trust Agreement.
Date: __________________________________,
as Trustee
by: _______________________________
Authorized Signatory
(REVERSE OF CLASS B CERTIFICATE)
The Class B Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Trustee or any affiliates of
any of them, and no recourse may be had against such parties or their assets
except as expressly set forth or contemplated herein or in the Agreement. In
addition, this Class B Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections and recoveries with respect to the Receivables (and certain other
amounts), all as more specifically set forth herein and in the Agreement. A
copy of the Agreement may be examined by any Certificateholder upon written
request during normal business hours at the principal office of the Depositor
and at such other places, if any, designated by the Depositor.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing not less than a majority of the Certificate Balance. Any such
consent by the Holder of this Class B Certificate shall be conclusive and
binding on such Holder and on all future Holders of this Class B Certificate
and of any Class B Certificate issued upon the transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent is made
upon this Class B Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders
of any of the Certificates.
((
Except as provided in the Agreement, the Class B Certificates are
issuable only as registered certificates without coupons in a minimum
denominations of $________. As provided in the Agreement and subject to
certain limitations therein set forth, Class B Certificates are exchangeable
for new Class B Certificates of authorized denominations evidencing the same
aggregate denomination, as requested by the Holder surrendering the same. No
service charge will be made for any such registration of transfer or
exchange, but the Trustee or the Certificate Registrar may require payment of
a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar may treat the Person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and none of
the Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property by the Trust. The Servicer of the Receivables may
at its option purchase the Trust property at a price specified in the
Agreement, and such purchase of the Receivables and other property of the
Trust will effect early retirement of the Class B Certificates; however, such
right of purchase is exercisable only as of the last day of any Collection
Period as of which the Pool Balance is less than or equal to 10% of the
Original Pool Balance.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________________________________________________________
(Please print or type name and address, including postal zip
code, of assignee)
_____________________________________________________________________________
the within Class B Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ________________________ to transfer said Class B
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
_________________________________________
Signature Guaranteed:
____________________________/*//
_______________________
EXHIBIT C
(FORM OF DEPOSITORY AGREEMENT)
Letter of Representations
(To be Completed by Issuer and Trustee)
_____________________________________________________________
(Name of Issuer)
_____________________________________________________________
(Name of Trustee)
___________________
(Date)
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: __________________________________________________
__________________________________________________
__________________________________________________
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Trustee will act
as trustee with respect to the Securities pursuant to a trust indenture dated
__, 199_ (the "Document"). _________________________________ (the
"Underwriter") is distributing the Securities through The Depository Trust
Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities,
Issuer and Trustee make the following representations to DTC:
I. Prior to closing on the Securities on ________________, 199_, there
shall be deposited with DTC one Security certificate registered in the name
of DTC's nominee, Cede & Co., for each stated maturity of the Securities in
the face amounts set forth on Schedule A hereto, the total of which
represents 100% of the principal amount of such Securities. If, however, the
aggregate principal amount of any maturity exceeds $150 million, one
certificate will be issued with respect to each $150 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount. Each $150 million certificate shall bear the
following legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to Issuer or its agent for registration of transfer, exchange,
or payment, and any certificate issued is registered in the name of Cede
& Co. or in such other name as 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.
II. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer or Trustee shall establish a record date
for such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 15 calendar days in advance of such record
date. Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212) 709-6897, and
receipt of such notices shall be confirmed by telephoning (212) 709-6870.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to DTC's Reorganization Department as indicated in Paragraph 4.
III. In the event of a full or partial redemption, Issuer or Trustee
shall send a notice to DTC specifying: (a) the amount of the redemption or
refunding; (b) in the case of a refunding, the maturity date(s) established
under the refunding; and (c) the date such notice is to be mailed to Security
holders or published (the "Publication Date"). Such notice shall be sent to
DTC by a secure means (e.g., legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such notice is
in DTC's possession no later than the close of business on the business day
before or, if possible, two business days before the Publication Date.
Issuer or Trustee shall forward such notice either in a separate secure
transmission for each CUSIP number or in a secure transmission for multiple
CUSIP numbers (if applicable) which includes a manifest or list of each CUSIP
number submitted in that transmission. (The party sending such notice shall
have a method to verify subsequently the use of such means and the timeliness
of such notice.) The Publication Date shall be not less than 30 days nor more
than 60 days prior to the redemption date or, in the case of an advance
refunding, the date that the proceeds are deposited in escrow. Notices to
DTC pursuant to this Paragraph by telecopy shall be sent to DTC's Call
Notification Department at (516) 227-4039 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC confirming
that the notice has been received, such party shall telephone (516) 227-4070.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
IV. In the event of an invitation to tender the Securities, notice by
Issuer or Trustee to Security holders specifying the terms of the tender and
the Publication Date of such notice shall be sent to DTC by a secure means in
the manner set forth in the preceding Paragraph. Notices to DTC pursuant to
this Paragraph and notices of other corporate actions (including mandatory
tenders, exchanges, and capital changes) by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-1093 or (212) 709-1094, and receipt of
such notices shall be confirmed by telephoning (212) 709-6884. Notices to DTC
pursuant to the above by mail or by any other means shall be sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
V. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
VI. Trustee shall send DTC written notice with respect to the dollar
amount per $1,000 original face value (or other minimum authorized
denomination if less than $1,000 face value) payable on each payment date
allocated as to the interest and principal portions thereof preferably 5, but
not less than 2, business days prior to such payment date. Such notices,
which shall also contain the current pool factor and Trustee contact's name
and telephone number, shall be sent by telecopy to DTC's Dividend Department
at (212) 709-1723, or if by mail or by any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
VII. (NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT
THE OTHER:) (The interest accrual period is record date to record date.) (The
interest accrual period is payment date to payment date.)
VIII. Interest payments and principal payments that are part of
periodic principal-and-interest payments shall be received by Cede & Co., as
nominee of DTC, or its registered assigns in same-day funds on each payment
date (or the equivalent in accordance with existing arrangements between
Issuer or Trustee and DTC). Such payments shall be made payable to the order
of Cede & Co. Absent any other existing arrangements, such payments shall be
addressed as follows:
Manager; Cash Receipts
Dividend Department
The Depository Trust Company
7 Hanover Square; 24th Floor
New York, NY 10004-2695
IX. (NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT
THE OTHER:)
Securities Eligible for DTC's Same-Day Funds Settlement ("SDFS") System.
Other principal payments (redemption payments) shall be made in same-day
funds by Trustee in the manner set forth in the SDFS Paying Agent Operating
Procedures, a copy of which previously has been furnished to Trustee.
Securities Eligible for DTC's Next-Day Funds Settlement ("NDFS") System.
Other principal payments (redemption payments) shall be made in next-day
funds by Trustee to Cede & Co., as nominee of DTC, or its registered assigns,
on each payment date. Such payments shall be made payable to the order of
Cede & Co., and shall be addressed as follows:
NDFS Redemptions Manager
Reorganization/Redemptions Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
X. DTC may direct Issuer or Trustee to use any other number or address
as the number or address to which notices or payments of interest or
principal may be sent.
XI. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or
Trustee's invitation) necessitating a reduction in the aggregate principal
amount of Securities outstanding or an advance refunding of part of the
Securities outstanding, DTC, in its discretion: (a) may request Issuer or
Trustee to issue and authenticate a new Security certificate; or (b) may make
an appropriate notation on the Security certificate indicating the date and
amount of such reduction in principal except in the case of final maturity,
in which case the certificate will be presented to Issuer or Trustee prior to
payment, if required.
XII. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trustee
shall notify DTC of the availability of certificates. In such event, Issuer
or Trustee shall issue, transfer, and exchange certificates in appropriate
amounts, as required by DTC and others.
XIII. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving reasonable
notice to Issuer or Trustee (at which time DTC will confirm with Issuer or
Trustee the aggregate principal amount of Securities outstanding). Under
such circumstances, at DTC's request Issuer and Trustee shall cooperate fully
with DTC by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.
XIV. Issuer: (a) understands that DTC has no obligation to, and will
not, communicate to its Participants or to any person having an interest in
the Securities any information contained in the Security certificate(s); and
(b) acknowledges that neither DTC's Participants nor any person having an
interest in the Securities shall be deemed to have notice of the provisions
of the Security certificates by virtue of submission of such certificate(s)
to DTC.
XV. Nothing herein shall be deemed to require Trustee to advance funds
on behalf of Issuer.
Notes: Very truly yours,
A. If there is a Trustee (as (Authorized Officer's Signature)
defined in this Letter of
Representations), Trustee as well
as Issuer must sign this Letter. __________________________________
If there is no Trustee, in signing (Issuer)
this Letter Issuer itself
undertakes to perform all of the
obligations set forth herein.
By: ______________________________
(Authorized Officer's Signature)
B. Schedule B contains
statements that DTC believes
accurately describe DTC, the __________________________________
method of effecting book-entry (Trustee)
transfers of securities
distributed through DTC, and
certain related matters.
By:________________________________
(Authorized Officer's Signature)
_____________________________________
(Administrator)
By: ________________________________
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: ___________________________
cc: Underwriter
Underwriter's Counsel
SCHEDULE A
(Describe Issue)
CUSIP Principal Amount Maturity Date Interest Rate
- ---- ---------------- ------------- -------------
EXHIBIT D
FORM OF SERVICER'S CERTIFICATE
(___________________) TRUST 199__-__
___% Asset Backed Certificates, Class A
___% Asset Backed Certificates, Class B
Distribution Date:
Collection Period:
Under the Pooling and Servicing Agreement dated as of _____________ by and
among Morgan Stanley ABS Capital II Inc., as Depositor,
_____________________________, as Servicer, and __________________________,
as Trustee, the Servicer is required to prepare certain information each
month regarding current distributions to Certificateholders and the
performance of the Trust during the previous month. The information that is
required to be prepared with respect to the Distribution Date and Collection
Period listed above is set forth below. Certain of the information is
presented on the basis of an original principal amount of $1,000 per Class A
Certificate or Class B Certificate, as appropriate, and certain other
information is presented based upon the aggregate amounts for the Trust as a
whole.
A. Information Regarding the Current Monthly Distribution.
1. Class A Certificates.
(a) The aggregate amount of the distribution to Class A
Certificateholders . . . . . . . . . . . . . . . . $_________
(b) The amount of the distribution set forth in paragraph A.1.(a)
above in respect of interest . . . . . . . . . . . $_________
(c) The amount of the distribution set forth in paragraph A.1.(a)
above in respect of principal . . . . . . . . . . $_________
(d) The amount of the distribution set forth in paragraph A.1.(a)
above per $1,000 interest . . . . . . . . . . . . $_________
(e) The amount of the distribution set forth in paragraph A.1.(b)
above per $1,000 interest . . . . . . . . . . . . $_________
(f) The amount of the distribution set forth in paragraph A.1.(c)
above per $1,000 interest . . . . . . . . . . . . $_________
2. Class B Certificates.
(a) The aggregate amount of the distribution to Class B
Certificateholders . . . . . . . . . . . . . . . . $_________
(b) The amount of the distribution set forth in paragraph A.2(a)
above in respect of interest . . . . . . . . . . . $_________
(c) The amount of the distribution set forth in paragraph A.2(a)
above in respect of principal . . . . . . . . . . $_________
(d) The amount of the distribution set forth in paragraph A.2(a)
above per $1,000 interest . . . . . . . . . . . . $_________
(e) The amount of the distribution set forth in paragraph A.2(b)
above per $1,000 interest . . . . . . . . . . . . $_________
(f) The amount of the distribution set forth in paragraph A.2(c)
above per $1,000 interest . . . . . . . . . . . . $_________
B. Information Regarding the Performance of the Trust.
1. Pool Balance and Certificate Balances.
(a) The Pool Balance close of business on the last day of the
preceding Collection Period . . . . . . . . . . . $_________
(b) The Class A Certificate Balance as of the close of business on
the last day of the preceding Collection Period, after giving
effect to payments allocated to principal set forth in
Paragraph A.1(c) above . . . . . . . . . . . . . . $_________
(c) The Class B Certificate Balance as of the close of business of
the last day of the preceding Collection Period, after giving
effect to payments allocated to principal set forth in
paragraph A.2(c) above . . . . . . . . . . . . . . $_________
(d) The Class A Pool Factor and the Class B Pool Factor as of the
close of business on the last day of the preceding Collection
Period . . . . . . . . . . . . . . . . . . . . . . $_________
2. Servicing Fee and Advances.
(a) The aggregate amount of the Servicing Fee paid to the Servicer
with respect to the preceding Collection Period . $_________
(b) The amount of such Servicing Fee per $1,000
interest . . . . . . . . . . . . . . . . . . . . . $_________
(c) The amount of any unpaid Servicing Fee . . . . . . $_________
(d) The change in the amount of any unpaid Servicing Fee from the
previous Distribution Date . . . . . . . . . . . . $_________
(e) Aggregate Advances on such Distribution Date . . . $_________
3. Payment Shortfalls.
(a) The amount of the Class A Interest Carryover Shortfall after
giving effect to the payments set forth in paragraph A.1(b)
above . . . . . . . . . . . . . . . . . . . . . . $_________
(b) The amount of the Class A Principal Carryover Shortfall after
giving effect to the payment set forth in paragraph A.1(c)
above . . . . . . . . . . . . . . . . . . . . . . $_________
(c) The amount of the Class B Interest Carryover Shortfall after
giving effect to the payments set forth in paragraph A.2(b)
above . . . . . . . . . . . . . . . . . . . . . . $_________
(d) The amount of the Class B Principal Carryover Shortfall after
giving effect to the payments set forth in paragraph A.2(c)
above . . . . . . . . . . . . . . . . . . . . . . $_________
(e) The amount otherwise distributable to Class B
Certificateholders that is distributed to Class A
Certificateholders . . . . . . . . . . . . . . . . $_________
4. Payahead Account.
(a) The aggregate Payahead Balance . . . . . . . . . . $_________
(b) The change in the Payahead Balance from the previous
Distribution Date . . . . . . . . . . . . . . . . $_________
5. Reserve Account.
(a) The Reserve Account balance after giving effect to
distributions made on such Distribution Date . . . $_________
(b) The change in the Reserve Account on such
Distribution Date . . . . . . . . . . . . . . . . $_________
SCHEDULE A
SCHEDULE OF RECEIVABLES
SCHEDULE B
LOCATION OF RECEIVABLE FILES
EXHIBIT 4.3
FORM OF INDENTURE
between
(__________________) TRUST 199_-_,
as Issuer
and
(_________________________________),
as Indenture Trustee
Dated as of ________ __, 199_
TABLE OF CONTENTS Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act 9
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . . 10
ARTICLE II
The Notes
SECTION 2.01. Form . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.02. Execution, Authentication and Delivery . . . . . . . . 10
SECTION 2.03. Temporary Notes . . . . . . . . . . . . . . . . . . . 11
SECTION 2.04. Registration; Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes . . . . . . 13
SECTION 2.06. Persons Deemed Owner . . . . . . . . . . . . . . . . . 14
SECTION 2.07. Payment of Principal and Interest; Defaulted
Interest . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.08. Cancellation . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.09. Release of Collateral . . . . . . . . . . . . . . . . 15
SECTION 2.10. Book-Entry Notes . . . . . . . . . . . . . . . . . . . 15
SECTION 2.11. Notices to Clearing Agency . . . . . . . . . . . . . . 16
SECTION 2.12. Definitive Notes . . . . . . . . . . . . . . . . . . . 16
SECTION 2.13. Tax Treatment . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.14. Determination of LIBOR . . . . . . . . . . . . . . . . 17
SECTION 2.15 Initial Calculation Agent; Replacement of Calculation Agent 17
ARTICLE III
Covenants
SECTION 3.01. Payment of Principal and Interest . . . . . . . . . . 18
SECTION 3.02. Maintenance of Office or Agency . . . . . . . . . . . 18
SECTION 3.03. Money for Payments To Be Held in Trust . . . . . . . . 18
SECTION 3.04. Existence . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.05. Protection of Trust Estate . . . . . . . . . . . . . . 20
SECTION 3.06. Opinions as to Trust Estate . . . . . . . . . . . . . 20
SECTION 3.07. Performance of Obligations; Servicing of Receivables . 21
SECTION 3.08. Negative Covenants . . . . . . . . . . . . . . . . . . 22
SECTION 3.09. Annual Statement as to Compliance . . . . . . . . . . 23
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms . 23
SECTION 3.11. Successor or Transferee . . . . . . . . . . . . . . . 25
SECTION 3.12. No Other Business . . . . . . . . . . . . . . . . . . 25
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.14. Servicer's Obligations . . . . . . . . . . . . . . . . 25
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities . . 25
SECTION 3.16. Capital Expenditures . . . . . . . . . . . . . . . . . 26
SECTION 3.17. Removal of Administrator . . . . . . . . . . . . . . . 26
SECTION 3.18. Restricted Payments . . . . . . . . . . . . . . . . . 26
SECTION 3.19. Notice of Events of Default . . . . . . . . . . . . . 26
SECTION 3.20. Further Instruments and Acts . . . . . . . . . . . . . 26
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture . . . . . . . 26
SECTION 4.02. Application of Trust Money . . . . . . . . . . . . . . 27
SECTION 4.03. Repayment of Moneys Held by Paying Agent . . . . . . . 28
ARTICLE V
Remedies
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . . 28
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment . . 29
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee . . . . . . . . . . . . . . . . . 30
SECTION 5.04. Remedies; Priorities . . . . . . . . . . . . . . . . . 31
SECTION 5.05. Optional Preservation of the Receivables . . . . . . . 33
SECTION 5.06. Limitation of Suits . . . . . . . . . . . . . . . . . 33
SECTION 5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest . . . . . . . . . . . . . . . . 34
SECTION 5.08. Restoration of Rights and Remedies . . . . . . . . . . 34
SECTION 5.09. Rights and Remedies Cumulative . . . . . . . . . . . . 34
SECTION 5.10. Delay or Omission Not a Waiver . . . . . . . . . . . . 34
SECTION 5.11. Control by Noteholders . . . . . . . . . . . . . . . . 35
SECTION 5.12. Waiver of Past Defaults . . . . . . . . . . . . . . . 35
SECTION 5.13. Undertaking for Costs . . . . . . . . . . . . . . . . 35
SECTION 5.14. Waiver of Stay or Extension Laws . . . . . . . . . . . 36
SECTION 5.15. Action on Notes . . . . . . . . . . . . . . . . . . . 36
SECTION 5.16. Performance and Enforcement of Certain Obligations . . 36
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee . . . . . . . . . . . . . 37
SECTION 6.02. Rights of Indenture Trustee . . . . . . . . . . . . . 38
SECTION 6.03. Individual Rights of Indenture Trustee . . . . . . . . 38
SECTION 6.04. Indenture Trustee's Disclaimer . . . . . . . . . . . . 38
SECTION 6.05. Notice of Defaults . . . . . . . . . . . . . . . . . . 39
SECTION 6.06. Reports by Indenture Trustee to Holders . . . . . . . 39
SECTION 6.07. Compensation and Indemnity . . . . . . . . . . . . . . 39
SECTION 6.08. Replacement of Indenture Trustee . . . . . . . . . . . 39
SECTION 6.09. Successor Indenture Trustee by Merger . . . . . . . . 40
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee . . . . . . . . . . . . . . . . . . 41
SECTION 6.11. Eligibility; Disqualification . . . . . . . . . . . . 42
SECTION 6.12. Preferential Collection of Claims Against Issuer . . . 42
SECTION 6.13. Pennsylvania Motor Vehicle Sales Finance Act
Licenses . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.03. Reports by Issuer . . . . . . . . . . . . . . . . . . 43
SECTION 7.04. Reports by Indenture Trustee . . . . . . . . . . . . . 43
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money . . . . . . . . . . . . . . . . . 43
SECTION 8.02. Trust Accounts . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.03. General Provisions Regarding Accounts . . . . . . . . 44
SECTION 8.04. Release of Trust Estate . . . . . . . . . . . . . . . 45
SECTION 8.05. Opinion of Counsel . . . . . . . . . . . . . . . . . . 46
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders 46
SECTION 9.02. Supplemental Indentures with Consent of Noteholders . 47
SECTION 9.03. Execution of Supplemental Indentures . . . . . . . . . 49
SECTION 9.04. Effect of Supplemental Indenture . . . . . . . . . . . 49
SECTION 9.05. Conformity with Trust Indenture Act . . . . . . . . . 49
SECTION 9.06. Reference in Notes to Supplemental Indentures . . . . 49
ARTICLE X
Redemption of Notes
SECTION 10.01. Redemption . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.02. Form of Redemption Notice . . . . . . . . . . . . . . 50
SECTION 10.03. Notes Payable on Redemption Date . . . . . . . . . . . 50
ARTICLE XI
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions, etc. . . . . . . 51
SECTION 11.02. Form of Documents Delivered to Indenture Trustee . . . 52
SECTION 11.03. Acts of Noteholders . . . . . . . . . . . . . . . . . 53
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.05. Notices to Noteholders; Waiver . . . . . . . . . . . . 54
SECTION 11.06. Alternate Payment and Notice Provisions . . . . . . . 55
SECTION 11.07. Conflict with Trust Indenture Act . . . . . . . . . . 55
SECTION 11.08. Effect of Headings and Table of Contents . . . . . . . 55
SECTION 11.09. Successors and Assigns . . . . . . . . . . . . . . . . 55
SECTION 11.10. Separability . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.11. Benefits of Indenture . . . . . . . . . . . . . . . . 55
SECTION 11.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.13. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.14. Counterparts . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.15. Recording of Indenture . . . . . . . . . . . . . . . . 56
SECTION 11.16. Trust Obligation . . . . . . . . . . . . . . . . . . . 56
SECTION 11.17. No Petition . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.18. Inspection . . . . . . . . . . . . . . . . . . . . . . 56
SCHEDULE A - Schedule of Receivables
EXHIBIT A-1 - Form of Class (A-1) Note
EXHIBIT A-2 - Form of Class (A-2) Note
EXHIBIT B - Form of Note Depository Agreement
INDENTURE dated as of ____________, 199_, between ____________________
TRUST 199_-_, a Delaware business trust (the "Issuer"), and
___________________, a ______________ banking corporation, 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) Asset Backed Notes and Class (A-2) (Floating Rate) Asset
Backed Notes (together, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture 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 _________ __, 199_ (including payments due on
or after _________ __, 199_ and collected after _________ __, 199_ and before
_________ __, 199_), in the case of Precomputed Receivables, and all moneys
received thereon on and after _________ __, 199_, in the case of Simple
Interest Receivables; (b) the security interests in the Financed Assets
granted by Obligors pursuant to the Receivables and any other interest of the
Issuer in such Financed Assets; (c) any proceeds with respect to the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Assets or Obligors; (d) any proceeds
with respect to the Receivables from recourse to Dealers thereon with respect
to which the Servicer has determined in accordance with its customary
servicing procedures that eventual payment in full is unlikely; (e) any
Financed Asset that shall have secured a Receivable and that shall have been
acquired by or on behalf of the Seller, the Depositor, the Servicer or the
Issuer; (f) 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); (g) the Sale and Servicing
Agreement; and (h) all present and future claims, demands, causes of action
and choses 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 thereof, 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 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, accepts the trusts under this Indenture
in accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that
the interests of the Holders of the Notes may be adequately and effectively
protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. (a) Definitions. Except as otherwise specified
herein or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement dated as
of ____________, 199( ) among the Administrator, the Issuer and the Indenture
Trustee.
"Administrator" means ______________________, a _____________
corporation, or any successor Administrator under the Administration
Agreement.
"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 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 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) and, so long as the Administration Agreement is in effect, any
Vice President or more senior officer of the Administrator who is authorized
to act for the Administrator in matters relating to the Issuer and to be
acted upon by the Administrator pursuant to the Administration Agreement and
who is identified on the list of Authorized Officers delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Receivables Purchase Agreement, the
Administration Agreement, the Note Depository Agreement, the Certificate
Depository Agreement and other documents and certificates delivered in
connection therewith.
"Book-Entry Notes" means a beneficial interest in the Class (A-1) and
Class (A-2) 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, a Sunday or a day on
which banking institutions or trust companies in The City of New York are
authorized or obligated by law, regulation or executive order to remain
closed.
"Calculation Agent" means the Indenture Trustee or any other Person
authorized by the Issuer to make the calculations described in Section 2.15
on behalf of the Trust and the Noteholders. The Indenture Trustee shall be
the initial Calculation Agent.
"Certificate Depository Agreement" has the meaning specified in
Section 1.01 of the Trust Agreement.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class (A-1) Notes" means the Class (A-1) (Floating Rate) Asset Backed
Notes, substantially in the form of Exhibit A-1.
"Class (A-2) Notes" means the Class (A-2) (Floating Rate) Asset Backed
Notes, substantially in the form of Exhibit A-2.
"Class (A-1) Interest Rate" means a per annum rate equal to LIBOR plus
____%, subject to a maximum rate with respect to any Floating Rate Interest
Accrual Period of __% per annum (computed on the basis of the actual number
of days in each Floating Rate Interest Accrual Period divided by 360).
"Class (A-2) Interest Rate" means a per annum rate equal to LIBOR plus
____%, subject to a maximum rate with respect to any Floating Rate Interest
Accrual Period of __% per annum (computed on the basis of the actual number
of days in each Floating Rate Interest Accrual Period divided by 360).
"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.
"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 at the date of execution of this Agreement is
located at ___________________________________________; Attention:
____________________, 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 at
the address designated by such successor Indenture Trustee by notice to 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 2.12.
"Depositor" means Morgan Stanley ABS Capital II Inc., in its capacity as
depositor under the Sale and Servicing Agreement, and its successor in
interest.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Floating Rate Interest Accrual Period" means the period from and
including the most recent Distribution Date on which interest has been paid
(or, in the case of the first Distribution Date, the Closing Date) to but
excluding the following Distribution Date.
"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 a 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 thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture Trustee" means __________________________, a
_____________________ 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
on 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 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is
Independent within the meaning thereof.
"Interest Rate" means the Class (A-1) Interest Rate or the Class (A-2)
Interest Rate.
"Interest Reset Date" means the first day of the applicable Interest
Reset Period.
"Interest Reset Period" means with respect to any Distribution Date, the
related Floating Rate Interest Accrual Period.
"Issuer" means _______________________ 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" or "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.
"LIBOR" means, with respect to the applicable Interest Reset Period, the
London interbank offered rate for U.S. dollar deposits for one month
determined by the Calculation Agent on the related LIBOR Determination Date
pursuant to Section 2.14.
"LIBOR Business Day" means any 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.
"LIBOR Determination Date" means (i) with respect to the first Interest
Reset Period, the second LIBOR Business Day prior to the Closing Date and
(ii) with respect to each Interest Reset Period thereafter, the second LIBOR
Business Day prior to the Interest Reset Date for such Interest Reset Period
for so long as the Class (A-2) Notes are outstanding.
"Note" means a Class (A-1) Note or a Class (A-2) Note.
"Note Depository Agreement" means the agreement dated ____________,
199_, among the Issuer, the Administrator, the Indenture Trustee and The
Depository Trust Company, as the initial Clearing Agency, relating to the
Class (A-1) Notes and Class (A-2) Notes, substantially in the form of
Exhibit B.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Officer's 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 11.01, and delivered
to the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's 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 an employee
of or counsel to the Issuer and who shall be satisfactory to the Indenture
Trustee, and which opinion or opinions shall be addressed to the Indenture
Trustee as Indenture Trustee, shall comply with any applicable requirements
of Section 11.01 and shall be in form and substance satisfactory to the
Indenture Trustee.
"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 with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee); and
(iii) Notes in exchange for or in lieu of which other Notes 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 other 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 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 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 Trust Agreement, or any
successor Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the Issuer to make payments to and
distributions from the Collection Account and the Note Distribution Account,
including payments of principal of or interest on the Notes on behalf of the
Issuer.
"Payment Date" means a Distribution Date.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall 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.
"Rating Agency" means a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, notice of
which designation shall be given to the Indenture Trustee, the Owner Trustee
and the Servicer. Any notice required to be given to a Rating Agency
pursuant to this Agreement shall also be given to _________________________
and ___________________________, although, except as set forth above, neither
shall be deemed to be a Rating Agency for any purposes of this Agreement.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement dated as of ____________, 199_, between the Seller, as seller and
the Depositor, as purchaser.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the day immediately preceding such
Distribution Date or Redemption Date or, if Definitive Notes have been issued
pursuant to Section 2.12, the 15th day of the preceding month.
"Redemption Date" means, in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to
Section 10.01(b), the Distribution Date specified by the Servicer or the
Issuer pursuant to Section 10.01(a) or (b), as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the
weighted average of the Interest Rates for each Class of Notes being so
redeemed to but excluding the Redemption Date, or (b) in the case of a
payment made to Noteholders pursuant to Section 10.01(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, Assistant Treasurer, 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.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of ____________, 199_, among the Issuer, the Depositor and
__________________, as Servicer.
"Schedule of Receivables" means the list of the Receivables set forth in
Schedule A (which Schedule may be in the form of microfiche).
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means ______________________, in its capacity as seller under
the Receivables Servicing Agreement, and its successor in interest.
"Servicer" means ____________________, in its capacity as servicer under
the Sale and Servicing Agreement, and any Successor Servicer thereunder.
"State" means any one of the 50 States of the United States of America
or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
"Telerate Page 3750" means the page so designated on the Dow Jones
Telerate Service or such other page as may replace that page on that service,
or such other service as may be nominated as the information vendor, for the
purpose of displaying London interbank offered rates of major banks.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to 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, capitalized terms used but not otherwise defined herein
have the respective meanings set forth in the Sale and Servicing Agreement
for all purposes of this Indenture.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
ARTICLE II
The Notes
SECTION 2.01. Form. The Class (A-1) Notes and the Class (A-2)
Notes, in each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form set forth in Exhibit A-1
and Exhibit A-2, 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 these methods (with or without
steel engraved borders), all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit A-1 and Exhibit A-2 are part of the terms of
this Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by 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 individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased 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 original issue in an aggregate principal
amount of $___________. The aggregate principal amount of Class (A-1) Notes
and Class (A-2) Notes outstanding at any time may not exceed such respective
amounts except as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of
$________ 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 2.03. Temporary Notes. Pending the preparation of
definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes that
are printed, lithographed, typewritten, mimeographed or otherwise produced,
of the tenor of the definitive Notes in lieu of which they are issued and
with such variations not inconsistent with the terms of this Indenture as the
officers executing such Notes may determine, as evidenced by their execution
of such Notes.
If temporary Notes are issued, the Issuer shall cause definitive Notes
to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive
Notes upon surrender of the temporary Notes at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes,
the Issuer shall execute, and the Indenture Trustee shall authenticate and
deliver in exchange therefor, a like principal amount of definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall in
all respects be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the "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 3.02, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or 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 shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
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 2.03 or 9.06 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If
(i) any mutilated Note is surrendered to the Indenture Trustee, or the
Indenture Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (ii) there is delivered to the Indenture
Trustee 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 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 2.06. 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 none of the Issuer, the Indenture Trustee or
any agent of the Issuer or the Indenture Trustee shall be affected by notice
to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) The Class (A-1) Notes and the Class (A-2) Notes shall accrue interest
at the Class (A-1) Interest Rate and the Class (A-1) Interest Rate,
respectively, as set forth in Exhibits A-1 and A-2, respectively, and such
interest shall be payable on each Distribution Date as specified therein,
subject to Section 3.01. Any installment of interest or principal payable on
a Note that is punctually paid or duly provided for by the Issuer on the
applicable Distribution 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 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 Distribution Date or on the applicable
class final scheduled Distribution Date (and except for the Redemption Price
for any Note called for redemption pursuant to Section 10.01(a)) which shall
be payable as provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Distribution Date as provided in the forms of the Notes set forth in
Exhibit A-1 and Exhibit A-2. 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 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. All principal payments on each Class of Notes
shall be made pro rata to the Noteholders of such Class entitled thereto.
The Indenture Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the
Distribution 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 or transmitted by facsimile prior to such final Distribution 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 10.02.
(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) at the applicable Interest Rate 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 15 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 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture
Trustee and shall be promptly cancelled by the Indenture Trustee. The Issuer
may at any time deliver to the Indenture Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Indenture Trustee. No Notes shall be authenticated
in lieu of or in exchange for any Notes cancelled as provided in this
Section, except as expressly permitted by this Indenture. All cancelled
Notes may be held or disposed of by the Indenture Trustee in accordance with
its standard retention or disposal policy as in effect at the time unless the
Issuer shall direct by an Issuer Order that they be destroyed or returned to
it; provided, that such Issuer Order is timely and the Notes have not been
previously disposed of by the Indenture Trustee.
SECTION 2.09. Release of Collateral. Subject to Section 11.01 and
the terms of the Basic Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and
Independent Certificates in accordance with TIA SectionSection 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 typewritten 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. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Owner thereof will receive a
definitive Note 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 such 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;
(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 Note 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 under this Indenture,
unless and until Definitive Notes shall have been issued to such 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 such Note Owners.
SECTION 2.12. Definitive Notes. If (i) the Administrator advises
the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to
the Book-Entry Notes and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Indenture Trustee
in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default or a
Servicer Default, Owners of the Book-Entry Notes representing beneficial
interests aggregating at least a majority of the Outstanding Amount of such
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 such 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 Notes representing the
Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall 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.
SECTION 2.13. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for
federal, state and local income, single business and franchise tax purposes,
the Notes will qualify as indebtedness of the Issuer secured by the Trust
Estate. The Issuer, by entering into this Indenture, and each Noteholder, by
its acceptance of a Note (and each Note Owner by its acceptance of an
interest in the applicable Book-Entry Note), agree to treat the Notes for
federal, state and local income, single business and franchise tax purposes
as indebtedness of the Issuer.
SECTION 2.14. Determination of LIBOR. (a) On each LIBOR
Determination Date, the Calculation Agent shall calculate LIBOR for the
related Interest Reset Period using the following method. If the offered
rate for United States dollar deposits for one month appears on Telerate Page
3750 as of 11:00 A.M., London Time, on such LIBOR Determination Date, LIBOR
for the related Interest Reset Period shall be such rate as it appears on
Telerate Page 3750. If such rate does not appear on Telerate Page 3750 on
any LIBOR Determination Date, the Calculation Agent will request each of the
reference banks (which shall be major banks that are engaged in transactions
in the London interbank market selected by the Calculation Agent) to provide
the Calculation Agent with its offered quotation for United States dollar
deposits for one month to prime banks in the London interbank market as of
11:00 A.M., London time, on such date. If at least two reference banks
provide the Calculation Agent with such offered quotations, LIBOR on such
date will be the arithmetic mean, rounded upwards, if necessary, to the
nearest 1/100,000 of 1%, with five one-millionths of a percentage point
rounded upwards, of all such quotations. If on such date fewer than two
reference banks provide the Calculation Agent with such offered quotations,
LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1%, with five one-millionths of a
percentage point rounded upwards, of the offered per annum rates that one or
more leading banks in The City of New York selected by the Calculation Agent
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. If such
banks in The City of New York are not quoting as provided above, LIBOR for
such date will be LIBOR applicable to the Interest Reset Period immediately
preceding such Interest Reset Period.
SECTION 2.15. Initial Calculation Agent; Replacement of Calculation
Agent. The Indenture Trustee shall be the initial Calculation Agent. If the
Calculation Agent is unable to perform its obligations under Section 2.14,
the Owner Trustee shall appoint a successor Calculation Agent, which
successor Calculation Agent shall be acceptable to the Indenture Trustee and
shall meet the eligibility requirements hereunder for the Indenture Trustee.
ARTICLE III
Covenants
SECTION 3.01. 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, subject to Section 8.02(c), the Issuer will cause to
be distributed all amounts on deposit in the Note Distribution Account on a
Distribution Date deposited therein pursuant to the Sale and Servicing
Agreement (i) for the benefit of the Class (A-1) Notes, to the Class (A-1)
Noteholders, and (ii) for the benefit of the Class (A-2) Notes, to the
Class (A-2) Noteholders. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will
maintain in the Borough of Manhattan, The City of New York, 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 the Indenture Trustee to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the
address thereof, such surrenders, notices and demands may be made or served
at the Corporate Trust Office, and the Issuer hereby appoints the Indenture
Trustee as its agent to receive all such surrenders, notices and demands.
SECTION 3.03. Money for Payments To Be Held in Trust. 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.
On or before the Business Day preceding each Distribution 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 all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) of which it has actual
knowledge 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 trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer 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, shall at the expense and direction of the Issuer
cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in The
City of New York, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Issuer. The Indenture Trustee shall also adopt and employ, at
the expense and direction 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 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other State or of the United States
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 3.05. Protection of Trust Estate. 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
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 its agent and attorney-in-
fact to execute any financing statement, continuation statement or other
instrument required to be executed pursuant to this Section 3.05.
SECTION 3.06. 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 any 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 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 3.07. Performance of Obligations; Servicing of Receivables.
(a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument
or agreement included in the 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 Sale 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 Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Servicer and the Administrator
to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the 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 Sale 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 Sale 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 the Sale 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 8.01
of the Sale 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. 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 Sale 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 $100,000,000 and whose
regular business includes the servicing of Contracts and (ii) enter into a
servicing agreement with the Issuer having substantially the same provisions
as the provisions of the Sale 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 Sale and Servicing Agreement, and in accordance
with Section 8.02 of the Sale 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
individual capacity 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 Sale and Servicing Agreement, the
Indenture Trustee shall be entitled to appoint as Servicer any one of its
affiliates, provided that it shall be 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 Sale 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 (i) that it will not, without
the prior written consent of the Indenture Trustee or the Holders of at 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 Sale and Servicing Agreement)
or the Basic Documents, or waive timely performance or observance by the
Servicer or the Depositor under the Sale and Servicing Agreement; and (ii)
that any such amendment shall not (A) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that are
required to be made for the benefit of the Noteholders or (B) reduce the
aforesaid percentage of the Notes that is 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 deem
necessary or appropriate in the circumstances.
SECTION 3.08. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, the Purchase
Agreement or the Sale 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 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; or
(iii) (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 any of the Financed Assets
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 3.09. 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
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and
of its 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 its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
(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 Issuer, any Noteholder or any Certificateholder;
(v) any action that 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 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 (A) shall be a United States citizen or a Person
organized and existing under the laws of the United 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 Issuer, any Noteholder or any Certificateholder;
(v) any action that 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. (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), ____________________ Trust 199_-_
will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Indenture Trustee
stating that ____________________ Trust 199_-_ 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 and activities incidental thereto. The Issuer shall not fund the
purchase of any new Contracts purchased with funds in the Reserve Account.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.09, 4.10, 4.11 and 5.09(b) and Article IX
of the Sale and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
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.
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, (x) distributions as contemplated by, and to the extent funds are
available for such purpose under, the Sale and Servicing Agreement or the
Trust Agreement and (y) payments to the Indenture Trustee pursuant to
Section 1(a)(ii) of the Administration Agreement. The Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Basic Documents.
SECTION 3.19. Notice of Events of Default. The Issuer shall give
the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder, each default on the part of the Servicer or the
Depositor of its obligations under the Sale and Servicing Agreement and each
default on the part of the Depositor or the Seller of its obligations under
the Receivables Purchase 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 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes
except as to (i) rights of registration of transfer and exchange,
(ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights
of Noteholders to receive payments of principal thereof and interest thereon,
(iv) Sections 3.03, 3.04, 3.05, 3.08, 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 6.07 and the obligations of the
Indenture Trustee under Section 4.02) 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 at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.05 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Class (A-2) Final
Scheduled Distribution Date within one year, or
c. 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 a., b. or c. 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
to the applicable final scheduled Distribution Date or Redemption Date
(if Notes shall have been called for redemption pursuant to
Section 10.01(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 Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of
Section 11.01(a) and, subject to Section 11.02, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
SECTION 4.02. Application of Trust Money. All moneys deposited
with the Indenture Trustee pursuant to Section 4.01 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 Sale and Servicing
Agreement or required by law.
SECTION 4.03. 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 3.03 and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.01. Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(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
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 misrepresentation 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 25% 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 of 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 60 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 any 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 Officer's Certificate of
any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (iii), its status and what action the Issuer
is taking or proposes to take with respect thereto.
SECTION 5.02. 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 not less than
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 such 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 payments 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 5.03. 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 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 on the overdue principal and, to the
extent payment at such rate of interest shall be legally enforceable, on
overdue installments of interest at the 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
Trustee may, as more particularly provided in Section 5.04, 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, or liquidator, sequestrator or similar official shall have
been appointed for or taken possession of the Issuer or its property or such
other obligor or Person, or in case of any other comparable judicial
Proceedings relative to the Issuer or other obligor upon the Notes, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered,
by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim
for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred, 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 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 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 or
other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the 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 5.04. 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 5.05):
(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 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 662/3% 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 6.07;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for interest (including any premium), ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for interest (including any premium);
THIRD: to Holders of the Class (A-1) Notes for amounts due and
unpaid on the Class (A-1) Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class (A-1) Notes for principal, until the Outstanding
Amount of the Class (A-1) Notes is reduced to zero;
FOURTH: to Holders of the Class (A-2) Notes for amounts due and
unpaid on the Class (A-2) Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class (A-2) Notes for principal, until the Outstanding
Amount of the Class (A-2) Notes is reduced to zero;
FIFTH: to the Issuer for amounts required to be distributed
pursuant to the Trust Agreement.
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 5.05. Optional Preservation of the Receivables. If the
Notes have been declared to be due and payable under Section 5.02 following
an Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee 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 account when determining whether or not
to maintain possession of the Trust Estate. In determining whether 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 proposed
action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.06. Limitation of Suits. No Holder of any Note shall
have any right to institute any Proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the 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 reasonable 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 is understood and intended that no one or more Holders of Notes 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 Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of 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.
SECTION 5.07. 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 and 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 5.08. 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 5.09. 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:
(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 5.04, any
direction to the Indenture Trustee to sell or liquidate the Trust Estate
shall be by Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 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 100% 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.
Notwithstanding the rights of Noteholders set forth in this Section, subject
to Section 6.01, the Indenture Trustee need not take any action that it
determines 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 5.02,
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 a Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to (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 10% 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 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, 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 had 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 5.04(b).
SECTION 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so and at
the Administrator's expense, the Issuer shall take all such lawful action as
the Indenture Trustee may request to compel or secure the performance and
observance by the Depositor or the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement or by the Seller or the Depositor, as applicable, of each of their
obligations under or in connection with the Receivables Purchase Agreement,
and to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale 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 Sale and Servicing
Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of 662/3% 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 Sale and Servicing
Agreement, or against the Seller or the Depositor under or in connection with
the Receivables Purchase Agreement, including the right or power to take any
action to compel or secure performance or observance by the Seller or the
Servicer or the Depositor, as the case may be, of each of their obligations
to the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Sale and Servicing Agreement or the
Receivables Purchase Agreement, as the case may be, and any right of the
Issuer to take such action shall be suspended.
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of
Default has occurred and is continuing, 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 the 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 to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(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.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) 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 Sale 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
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
SECTION 6.02. 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 Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, 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, that the Indenture Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.03. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuer or its
Affiliates with the same rights it would have if it were not Indenture
Trustee. Any Paying Agent, Note Registrar, co-registrar or co-paying agent
may do the same with like rights. However, the Indenture Trustee must comply
with Sections 6.11 and 6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture 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 6.05. Notice of Defaults. If a Default occurs and is
continuing and if it is 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 provisions of such Note), the Indenture Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders. The
Indenture Trustee shall deliver to each Noteholder such information as may be
required to enable such holder to prepare its federal and state income tax
returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall, or
shall cause the Administrator 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 Administrator 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 Administrator to, indemnify the Indenture Trustee against any
and all loss, liability or expense (including attorneys' fees) incurred by it
in connection with the administration of this trust and the performance of
its duties hereunder. The Indenture Trustee shall notify the Issuer and the
Administrator promptly of any claim for which it may seek indemnity. Failure
by the Indenture Trustee to so notify the Issuer and the Administrator shall
not relieve the Issuer or the Administrator of its obligations hereunder.
The Issuer shall, or shall cause the Administrator to, defend any such claim,
and the Indenture Trustee may have separate counsel and the Issuer shall, or
shall cause the Administrator to, pay the fees and expenses of such counsel.
Neither the Issuer nor the Administrator need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's 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 5.01(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.
SECTION 6.08. 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 6.08. 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.
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 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 and the Administrator's obligations under
Section 6.07 shall continue for the benefit of the retiring Indenture
Trustee.
SECTION 6.09. Successor Indenture Trustee by Merger. If the
Indenture Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall
provide the Rating Agencies prior written notice of any such transaction.
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-Indenture Trustee or Separate
Indenture 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 Estate may at the time be
located, the Indenture Trustee shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee
or co-trustees, 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 Estate, 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 notice to Noteholders of the appointment of any co-
trustee or separate trustee shall be required under Section 6.08 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 Estate 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 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 Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition, and the time deposits of the Indenture Trustee shall be rated at
least A-1 by Standard & Poor's and P-1 by Moody's. The Indenture Trustee
shall comply with TIA Section 310(b), including the optional provision
permitted by the second sentence of TIA Section 310(b)(9); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA
Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
SECTION 6.13. Pennsylvania Motor Vehicle Sales Finance Act Licenses.
The Indenture Trustee shall use its best efforts to maintain the
effectiveness of all licenses required under the Pennsylvania Motor Vehicle
Sales Finance Act in connection with this Indenture and the transactions
contemplated hereby until the lien and security interest of this Indenture
shall no longer be in effect in accordance with the terms hereof.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished
to the Indenture Trustee (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, and
(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.
SECTION 7.02. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 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 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) that the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) and by rules and regulations prescribed from time
to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04. Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each ____________ beginning with
____________, 199_, the Indenture Trustee shall mail to each Noteholder as
required by TIA Section 313(c) a brief report dated as of such date that
complies with TIA Section 313(a). The Indenture Trustee also shall comply
with TIA Section 313(b).
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 8.01. 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 8.02. 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
Sale and Servicing Agreement.
(b) On or before each Distribution 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 Sale and Servicing
Agreement. On or before each Distribution Date, all amounts required to be
deposited in the Note Distribution Account with respect to the preceding
Collection Period pursuant to Sections 5.06 and 5.07 of the Sale and
Servicing Agreement will be transferred from the Collection Account and/or
the Reserve Account to the Note Distribution Account.
(c) On each Distribution 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 (including any premium) in
the following amounts and in the following order of priority (except as
otherwise provided in Section 5.04(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 the 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 Holders of the Class (A-1) Notes on account of
principal until the Outstanding Amount of the Class (A-1) Notes is
reduced to zero; and
(iii) to the Holders of the Class (A-2) Notes on account of
principal until the Outstanding Amount of the Class (A-2) Notes is
reduced to zero.
SECTION 8.03. 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 (or the investment
manager referred to in clause (2) of Section 5.01(b) of the Sale and
Servicing Agreement) upon Issuer Order, subject to the provisions of
Section 5.01(b) of the Sale and Servicing Agreement. All income or other
gain from investments of moneys deposited in the Trust Accounts shall be
deposited by the Indenture Trustee in the Collection Account, and any loss
resulting from such investments shall be charged to such 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 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 6.01(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 trustee, in accordance
with their terms.
(c) If (i) the Issuer (or the Servicer or any investment manager
pursuant to Section 5.01(b) of the Sale and Servicing Agreement) shall have
failed to give investment directions for any funds on deposit in the Trust
Accounts to the Indenture Trustee by 11:00 a.m. Eastern 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 5.02 or (iii) if such Notes
shall have been declared due and payable following an Event of Default but
amounts collected or receivable from the Trust Estate are being applied in
accordance with Section 5.05 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 8.04. Release of Trust Estate. (a) Subject to the
payment of its fees and expenses pursuant to Section 6.07, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article 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 moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07
have been paid, release any remaining portion of the 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. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and
(if required by the TIA) Independent Certificates in accordance with TIA
SectionSection 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.01.
SECTION 8.05. 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 8.04(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, except in connection
with any action contemplated by Section 8.04(c), 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 9.01. 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 (which shall conform to
the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required
to be subjected to the lien 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 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 that 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 adversely affect 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, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder.
SECTION 9.02. Supplemental Indentures with Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior notice to 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
rights 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 of
or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions 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;
(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 Distribution 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 9.03. Execution of Supplemental Indentures. In executing,
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02, shall be fully 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 9.04. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and shall 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 9.05. 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 9.06. 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 10.01. Redemption. (a) The Class (A-2) Notes are subject
to redemption in whole, but not in part, at the direction of the Servicer
pursuant to Section 9.01(a) of the Sale and Servicing Agreement, on any
Distribution Date on which the Servicer exercises its option to purchase the
Trust Estate pursuant to said Section 9.01(a), for a purchase price equal to
the Redemption Price; provided, 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 Class (A-2)
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 20 days prior to the Redemption Date and the Issuer shall deposit
by 10:00 A.M. New York City time on the Redemption Date with the Indenture
Trustee in the Note Distribution Account the Redemption Price of the Class
(A-2) Notes to be redeemed, whereupon all such Class (A-2) Notes shall be due
and payable on the Redemption Date upon the furnishing of a notice complying
with Section 10.02 to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.02 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 10.01(b), the Servicer
or the Issuer shall, to the extent practicable, furnish notice of such event
to the Indenture Trustee not later than 20 days prior to the Redemption Date,
whereupon all such amounts shall be payable on the Redemption Date.
SECTION 10.02. Form of Redemption Notice. (a) Notice of
redemption under Section 10.01(a) shall be given by the Indenture Trustee by
first-class mail, postage prepaid, or by facsimile mailed or transmitted not
later than 10 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 or facsimile number
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair
or affect the validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not required
to be given to Noteholders.
SECTION 10.03. 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 10.01(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 11.01. Compliance Certificates and Opinions, etc. (a)
Upon any application or request by the Issuer to the Indenture Trustee to
take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with, (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting
the applicable requirements of this Section, 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:
(1) 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;
(2) 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;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) 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 11.01(a) or elsewhere in this Indenture, furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such 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 Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Indenture Trustee 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 10% 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 Officer's Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(iii) 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 Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed
to be released and stating that in the opinion of such person the
proposed release will not impair the security under this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property, other than property as
contemplated by clause (v) below 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 10% 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 Officer's Certificate is less than $25,000 or less than one
percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.10 or any other provision of this
Section, the Issuer may, without compliance with the requirements of the
other provisions of this Section, (A) collect, liquidate, sell or
otherwise dispose of Receivables or Financed Assets 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, so long as the Issuer shall deliver to the
Indenture Trustee every six months, commencing ______________, 199__, an
Officer's Certificate of the Issuer stating that all the dispositions of
Collateral described in clauses (A) or (B) above that occurred during
the preceding six calendar months were in the ordinary course of the
Issuer's business and that the proceeds thereof were applied in
accordance with the Basic Documents.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee. In
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person,
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
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, the Issuer or the
Administrator, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Depositor, the Issuer or
the Administrator, 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.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of
such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
SECTION 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except
as herein otherwise expressly provided such action shall become effective
when such instrument or instruments are delivered to the Indenture Trustee
and, where it is hereby expressly required, to the Issuer. Such instrument
or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Noteholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Indenture
Trustee and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(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 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at its Corporate Trust
Office, or
(ii) 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:
_______________ Trust 199_-_, in care of ____________________,
_______________________________________________, Attention of
___________________, or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer or the Administrator.
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 Ratings Services, a division of The McGraw-Hill Companies, Inc., 25
Broadway (15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department, (iii) in the case of Fitch Investors Service, L.P.,
at the following address: One State Street Plaza, New York, N.Y. 10004, and
(iv) in the case of Duff & Phelps Credit Rating Co., at the following
address: 17 State Street, 12th Floor, New York, N.Y. 10004; or as to each of
the foregoing, at such other address as shall be designated by written notice
to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Holder's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice
so mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event
of Default.
SECTION 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for
in this Indenture for such payments or notices. The Issuer will furnish to
the Indenture Trustee a copy of each such agreement and the Indenture Trustee
will cause payments to be made and notices to be given in accordance with
such agreements.
SECTION 11.07. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA SectionSection 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 11.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture
Trustee in this Indenture shall bind its successors, co-trustees and agents.
SECTION 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, and no
interest shall accrue for the period from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. THIS 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 SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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 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
Article 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
Issuer, or join in any institution against the Depositor or the Issuer of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the 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, all 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.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized and duly attested, all as of the day and year first above
written.
(_________________________) 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:
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
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
_______________________ TRUST 199_-_, a Delaware business trust, and that he
executed the same as the act of 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 ____th day of ________,
199_.
Notary Public in and for the State of New York.
My commission expires:
________________________________________________
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
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 ______________________________, a
________________ banking corporation, and that she executed the same as the
act of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____th day of
_____________, 199_.
Notary Public in and for the State of New York.
My commission expires:
________________________________________
SCHEDULE A
Provided to the Owner Trustee at Closing
EXHIBIT A-1
(FORM OF CLASS A-1 NOTE)
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.
REGISTERED $____________
No. R-__ CUSIP NO. ____________
(_____________) TRUST 199_-_
CLASS A-1 FLOATING RATE ASSET BACKED NOTES
(____________) Trust 199_-_, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of ____________________________ DOLLARS payable on
each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $____________ 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 3.01 of the Indenture
dated as of ____________, 199__ (the "Indenture"), between the Issuer and
______________________, a ___________ banking corporation, as Indenture
Trustee (the "Indenture Trustee"); provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of the
______________ ______ Distribution Date (the "Class A-1 Final Scheduled
Distribution Date") and the Redemption Date, if any, pursuant to
Section 10.01(a) of the Indenture. No payments of principal of the Class A-2
Notes shall be made until the Class A-1 Notes have been paid in full.
Capitalized terms used but not defined herein are defined in Article I of the
Indenture, which also contains rules as to construction that shall be
applicable herein.
The Issuer will pay interest on this Note at a rate per annum equal to
LIBOR plus 0.____%, subject to a maximum rate of ___% per annum, on each
Distribution Date until the principal of this Note is paid or made available
for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the last sentence of Section 3.01 of the Indenture. LIBOR for
each Interest Reset Period and related Distribution Date will be determined
on the related LIBOR Determination Date by the Calculation Agent as set forth
in Section 2.14 of the Indenture. All determinations of LIBOR by the
Calculation Agent shall, in the absence of manifest error, be conclusive for
all purposes, and each Holder of this Note, by accepting a Class A-1 Note,
agrees to be bound by such determination. Interest on this Note will accrue
for each Distribution Date from the Closing Date (in the case of the first
Distribution Date) or from the most recent Distribution Date on which
interest has been paid to but excluding such Distribution Date. Interest
will be computed on the basis of the actual number of days in each Floating
Rate Interest Accrual Period divided by 360. 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 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, 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, as of the date set forth
below.
Date: ________________ 199( - ),
by: ( ), not in its individual
capacity but solely as Owner Trustee under the
Trust Agreement,
by: _____________________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date: ( ), not in
its individual capacity but solely as
Indenture Trustee,
by: _____________________________________________
Authorized Signatory
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 Floating Rate Asset Backed Notes (herein called
the "Class A-1 Notes"), all issued 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 Class A-1 Notes are
subject to all terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes (together, 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 Class A-1 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means
the ____ day of each month, 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 the Class A-1 Final Scheduled
Distribution Date 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 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 Class A-1 Notes shall be made pro
rata to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
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 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 Distribution 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 Distribution 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 Distribution Date by
notice mailed or transmitted by facsimile prior to such Distribution 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 City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Interest Rate to the extent lawful.
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
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, 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 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 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 by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Depositor or the Issuer, or join
in any institution against the Depositor or the Issuer 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.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
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 none of the Issuer, the Indenture Trustee or 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 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 in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of _________________ in its individual
capacity, _________________ in its individual capacity, any owner of a
beneficial interest in the Issuer, or 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 this Note or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
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.
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: ____________________________ ____________________________________*/
Signature Guaranteed:
___________________________________*/
________________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the
within Note in every particular, without alteration, enlargement or
any change whatever. Such signature must be guaranteed by an
"eligible guarantor institution" meeting the requirements of the
Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
EXHIBIT A-2
(FORM OF CLASS A-2 NOTE)
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.
REGISTERED $____________
No. R-__ CUSIP NO. ____________
(_____________) TRUST 199_-_
CLASS A-2 FLOATING RATE ASSET BACKED NOTES
(____________) Trust 199_-_, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of DOLLARS payable
on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $____________ 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 3.01 of the Indenture dated as of
___________, 199__ (the "Indenture"), between the Issuer and _____________, a
___________ banking corporation, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the ___________ ____
Distribution Date (the "Class A-2 Final Scheduled Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.01(a) of the Indenture. No
payments of principal of the Class A-2 Notes shall be made until the Class A-
1 Notes have been paid in full. Capitalized terms used but not defined
herein are defined in Article I of the Indenture, which also contains rules
as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at a rate per annum equal to
LIBOR plus ____%, subject to a maximum rate of ____% per annum, on each
Distribution Date until the principal of this Note is paid or made available
for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the last sentence of Section 3.01 of the Indenture. LIBOR for
each Interest Reset Period and related Distribution Date will be determined
on the related LIBOR Determination Date by the Calculation Agent as set forth
in Section 2.14 of the Indenture. All determinations of LIBOR by the
Calculation Agent shall, in the absence of manifest error, be conclusive for
all purposes, and each Holder of this Note, by accepting a Class A-2 Note,
agrees to be bound by such determination. Interest on this Note will accrue
for each Distribution Date from the Closing Date (in the case of the first
Distribution Date) or from the most recent Distribution Date on which
interest has been paid to but excluding such Distribution Date. Interest
will be computed on the basis of the actual number of days in each Floating
Rate Interest Accrual Period divided by 360. 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 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, 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, as of the date set forth
below.
Date: (______________) TRUST 199_-_,
by: ( ), not in its individual
capacity but solely as Owner Trustee under the
Trust Agreement,
by: ______________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date: ( ), not in its individual
capacity but solely as Indenture Trustee,
by: _____________________________________________
Authorized Signatory
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 Floating Rate Asset Backed Notes (herein called
the "Class A-2 Notes"), all issued 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 Class A-2 Notes are
subject to all terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes, (together, 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 Class A-2 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means
the sixth day of each month, 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 the Class A-2 Final Scheduled
Distribution Date 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 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 Class A-2 Notes shall be made pro
rata to the Class A-2 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
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 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 Distribution 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 Distribution 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 Distribution Date by
notice mailed or transmitted by facsimile prior to such Distribution 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 City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Interest Rate to the extent lawful.
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
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, 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 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 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 by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Depositor or the Issuer, or join
in any institution against the Depositor or the Issuer 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.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
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 none of the Issuer, the Indenture Trustee or 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 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 in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of __________________________ in its
individual capacity, The _______________ in its individual capacity, any
owner of a beneficial interest in the Issuer, or 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 this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
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.
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: ___________________________ _________________________________*/
Signature Guaranteed:
_________________________________*/
________________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the
within Note in every particular, without alteration, enlargement or
any change whatever. Such signature must be guaranteed by an
"eligible guarantor institution" meeting the requirements of the
Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
EXHIBIT A-3
EXHIBIT B
(Form of Note Depository Agreement)
Letter of Representations
(To be Completed by Issuer and Trustee)
___________________________________
(Name of Issuer)
___________________________________
(Name of Trustee)
______________
(Date)
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: ______________________________________________________
______________________________________________________
______________________________________________________
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Trustee will act
as trustee with respect to the Securities pursuant to a trust indenture dated
_____________________, 199__ (the "Document"). ________________________
(the "Underwriter") is distributing the Securities through The Depository
Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities,
Issuer and Trustee make the following representations to DTC:
1. Prior to closing on the Securities on _____________________, 199_,
there shall be deposited with DTC one Security certificate registered in the
name of DTC's nominee, Cede & Co., for each stated maturity of the Securities
in the face amounts set forth on Schedule A hereto, the total of which
represents 100% of the principal amount of such Securities. If, however, the
aggregate principal amount of any maturity exceeds $200 million, one
certificate will be issued with respect to each $200 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount. Each Security certificate shall bear the
following legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to Issuer or its agent for registration of transfer, exchange,
or payment, and any certificate issued is registered in the name of Cede
& Co. or in such other name as 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.
2. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer or Trustee shall establish a record date
for such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 15 calendar days in advance of such record
date. Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212) 709-6897, and
receipt of such notices shall be confirmed by telephoning (212) 709-6870.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to DTC's Reorganization Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Trustee
shall send a notice to DTC specifying: (a) the amount of the redemption or
refunding; (b) in the case of a refunding, the maturity date(s) established
under the refunding; and (c) the date such notice is to be mailed to Security
holders or published (the "Publication Date"). Such notice shall be sent to
DTC by a secure means (e.g., legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such notice is
in DTC's possession no later than the close of business on the business day
before or, if possible, two business days before the Publication Date.
Issuer or Trustee shall forward such notice either in a separate secure
transmission for each CUSIP number or in a secure transmission for multiple
CUSIP numbers (if applicable) which includes a manifest or list of each CUSIP
number submitted in that transmission. (The party sending such notice shall
have a method to verify subsequently the use of such means and the timeliness
of such notice.) The Publication Date shall be not less than 30 days nor more
than 60 days prior to the redemption date or, in the case of an advance
refunding, the date that the proceeds are deposited in escrow. Notices to
DTC pursuant to this Paragraph by telecopy shall be sent to DTC's Call
Notification Department at (516) 227-4039 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC confirming
that the notice has been received, such party shall telephone (516) 227-4070.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or
Trustee to Security holders specifying the terms of the tender and the
Publication Date of such notice shall be sent to DTC by a secure means in the
manner set forth in the preceding Paragraph. Notices to DTC pursuant to this
Paragraph and notices of other corporate actions by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094, and
receipt of such notices shall be confirmed by telephoning (212) 709-6884.
Notices to DTC pursuant to the above by mail or by any other means shall be
sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
5. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
6. Trustee shall send DTC written notice with respect to the dollar
amount per $1,000 original face value (or other minimum authorized
denomination if less than $1,000 face value) payable on each payment date
allocated as to the interest and principal portions thereof preferably 5, but
not less than 2, business days prior to such payment date. Such notices,
which shall also contain the current pool factor, and special adjustments to
principal/interest rates (e.g., adjustments due to deferred interest or
shortfall), and Trustee contact's name and telephone number, shall be sent by
telecopy to DTC's Dividend Department at (212) 709-1723, or if by mail or by
any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
7. (NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT
THE OTHER:) (The interest accrual period is record date to record date.) (The
interest accrual period is payment date to payment date.)
8. Trustee must provide DTC, no later than noon (Eastern Time) on the
payment date, CUSIP numbers for each issue for which payment is being sent,
as well as the dollar amount of the payment for each issue. Notification of
payment details should be sent using automated communications.
9. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee
of DTC, or its registered assigns in same-day funds, no later than 2:30 p.m.
(Eastern Time) on each payment date (in accordance with existing arrangements
between Issuer or Trustee and DTC). Absent any other arrangements between
Issuer or Trustee and DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
Issuer or Trustee shall provide interest payment information to a standard
announcement service subscribed to by DTC. In the unlikely event that no
such service exists, Issuer or Trustee shall provide interest payment
information directly to DTC in advance of the interest payment date as soon
as the information is available. This information should be conveyed
directly to DTC electronically. If electronic transmission is not available,
absent any other arrangements between Trustee and DTC, such information
should be sent by telecopy to DTC's Dividend Department at (212) 709-1723 or
(212) 709-1686, and receipt of such notices shall be confirmed by telephoning
(212) 709-1270. Notices to DTC pursuant to the above by mail or by any other
means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
10. DTC shall receive maturity and redemption payments allocated with
respect to each CUSIP number on the payable date in same-day funds by 2:30
p.m. (Eastern Time). Absent any other arrangements between Trustee and DTC,
such payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth
in DTC's SDFS Paying Agent Operating Procedures, a copy of which has
previously been furnished to Trustee.
11. DTC shall receive all reorganization payments and CUSIP-level
detail resulting from corporate actions (such as tender offers, remarketings,
or mergers) on the first payable date in same-day funds by 2:30 p.m. (Eastern
Time). Absent any other arrangements between Trustee and DTC, such payments
shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Reorganization Account 066-027608
12. DTC may direct Issuer or Trustee to use any other number or address
as the number or address to which notices or payments of interest or
principal may be sent.
13. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or
Trustee's invitation) necessitating a reduction in the aggregate principal
amount of Securities outstanding or an advance refunding of part of the
Securities outstanding, DTC, in its discretion: (a) may request Issuer or
Trustee to issue and authenticate a new Security certificate; or (b) may make
an appropriate notation on the Security certificate indicating the date and
amount of such reduction in principal except in the case of final maturity,
in which case the certificate will be presented to Issuer or Trustee prior to
payment, if required.
14. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trustee
shall notify DTC of the availability of certificates. In such event, Issuer
or Trustee shall issue, transfer, and exchange certificates in appropriate
amounts, as required by DTC and others.
15. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Trustee (at which time DTC will confirm with Issuer or Trustee the
aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Trustee shall cooperate fully with
DTC by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.
16. Issuer: (a) understands that DTC has no obligation to, and will
not, communicate to its Participants or to any person having an interest in
the Securities any information contained in the Security certificate(s); and
(b) acknowledges that neither DTC's Participants nor any person having an
interest in the Securities shall be deemed to have notice of the provisions
of the Security certificates by virtue of submission of such certificate(s)
to DTC.
17. Nothing herein shall be deemed to require Trustee to advance funds
on behalf of Issuer.
Notes: Very truly yours,
A. If there is a Trustee (as
defined in this Letter of _________________________________
Representations), Trustee as well (Issuer)
as Issuer must sign this Letter.
If there is no Trustee, in signing By: _____________________________
this Letter Issuer itself (Authorized Officer's Signature)
undertakes to perform all of the
obligations set forth herein. _________________________________
(Trustee)
B. Schedule B contains statements
that DTC believes accurately By: _______________________________
describe DTC, the method of (Authorized Officer's Signature)
effecting book-entry transfers of
securities distributed through DTC,
and certain related matters.
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: _________________________
cc: Underwriter
Underwriter's Counsel
SCHEDULE A
_____________________________________________
_____________________________________________
(Describe Issue)
CUSIP Principal Amount Maturity Date Interest Rate
- ----- ---------------- ------------- -------------
SCHEDULE B
SAMPLE OFFICIAL STATEMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(PREPARED BY DTC--BRACKETED MATERIAL MAY BE APPLICABLE ONLY TO CERTAIN
ISSUES)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities
will be issued as fully-registered securities registered pin the name of Cede
& Co. (DTC's partnership nominee). One fully-registered Security certificate
will be issued for (each issue of the Securities, (each) in the aggregate
principal amount of such issue, and will be deposited with DTC. (If,
however, the aggregate principal amount of (any) issue exceeds $200 million,
one certificate will be issued with respect to each $200 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount of such issue.)
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities
on DTC's records. The ownership interest of each actual purchaser of each
Security ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Securities, except in the event that use of the
book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
(6. Redemption notices shall be sent to Cede & Co. If less than all of
the Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.)
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Securities are credited on the record date (identified in
a listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on payable
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on payable
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC,
Trustee, or Issuer, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to DTC
is the responsibility of the Issuer or Trustee, disbursement of such payments
to Direct Participants shall be the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners shall be the responsibility of
Direct and Indirect Participants.
(9. A Beneficial Owner shall give notice to elect to have its
Securities purchased or tendered, through its Participant, to Trustee (or
Tender/Remarketing Agent), and shall effect delivery of such Securities by
causing the Direct Participant to transfer the Participant's interest in the
Securities, on DTC's records, to Trustee (or Tender/Remarketing Agent). The
requirement for physical delivery of Securities in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the
ownership rights in the Securities are transferred by Direct Participants on
DTC's records and followed by a book-entry credit of tendered Securities to
Trustee (or Tender/Remarketing Agent's) DTC account.)
10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Agent. Under such circumstances, in the event that a successor
securities depository is not obtained, Security certificates are required to
be printed and delivered.
11. The Issuer may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In
that event, Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable,
but Issuer takes no responsibility for the accuracy thereof.
(BROWN & WOOD LLP LETTERHEAD)
June 27, 1997
Morgan Stanley ABS Capital II Inc.
1585 Broadway
New York, New York 10036
Re: Morgan Stanley ABS Capital II Inc.
Registration Statement on Form S-3
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Morgan Stanley ABS Capital II Inc., a
Delaware corporation (the "Depositor"), in connection with the preparation of
the registration statement on Form S-3 (the "Registration Statement")
relating to the Securities (defined below) and with the authorization and
issuance from time to time in one or more series of asset-backed securities
to be registered pursuant to the Registration Statement (the "Securities").
As set forth in the Registration Statement, the Notes and/or the Certificates
will be issued from time to time in series, with each series to be issued by
a trust (each, a "Trust") to be formed by the Depositor pursuant to a Trust
Agreement (each, a "Trust Agreement") between the Depositor and an Owner
Trustee or a Pooling and Servicing Agreement among the Depositor, the
Servicer and the Trustee (each a "Pooling and Servicing Agreement"). With
respect to each series, the Certificates will be issued pursuant to a Trust
Agreement or a Pooling and Servicing Agreement, the Notes will be issued
pursuant to an Indenture (each an "Indenture") between the related Trust and
an Indenture Trustee. The Certificates and Notes will be sold from time to
time pursuant to certain underwriting Agreements (the "Underwriting
Agreements") between the Depositor and various Underwriters named therein.
We have examined and relied upon the Registration Statement and, in each
case as filed with the Registration Statement, the form of Sale and Servicing
Agreement among a Trust, the Depositor and the Servicer, the form of
Indenture (including the forms of Notes included as exhibits thereto), the
form of Trust Agreement or Pooling and Servicing Agreement (including the
forms of Certificates included as an exhibit thereto and, with respect to the
Trust Agreement, the form of Certificate of Trust to be filed pursuant to the
Delaware Business Trust Act) and the form of the Underwriting Agreement
relating to the Notes and the Certificates (collectively, the "Operative
Documents"). In addition, we have examined and considered executed originals
or counterparts, or certified or other copies of such certificates,
instruments, documents and other corporate records of the Depositor and
matters of fact and law as we have deemed necessary for the purposes of the
opinion expressed below. Capitalized terms not otherwise defined herein have
the meanings assigned to them in the Registration Statement.
In our examination we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
documents. As to any facts material to the opinions expressed herein which
were not independently established or verified, we have relied upon
statements and representations of officers and other representatives of the
Depositor and others.
Based on and subject to the foregoing, we are of the opinion that, with
respect to the Notes and/or Certificates of any series, when (i) the
Registration Statement becomes effective pursuant to the provisions of the
Securities Act of 1933, as amended, (ii) the amount, price, interest rate and
other principal terms of such Notes and/or Certificates have been duly
approved by the Board of Directors of the Depositor, (iii) the applicable
Operative Documents relating to such series have each been duly completed,
executed and delivered by the parties thereto substantially in the form filed
as an exhibit to the Registration Statement reflecting the terms established
as described above, (iv) with respect to each Trust formed pursuant to a
Trust Agreement, the Certificate of Trust for the related trust has been duly
executed by the Owner Trustee and timely filed with the Secretary of State of
the State of Delaware, (v) with respect to each series that includes Notes,
the related Indenture has been duly qualified under the Trust Indenture Act
of 1939, as amended, and (vi) such Notes and/or Certificates have been duly
executed and issued by the related Trust and authenticated by the Owner
Trustee, the Indenture Trustee or Trustee, as applicable, and sold by the
Depositor, all in accordance with the terms and conditions of the related
Operative Documents and in the manner described in the Registration
Statement, such Notes and/or Certificates will have been duly authorized
by all necessary action of the Trust and will have been legally issued,
fully paid and nonassessable, and the holders thereof will be entitled
to the benefits of the related Agreement.
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the laws of the State of New York
(excluding choice of law principles therein) and the federal laws of the
United States of America.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Legal Matters" in each Prospectus forming a part of the Registration
Statement, without admitting that we are "experts" within the meaning of the
1933 Act or the Rules and Regulations of the Commission issued thereunder,
with respect to any part of the Registration Statement, including this
exhibit.
Very truly yours,
/s/Brown & Wood LLP
(BROWN & WOOD LLP LETTERHEAD)
June 27, 1997
Morgan Stanley ABS Capital II Inc.
1585 Broadway
New York, New York 10036
RE: Morgan Stanley ABS Capital II Inc.
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as special federal tax counsel to the trusts referred to
below in connection with the filing by Morgan Stanley ABS Capital II Inc., a
Delaware corporation (the "Registrant"), of a Registration Statement on Form
S-3 (such registration statement, together with the exhibits and any
amendments thereto, the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act") for the registration under the Act of asset backed notes
(the "Notes") and asset backed certificates (the "Certificates") to be
registered pursuant to the Registration Statement and issued from time to
time in one or more series. As described in the Registration Statement, the
Notes and/or the Certificates will be issued from time to time in series,
with each series being issued by a trust (each, a "Trust") to be formed by
the Registrant pursuant to a Trust Agreement (each, a "Trust Agreement")
between the Registrant specified in the related prospectus supplement and a
trustee, or a Pooling and Servicing Agreement (each, a "Pooling and Servicing
Agreement") among the Registrant, a servicer and a trustee. Each series may
include one or more classes of Notes, which will be issued pursuant to an
Indenture between the related Trust and an indenture trustee. Each series
may also include one or more classes of Certificates, which will be issued
pursuant to a Trust Agreement or a Pooling and Servicing Agreement.
We have advised the Registrant with respect to certain federal income
tax consequences of the proposed issuance of the Notes and Certificates.
This advice is summarized under the headings "Summary of Terms -- Tax Status"
and "Federal Income Tax Consequences" in the Prospectus and Summary of Terms -
"Tax Status" in the Prospectus Supplements, all a part of the Registration
Statement. Such description does not purport to discuss all possible federal
income tax ramifications of the proposed issuance, but with respect to those
federal consequences that are discussed, in our opinion, the description is
accurate in all material respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as special federal
tax counsel to the Trust) under the heading "Federal Income Tax Consequences"
in the Prospectus forming a part of the Registration Statement, without
implying or admitting that we are "experts" within the meaning of the Act or
the rules and regulations of the Commission issued thereunder, with respect
to any part of the Registration Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
FORM OF SALE AND SERVICING AGREEMENT
between
(____________) TRUST 199_-_,
Issuer,
and
MORGAN STANLEY ABS CAPITAL II INC.,
Depositor
and
(___________________)
Servicer
Dated as of ________ __, 199_
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . . . . 16
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables . . . . . . . . . . . . . . . . 17
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of the
Depositor with Respect to the Receivables . . . . . . . 17
SECTION 3.02. Repurchase upon Breach . . . . . . . . . . . . . . . . . . 18
SECTION 3.03. Custody of Receivable Files . . . . . . . . . . . . . . . 18
SECTION 3.04. Duties of Servicer as Custodian . . . . . . . . . . . . . 19
SECTION 3.05. Instructions; Authority To Act . . . . . . . . . . . . . . 19
SECTION 3.06. Custodian's Indemnification . . . . . . . . . . . . . . . 19
SECTION 3.07. Effective Period and Termination . . . . . . . . . . . . . 20
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.02. Collection and Allocation of Receivable Payments . . . . . 21
SECTION 4.03. Realization upon Receivables . . . . . . . . . . . . . . . 21
SECTION 4.04. Physical Damage Insurance . . . . . . . . . . . . . . . . 21
SECTION 4.05. Maintenance of Security Interests in
Financed Assets . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.06. Covenants of Servicer . . . . . . . . . . . . . . . . . . 21
SECTION 4.07. Purchase of Receivables upon Breach . . . . . . . . . . . 22
SECTION 4.08. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.09. Servicer's Certificate . . . . . . . . . . . . . . . . . . 22
SECTION 4.10. Annual Statement as to Compliance; Notice of
Default . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.11. Annual Independent Certified Public
Accountants' Report . . . . . . . . . . . . . . . . . . 23
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables . . . . . . . . . . . 23
SECTION 4.13. Servicer Expenses . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.14. Appointment of Subservicer . . . . . . . . . . . . . . . . 23
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Establishment of Trust Accounts . . . . . . . . . . . . . 24
SECTION 5.02. Collections . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.03. Application of Collections . . . . . . . . . . . . . . . . 26
SECTION 5.04 Application of Payaheads . . . . . . . . . . . . . . . . . 26
SECTION 5.05. Advances . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.06. Additional Deposits . . . . . . . . . . . . . . . . . . . 27
SECTION 5.07. Distributions . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.08. Reserve Account . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.09. Statements to Certificateholders and Noteholders . . . . . 31
SECTION 5.10. Net Deposits . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
The Depositor
SECTION 6.01. Representations of Depositor . . . . . . . . . . . . . . . 32
SECTION 6.02. Corporate Existence . . . . . . . . . . . . . . . . . . . 33
SECTION 6.03. Liability of Depositor; Indemnities . . . . . . . . . . . 33
SECTION 6.04. Merger or Consolidation of, or Assumption of
the Obligations of, Depositor . . . . . . . . . . . . . 34
SECTION 6.05. Limitation on Liability of Depositor and Others . . . . . 34
SECTION 6.06. Depositor May Own Certificates or Notes . . . . . . . . . 35
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer . . . . . . . . . . . . . . . 35
SECTION 7.02. Indemnities of Servicer . . . . . . . . . . . . . . . . . 36
SECTION 7.03. Merger or Consolidation of, or Assumption
of the Obligations of, Servicer . . . . . . . . . . . . 37
SECTION 7.04. Limitation on Liability of Servicer and Others . . . . . . 37
SECTION 7.05. _____________ Not To Resign as Servicer . . . . . . . . . 38
ARTICLE VIII
Default
SECTION 8.01. Servicer Default . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.02. Appointment of Successor . . . . . . . . . . . . . . . . . 39
SECTION 8.03. Repayment of Advances . . . . . . . . . . . . . . . . . . 40
SECTION 8.04. Notification to Noteholders and
Certificateholders . . . . . . . . . . . . . . . . . . . 40
SECTION 8.05. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 40
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables . . . . . . . . . . . 40
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.02. Protection of Title to Trust . . . . . . . . . . . . . . 42
SECTION 10.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.04. Assignment by the Depositor or the Servicer . . . . . . . 45
SECTION 10.05. Limitations on Rights of Others . . . . . . . . . . . . . 45
SECTION 10.06. Severability . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.07. Separate Counterparts . . . . . . . . . . . . . . . . . . 45
SECTION 10.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.10. Assignment by Issuer . . . . . . . . . . . . . . . . . . 45
SECTION 10.11. Nonpetition Covenants . . . . . . . . . . . . . . . . . . 45
SECTION 10.12. Limitation of Liability of Owner Trustee
and Indenture Trustee . . . . . . . . . . . . . . . . . 46
SCHEDULE A Schedule of Receivables . . . . . . . . . . . . . . . . . 47
SCHEDULE B Location of the Receivable Files . . . . . . . . . . . . . 48
EXHIBIT A Form of Distribution Statement to
Certificateholders . . . . . . . . . . . . . . . . . 49
EXHIBIT B Form of Distribution Statement to Noteholders . . . . . . 50
EXHIBIT C Form of Servicer's Certificate . . . . . . . . . . . . . . 51
SALE AND SERVICING AGREEMENT dated as of ______ __, 199_, between
__________ TRUST 199_-_, a Delaware business trust (the "Issuer"), and
MORGAN STANLEY ABS CAPITAL II INC., a Delaware corporation, as Depositor
and _____________, a ______ corporation, as servicer.
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with (automotive) (marine) (recreational vehicle)
retail installment sale contracts and loan installments generated by
_________________________ in the ordinary course of business;
WHEREAS Morgan Stanley ABS Capital II Inc. is willing to sell such
receivables to the Issuer; and
WHEREAS ___________ is willing to service such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions. Whenever used in this Agreement, the
-----------
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
("Accelerated Principal Distribution Amount" means, with respect to any
-----------------------------------------
Distribution Date, an amount equal to that portion of the Total Distribution
Amount for such Distribution Date that remains after the payment of (i) the
Servicing Fee, (ii) the Noteholders' Interest Distributable Amount, (iii) the
Regular Principal Distribution Amount, (iv) the Certificateholders' Interest
Distributable Amount, and (v) the amount, if any, required to be deposited
into the Reserve Account on such Distribution Date pursuant to Section
5.07(b)(ii)(F).)
"Advance" means either a Precomputed Advance or Simple Interest Advance
-------
or both, as applicable.
"Amount Financed" means with respect to a Receivable, the amount
---------------
advanced toward the purchase price of the Financed Assets and any related
costs, exclusive of any amount allocable to the premium of force-placed
physical damage insurance covering the Financed Assets.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
---------------------- ---
of finance charges stated in the related Contract.
"Available Amount" means, with respect to any Distribution Date, the
----------------
amount of funds on deposit in the Reserve Account on such Distribution Date
(other than Investment Earnings on Eligible Investments) (less the
Certificate Interest Reserve Amount with respect to such Distribution Date
before giving effect to any reduction thereto on such date).
"Certificate Balance" equals, initially, $_____________ and, thereafter,
-------------------
equals the Initial Certificate Balance reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such term
--------------------------------
in the Trust Agreement.
"Certificate Interest Reserve Amount" means, at the time of reference,
-----------------------------------
the lesser of (i) $__________ less the amount of any application of the
Certificate Interest Reserve Amount to pay interest on the Certificates on
any prior Distribution Date and (ii) ______% of the Certificate Balance on
such Distribution Date (before giving effect to any reduction thereof on such
Distribution Date); provided, however, that the Certificate Interest Reserve
Amount shall be zero subsequent to any reduction by any Rating Agency of its
rating of any Class of Notes to less than "A-" or its equivalent, or
withdrawal by any Rating Agency of its rating of any Class of Notes, unless
such rating has been restored.
"Certificate Pool Factor" means, as of the close of business on the last
-----------------------
day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made
on the immediately following Distribution Date) divided by the Initial
Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificateholders" has the meaning assigned to such term in the Trust
------------------
Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
----------------------------------------
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount for such
date.
"Certificateholders' Interest Carryover Shortfall" means, with respect
------------------------------------------------
to any Distribution Date, the excess of the sum of the Certificateholders'
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus 30 days' interest on such excess, to the extent
permitted by law, at the Pass-Through Rate.
"Certificateholders' Interest Distributable Amount" means, with respect
-------------------------------------------------
to any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date. Interest with
respect to the Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of this Agreement and the
Basic Documents.
"Certificateholders' Monthly Interest Distributable Amount" means, with
---------------------------------------------------------
respect to any Distribution Date, 30 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including the Closing Date
to but excluding ________ __, 199_) 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 Distribution Date, on the Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means, with
----------------------------------------------------------
respect to any Distribution Date prior to the Distribution Date on which the
Notes are paid in full, zero; and with respect to any Distribution Date on or
after the Distribution Date on which the Notes are paid in full, the Regular
Principal Distribution Amount for such Distribution Date (less, on the
Distribution Date on which the Notes are paid in full, the portion thereof
payable on the Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of the
-------------------------------------------------
close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders'
Principal Carryover Shortfall from the preceding Distribution Date, over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect
--------------------------------------------------
to any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Final Scheduled Distribution Date, the principal required to
be included in the Certificateholders' Principal Distributable Amount will
include the lesser of (a) (i) any Scheduled Payments of principal due and
remaining unpaid on each Precomputed Receivable and (ii) any principal due
and remaining unpaid on each Simple Interest Receivable, in each case, in the
Trust as of the Final Scheduled Maturity Date or (b) the amount that is
necessary (after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero.
"Certificates" means the Trust Certificates (as defined in the Trust
------------
Agreement).
"Class" means any one of the classes of Notes.
-----
"Class (A-1) Final Scheduled Distribution Date" means the _________ 199_
---------------------------------------------
Distribution Date.
"Class (A-1) Noteholder" means the Person in whose name a Class (A-1)
----------------------
Note is registered in the Note Register.
"Class (A-2) Final Scheduled Distribution Date" means the _________ ____
---------------------------------------------
Distribution Date.
"Class (A-2) Noteholder" means the Person in whose name a Class (A-2)
----------------------
Note is registered in the Note Register.
"Collection Account" means the account designated as such, established
------------------
and maintained pursuant to Section 5.01(a)(i).
"Collection Period" means a calendar month. Any amount stated as of the
-----------------
last day of a Collection Period or as of the first day of a Collection Period
shall give effect to the following calculations as determined as of the close
of business on such last day: (1) all applications of collections, (2) all
current and previous Payaheads, (3) all applications of Payahead Balances,
(4) all Advances and reductions of Outstanding Precomputed Advances or
Outstanding Simple Interest Advances and (4) all distributions to be made on
the following Distribution Date.
"Contract" means a (automotive) (marine) (recreational vehicle) retail
--------
installment sale contract or installment loan.
"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 at the date of the execution of this Agreement is
located at _______________________, ________, ________ _____; or at such
other address as the Indenture Trustee may designate from time to time by
notice to the Noteholders and the Depositor, or the principal corporate trust
office of any successor Indenture Trustee (of which address such successor
Indenture Trustee will notify the Noteholders and the Depositor).
"Cutoff Date" means _________ __, 199__
-----------
"Dealer" means the dealer who sold a Financed Asset to an Obligor and
------
who originated and assigned the related Receivable to an Originator.
"Delivery" when used with respect to Trust Account Property means:
--------
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and
are susceptible of physical delivery, transfer thereof to the Indenture
Trustee or its nominee or custodian by physical delivery to the
Indenture Trustee or its nominee or custodian endorsed to, or
registeredin the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered
in the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section 8-
313 of the UCC) and the making by such financial intermediary of entries
on its books and records identifying such certificated securities as
belonging to the Indenture Trustee or its nominee or custodian and the
sending by such financial intermediary of a confirmation of the purchase
of such certificated security by the Indenture Trustee or its nominee or
custodian, or (ii) by delivery thereof to a "clearing corporation" (as
defined in Section 8-102(3) of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of
the certificated securities for the sole and exclusive account of the
financial intermediary, the maintenance of such certificated securities
by such clearing corporation or a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the sending of a confirmation
by the financial intermediary of the purchase by the Indenture Trustee
or its nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian; and
such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property (as defined herein) to the Indenture Trustee or
its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the UCC: book-
entry registration of such Trust Account Property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a financial
intermediary which is also a "depository" pursuant to applicable Federal
regulations and issuance by such financial intermediary of a deposit
advice or other written confirmation of such book-entry registration to
the Indenture Trustee or its nominee or custodian of the purchase by the
Indenture Trustee or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of entries in its
books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Indenture Trustee or its nominee or custodian and
indicating that such custodian holds such Trust Account Property solely
as agent for the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate
to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by the Indenture Trustee or its nominee or custodian of such
uncertificated security, the making by such financial intermediary of
entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or
custodian.
"Depositor" means Morgan Stanley ABS Capital II Inc, or its successor
---------
in interest.
"Distribution Date" means, with respect to each Collection Period, the
-----------------
_____ day of the following month or, if such day is not a Business Day, the
immediately following Business Day, commencing on ________ __, 199__.
"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 shall have a credit
rating from each Rating Agency in one of its generic rating categories that
signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
--------------------
Indenture Trustee, the Owner Trustee or __________________________ so long as
it shall be Paying Agent under the Trust Agreement 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) has either (A) a long-term unsecured debt
rating of AAA or better by Standard & Poor's and A1 or better by Moody's or
(B) a certificate of deposit rating of A-1+ by Standard & Poor's and P-1 or
better by Moody's, or any other long-term, short-term or certificate of
deposit rating acceptable to the Rating Agencies and (ii) whose deposits are
insured by the FDIC. If so qualified, the Indenture Trustee, the Owner
Trustee or _____________________ may be considered an Eligible Institution
for the purposes of clause (b) of this definition.
"Eligible Investments" means book-entry securities, negotiable
--------------------
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws
of the United States of America or any state thereof (or any domestic
branch of a foreign bank) and subject to supervision and examination by
Federal or State banking or depository institution authorities;
provided, however, that at the time of the investment or contractual
commitment to invest therein, the commercial paper or other short-term
unsecured debt obligations (other than such obligations the rating of
which is based on the credit of a Person other than such depository
institution or trust company) thereof shall have a credit rating from
each of the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (b);
(g) repurchase obligations with respect to any security or whole
loan, entered into with (i) a depository institution or trust company
(acting as principal) described in clause (b) above (except that the
rating referred to in the proviso in such clause (b) shall be (A-1) or
higher in the case of Standard & Poor's) (such depository institution or
trust company being referred to in this definition as a "financial
institution"), (ii) a broker/dealer (acting as principal) registered as
a broker or dealer under Section 15 of the Exchange Act (a
"broker/dealer") the unsecured short-term debt obligations of which are
rated P-1 by Moody's and at least (A-1) by Standard & Poor's at the time
of entering into such repurchase obligation (a "rated broker/dealer"),
(iii) an unrated broker/dealer (an "unrated broker/dealer"), acting as
principal, that is a wholly-owned subsidiary of a non-bank holding
company the unsecured short-term debt obligations of which are rated P-1
by Moody's and at least (A-1) by Standard & Poor's at the time of
entering into such repurchase obligation (a "Rated Holding Company") or
(iv) an unrated subsidiary (a "Guaranteed Counterparty"), acting as
principal, that is a wholly-owned subsidiary of a direct or indirect
parent Rated Holding Company, which guarantees such subsidiary's
obligations under such repurchase agreement; provided that the following
conditions are satisfied:
(A) the aggregate amount of funds invested in repurchase
obligations of a financial institution, a rated broker/dealer, an
unrated broker/dealer or Guaranteed Counterparty in respect of
which the Standard & Poor's unsecured short-term ratings are (A-1)
(in the case of an unrated broker/dealer or Guaranteed
Counterparty, such rating being that of the related Rated Holding
Company) shall not exceed ___% of the sum of the then outstanding
principal balance of the Notes and the Certificate Balance (there
being no limit on the amount of funds that may be invested in
repurchase obligations in respect of which such Standard & Poor's
rating is (A-1)+ (in the case of an unrated broker/dealer or
Guaranteed Counterparty, such rating being that of the related
Rated Holding Company));
(B) in the case of the Reserve Account, the rating from
Standard & Poor's in respect of the unsecured short-term debt
obligations of the financial institution, rated broker/dealer,
unrated broker/dealer or Guaranteed Counterparty (in the case of an
unrated broker/dealer or Guaranteed Counterparty, such rating being
that of the related Rated Holding Company) shall be (A-1)+;
(C) the repurchase obligation must mature within 30 days of
the date on which the Indenture Trustee or the Issuer, as
applicable, enters into such repurchase obligation;
(D) the repurchase obligation shall not be subordinated to
any other obligation of the related financial institution, rated
broker/dealer, unrated broker/dealer or Guaranteed Counterparty;
(E) the collateral subject to the repurchase obligation is
held, in the appropriate form, by a custodial bank on behalf of the
Indenture Trustee or the Issuer, as applicable;
(F) the repurchase obligation shall require that the
collateral subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a Guaranteed
Counterparty, the following conditions shall also be satisfied:
(i) the Indenture Trustee or the Issuer, as applicable,
shall have received an opinion of counsel (which may be in-
house counsel) to the effect that the guarantee of the related
Rated Holding Company is a legal, valid and binding agreement
of the Rated Holding Company, enforceable in accordance with
its terms, subject as to enforceability to bankruptcy,
insolvency, reorganization and moratorium or other similar
laws affecting creditors' rights generally and to general
equitable principles;
(ii) the Indenture Trustee or the Issuer, as applicable,
shall have received (x) an incumbency certificate for the
signer of such guarantee, certified by an officer of such
Rated Holding Company and (y) a resolution, certified by an
officer of the Rated Holding Company, of the board of
directors (or applicable committee thereof) of the Rated
Holding Company authorizing the execution, delivery and
performance of such guarantee by the Rated Holding Company;
(iii) the only conditions to the obligation of such
Rated Holding Company to pay on behalf of the Guaranteed
Counterparty shall be that the Guaranteed Counterparty shall
not have paid under such repurchase obligation when required
(it being understood that no notice to, demand on or other
action in respect of the Guaranteed Counterparty is necessary)
and that the Indenture Trustee or the Issuer shall make a
demand on the Rated Holding Company to make the payment due
under such guarantee;
(iv) the guarantee of the Rated Holding Company shall be
irrevocable with respect to such repurchase obligation and
shall not be subordinated to any other obligation of the Rated
Holding Company; and
(v) each of Standard & Poor's and Moody's has confirmed
in writing to the Indenture Trustee or Issuer, as applicable,
that it has reviewed the form of the guarantee of the Rated
Holding Company and has determined that the issuance of such
guarantee will not result in the downgrade or withdrawal of
the ratings assigned to the Notes or the Certificates.
(H) the repurchase obligation shall require that the
repurchase obligation be overcollateralized and shall provide that,
upon any failure to maintain such overcollateralization, the
repurchase obligation shall become due and payable, and unless the
repurchase obligation is satisfied immediately, the collateral
subject to the repurchase agreement shall be liquidated and the
proceeds applied to satisfy the unsatisfied portion of the
repurchase obligation;
(h) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that
the acquisition of such investment as an Eligible Investment will not
result in a withdrawal or downgrading of the ratings on the Notes or
Certificates.
"FDIC" means the Federal Deposit Insurance Corporation.
----
"Final Scheduled Distribution Date" means the Distribution Date
---------------------------------
immediately following the Final Scheduled Maturity Date.
"Final Scheduled Maturity Date" means ______ __, ____.
-----------------------------
"Financed Asset" means a new or used (automobile, light-duty truck),
--------------
(recreational vehicle), (boat, boat motor and any accompanying travellers),
together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"Indenture" means the Indenture dated as of ______ __, 199__, between
---------
the Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
-----------------
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" shall have the meaning set forth in the
---------------------------
Trust Agreement.
"Insolvency Event" means, with respect to a specified Person, (a) the
----------------
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property 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 such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or (b) the commencement by such Person 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 such Person to the
entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due, or the taking of action by such Person in furtherance of any of the
foregoing.
"Interest Distribution Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the following amounts, without duplication, with respect to
the Receivables in respect of the Collection Period preceding such
Distribution Date: (a) that portion of all collections on Receivables
(including Payaheads) allocable to interest plus that portion of Payaheads
allocable to principal, (b) Liquidation Proceeds with respect to the
Receivables to the extent allocable to interest due thereon in accordance
with the Servicer's customary servicing procedures, (c) all Advances made by
the Servicer of interest due on Receivables, (d) the Purchase Amount of each
Receivable that became a Purchased Receivable during such Collection Period
to the extent attributable to accrued interest on such Receivable,
(e) Recoveries for such Collection Period, and (f) Investment Earnings for
the related Distribution Date; provided, however, that in calculating the
Interest Distribution Amount the following will be excluded: (i) amounts
received on Precomputed Receivables to the extent of any unreimbursed
Precomputed Advances of interest; (ii) Liquidation Proceeds with respect to a
particular Precomputed Receivable to the extent of any unreimbursed
Precomputed Advances of interest; (iii) all payments and proceeds (including
Liquidation Proceeds) of any Purchased Receivables the Purchase Amount of
which has been included in the Interest Distribution Amount in a prior
Collection Period; (iv) the sum for all the Simple Interest Receivables of
collections on each such Simple Interest Receivable received during such
preceding Collection Period in excess of the amount of interest that would be
due on the aggregate Principal Balance of the Simple Interest Receivables
during such Collection Period at their respective APRs if a payment were
received on each Simple Interest Receivable during such Collection Period on
the date payment is due under the terms of such Simple Interest Receivable;
and (v) Liquidation Proceeds with respect to a Simple Interest Receivable
attributable to accrued and unpaid interest thereon (but not including
interest for the then current Collection Period) but only to the extent of
any unreimbursed Simple Interest Advances.
"Investment Earnings" means, with respect to any Distribution Date, the
-------------------
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.01(b).
"Issuer" means (__________) Trust 199_-_.
------
"Lien" means a security interest, lien, charge, pledge, equity or
----
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of
any act or omission by the related Obligor.
"Liquidated Receivable" means any Receivable, liquidated by the Servicer
---------------------
through the sale of a Financed Asset or otherwise.
"Liquidation Proceeds" means, with respect to any Liquidated Receivable,
--------------------
the moneys collected in respect thereof, from whatever source on a Liquidated
Receivable during the Collection Period in which such Receivable, became a
Liquidated Receivable, net of the sum of any amounts expended by the Servicer
in connection with such liquidation and any amounts required by law to be
remitted to the Obligor on such Liquidated Receivable.
"Moody's" means Moody's Investors Service, Inc., or its successor.
-------
"Note Distribution Account" means the account designated as such,
-------------------------
established and maintained pursuant to Section 5.01.
"Note Pool Factor" means, with respect to each Class of Notes as of the
----------------
close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the outstanding principal balance of such Class of
Notes (after giving effect to any reductions thereof to be made on the
immediately following Distribution Date) divided by the original outstanding
principal balance of such Class of Notes. The Note Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Note Pool Factor will
decline to reflect reductions in the outstanding principal balance of such
Class of Notes.
"Noteholders' Distributable Amount" means, with respect to any
---------------------------------
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount for such Distribution
Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
-----------------------------------------
Distribution Date, the excess of the sum of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Noteholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest that is actually deposited in
the Note Distribution Account on such preceding Distribution Date, plus
interest on the amount of interest due but not paid to Noteholders on the
preceding Distribution Date, to the extent permitted by law, at the
respective Interest Rates borne by each Class of the Notes for the related
Interest Period.
"Noteholders' Interest Distributable Amount" means, with respect to any
------------------------------------------
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the Basic Documents, interest with respect to the Class (A-1) and Class (A-2)
Notes shall be computed on the basis of the actual number of days in each
applicable Floating Rate Interest Accrual Period divided by 360.
"Noteholders' Monthly Interest Distributable Amount" means, with respect
--------------------------------------------------
to any Distribution Date, interest accrued for the related Interest Accrual
Period or Floating Rate Interest Accrual Period, as applicable, on each Class
of Notes at the respective Interest Rate for such Class on the outstanding
principal balance of the Notes of such Class on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the
Closing Date), after giving effect to all distributions of principal to the
Noteholders of such Class on or prior to such Distribution Date (or, in the
case of the first Distribution Date, on the Closing Date).
"Noteholders' Monthly Principal Distributable Amount" means, with
---------------------------------------------------
respect to any Distribution Date, the sum of (i) the Regular Principal
Distribution Amount plus (ii) the Accelerated Principal Distribution Amount
plus (iii) any accelerated payments of principal required to be made from
amounts on deposit in the Reserve Account pursuant to Section 5.08(b)(ii).
"Noteholders' Principal Carryover Shortfall" means, as of the close of
------------------------------------------
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date, over the amount in respect of
principal that is actually deposited in the Note Distribution Account on such
current Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
-------------------------------------------
Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Noteholders' Principal Distributable Amount
shall not exceed the outstanding principal balance of the Notes. In
addition, (a) on the Class (A-1) Final Scheduled Distribution 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 Distribution Date and
allocable to principal) to reduce the Outstanding Amount of the Class (A-1)
Notes to zero; and on the Class (A-2) Final Scheduled Distribution 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 Distribution Date and
allocable to principal) to reduce the Outstanding Amount of the Class A-2
Notes to zero.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
Financed Asset and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by (a) the chairman
---------------------
of the board, any vice president, the controller or any assistant controller
and (b) the president, a treasurer, assistant treasurer, secretary or
assistant secretary of the Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who
------------------
may be an employee of or counsel to the Depositor, the Seller or the
Servicer, which counsel shall be acceptable to the Indenture Trustee, the
Owner Trustee or the Rating Agencies, as applicable.
"Original Pool Balance" means $________________.
---------------------
"Originator" means ____________________________ who originated or
----------
purchased a Contract from a Dealer and sold such Contract to the Seller.
"Outstanding Precomputed Advances" on the Precomputed Receivables means
--------------------------------
the sum, as of the close of business on the last day of a Collection Period,
of all Precomputed Advances as reduced as provided in Section 5.05(a).
"Outstanding Simple Interest Advances" on the Simple Interest
------------------------------------
Receivables means the sum, as of the close of business on the last day of a
Collection Period, of all Simple Interest Advances as reduced as provided in
Section 5.05(b).
"Owner Trust Estate" has the meaning assigned to such term in the Trust
------------------
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
-------------
Agreement, its successors in interest and any successor owner trustee under
the Trust Agreement.
"Pass-Through Rate" means ____% per annum.
-----------------
"Payahead" on a Receivable that is a Precomputed Receivable means the
--------
amount, as of the close of business on the last day of a Collection Period,
computed in accordance with Section 5.03 with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
----------------
maintained pursuant to Section 5.02(d).
"Payahead Balance" on a Receivable that is a Precomputed Receivable
----------------
means the sum, as of the close of business on the last day of a Collection
Period, of all Payaheads made by or on behalf of the Obligor with respect to
such Precomputed Receivable, as reduced by applications of previous Payaheads
with respect to such Precomputed Receivable pursuant to Sections 5.03 and
5.05.
"Payment Determination Date" means, with respect to any Distribution
--------------------------
Date, the Business Day immediately preceding such Distribution Date.
"Physical Property" has the meaning assigned to such term in the
-----------------
definition of "Delivery" above.
"Pool Balance" means, as of the close of business on the last day of a
------------
Collection Period, the aggregate Principal Balance of the Receivables as of
such day (excluding Purchased Receivables and Liquidated Receivables).
"Precomputed Advance" means the amount, as of the close of business on
-------------------
the last day of a Collection Period, which the Servicer is required to
advance on the related Precomputed Receivables pursuant to Section 5.05(a).
"Precomputed Receivable" means any Receivable under which the portion
----------------------
of a payment allocable to earned interest (which may be referred to in the
related Contract as an add-on finance charge) and the portion allocable to
the Amount Financed is determined according to the sum of periodic balances
or the sum of monthly balances or any equivalent method or which is a monthly
actuarial receivable.
"Principal Balance" of (a) a Precomputed Receivable, as of the close of
-----------------
business on the last day of a Collection Period, means the Amount Financed
minus the sum of (i) that portion of all Scheduled Payments (excluding
Payaheads retained in the Payahead Account, but including Payaheads that have
been applied to Scheduled Payments) due on or prior to such day allocable to
principal using the actuarial or constant yield method, (ii) any refunded
portion of extended warranty protection plan costs or of physical damage,
credit life or disability insurance premiums included in the Amount Financed,
(iii) any payment of the Purchase Amount with respect to the Precomputed
Receivable allocable to principal and (iv) any prepayment in full or any
partial prepayments applied to reduce the Principal Balance of the
Precomputed Receivable and (b) a Simple Interest Receivable, as of the close
of business on the last day of a Collection Period, means the Amount Financed
minus the sum of (i) the portion of all payments made by or on behalf of the
related Obligor on or prior to such day and allocable to principal using the
Simple Interest Method and (ii) any payment of the Purchase Amount with
respect to the Simple Interest Receivable allocable to principal.
"Purchase Amount" means the amount, as of the close of business on the
---------------
last day of a Collection Period, required to prepay in full a Receivable
under the terms thereof including interest to the end of the month of
purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or by the Depositor pursuant to Section 3.02.
"Rating Agency" means Moody's and Standard & Poor's or, if no such
-------------
organization or successor is any longer in existence, a nationally recognized
statistical rating organization or other comparable Person designated by the
Depositor, notice of which designation shall be given to the Indenture
Trustee, the Owner Trustee and the Servicer. Any notice required to be given
to a Rating Agency pursuant to this Agreement shall also be given to Fitch
Investors Service, L.P. and Duff & Phelps Credit Rating Co., although, except
as set forth above, neither shall be deemed to be a Rating Agency for any
purposes of this Agreement.
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency shall have been given 10 days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Depositor, the Servicer, the
Owner Trustee and the Indenture Trustee in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Notes
or the Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
---------------
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
"Receivable Files" means the documents specified in Section 3.03.
----------------
"Receivables Purchase Agreement" means the Receivables Purchase
------------------------------
Agreement dated as of ____________, 199__, between the Seller, as seller and
the Depositor, as purchaser.
"Recoveries" means, with respect to any Receivable that becomes a
----------
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts
required by law to be remitted to the Obligor.
"Regular Principal Distribution Amount" means, with respect to any
-------------------------------------
Distribution Date, the sum of the following amounts, without duplication,
with respect to the Receivables in respect of the Collection Period preceding
such Distribution Date: (a) that portion of all collections on Receivables
allocable to principal (exclusive of Payaheads allocable to principal that
have not been applied as payments under the related Receivables in such
Collection Period and inclusive of Payaheads allocable to principal that have
been applied as payments under the related Receivables in such Collection
Period), (b) all Liquidation Proceeds attributable to the principal amount of
Receivables that became Liquidated Receivables during such Collection Period
in accordance with the Servicer's customary servicing procedures, plus the
amount of Realized Losses with respect to such Liquidated Receivables,
(c) all Precomputed Advances made by the Servicer of principal due on the
Precomputed Receivables, (d) to the extent attributable to principal, the
Purchase Amount of each Receivable that became a Purchased Receivable during
such Collection Period, (e) partial prepayments on Precomputed Receivables
relating to refunds of extended warranty protection plan costs or of physical
damage, credit life or disability insurance policy premiums, but only if such
costs or premiums were financed by the respective Obligors thereon as of the
date of the original contract and only to the extent not included under
clause (a) above, and (f) on the Final Scheduled Distribution Date, any
amounts advanced by the Servicer on such Final Scheduled Distribution Date
with respect to principal on the Receivables; provided, however, that in
calculating the Regular Principal Distribution Amount the following will be
excluded: (i) amounts received on Precomputed Receivables to the extent that
the Servicer has previously made an unreimbursed Precomputed Advance of
principal, (ii) Liquidation Proceeds with respect to a particular Precomputed
Receivable to the extent of any unreimbursed Precomputed Advances of
principal, (iii) all payments and proceeds (including Liquidation Proceeds)
of any Purchased Receivables the Purchase Amount of which has been included
in the Principal Distribution Amount in a prior Collection Period, and
(iv) Recoveries.
"Reserve Account" means the account designated as such, established and
---------------
maintained pursuant to Section 5.01.
"Reserve Account Initial Deposit" means an amount equal to the Specified
-------------------------------
Reserve Account Balance on the Closing Date (which is equal to
$__________________).
"Scheduled Payment" on a Precomputed Receivable means that portion of
-----------------
the payment required to be made by the Obligor during the respective
Collection Period sufficient to amortize the Principal Balance under the
actuarial method over the term of the Receivable and to provide interest at
the APR.
"Seller" means ______________ and its successors in interest.
------
"Servicer" means _______________, as the servicer of the Receivables,
--------
and each successor to _____ (in the same capacity) pursuant to Section 7.03
or 8.02.
"Servicer Default" means an event specified in Section 8.01.
----------------
"Servicer's Certificate" means an Officers' Certificate of the Servicer
----------------------
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicing Fee" means the fee payable to the Servicer for services
-------------
rendered during each Collection Period, determined pursuant to Section 4.08.
"Servicing Fee Rate" means ____% per annum.
------------------
"Simple Interest Advance" means the amount of interest, as of the close
-----------------------
of business on the last day of a Collection Period, which the Servicer is
required to advance on the Simple Interest Receivables pursuant to
Section 5.05(b).
"Simple Interest Method" means the method of allocating a fixed level
----------------------
payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by the
period of time elapsed since the preceding payment of interest was made and
the remainder of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable 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.
"Specified Reserve Account Balance" means (STATE FORMULA).
---------------------------------
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
-----------------
of The McGraw-Hill Companies, Inc., or its successor.
"Receivable" means any Contract listed on Schedule A (which Schedule may
----------
be in the form of microfiche).
"Total Distribution Amount" means, for each Distribution Date, the sum
-------------------------
of the applicable Interest Distribution Amount and the applicable Regular
Principal Distribution Amount (other than the portion thereof attributable to
Realized Losses).
"Trust" means the Issuer.
-----
"Trust Account Property" means the Trust Accounts, all amounts and
----------------------
investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and
all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.01.
--------------
"Trust Agreement" means the Trust Agreement dated as of ______ __, 199_,
---------------
between the Depositor and the Owner Trustee.
"Trust Officer" means, in the case of 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 and, with respect to the Owner Trustee, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and the Basic
Documents on behalf of the Owner Trustee.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
-----------------------------
used herein and not otherwise defined herein shall have the meanings assigned
to them 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. 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 definitions
contained in this Agreement or in any such certificate or other document
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; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules 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.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.01. Conveyance of Receivables. In consideration of the
-------------------------
Issuer's delivery to or upon the order of the Depositor of $_____________
less the amount to be deposited to the Reserve Account on the Closing Date,
the Depositor does hereby sell, transfer, assign, set over and otherwise
convey to the Issuer, without recourse (subject to the obligations of the
Depositor set forth herein), all right, title and interest of the Depositor
in and to:
(a) the Receivables and all moneys due thereon on or after
____________, 199__, in the case of Precomputed Receivables (including
such payments due on or after _______________, 199_ and collected after
___________, 199_ and before ______________, 199_), and all moneys
received thereon on and after ____________, 199_, in the case of Simple
Interest Receivables;
(b) the security interests in the Financed Assets granted by
Obligors pursuant to the Receivables and any other interest of the
Depositor in the Financed Assets;
(c) any proceeds with respect to the Receivables from claims on
any physical damage, credit life or disability insurance policies
covering Financed Assets or Obligors;
(d) any proceeds from recourse to Dealers with respect to
Receivables with respect to which the Servicer has determined in
accordance with its customary servicing procedures that eventual payment
in full is unlikely;
(e) any Financed Asset that shall have secured a Receivable and
shall have been acquired by or on behalf of the Seller, the Servicer,
the Depositor or the Trust;
(f) all right, title and interest of the Depositor under the
Receivables Purchase Agreement, including, without limitation, the right
of the Depositor to cause the Seller to purchase receivables under
certain circumstances;
(g) all right, title and interest in all funds on deposit from
time to time in the Trust Accounts, including the Reserve Account
Initial Deposit and the Certificate Distribution Account, and in all
investments and proceeds thereof (including all income thereon); and
(h) the proceeds of any and all of the foregoing.
ARTICLE III
The Receivables
---------------
SECTION 3.01. Representations and Warranties of the Depositor with
----------------------------------------------------
Respect to the Receivables. The Depositor makes the following
- --------------------------
representations and warranties as to the Receivables on which the Issuer is
deemed to have relied in acquiring the Receivables. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date, but shall survive the sale, transfer and assignment of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Title. It is the intention of the Depositor that the transfer
-----
and assignment herein contemplated constitute a sale of the Receivables from
the Depositor to the Issuer and that the beneficial interest in and title to
the Receivables not be part of the debtor's estate in the event of the filing
of a bankruptcy petition by or against the Depositor under any bankruptcy
law. No Receivable has been sold, transferred, assigned or pledged by the
Depositor to any Person other than the Issuer. Immediately prior to the
transfer and assignment herein contemplated, the Depositor had good and
marketable title to each Receivable, free and clear of all Liens and rights
of others and, immediately upon the transfer thereof, the Issuer shall have
good and marketable title to each Receivable, free and clear of all Liens and
rights of others; and the transfer has been perfected under the UCC.
(b) All Filings Made. All filings (including UCC filings)
----------------
necessary in any jurisdiction to give (i) the Issuer a first perfected
ownership interest in the Receivables and (ii) the Indenture Trustee a first
perfected security interest in the Receivables shall have been made.
SECTION 3.02. Repurchase upon Breach. The Depositor, the Servicer or
----------------------
the Owner Trustee, as the case may be, shall inform the other parties to this
Agreement and the Indenture Trustee promptly, in writing, upon the discovery
of any breach of the Depositor's representations and warranties made pursuant
to Section 3.01 or the Seller's representations and warranties made pursuant
to Section 3.02 of the Receivables Purchase Agreement. Unless any such
breach shall have been cured by the last day of the second Collection Period
following the discovery thereof by the Trustee or receipt by the Trustee of
notice from the Depositor or the Servicer of such breach, the Depositor shall
be obligated to repurchase any Receivable materially and adversely affected
by any such breach as of such last day (or, at the Depositor's option, the
last day of the first Collection Period following such discovery or notice).
In consideration of the repurchase of any Receivable, the Depositor shall
remit the Purchase Amount, in the manner specified in Section 5.06 provided,
--------
however, that the obligation of the Depositor to repurchase any receivable
- -------
arising solely as a result of a breach of the Seller's representations and
warranties under Section 3.02 of the Receivables Purchase Agreement is
subject to the receipt by the Depositor of the Purchase Amount from the
Seller. Subject to the provisions of Section 6.03, the sole remedy of the
Trustee, the Trust, the Noteholders or the Certificateholders with respect to
a breach of representations and warranties pursuant to the agreement
contained in this Section shall be to require the Depositor to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein or to enforce the Seller's obligation to the Depositor to repurchase
such Receivables pursuant to the Receivables Purchase Agreement.
SECTION 3.03. Custody of Receivable Files. To assure uniform quality
---------------------------
in servicing the Receivables and to reduce administrative costs, the Issuer
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee
as custodian of the following documents or instruments which are hereby or
will hereby be constructively delivered to the Indenture Trustee, as pledgee
of the Issuer, as of the Closing Date with respect to each Receivable:
(a) the fully executed original Receivable;
(b) the original credit application fully executed by the Obligor;
(c) the original certificate of title or such documents that the
Servicer, or the Depositor shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Depositor
in the Financed Asset; and
(d) any and all other documents that the Servicer or the Depositor
shall keep on file, in accordance with its customary procedures,
relating to a Receivable, an Obligor, or a Financed Asset.
SECTION 3.04. Duties of Servicer as Custodian. (a) Safekeeping. The
------------------------------- -----------
Servicer shall hold the Receivable Files as custodian for the benefit of the
Issuer and maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as shall enable the Issuer to
comply with this Agreement. In performing its duties as custodian the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable (automotive) (marine) (recreational vehicle)
receivables that the Servicer services for itself or others. The Servicer
shall conduct, or cause to be conducted, periodic audits of the Receivable
Files held by it under this Agreement and of the related accounts, records
and computer systems, in such a manner as shall enable the Issuer or the
Indenture Trustee to verify the accuracy of the Servicer's record keeping.
The Servicer shall promptly report to the Issuer and the Indenture Trustee
any failure on its part to hold the Receivable Files and maintain its
accounts, records and computer systems as herein provided and shall promptly
take appropriate action to remedy any such failure. Nothing herein shall be
deemed to require an initial review or any periodic review by the Issuer or
the Indenture Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain
------------------------------------
each Receivable File at one of its offices specified in Schedule B or at such
other office as shall be specified to the Issuer and the Indenture Trustee by
written notice not later than 90 days after any change in location. The
Servicer shall make available to the Issuer and the Indenture Trustee or
their respective duly authorized representatives, attorneys or auditors a
list of locations of the Receivable Files and the related accounts, records
and computer systems maintained by the Servicer at such times during normal
business hours as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon instruction from the Indenture Trustee,
--------------------
the Servicer shall release any Receivable File to the Indenture Trustee, the
Indenture Trustee's agent or the Indenture Trustee's designee, as the case
may be, at such place or places as the Indenture Trustee may designate, as
soon as practicable.
SECTION 3.05. Instructions; Authority To Act. The Servicer shall be
------------------------------
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by a Trust Officer of
the Indenture Trustee.
SECTION 3.06. Custodian's Indemnification. The Servicer as custodian
---------------------------
shall indemnify the Trust, the Owner Trustee and the Indenture Trustee and
each of their respective officers, directors, employees and agents for any
and all liabilities, obligations, losses, compensatory damages, payments,
costs or expenses of any kind whatsoever that may be imposed on, incurred by
or asserted against the Trust, the Owner Trustee or the Indenture Trustee or
any of their respective officers, directors, employees and agents as the
result of any improper act or omission in any way relating to the maintenance
and custody by the Servicer as custodian of the Receivable Files; provided,
however, that the Servicer shall not be liable to the Owner Trustee for any
portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Owner Trustee, and the Servicer shall not be liable to
the Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Indenture Trustee.
SECTION 3.07. Effective Period and Termination. The Servicer's
--------------------------------
appointment as custodian shall become effective as of the Cutoff Date and
shall continue in full force and effect until terminated pursuant to this
Section. If _______ shall resign as Servicer in accordance with the
provisions of this Agreement or if all of the rights and obligations of any
Servicer shall have been terminated under Section 8.01, the appointment of
such Servicer as custodian shall be terminated by the Indenture Trustee or by
the Holders of Notes evidencing not less than 25% of the Outstanding Amount
of the Notes or, with the consent of Holders of the Notes evidencing not less
than 25% of the Outstanding Amount of the Notes, by the Owner Trustee or by
Certificateholders evidencing not less than 25% of the Certificate Balance,
in the same manner as the Indenture Trustee or such Holders may terminate the
rights and obligations of the Servicer under Section 8.01. The Indenture
Trustee or, with the consent of the Indenture Trustee, the Owner Trustee may
terminate the Servicer's appointment as custodian, with cause, at any time
upon written notification to the Servicer and, without cause, upon 30 days'
prior written notification to the Servicer. As soon as practicable after any
termination of such appointment, the Servicer shall deliver the Receivable
Files to the Indenture Trustee or the Indenture Trustee's agent at such place
or places as the Indenture Trustee may reasonably designate.
ARTICLE IV
Administration and Servicing of Receivables
-------------------------------------------
SECTION 4.01. Duties of Servicer. The Servicer, for the benefit of the
------------------
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable (automotive) (marine) (recreational
vehicle) receivables that it services for itself or others. The Servicer's
duties shall include collection and posting of all payments, responding to
inquiries of Obligors on such Receivables, investigating delinquencies,
sending payment coupons to Obligors, reporting tax information to Obligors,
accounting for collections, furnishing monthly and annual statements to the
Owner Trustee and the Indenture Trustee with respect to distributions and
making Advances pursuant to Section 5.05. Subject to the provisions of
Section 4.02, the Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer. Without limiting the
generality of the foregoing, the Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Assets securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the
Issuer (in the case of a Receivable other than a Purchased Receivable) shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce such Receivable, the Owner Trustee shall, at the
Servicer's expense and direction, take steps to enforce such Receivable,
including bringing suit in its name or the name of the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders. The Owner
Trustee shall upon the written request of the Servicer furnish the Servicer
with any powers of attorney and other documents reasonably necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
SECTION 4.02. Collection and Allocation of Receivable Payments. The
------------------------------------------------
Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable (automotive) (marine) (recreational vehicle)
receivables that it services for itself or others. The Servicer shall
allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
(automotive) (marine) (recreational vehicle) receivables that it services for
itself or others. The Servicer may grant extensions, rebates or adjustments
on a Receivable, which shall not, for the purposes of this Agreement, modify
the original due dates or amounts of the Scheduled Payments on a Precomputed
Receivable or the original due dates or amounts of the originally scheduled
payments of interest on Simple Interest Receivables; provided, however, that
if the Servicer extends the date for final payment by the Obligor of any
Receivable beyond the Final Scheduled Maturity Date, it shall promptly
repurchase the Receivable from the Issuer in accordance with the terms of
Section 4.07. The Servicer may in its discretion waive any late payment
charge or any other fees that may be collected in the ordinary course of
servicing a Receivable. The Servicer shall not agree to any alteration of
the interest rate on any Receivable or of the amount of any Scheduled Payment
on Precomputed Receivables or the originally scheduled payments on Simple
Interest Receivables.
SECTION 4.03. Realization upon Receivables. On behalf of the Issuer,
----------------------------
the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Assets securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. The Servicer shall follow
such customary and usual practices and procedures as it shall deem necessary
or advisable in its servicing of receivables, which may include reasonable
efforts to realize upon any recourse to Dealers and selling the Financed
Asset at public or private sale. The foregoing shall be subject to the
provision that, in any case in which the Financed Asset shall have suffered
damage, the Servicer shall not expend funds in connection with the repair or
the repossession of such Financed Asset unless it shall determine in its
discretion that such repair and/or repossession will increase the Liquidation
Proceeds by an amount greater than the amount of such expenses.
SECTION 4.04. Physical Damage Insurance. The Servicer shall, in
-------------------------
accordance with its customary servicing procedures, require that each Obligor
shall have obtained physical damage insurance covering the Financed Asset as
of the execution of the Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed Assets.
----------------------------------------------------
The Servicer shall, in accordance with its customary servicing procedures,
take such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the related Financed Asset. The
Servicer is hereby authorized to take such steps as are necessary to re-
perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of a Financed Asset or for any other
reason.
SECTION 4.06. Covenants of Servicer. The Servicer shall not release
---------------------
the Financed Asset securing any Receivable from the security interest granted
by such Receivable in whole or in part except in the event of payment in full
by the Obligor thereunder or repossession, nor shall the Servicer impair the
rights of the Issuer, the Indenture Trustee, the Certificateholders or the
Noteholders in such Receivable, nor shall the Servicer increase the number of
scheduled payments due under a Receivable.
SECTION 4.07. Purchase of Receivables upon Breach. The Servicer or the
-----------------------------------
Owner Trustee shall inform the other party and the Indenture Trustee and the
Depositor promptly, in writing, upon the discovery of any breach pursuant to
Section 4.02, 4.05 or 4.06. Unless the breach shall have been cured by the
last day of the second Collection Period following such discovery (or, at the
Servicer's election, the last day of the first following Collection Period),
the Servicer shall purchase any Receivable materially and adversely affected
by such breach as of such last day. If the Servicer takes any action during
any Collection Period pursuant to Section 4.02 that impairs the rights of the
Issuer, the Indenture Trustee, the Certificateholders or the Noteholders in
any Receivable or as otherwise provided in Section 4.02, the Servicer shall
purchase such Receivable as of the last day of such Collection Period. In
consideration of the purchase of any such Receivable pursuant to either of
the two preceding sentences, the Servicer shall remit the Purchase Amount in
the manner specified in Section 5.06. For purposes of this Section, the
Purchase Amount shall consist in part of a release by the Servicer of all
rights of reimbursement with respect to Outstanding Precomputed Advances and
Outstanding Simple Interest Advances on the Receivable. Subject to
Section 7.02, the sole remedy of the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders or the Noteholders with respect to a breach
pursuant to Section 4.02, 4.05 or 4.06 shall be to require the Servicer to
purchase Receivables pursuant to this Section. The Owner Trustee shall have
no duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this
Section.
SECTION 4.08. Servicing Fee. The Servicing Fee for a Distribution Date
-------------
shall equal the product of (a) one-twelfth, (b) the Servicing Fee Rate and
(c) the Pool Balance as of the first day of the preceding Collection Period.
The Servicer shall also be entitled to all late fees, prepayment charges
including, in the case of a Receivable that provides for payments according
to the "Rule of 78s" and that is prepaid in full, the difference between the
Principal Balance of such Receivable (plus accrued interest to the date of
prepayment) and the principal balance of such Receivable computed according
to the "Rule of 78s"), and other administrative fees or similar charges
allowed by applicable law with respect to the Receivables, collected (from
whatever source) on the Receivables, plus any reimbursement pursuant to the
last paragraph of Section 7.02.
SECTION 4.09. Servicer's Certificate. Not later than (11:00 A.M. (New
----------------------
York time)) on each Payment Determination Date, the Servicer shall deliver to
the Owner Trustee, each Paying Agent, the Indenture Trustee and the
Depositor, with a copy to the Rating Agencies, a Servicer's Certificate
containing all information necessary to make the distributions to be made on
the related Distribution Date pursuant to Sections 5.07 and 5.08 for the
related Collection Period. Receivables to be purchased by the Servicer or to
be repurchased by the Depositor or the Seller shall be identified by the
Servicer by account number with respect to such Receivable (as specified in
Schedule A).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
----------------------------------------------------
(a) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee, on or before _________ of each year beginning ________, 199__, an
Officers' Certificate, dated as of ____________ 31 of the preceding year,
stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or such longer period as shall have elapsed since
the Closing Date) and of its performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such year or, if there has been a
default in the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof. The
Indenture Trustee shall send a copy of such certificate and the report
referred to in Section 4.11 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 4.11 may be obtained by any
Certificateholder, Certificate Owner, Noteholder or Note Owner by a request
in writing to the Owner Trustee addressed to the Corporate Trust Office.
Upon the telephone request of the Owner Trustee, the Indenture Trustee will
promptly furnish the Owner Trustee a list of Noteholders as of the date
specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter,
written notice in an Officers' Certificate of any event which with the giving
of notice or lapse of time, or both, would become a Servicer Default under
Section 8.01(a) or (b).
SECTION 4.11. Annual Independent Certified Public Accountants' Report.
-------------------------------------------------------
The Servicer shall cause a firm of independent certified public accountants,
which may also render other services to the Servicer, the Depositor or their
Affiliates, to deliver to the Owner Trustee and the Indenture Trustee on or
before __________ of each year beginning ________ , 199__, a report addressed
to the Board of Directors of the Servicer, to the effect that such firm has
examined the financial statements of the Servicer and issued its report
thereon and that such examination (a) was made in accordance with generally
accepted auditing standards and accordingly included such tests of the
accounting records and such other auditing procedures as such firm considered
necessary in the circumstances; (b) included tests relating to (automotive)
(marine) (recreation vehicle) loans serviced for others in accordance with
the requirements of the Uniform Single Attestation Program for Mortgage
Bankers (the "Program"), to the extent the procedures in such Program are
applicable to the servicing obligations set forth in this Agreement; and
(c) except as described in the report, disclosed no exceptions or errors in
the records relating to (automobile and light-duty truck) (boat)
(recreational vehicle) loans serviced for others that, in the firm's opinion,
paragraph four of such Program requires such firm to report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
Receivables. The Servicer shall provide to the Certificateholders and
- -----------
Noteholders access to the Receivable Files in such cases where the
Certificateholders or Noteholders shall be required by applicable statutes or
regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours
at the offices of the Servicer. Nothing in this Section shall affect the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of the
Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section.
SECTION 4.13. Servicer Expenses. The Servicer shall be required to pay
-----------------
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and
reports to Certificateholders and Noteholders.
SECTION 4.14. Appointment of Subservicer. The Servicer may at any time
--------------------------
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; and provided, further, that the
Servicer shall remain obligated and be liable to the Issuer, the Owner
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders
for the servicing and administering of the Receivables in accordance with the
provisions hereof without diminution of such obligation and liability by
virtue of the appointment of such subservicer and to the same extent and
under the same terms and conditions as if the Servicer alone were servicing
and administering the Receivables. The fees and expenses of the subservicer
shall be as agreed between the Servicer and its subservicer from time to
time, and none of the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders shall have any responsibility therefor.
ARTICLE V
Distributions; Reserve Account;
-------------------------------
Statements to Certificateholders and Noteholders
------------------------------------------------
SECTION 5.01. Establishment of Trust Accounts. (a) (i) The Servicer,
-------------------------------
for the benefit of the Noteholders and the Certificateholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account (the "Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Noteholders and the Certificateholders.
(ii) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account (the "Note Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders.
(iii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders and the
Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively the "Trust Accounts") shall be
invested (1) by the Indenture Trustee in Eligible Investments selected in
writing by the Servicer or an investment manager selected by the Servicer,
which investment manager shall have agreed to comply with the terms of this
Agreement as it relates to investing such funds or (2) by an investment
manager in Eligible Investments selected by such investment manager; provided
that (A) such investment manager shall be selected by the Servicer, (B) such
investment manager shall have agreed to comply with the terms of this
Agreement as it relates to investing such funds, (C) any investment so
selected by such investment manager shall be made in the name of the
Indenture Trustee and shall be settled by a Delivery to the Indenture Trustee
that complies with the terms of this Agreement as it relates to investing
such funds, and (D) prior to the settlement of any investment so selected by
such investment manager the Indenture Trustee shall affirm that such
investment is an Eligible Investment. It is understood and agreed that the
Indenture Trustee shall not be liable for any loss arising from an investment
in Eligible Investments made in accordance with this Section 5.01(b). All
such Eligible Investments shall be held by the Indenture Trustee for the
benefit of the Noteholders and the Certificateholders or the Noteholders, as
applicable; provided, that on each Payment Determination Date all interest
and other investment income (net of losses and investment expenses) on funds
on deposit in the Trust Accounts shall be deposited into the Collection
Account and shall be deemed to constitute a portion of the Interest
Distribution Amount for the related Distribution Date. Other than as
permitted by the Rating Agencies, funds on deposit in the Collection Account,
the Reserve Account and the Note Distribution Account shall be invested in
Eligible Investments that will mature (A) not later than the Business Day
immediately preceding the next Distribution Date or (B) on such next
Distribution Date if either (x) such investment is held in the trust
department of the institution with which the Collection Account, the Reserve
Account, the Note Distribution Account or the Certificate Distribution
Account, as applicable, is then maintained and is invested in a time deposit
of the Indenture Trustee rated at least (A-1) by Standard & Poor's and P-1 by
Moody's (such account being maintained within the trust department of the
Indenture Trustee) or (y) the Indenture Trustee (so long as the short-term
unsecured debt obligations of the Indenture Trustee are either (i) rated at
least P-1 by Moody's and (A-1) by Standard & Poor's on the date such
investment is made or (ii) guaranteed by an entity whose short-term unsecured
debt obligations are rated at least P-1 by Moody's and (A-1) by Standard &
Poor's on the date such investment is made) has agreed to advance funds on
such Distribution Date to the Note Distribution Account and the Certificate
Distribution Account in the amount payable on such investment on such
Distribution Date pending receipt thereof to the extent necessary to make
distributions on such Distribution Date. The guarantee referred to in clause
(y) of the preceding sentence shall be subject to the Rating Agency
Condition. For the purpose of the foregoing, unless the Indenture Trustee
affirmatively agrees in writing to make such advance with respect to such
investment prior to the time an investment is made, it shall not be deemed to
have agreed to make such advance. Funds deposited in a Trust Account on a
day which immediately precedes a Distribution Date upon the maturity of any
Eligible Investments are not required to be invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts
and in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust
Estate. The Trust Accounts shall be under the sole dominion and control
of the Indenture Trustee for the benefit of the Noteholders or the
Noteholders and the Certificateholders, as the case may be. If, at any
time, any of the Trust Accounts ceases to be an Eligible Deposit
Account, the Indenture Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a
new Trust Account as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.01(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive custody
and control of the Indenture Trustee, and the Indenture Trustee
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture
Trustee or a financial intermediary (as such term is defined in
Section 8-313(4) of the UCC) acting solely for the Indenture
Trustee;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-
entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals
and payments from the Trust Accounts for the purpose of permitting the
Servicer or the Owner Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties
under the Indenture.
(d) The Servicer shall establish and maintain with the Trustee an
Eligible Deposit Account (the "Payahead Account"). The Payahead Account
shall not be property of the Trust. The Servicer shall, or shall cause the
Trustee to, transfer all Payaheads from the Collection Account to the
Payahead Account on or prior to the date on which Payaheads are transferred
to the Collection Account pursuant to Section 5.05.
SECTION 5.02. Collections. The Servicer shall remit within two
-----------
Business Days of receipt thereof to the Collection Account all payments by or
on behalf of the Obligors with respect to the Receivables (other than
Purchased Receivables) and all Liquidation Proceeds, both as collected during
the Collection Period. Notwithstanding the foregoing, for so long as
(i) _________ remains the Servicer, (ii) no Servicer Default shall have
occurred and be continuing and (iii)(x) _________ maintains a short-term
rating of at least A-1 by Standard & Poor's and P-1 by Moody's (and for five
Business Days following a reduction in either such rating) or (y) prior to
ceasing daily remittances, the Rating Agency Condition shall have been
satisfied (and any conditions or limitations imposed by the Rating Agencies
in connection therewith are complied with), the Servicer shall remit such
collections with respect to the preceding calendar month to the Collection
Account on the Payment Determination Date immediately preceding the related
Distribution Date. For purposes of this Article V the phrase "payments by or
on behalf of Obligors" shall mean payments made with respect to the
Receivables by Persons other than the Servicer or the Depositor.
SECTION 5.03. Application of Collections. (a) All collections for the
--------------------------
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be applied
first, in the case of Precomputed Receivables, to reduce Outstanding
Precomputed Advances as described in Section 5.05(a) and, in the case of
Simple Interest Receivables, to reduce Outstanding Simple Interest
Advances to the extent described in Section 5.05(b). Next, any excess
shall be applied, in the case of Precomputed Receivables, to the
Scheduled Payment and, in the case of Simple Interest Receivables, to
interest and principal in accordance with the Simple Interest Method.
With respect to Precomputed Receivables, any remaining excess shall be
added to the Payahead Balance, and shall be applied to prepay the
Precomputed Receivable, but only if the sum of such excess and the
previous Payahead Balance shall be sufficient to prepay the Receivable
in full. Otherwise, any such remaining excess payments shall constitute
a Payahead and shall increase the Payahead Balance.
SECTION 5.04. Application of Payaheads. Within two Business Days
------------------------
following each Determination Date, the Trustee shall cause to be transferred
from the Payahead Account to the Collection Account, in immediately available
funds, the aggregate Payaheads from previous Collection Periods applicable as
all or part of any Scheduled Payment on a Precomputed Receivable due during
the related Collection Period, in the amounts set forth in the Servicer's
Certificate for such Distribution Date.
SECTION 5.05. Advances. (a) As of the close of business on the last
--------
day of each Collection Period, if the payments by or on behalf of the Obligor
on a Precomputed Receivable (other than a Purchased Receivable) shall be less
than the Scheduled Payment, the Payahead Balance shall be applied by the
Servicer to the extent of the shortfall and such Payahead Balance shall be
reduced accordingly. Next, the Servicer shall advance any remaining
shortfall (such amount, a "Precomputed Advance"), to the extent that the
Servicer, at its sole discretion, shall determine that the Precomputed
Advance shall be recoverable from the Obligor, the Purchase Amount,
Liquidation Proceeds or proceeds of any other Precomputed Receivables. With
respect to each Precomputed Receivable, the Precomputed Advance shall
increase Outstanding Precomputed Advances. Outstanding Precomputed Advances
shall be reduced by subsequent payments by or on behalf of the Obligor,
collections of Liquidation Proceeds in respect of such Precomputed
Receivables or payments of the Purchase Amount with respect to such
Precomputed Receivables.
If the Servicer shall determine that an Outstanding Precomputed Advance
with respect to any Precomputed Receivable shall not be recoverable as
aforesaid, the Servicer shall be reimbursed from any collections made on
other Precomputed Receivables in the Trust and Outstanding Precomputed
Advances with respect to such Precomputed Receivables shall be reduced
accordingly.
(b) As of the close of business on the last day of each Collection
Period, the Servicer shall advance an amount equal to the amount of interest
due on the Simple Interest Receivables at their respective APR's for the
related Collection Period (assuming the Simple Interest Receivables pay on
their respective due dates) minus the amount of interest actually received on
the Simple Interest Receivables during the related Collection Period (such
amount, a "Simple Interest Advance"). With respect to each Simple Interest
Receivable, the Simple Interest Advance shall increase Outstanding Simple
Interest Advances. If such calculation results in a negative number, an
amount equal to the absolute value of such negative number shall be paid to
the Servicer and the amount of Outstanding Simple Interest Advances shall be
reduced by such amount. In addition, in the event that a Simple Interest
Receivable becomes a Liquidated Receivable, Liquidation Proceeds with respect
to such Simple Interest Receivable attributable to accrued and unpaid
interest thereon (but not including interest for the then current Collection
Period) shall be paid to the Servicer to reduce Outstanding Simple Interest
Advances, but only to the extent of any Outstanding Simple Interest Advances.
The Servicer shall not make any advance in respect of principal of Simple
Interest Receivables.
SECTION 5.06. Additional Deposits. The Servicer shall deposit in the
-------------------
Collection Account on the Payment Determination Date for the related
Collection Period the aggregate Advances pursuant to Section 5.05. To the
extent that the Servicer fails to make a Simple Interest Advance pursuant to
Section 5.05(b) on the date required, the Servicer shall notify the Indenture
Trustee to withdraw such amount (or, if determinable, such portion of such
amount as does not represent advances for delinquent interest) from the
Reserve Account and deposit such amount in the Collection Account. The
Servicer and the Depositor shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables and the Servicer shall deposit therein all amounts to be paid
under Section 9.01. The Servicer will deposit the aggregate Purchase Amount
with respect to Purchased Receivables when such obligations are due, unless
the Servicer shall not be required to make daily deposits pursuant to
Section 5.02. All such other deposits shall be made on the Payment
Determination Date for the related Collection Period.
SECTION 5.07. Distributions.
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(a) (i) On each Payment Determination Date, the Servicer shall
calculate all amounts required to be deposited in the Note Distribution
Account and the Certificate Distribution Account.
(ii) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Payment Determination Date pursuant
to Section 4.09) to make the following deposits and distributions for
receipt by the Servicer or deposit in the applicable account by 11:00
A.M. (New York time), to the extent of the Total Distribution Amount, in
the following order of priority:
(A) to the extent the Servicer has not received the payment
of the Servicing Fee at the beginning of the related Collection
Period pursuant to clause (a) above, to the Servicer, from the
Interest Distribution Amount, the Servicing Fee (and all unpaid
Servicing Fees from prior Collection Periods);
(B) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (A),
the Noteholders' Interest Distributable Amount;
(C) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (A)
and (B), the Noteholders' Principal Distributable Amount;
(D) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (A)
through (C), the Certificateholders' Interest Distributable Amount;
(E) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (A)
through (D), the Certificateholders' Principal Distributable
Amount;
(F) to the Reserve Account, from the Total Distribution
Amount remaining after the application of clauses (A) through (E)
(it being understood that the Accelerated Principal Distribution
Amount is a function of and subject to the amount required to be
deposited in the Reserve Account pursuant to this clause (F)), the
amount, if any, necessary to reinstate the balance in the Reserve
Account up to the Specified Reserve Account Balance; and
(G) to the Reserve Account, the portion, if any, of the Total
Distribution Amount remaining after the application of clauses (A)
through (F).
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
SECTION 5.08. Reserve Account. (a) On the Closing Date, the Owner
---------------
Trustee will deposit, on behalf of the Depositor, the Reserve Account Initial
Deposit into the Reserve Account from the net proceeds of the sale of the
Notes and the Certificates.
(b) (i) After giving effect to clause (ii) below, if the amount
on deposit in the Reserve Account on any Distribution Date (after giving
effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account Balance
for such Distribution Date, the Servicer shall instruct the Indenture
Trustee to distribute the amount of such excess to the Depositor.
(ii) On each Distribution Date subsequent to any reduction or
withdrawal by any Rating Agency of its rating of any Class of Notes,
unless such rating has been restored, if the amount on deposit in the
Reserve Account (after taking into account any deposits thereto pursuant
to Section 5.07(a) and withdrawals therefrom pursuant to
Section 5.08(c), (d) or (e) on such date) is greater than the Specified
Reserve Account Balance for such Distribution Date, then the Servicer
shall instruct the Indenture Trustee to include the amount of such
excess in the Noteholders' Monthly Principal Distribution Amount and to
deposit the amount of such excess (up to the amount of cash or cash
equivalents in the Reserve Account) to the Collection Account for
deposit to the Note Distribution Account for distribution to Noteholders
as an accelerated payment of principal on such Distribution Date;
provided, that the amount of such deposit shall not exceed the
outstanding principal balance of the Notes after giving effect to all
other payments of principal to be made on such date.
(c) If the Servicer determines pursuant to Section 5.05 that it is
required to make an Advance on a Payment Determination Date and does not do
so from its own funds, the Servicer shall instruct the Indenture Trustee to
withdraw funds from the Reserve Account and deposit them in the Collection
Account to cover any shortfall. Such payment shall be deemed to have been
made by the Servicer pursuant to Section 5.05 for purposes of making
distributions pursuant to this Agreement, but shall not otherwise satisfy the
Servicer's obligation to deliver the amount of the Advances, and the Servicer
shall within two Business Days replace any funds in the Reserve Account so
used.
(d) (i) In the event that the Noteholders' Distributable Amount
for a Distribution Date exceeds the sum of the amounts deposited into
the Note Distribution Account pursuant to Section 5.07(a)(ii)(B) and (C)
on such Distribution Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Reserve Account on such Distribution Date
an amount equal to such excess, to the extent of funds available therein
up to the Available Amount, and deposit such amount into the Note
Distribution Account.
(ii) In the event that the Noteholders' Principal Distributable
Amount on the Class A-1 Final Scheduled Distribution Date or the Class
(A-2) Final Scheduled Distribution Date exceeds the amount deposited
into the Note Distribution Account pursuant to Section 5.07(a)(ii)(C) on
such Distribution Date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Reserve Account on such Distribution Date
an amount equal to such excess, to the extent of funds available therein
up to the Available Amount, and deposit such amount into the Note
Distribution Account.
(e) (i) In the event that the Certificateholders' Distributable
Amount for a Distribution Date exceeds the sum of the amounts deposited
into the Certificate Distribution Account pursuant to Section
5.07(a)(ii)(D) and (E) on such Distribution Date, the Servicer shall
instruct the Indenture Trustee to withdraw from the Reserve Account on
such Distribution Date an amount equal to such excess, to the extent of
funds available therein up to the Available Amount after giving effect
to paragraphs (c) and (d) above, and deposit such amount into the
Certificate Distribution Account on such Distribution Date.
(ii) In the event that the Certificateholders' Monthly Interest
Distributable Amount for a Distribution Date exceeds the amount
deposited in the Certificate Distribution Account pursuant to
Section 5.07(b)(ii)(D), the Servicer shall instruct the Indenture
Trustee to withdraw from the Reserve Account on such Distribution Date
an amount equal to such excess, to the extent of funds available
therein, after giving effect to paragraphs (d)(i) and (e)(i) above, up
to the Certificate Interest Reserve Amount with respect to such
Distribution Date, and deposit such amount into the Certificate
Distribution Account.
(iii) In the event that the Certificateholders' Principal
Distributable Amount on the Final Scheduled Distribution Date exceeds
the amount deposited in the Certificate Distribution Account pursuant to
Section 5.07(b)(ii)(E), the Servicer shall instruct the Indenture
Trustee to withdraw from the Reserve Account on such Distribution Date
an amount equal to such excess, to the extent of funds available therein
after giving effect to paragraphs (d) and (e)(i) above, and deposit such
amount into the Certificate Distribution Account.
(f) Subject to Section 9.01, amounts will continue to be applied
pursuant to Section 5.07 following payment in full of the Outstanding
Amount of the Notes and the Certificate Balance until the Pool Balance is
reduced to zero. Following the payment in full of the aggregate Outstanding
Amount of the Notes and the Certificate Balance and of all other amounts
owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders and Certificateholders and the termination of the
Trust, any amount remaining on deposit in the Reserve Account shall be
distributed to the Depositor.
(g) On the Final Scheduled Distribution Date, if the amount of funds
remaining in the Reserve Account (after all other distributions to be made
from the Reserve Account pursuant to this Section have been made, other than
paragraphs (b)(i) and (f)) is in excess of the amounts described below, a
portion of such excess according to the following schedule shall be deposited
in the Certificate Distribution Account for distribution to
Certificateholders:
(i) with respect to all such funds in the Reserve Account in
excess of $_________________ but which do not exceed $_____________, __%
of such amount;
(ii) with respect to all such funds in the Reserve Account in
excess of $____________ but which do not exceed $__________, __% of such
amount;
(iii)with respect to all such funds in the Reserve Account in
excess of $____________ but which do not exceed $_____________, __% of
such amount;
(iv) with respect to all such funds in the Reserve Account in
excess of $_____________ but which do not exceed $____________, __% of
such amount; and
(v) with respect to all such funds in the Reserve Account in
excess of $_______________, ___% of such amount.
The amounts to be deposited in the Certificate Distribution Account pursuant
to the preceding sentence are in excess of all amounts otherwise required to
be deposited in the Certificate Distribution Account pursuant to this
Agreement, notwithstanding anything to the contrary contained herein.)
SECTION 5.09. Statements to Certificateholders and Noteholders. On
------------------------------------------------
each Distribution Date, the Servicer shall provide to the Owner Trustee (with
a copy to the Rating Agencies and each Paying Agent) for the Owner Trustee to
forward to each Certificateholder of record as of the most recent Record Date
and to the Indenture Trustee (with a copy to each Paying Agent) for the
Indenture Trustee to forward to each Noteholder of record as of the most
recent Record Date a statement substantially in the form of Exhibits A and B,
respectively, setting forth at least the following information as to the
Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
allocable to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest
allocable to each Class of Notes and to the Certificates;
(iii) the outstanding principal balance of each Class of Notes,
the Note Pool Factor for each such Class, the Certificate Balance and
the Certificate Pool Factor as of the close of business on the last day
of the preceding Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(iv) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(v) the amount of Realized Losses, if any, with respect to the
related Collection Period;
(vi) the balance of the Reserve Account on such Payment
Determination Date after giving effect to deposits and withdrawals to be
made on the next following Distribution Date, if any;
(vii) the aggregate Payahead Balance; and
(viii) the Pool Balance as of the close of business on the last
day of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above.
Each amount set forth on the Distribution Date statement under clauses
(i), (ii) or (iv) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Certificate or Note, as applicable.
SECTION 5.10. Net Deposits. As an administrative convenience, unless
------------
the Servicer is required to remit collections daily, the Servicer will be
permitted to make the deposit of collections on the Receivables, aggregate
Advances and Purchase Amounts for or with respect to the Collection Period
net of distributions to be made to the Servicer with respect to the
Collection Period. Similarly, the Servicer may cause a single net transfer
to be made from the Collection Account to the Payahead Account, or vice
versa. The Servicer, however, will account to the Owner Trustee, the
Indenture Trustee, the Noteholders and the Certificateholders as if all
deposits, distributions and transfers were made individually.
ARTICLE VI
The Depositor
-------------
SECTION 6.01. Representations of Depositor. The Depositor makes the
----------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, in the case of the
Receivables, and shall survive the sale of the Receivables to the Issuer and
the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Depositor is duly
------------------------------
organized and validly existing as a corporation in good standing under the
laws of the State of Delaware, with the 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, and had at all relevant
times, and has, the corporate power, authority and legal right to acquire and
own the Receivables.
(b) Due Qualification. The Depositor is duly qualified to do
-----------------
business as a foreign corporation 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.
(c) Power and Authority. The Depositor has the corporate power
-------------------
and authority to execute and deliver this Agreement and to carry out its
respective terms; the Depositor has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the Issuer,
and the Depositor shall have duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution, delivery and
performance of this Agreement has been, duly authorized by the Depositor by
all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes, a legal,
------------------
valid and binding obligation of the Depositor enforceable in accordance with
its terms.
(e) No Violation. 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 or bylaws of the Depositor, or any indenture,
agreement or other instrument to which the Depositor is a party or by which
it is bound; or 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); or violate
anylaw or, to the best of the Depositor's knowledge, any order, rule or
regulation applicable to the Depositor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(f) No Proceedings. To the Depositor's best knowledge, there are
--------------
no proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Depositor or its properties: (i) asserting the
invalidity of this Agreement, the Indenture or any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the
other Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement, the
Indenture, any of the other Basic Documents, the Notes or the Certificates or
(iv) which might adversely affect the federal or state income tax attributes
of the Notes or the Certificates.
(g) Chief Executive Office. The chief executive office of the
----------------------
Depositor is located at 1585 Broadway, New York, New York 10036.
SECTION 6.02. Corporate Existence. During the term of this Agreement,
-------------------
the Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation 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 Agreement, the Basic
Documents and each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Depositor and
its Affiliates will be conducted on an arm's-length basis.
SECTION 6.03. Liability of the Depositor; Indemnities. The Depositor
---------------------------------------
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement:
(a) The Depositor shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Servicer and any
of the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Indenture Trustee from and against any taxes that
may at any time be asserted against any such Person with respect to the
transactions contemplated herein and in the Basic Documents, including
any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer,
not including any taxes asserted with respect to, and as of the date of,
the sale of the Receivables to the Issuer or the issuance and original
sale of the Certificates and the Notes, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising
out of distributions on the Certificates or the Notes) and costs and
expenses in defending against the same.
(b) The Depositor shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders
and the Noteholders and any of the officers, directors, employees and
agents of the Issuer, the Owner Trustee and the Indenture Trustee from
and against any loss, liability or expense incurred by reason of (i) the
Depositor's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and
(ii) the Depositor's or the Issuer's violation of federal or state
securities laws in connection with the offering and sale of the Notes
and the Certificates.
(c) The Depositor shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee and their respective officers,
directors, employees and agents from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein and in the Trust Agreement contained, in the case of the Owner
Trustee, and in the Indenture contained, in the case of the Indenture
Trustee, except to the extent that such cost, expense, loss, claim,
damage or liability: (i) in the case of the Owner Trustee, shall be due
to the willful misfeasance, bad faith or negligence (except for errors
in judgment) of the Owner Trustee or, in the case of the Indenture
Trustee, shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of the Indenture Trustee; or
(ii) in the case of the Owner Trustee, shall arise from the breach by
the Owner Trustee of any of its representations or warranties set forth
in Section 7.03 of the Trust Agreement.
(d) The Depositor shall pay any and all taxes levied or assessed
upon all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee and the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Depositor shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Depositor, without
interest.
SECTION 6.04. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Depositor. Any Person (a) into which the Depositor may be
- -------------------------
merged or consolidated, (b) which may result from any merger or consolidation
to which the Depositor shall be a party or (c) which may succeed to the
properties and assets of the Depositor substantially as a whole, which person
in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Depositor under this Agreement, shall be the
successor to the Depositor hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement;
provided, however, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.01
shall have been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default shall have
occurred and be continuing, (ii) the Depositor shall have delivered to the
Owner Trustee and the Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agency Condition shall
have been satisfied with respect to such transaction and (iv) the Depositor
shall have delivered to the Owner Trustee and the Indenture Trustee an
Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary fully to preserve and protect
the interest of the Owner Trustee and Indenture Trustee, respectively, in the
Receivables and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve
and protect such interests. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement of assumption and compliance with
clauses (i), (ii), (iii) and (iv) above shall be conditions to the
consummation of the transactions referred to in clauses (a), (b) or (c)
above.
SECTION 6.05. Limitation on Liability of Depositor and Others. The
-----------------------------------------------
Depositor and any director, officer, employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor shall not be under any obligation
to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion
may involve it in any expense or liability.
SECTION 6.06. Depositor May Own Certificates or Notes. The Depositor
---------------------------------------
and any Affiliate thereof may in its individual or any other capacity become
the owner or pledgee of Certificates or Notes with the same rights as it
would have if it were not the Depositor or an Affiliate thereof, except as
expressly provided herein or in any Basic Document.
ARTICLE VII
The Servicer
------------
SECTION 7.01. Representations of Servicer. The Servicer makes the
---------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, in the case of the
Receivables, and shall survive the sale of the Receivables to the Issuer and
the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly
------------------------------
organized and validly existing as a corporation in good standing under the
laws of the state of its incorporation, with the 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, and
had at all relevant times, and has, the corporate power, authority and legal
right to acquire, own, sell and service the Receivables and to hold the
Receivable Files as custodian.
(b) Due Qualification. The Servicer is duly qualified to do
-----------------
business as a foreign corporation 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 (including the servicing
of the Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer has the corporate power and
-------------------
authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
------------------
and binding obligation of the Servicer enforceable in accordance with its
terms.
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof shall
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which it
is bound; or 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); or violate any law or, to the best of
the Servicer's knowledge, any order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(f) No Proceedings. To the Servicer's best knowledge, there are
--------------
no proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the
other Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement, the
Indenture, any of the other Basic Documents, the Notes or the Certificates or
(iv) relating to the Servicer and which might adversely affect the federal or
state income tax attributes of the Notes or the Certificates.
(g) No Insolvent Obligors. As of the Cutoff Date, no Obligor on
---------------------
a Receivable is shown on the Receivable Files as the subject of a bankruptcy
proceeding.
SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable
-----------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Depositor and any of the officers, directors,
employees and agents of the Issuer, the Owner Trustee and the Indenture
Trustee from and against any and all costs, expenses, losses, damages,
claims and liabilities arising out of or resulting from the use,
ownership or operation by the Servicer or any Affiliate thereof of a
Financed Asset.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the
Certificateholders and the Noteholders and any of the officers,
directors, employees and agents of the Issuer, the Owner Trustee and the
Indenture Trustee from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any
such Person through, the negligence, willful misfeasance or bad faith of
the Servicer in the performance of its duties under this Agreement or by
reason of reckless disregard of its obligations and duties under this
Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of __________ (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Servicer, without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer. Any Person (a) into which the Servicer may be
- ------------------------
merged or consolidated, (b) which may result from any merger or consolidation
to which the Servicer shall be a party, (c) which may succeed to the
properties and assets of the Servicer substantially as a whole or (d) with
respect to the Servicer's obligations hereunder, which is a corporation 50%
or more of the voting stock of which is owned, directly or indirectly, by
________________________, which Person executed an agreement of assumption to
perform every obligation of the Servicer hereunder, shall be the successor to
the Servicer under this Agreement without further act on the part of any of
the parties to this Agreement; provided, however, that (i) immediately after
giving effect to such transaction, no Servicer Default and no event which,
after notice or lapse of time, or both, would become a Servicer Default shall
have occurred and be continuing, (ii) the Servicer shall have delivered to
the Owner Trustee and the Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agency Condition shall
have been satisfied with respect to such transaction, (iv) immediately after
giving effect to such transaction, the successor to the Servicer shall become
the Administrator under the Administration Agreement in accordance with
Section 8 of such Agreement and (v) the Servicer shall have delivered to the
Owner Trustee and the Indenture Trustee an Opinion of Counsel stating that,
in the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee and the Indenture Trustee, respectively, in the Receivables and
reciting the details of such filings or (B) no such action shall be necessary
to preserve and protect such interests. Notwithstanding anything herein to
the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii), (iii), (iv) and (v) above shall be
conditions to the consummation of the transactions referred to in clause (a),
(b) or (c) above.
SECTION 7.04. Limitation on Liability of Servicer and Others. Neither
----------------------------------------------
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this
Agreement or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any
person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement
and the Basic Documents and the rights and duties of the parties to this
Agreement and the Basic Documents and the interests of the Certificateholders
under this Agreement and the Noteholders under the Indenture.
SECTION 7.05. ________ Not To Resign as Servicer. Subject to the
-----------------------------------
provisions of Section 7.03, _________ shall not resign from the obligations
and duties hereby imposed on it as Servicer under this Agreement except upon
a determination that the performance of its duties under this Agreement shall
no longer be permissible under applicable law. Notice of any such
determination permitting the resignation of __________ shall be communicated
to the Owner Trustee and the Indenture Trustee at the earliest practicable
time (and, if such communication is not in writing, shall be confirmed in
writing at the earliest practicable time) and any such determination shall be
evidenced by an Opinion of Counsel to such effect delivered to the Owner
Trustee and the Indenture Trustee concurrently with or promptly after such
notice. No such resignation shall become effective until the Indenture
Trustee or a successor Servicer shall (i) have assumed the responsibilities
and obligations of _________ in accordance with Section 8.02 and (ii) have
become the Administrator under the Administration Agreement in accordance
with Section 8 of such Agreement.
ARTICLE VIII
Default
-------
SECTION 8.01. Servicer Default. If any one of the following events (a
----------------
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Indenture
Trustee for deposit in any of the Trust Accounts or the Certificate
Distribution Account any required payment or to direct the Indenture
Trustee to make any required distributions therefrom, which failure
continues unremedied for a period of three Business Days after written
notice of such failure is received by the Servicer from the Owner
Trustee or the Indenture Trustee or after discovery of such failure by
an officer of the Servicer; or
(b) failure by the Service, as the case may be, duly to observe or
to perform in any material respect any other covenants or agreements of
the Servicer (as the case may be) set forth in this Agreement or any
other Basic Document, which failure shall (i) materially and adversely
affect the rights of Certificateholders or Noteholders and (ii) continue
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (A) to the Servicer (as the case may be) by the Owner Trustee
or the Indenture Trustee or (B) to the Servicer (as the case may be),
and to the Owner Trustee and the Indenture Trustee by the Holders of
Notes or Certificates, as applicable, evidencing not less than 25% of
the Outstanding Amount of the Notes or 25% of the outstanding
Certificate Balance; or
(c) the occurrence of an Insolvency Event with respect to the
Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee or the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the Servicer (and to the Indenture Trustee
and the Owner Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 7.02
hereof) of the Servicer under this Agreement. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Notes, the Certificates or
the Receivables or otherwise, shall, without further action, pass to and be
vested in the Indenture Trustee or such successor Servicer as may be
appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Indenture Trustee and the Owner Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the predecessor Servicer
for deposit, or shall thereafter be received by it with respect to any
Receivable. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the
successor Servicer and amending this Agreement to reflect such succession as
Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses.
Upon receipt of notice of the occurrence of a Servicer Default, the Owner
Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.02. Appointment of Successor. (a) Upon the Servicer's
------------------------
receipt of notice of termination pursuant to Section 8.01 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the later of (i) the date 45 days from the delivery to the Owner
Trustee and the Indenture Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (ii) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's termination
hereunder, the Indenture Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment (including its appointment as
Administrator under the Administration Agreement as set forth in Section
8.02(b)) by a written assumption in form acceptable to the Owner Trustee and
the Indenture Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section, the Indenture Trustee without
further action shall automatically be appointed the successor Servicer and
the Indenture Trustee shall be entitled to the Servicing Fee.
Notwithstanding the above, the Indenture Trustee shall, if it shall be
legally unable so to act, appoint or petition a court of competent
jurisdiction to appoint any established institution, having a net worth of
not less than $100,000,000 and whose regular business shall include the
servicing of (automotive) (marine) (recreational vehicle) receivables, as the
successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall (i) be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement and (ii) become the Administrator under the
Administration Agreement in accordance with Section 8 of such Agreement.
(c) The Servicer may not resign unless it is prohibited from serving as
such by law.
SECTION 8.03. Repayment of Advances. If the Servicer shall change, the
---------------------
predecessor Servicer shall be entitled to receive reimbursement for
Outstanding Advances pursuant to Sections 5.03 and 5.05 with respect to all
Advances made by the predecessor Servicer.
SECTION 8.04. Notification to Noteholders and Certificateholders. Upon
--------------------------------------------------
any termination of, or appointment of a successor to, the Servicer pursuant
to this Article VIII, the Owner Trustee shall give prompt written notice
thereof to Certificateholders, and the Indenture Trustee shall give prompt
written notice thereof to Noteholders and the Rating Agencies.
SECTION 8.05. Waiver of Past Defaults. The Holders of Notes evidencing
-----------------------
not less than a majority of the Outstanding Amount of the Notes or the
Holders (as defined in the Trust Agreement) of Certificates evidencing not
less than a majority of the outstanding Certificate Balance (in the case of
any default which does not adversely affect the Indenture Trustee or the
Noteholders) may, on behalf of all Noteholders and Certificateholders, waive
in writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required
deposits to or payments from any of the Trust Accounts in accordance with
this Agreement. Upon any such waiver of a past default, such default shall
cease to exist, and any Servicer Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
ARTICLE IX
Termination
-----------
SECTION 9.01. Optional Purchase of All Receivables. (a) As of the
------------------------------------
last day of any Collection Period immediately preceding a Distribution Date
as of which the then outstanding Pool Balance is ____% or less of the
Original Pool Balance and the Class (A-1) Notes, have been paid in full, the
Servicer shall have the option to purchase the Owner Trust Estate, other than
the Trust Accounts and the Certificate Distribution Account; provided,
however, that, unless Moody's agrees otherwise, the Servicer may not effect
any such purchase if the rating of ___________'s long-term debt obligations
is less than Baa3 by Moody's, unless the Owner Trustee and the Indenture
Trustee shall have received an Opinion of Counsel to the effect that such
purchase would not constitute a fraudulent conveyance. To exercise such
option, the Servicer shall deposit pursuant to Section 5.06 in the Collection
Account an amount equal to the aggregate Purchase Amount for the Receivables
(including defaulted Receivables), plus the appraised value of any such other
property held by the Trust other than the Trust Accounts and the Certificate
Distribution Account, such value to be determined by an appraiser mutually
agreed upon by the Servicer, the Owner Trustee and the Indenture Trustee, and
shall succeed to all interests in and to the Trust. Notwithstanding the
foregoing, the Servicer shall not be permitted to exercise such option unless
the amount to be deposited in the Collection Account pursuant to the
preceding sentence is greater than or equal to the sum of the outstanding
principal balance of the Notes and the Certificate Balance and all accrued
but unpaid interest (including any overdue interest and premium) thereon.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a
Distribution Date, on the Distribution Date immediately following such
deposit), the Servicer shall instruct the Indenture Trustee to make the
following deposits (after the application on such Distribution Date of the
Total Distribution Amount and funds on deposit in the Reserve Account
pursuant to Sections 5.07 and 5.08) from the Insolvency Proceeds and any
funds remaining on deposit in the Reserve Account (including the proceeds of
any sale of investments therein as described in the following sentence):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into
the Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
balance of the Notes (after giving effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits
made in the Note Distribution Account on such Distribution Date and on
prior Distribution Dates);
(iii) to the Certificate Distribution Account, any portion of
the Certificateholders' Interest Distributable Amount not otherwise
deposited into the Certificate Distribution Account on such Distribution
Date;
(iv) to the Certificate Distribution Account, the Certificate
Balance (after giving effect to the reduction in the Certificate Balance
to result from the deposits made in the Certificate Distribution Account
on such Distribution Date); and
(v) any remaining amount to the Reserve Account.
Any investments on deposit in the Reserve Account or Note Distribution
Account which will not mature on or before such Distribution Date shall be
sold by the Indenture Trustee at such time as will result in the Indenture
Trustee receiving the proceeds from such sale not later than the Payment
Determination Date preceding such Distribution Date. Any Insolvency Proceeds
remaining in the Reserve Account after the deposits described in clauses (i)
through (v) above shall be paid to the Depositor.
(c) As described in Article IX of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
other than Section 5.08(b) and the Owner Trustee will succeed to the rights
of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment. This Agreement may be amended by the
---------
Depositor, the Servicer and the Issuer, with the consent of the Indenture
Trustee, but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this
Agreement or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of
any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor,
the Servicer and the Issuer, with the consent of the Indenture Trustee, the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Holders (as defined in
the Trust Agreement) of outstanding Certificates evidencing not less than a
majority of the outstanding Certificate Balance, 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
Noteholders or 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 Receivables or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage
of the Outstanding Amount of the Notes and the Certificate Balance, the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and the Holders (as
defined in the Trust Agreement) of all the outstanding Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee and each of the
Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 10.02(i)(1). The Owner Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects
the Owner Trustee's or the Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
SECTION 10.02. Protection of Title to Trust. (a) The Depositor shall
----------------------------
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and of the Indenture Trustee in the Receivables and in the proceeds
thereof. The Depositor shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following
such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-
402(7) of the UCC, unless it shall have given the Owner Trustee and the
Indenture Trustee at least five days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment or new financing statement. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to)
each Receivable and the amounts from time to time deposited in the Collection
Account and the Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer
to a Receivable shall indicate clearly the interest of the Issuer and the
Indenture Trustee in such Receivable and that such Receivable is owned by the
Issuer and has been pledged to the Indenture Trustee. Indication of the
Issuer's and the Indenture Trustee's interest in a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, the related Receivable shall have been paid in full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in
(automotive) (marine) (recreational vehicle) receivables to any prospective
purchaser, lender or other transferee, the Servicer shall give to such
prospective purchaser, lender or other transferee computer tapes, records or
printouts (including any restored from backup archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold and is owned by the Issuer and has been pledged
to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents at
any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables
and to each of the Servicer's Certificates furnished before such request
indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto and on certain Distribution Dates as
required by Section 2.05(b)(x)(B), an Opinion of Counsel stating that,
in the opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner Trustee and the
Indenture Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details
are given, or (B) no such action shall be necessary to preserve and
protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel, either
(A) all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Depositor shall, to the extent required by applicable law,
cause the Certificates and the Notes to be registered with the Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the
time periods specified in such sections.
SECTION 10.03. Notices. All demands, notices, communications and
-------
instructions upon or to the Depositor, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Depositor, to Morgan Stanley ABS Capital II Inc. 1585
Broadway, New York, NY 10036 , Attention of General Counsel (212-761-4000) or
the Servicer, to ___________________________, Attention of
___________________, (b) in the case of the Issuer or the Owner Trustee, at
the Corporate Trust Office (as defined in the Trust Agreement), (c) in the
case of the Indenture Trustee, at the Corporate Trust Office, (d) in the case
of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007, (e) in the case of Standard &
Poor's, to Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., 25 Broadway (15th Floor), New York, New York 10004,
Attention of Asset Backed Surveillance Department, (f) in the case of Fitch
Investors Service, L.P., to One State Street Plaza, New York, N.Y. 10004, and
(g) in the case of Duff & Phelps Credit Rating Co., to 17 State Street, 12th
Floor, New York, New York 10004; or, as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 10.04. Assignment by the Depositor or the Servicer.
-------------------------------------------
Notwithstanding anything to the contrary contained herein, except as provided
in the remainder of this Section, as provided in Sections 6.04 and 7.03
herein and as provided in the provisions of this Agreement concerning the
resignation of the Servicer, this Agreement may not be assigned by the
Depositor or the Servicer.
SECTION 10.05. Limitations on Rights of Others. The provisions of this
-------------------------------
Agreement are solely for the benefit of the Depositor, the Servicer, the
Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee and
the Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
SECTION 10.06. 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, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10.07. Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.09. Governing Law. This Agreement 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 shall be determined in accordance with such laws.
SECTION 10.10. Assignment by Issuer. The Depositor hereby acknowledges
--------------------
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders of all right, title and interest of the Issuer
in, to and under the Receivables and/or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee.
SECTION 10.11. Nonpetition Covenants. Notwithstanding any prior
---------------------
termination of this Agreement, the Servicer and the Depositor shall not,
prior to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer or, acquiesce, petition or otherwise
invoke or cause the Issuer or the Depositor to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against the Issuer or the Depositor under any federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or the Depositor or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer or the Depositor.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
------------------------------------------------------
Trustee. (a) Notwithstanding anything contained herein to the contrary,
- -------
this Agreement has been countersigned by _________________________________
not in its individual capacity but solely in its capacity as Owner Trustee of
the Issuer and in no event shall ____________________ in its individual
capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance
of its duties or obligations hereunder or 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.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by ________________________, not in its
individual capacity but solely as Indenture Trustee and in no event shall
______________________ have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
(______________) TRUST 199_-_
By: ( ), not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By: ___________________________________
Name:
Title:
Morgan Stanley ABS Capital II Inc.
Depositor
By:________________________________
Name:
Title:
(__________________________),
Servicer
By:_____________________________
Name:
Title:
Acknowledged and accepted
as of the day and year
first above written:
(______________________),
not in its individual capacity
but solely as Indenture Trustee
By: ___________________________________________
Name:
Title:
SCHEDULE A
Schedule of Receivables
-----------------------
Delivered to the Owner Trustee at Closing
SCHEDULE B
Location of Receivable Files
----------------------------
EXHIBIT A
Form of Distribution Statement to Certificateholders
----------------------------------------------------
(_____________________________)
(______________) Trust 199_-_ Distribution Date Statement to
Certificateholders
Principal Distribution Amount
Principal Per $1,000 Certificate
Interest Distribution Amount
Interest Per $1,000 Certificate
Note Balance:
Class A-1 Notes:
Class A-2 Notes:
Note Pool Factor:
Class A-1 Notes:
Class A-2 Notes:
Certificate Balance
Certificate Pool Factor
Servicing Fee
Servicing Fee Per $1,000 Certificate
Pool Balance
Realized Losses
Reserve Account Balance
Payahead Balance
EXHIBIT B
Form of Distribution Statement to Noteholders
---------------------------------------------
(________________) Trust 199_-_ Distribution Date Statement to Noteholders
Principal Distribution Amount
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Interest Distribution Amount
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Note Balance
Class A-1 Notes
Class A-2 Notes
Note Pool Factor
Class A-1 Notes
Class A-2 Notes
Certificate Balance
Servicing Fee
Servicing Fee Per $1,000 Note
Realized Losses
Reserve Account Balance
Payahead Balance
EXHIBIT C
Form of Servicer's Certificate
------------------------------
(_________________) Trust 199_-_ Monthly Servicer's Certificate
Period
Distribution Date
Dates Covered From & Incl. To & Incl.
Collections
Accrual
30/360 Days
Actual/360 Days
Receivables Balances Beginning Ending
Pool Balance
Simple Interest
Original Pool Balance
Principal Distribution Amount
Principal Collections
+ Repurchases
+ Liquidation Proceeds
+ Realized Losses
Interest Distribution Amount
Collections - Precomputed Contracts
+ Collections - Simple Interest Contracts
+ Simple Interest Advances
+ Investment Earnings
Total Distribution Amount
Principal Distribution Amount
+ Interest Distribution Amount
-- Realized Losses
Total Distribution Amount:
Loss & Delinquency
Account Activity
Interest/
Beginning Ending Interest
Balance Balance Change Factor Servicing Shortfall
Initial Pool
Principal Paydown
Payaheads
Advance
Reserve
Available Amount
Certificate Interest Reserve
Certificate Interest Reserve Draw
Notes
Class (A-1)
Class (A-2)
Certificates
Over Collateralization
Principal Allocation
Mandatory
Regular Accelerated Redemption/ Total Principal
Principal Principal Repayment Principal Shortfall
Notes
Class (A-1)
Class (A-2)
Certificates
Total =======================================================================
Miscellaneous
Noteholders' Percentage
Certificateholders' Percentage
Maximum Excess Principal
Available Excess Principal
Specified Reserve Account Balance
Certificate Interest Reserve Draw
Distribution Account to Depositor
Servicing Fee to Servicer
Allocation of Funds
Sources
Principal Distribution Amount
Interest Distribution Amount
Available Amount
Certificate Interest Reserve
Reserve Deposit from PFA
Redemption/Prepay Amt.
Total Sources
EXHIBIT 10.2
Form of Administration Agreement
This ADMINISTRATION AGREEMENT dated as of _______________,
199_, among (______________) TRUST 199_-_, a Delaware business
trust (the "Issuer"), ________________________, a _________
corporation, as administrator (the "Administrator"), and
________________, a __________ banking corporation, not in its
individual capacity but solely as Indenture Trustee (the "Indenture
Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer is issuing the Class (A-1) (Floating Rate) Asset
Backed Notes and Class (A-2) (Floating Rate) Asset Backed Notes, (together,
the "Notes") pursuant to the Indenture dated as of ___________, 199_ (as
amended and supplemented from time to time, the "Indenture"), between the
Issuer and the Indenture Trustee (capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in the Inden-
ture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership interests
in the Issuer, including (i) a Sale and Servicing Agreement dated as of
___________, 199_ (as amended and supplemented from time to time, the "Sale
and Servicing Agreement"), among the Issuer, Morgan Stanley ABS Capital II
Inc., as depositor (the "Depositor") and ___________________, as servicer
(the "Servicer"), (ii) a Letter of Representations dated ____________, 199_
(as amended and supplemented from time to time, the "Note Depository
Agreement"), among the Issuer, the Indenture Trustee, the Administrator and
The Depository Trust Company ("DTC") relating to the Notes, (iii) a Letter of
Representations dated ______________, 199_ (as amended and supplemented from
time to time, the "Certificate Depository Agreement", and together with the
Note Depository Agreement, the "Depository Agreements"), among the Issuer,
the Administrator, the Owner Trustee and DTC relating to the Certificates and
(iv) the Indenture (the Sale and Servicing Agreement, the Depository
Agreements and the Indenture being referred to hereinafter collectively as
the "Related Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the
Notes and the collateral therefor pledged pursuant to the Indenture (the
"Collateral") and (b) the beneficial ownership interests in the Issuer (the
registered holders of such interests being referred to herein as the
"Owners");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner
Trustee referred to in the preceding clause and to provide such additional
services consistent with the terms of this Agreement and the Related
Agreements as the Issuer and the Owner Trustee may from time to time request;
and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and
the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator. (a) Duties with Respect to the
---------------------------
Depository Agreements and the Indenture. (i) The Administrator agrees to
perform all its duties as Administrator and the duties of the Issuer and the
Owner Trustee under the Depository Agreements. In addition, the
Administrator shall consult with the Owner Trustee regarding the duties of
the Issuer or the Owner Trustee under the Indenture and the Depository
Agreements. The Administrator shall monitor the performance of the Issuer
and shall advise the Owner Trustee when action is necessary to comply with
the Issuer's or the Owner Trustee's duties under the Indenture and the
Depository Agreements. The Administrator shall prepare for execution by the
Issuer, or shall cause the preparation by other appropriate persons of, all
such documents, reports, filings, instruments, certificates and opinions that
it shall be the duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, the Administrator shall take all appropriate
action that is the duty of the Issuer or the Owner Trustee to take pursuant
to the Indenture including, without limitation, such of the foregoing as are
required with respect to the following matters under the Indenture
(references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give the
Indenture Trustee notice of any appointment of a new Note Registrar and
the location, or change in location, of the Note Register
(Section 2.04);
(B) the notification of Noteholders of the final principal payment
on their Notes (Section 2.07(b));
(C) the fixing or causing to be fixed of any specified record date
and the notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.07(c));
(D) the preparation of or obtaining of the documents and instru-
ments required for authentication of the Notes and delivery of the same
to the Indenture Trustee (Section 2.02);
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 2.09);
(F) the maintenance of an office in the Borough of Manhattan, City
of New York, for registration of transfer or exchange of Notes
(Section 3.02);
(G) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the Inden-
ture regarding funds held in trust (Section 3.03);
(H) the direction to the Indenture Trustee to deposit moneys with
Paying Agents, if any, other than the Indenture Trustee (Section 3.03);
(I) the obtaining and preservation of the Issuer's qualification
to do business in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of the
Indenture, the Notes, the Collateral and each other instrument and
agreement included in the Trust Estate (Section 3.04);
(J) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking of
such other action as is necessary or advisable to protect the Trust
Estate (Section 3.05);
(K) the delivery of the Opinion of Counsel on the Closing Date and
the annual delivery of Opinions of Counsel as to the Trust Estate, and
the annual delivery of the Officer's Certificate and certain other
statements as to compliance with the Indenture (Sections 3.06 and 3.09);
(L) the identification to the Indenture Trustee in an Officer's
Certificate of a Person with whom the Issuer has contracted to perform
its duties under the Indenture (Section 3.07(b));
(M) the notification of the Indenture Trustee and the Rating
Agencies of a Servicer Default under the Sale and Servicing Agreement
and, if such Servicer Default arises from the failure of the Servicer to
perform any of its duties under the Sale and Servicing Agreement with
respect to the Receivables, the taking of all reasonable steps available
to remedy such failure (Section 3.07(d));
(N) the duty to cause the Servicer to comply with Sections 4.09,
4.10, 4.11 and 5.09 and Article XI of the Sale and Servicing
Agreement (Section 3.14);
(O) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10(b));
(P) the delivery of written notice to the Indenture Trustee and
the Rating Agencies of each Event of Default under the Indenture and
each default by the Servicer or the Depositor under the Sale and
Servicing Agreement (Section 3.19);
(Q) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto (Section 4.01);
(R) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.04);
(S) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
(T) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or
removal of any co-trustee or separate trustee (Sections 6.08 and 6.10);
(U) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.01);
(V) the preparation and, after execution by the Issuer, the filing
with the Commission, any applicable state agencies and the Indenture
Trustee of documents required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and regulations prescribed
by, the Commission and any applicable state agencies and the
transmission of such summaries, as necessary, to the Noteholders
(Section 7.03);
(W) the opening of one or more accounts in the Issuer's name, the
preparation and delivery of Issuer Orders, Officer's Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts
(Sections 8.02 and 8.03);
(X) the preparation of an Issuer Request and Officer's Certificate
and the obtaining of an Opinion of Counsel and Independent Certificates,
if necessary, for the release of the Trust Estate (Sections 8.04 and
8.05);
(Y) the preparation of Issuer Orders and the obtaining of Opinions
of Counsel with respect to the execution of supplemental indentures and
the mailing to the Noteholders of notices with respect to such
supplemental indentures (Sections 9.01, 9.02 and 9.03);
(Z) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.06);
(AA) the duty to notify Noteholders of redemption of the Notes or
to cause the Indenture Trustee to provide such notification (Sec-
tion 10.02);
(BB) the preparation and delivery of all Officer's Certificates,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.01(a));
(CC) the preparation and delivery of Officer's Certificates and the
obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.01(b));
(DD) the notification of the Rating Agencies, upon the failure of
the Indenture Trustee to give such notification, of the information
required pursuant to Section 11.04 of the Indenture (Section 11.04);
(EE) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.06);
(FF) the recording of the Indenture, if applicable (Section 11.15);
(GG) the preparation of Definitive Notes in accordance with the
instructions of the Clearing Agency (Section 2.12); and
(HH) the appointment of any successor Calculation Agent (Section
2.15).
(ii) The Administrator will:
(A) pay the Indenture Trustee (and any separate trustee or co-
trustee appointed pursuant to Section 6.10 of the Indenture (a "Separate
Trustee")) from time to time reasonable compensation for all services
rendered by the Indenture Trustee or Separate Trustee, as the case may
be, under the Indenture (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust);
(B) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee or any Separate Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or made
by the Indenture Trustee or Separate Trustee, as the case may be, in
accordance with any provision of the Indenture (including the reasonable
compensation, 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;
(C) indemnify the Indenture Trustee and any Separate Trustee and
their respective agents for, and hold them harmless against, any losses,
liability or expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance or
administration of the transactions contemplated by the Indenture,
including the reasonable costs and expenses of defending themselves
against any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and hold them
harmless against, any losses, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated
by the Trust Agreement, including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with
the exercise or performance of any of their powers or duties under the
Trust Agreement.
(b) Additional Duties. (i) In addition to the duties of the
-----------------
Administrator set forth above, the Administrator shall perform such calcula-
tions and shall prepare or shall cause the preparation by other appropriate
persons of, and shall execute on behalf of the Issuer or the Owner Trustee,
all such documents, reports, filings, instruments, certificates and opinions
that it shall be the duty of the Issuer or the Owner Trustee to prepare, file
or deliver pursuant to the Related Agreements or Section 5.05(a), (b), (c) or
(d) of the Trust Agreement, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the Related Agreements. In furtherance thereof,
the Owner Trustee shall, on behalf of itself and of the Issuer, execute and
deliver to the Administrator and to each successor Administrator appointed
pursuant to the terms hereof, one or more powers of attorney substantially in
the form of Exhibit A hereto, appointing the Administrator the attorney-in-
fact of the Owner Trustee and the Issuer for the purpose of executing on
behalf of the Owner Trustee and the Issuer all such documents, reports,
filings, instruments, certificates and opinions. Subject to Section 5 of
this Agreement, and in accordance with the directions of the Owner Trustee,
the Administrator shall administer, perform or supervise the performance of
such other activities in connection with the Collateral (including the
Related Agreements) as are not covered by any of the foregoing provisions and
as are expressly requested by the Owner Trustee and are reasonably within the
capability of the Administrator. Such responsibilities shall include the
obtainment and maintenance of any licenses required to be obtained or
maintained by the Trust under the Pennsylvania Motor Vehicle Sales Finance
Act. In addition, the Administrator shall promptly notify the Indenture
Trustee and the Owner Trustee in writing of any amendment to the Pennsylvania
Motor Vehicle Sales Finance Act that would affect the duties or obligations
of the Indenture Trustee or the Owner Trustee under any Basic Document and
shall assist the Indenture Trustee or the Owner Trustee in its obtainment and
maintenance of any licenses required to be obtained or maintained by the
Indenture Trustee or the Owner Trustee thereunder. In connection therewith,
the Administrator shall cause the Depositor to pay all fees and expenses
under such Act.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax is
imposed on the Trust's payments (or allocations of income) to an Owner as
contemplated in Section 5.02(c) of the Trust Agreement. Any such notice
shall specify the amount of any withholding tax required to be withheld by
the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section 5.05(a),
(b), (c) and (d), the penultimate sentence of Section 5.05 and Section
5.06(a) of the Trust Agreement with respect to, among other things,
accounting and reports to Owners; provided, however, that the Owner Trustee
shall retain responsibility for the distribution of the Schedule K-1s
necessary to enable each Owner to prepare its federal and state income tax
returns.
(iv) The Administrator shall satisfy its obligations with respect
to clauses (ii) and (iii) above by retaining, at the expense of the Trust
payable by the Administrator, a firm of independent public accountants (the
"Accountants") acceptable to the Owner Trustee, which shall perform the
obligations of the Administrator thereunder. In connection with paragraph
(ii) above, the Accountants will provide prior to September 6, 1996, a letter
in form and substance satisfactory to the Owner Trustee as to whether any tax
withholding is then required and, if required, the procedures to be followed
with respect thereto to comply with the requirements of the Code. The
Accountants shall be required to update the letter in each instance that any
additional tax withholding is subsequently required or any previously
required tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement required to
be performed in connection with the resignation or removal of the Owner
Trustee, and any other duties expressly required to be performed by the
Administrator under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its affiliates; provided, however,
that the terms of any such transactions or dealings shall be in accordance
with any directions received from the Issuer and shall be, in the
Administrator's opinion, no less favorable to the Issuer than would be
available from unaffiliated parties.
(c) Non-Ministerial Matters. (i) With respect to matters that in
-----------------------
the reasonable judgment of the Administrator are non-ministerial, the
Administrator shall not take any action unless within a reasonable time
before the taking of such action, the Administrator shall have notified the
Owner Trustee of the proposed action and the Owner Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of
the preceding sentence, "non-ministerial matters" shall include, without
limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the Receivables
or Eligible Investment Receivables);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or Successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or
Indenture Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement,
the Administrator shall not be obligated to, and shall not, (x) make any
payments to the Noteholders under the Related Agreements, (y) sell the Trust
Estate pursuant to Section 5.04 of the Indenture or (z) take any other action
that the Issuer directs the Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of
-------
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer and the
Company at any time during normal business hours.
3. Compensation. As compensation for the performance of the
------------
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to $_______ per
month which shall be solely an obligation of the Depositor.
4. Additional Information To Be Furnished to Issuer. The
------------------------------------------------
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
5. Independence of Administrator. For all purposes of this Agreement,
-----------------------------
the Administrator shall be an independent contractor and shall not be subject
to the supervision of the Issuer or the Owner Trustee with respect to the
manner in which it accomplishes the performance of its obligations hereunder.
Unless expressly authorized by the Issuer, the Administrator shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way
and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
6. No Joint Venture. Nothing contained in this Agreement (i) shall
----------------
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to
confer on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent
---------------------------------
the Administrator or its Affiliates from engaging in other businesses or, in
its sole discretion, from acting in a similar capacity as an administrator
for any other person or entity even though such person or entity may engage
in business activities similar to those of the Issuer, the Owner Trustee or
the Indenture Trustee.
8. Term of Agreement; Resignation and Removal of
---------------------------------------------
Administrator. (a) This Agreement shall continue in force until the
- -------------
dissolution of the Issuer, upon which event this Agreement shall
automatically terminate.
(b) Subject to Section 8(e), the Administrator may resign its duties
hereunder by providing the Issuer with at least 60 days' prior written
notice.
(c) Subject to Section 8(e), the Issuer may remove the Administrator
without cause by providing the Administrator with at least 60 days' prior
written notice.
(d) Subject to Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination
from the Issuer to the Administrator if any of the following events shall
occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice of such default, shall not
cure such default within ten days (or, if such default cannot be cured in
such time, shall not give within ten days such assurance of cure as shall be
reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for the Administrator or any sub-
stantial part of its property or order the winding-up or liquidation of its
affairs; or
(iii) the Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, shall consent to the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official for the Administrator or any substantial part of its property, shall
consent to the taking of possession by any such official of any substantial
part of its property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section shall occur, it shall give written
notice thereof to the Issuer and the Indenture Trustee within seven days
after the happening of such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer and (ii) such successor Administrator shall have
agreed in writing to be bound by the terms of this Agreement in the same
manner as the Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges
that upon the appointment of a Successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
Successor Servicer shall automatically become the Administrator under this
Agreement.
9. Action upon Termination, Resignation or Removal. Promptly upon
-----------------------------------------------
the effective date of termination of this Agreement pursuant to Section 8(a)
or the resignation or removal of the Administrator pursuant to Section 8(b)
or (c), respectively, the Administrator shall be entitled to be paid all fees
and reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such
termination pursuant to Section 8(a) deliver to the Issuer all property and
documents of or relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or removal of the
Administrator pursuant to Section 8(b) or (c), respectively, the
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the Administrator.
10. Notices. Any notice, report or other communication given
-------
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
(___________________) Trust 199_-_
c/o _____________________
_________________________
_________________________
Attention: ________________________
(b) if to the Administrator, to:
_____________________
_____________________
_____________________
Attention: _______________
(c) if to the Indenture Trustee, to:
_______________________
_______________________
_______________________
Attention: _______________________
or to such other address as any party shall have provided to the other
parties in writing. Any notice required to be in writing hereunder shall be
deemed given if such notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided above.
11. Amendments. This Agreement may be amended from time to time by a
----------
written amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee, with the written consent of the
Owner Trustee, without the consent of the Noteholders and the
Certificateholders, 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 Noteholders or Certificateholders;
provided that such amendment will not, in the Opinion of Counsel satisfactory
to the Indenture Trustee, materially and adversely affect the interest of any
Noteholder or Certificateholder. This Agreement may also be amended by the
Issuer, the Administrator and the Indenture Trustee with the written consent
of the Owner Trustee and the holders of Notes evidencing at least a majority
of the Outstanding Amount of the Notes and the holders of Certificates
evidencing at least a majority of the Certificate Balance 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
Noteholders or the Certificateholders; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that are required to be made for the benefit of the Noteholders
or Certificateholders or (ii) reduce the aforesaid percentage of the holders
of Notes and Certificates which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes
and Certificates. Notwithstanding the foregoing, the Administrator may not
amend this Agreement without the permission of the Depositor, which
permission shall not be unreasonably withheld.
12. Successors and Assigns. This Agreement may not be assigned by the
----------------------
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the satisfaction of the
Rating Agency Condition in respect thereof. An assignment with such consent
and satisfaction, if accepted by the assignee, shall bind the assignee
hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger,
consolidation or purchase of assets) to the Administrator; provided that such
successor organization executes and delivers to the Issuer, the Owner Trustee
and the Indenture Trustee an agreement in which such corporation or other
organization agrees to be bound hereunder by the terms of said assignment in
the same manner as the Administrator is bound hereunder. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
13. GOVERNING LAW. THIS AGREEMENT 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 SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted for
--------
convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts,
------------
each of which when so executed shall be an original, but all of which
together shall constitute but one and the same agreement.
16. Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
17. Not Applicable to the Administrator in Other Capacities. Nothing
-------------------------------------------------------
in this Agreement shall affect any obligation ________________ may have in
any other capacity.
18. Limitation of Liability of Owner Trustee and Indenture Trustee.
--------------------------------------------------------------
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by ___________________ not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall _____________________ in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder, as to all of which recourse shall be had solely to the assets of
the Issuer. For all purposes of this Agreement, 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.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by __________________ not in its individual
capacity but solely as Indenture Trustee and in no event shall
______________________ have any liability for the representations, warran-
ties, covenants, agreements or other obligations of the Issuer hereunder or
in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party
-----------------------
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
* * * * * * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
(_________________) TRUST 199_-_
By: _________________________,
not in its individual capacity but
solely as Owner Trustee on behalf of
the Trust
By:_______________________________________
Name:
Title:
(_______________________________),
not in its individual capacity
but solely as Indenture Trustee
By:_______________________________________
Name:
Title:
(___________________________)
as Administrator
By:_______________________________________
Name:
Title:
EXHIBIT A
POWER OF ATTORNEY
STATE OF __________ }
}
COUNTY OF _________ }
K N O W A L L M E N B Y T H E S E P R E S E N T S , t h a t
___________________________________, a ______________ banking corporation,
not in its individual capacity but solely as owner trustee (the "Owner
Trustee") for (_____________) Trust 199_-__ (the "Trust"), does hereby make,
constitute and appoint ____________________, as administrator under the
Administration Agreement dated ______________ (the "Administration
Agreement"), among the Trust, the Administrator and
___________________________________________, as Indenture Trustee, as the
same may be amended from time to time, and its agents and attorneys, as
Attorneys-in-Fact to execute on behalf of the Owner Trustee or the Trust all
such documents, reports, filings, instruments, certificates and opinions as
it should be the duty of the Owner Trustee or the Trust to prepare, file or
deliver pursuant to the Basic Documents, or pursuant to Section 5.05(a), (b),
(c) or (d) of the Trust Agreement, including, without limitation, to appear
for and represent the Owner Trustee and the Trust in connection with the
preparation, filing and audit of federal, state and local tax returns
pertaining to the Trust, and with full power to perform any and all acts
associated with such returns and audits that the Owner Trustee could perform,
including without limitation, the right to distribute and receive
confidential information, defend and assert positions in response to audits,
initiate and defend litigation, and to execute waivers of restrictions on
assessments of deficiencies, consents to the extension of any statutory or
regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by
the Owner Trustee are hereby revoked.
Capitalized terms that are used and not otherwise defined herein shall
have the meanings ascribed thereto in the Administration Agreement.
EXECUTED this ___ of _____________, 199_.
(________________________________),
not in its individual capacity but solely
as Owner Trustee
By:__________________________________
Name:
Title:
STATE OF ___________}
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
, known to me to be
- -------------------------------------------------------
the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he/she signed the same for the purposes and
considerations therein expressed.
Sworn to before me this ___
day of _______, 199__.
- -------------------------------------------------------------
Notary Public - State of ____________________________________
EXHIBIT 10.3
- ---------------------------------------------------------------------------
FORM OF RECEIVABLES PURCHASE AGREEMENT
between
(________________________________________),
as Seller,
and
MORGAN STANLEY ABS CAPITAL II INC.,
as Purchaser
Dated as of __________, 199_
- ---------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I
Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
-------------------
ARTICLE II
SECTION 2.01. Conveyance of Receivables . . . . . . . . . . . . . . 2
-------------------------
SECTION 2.02. The Closing . . . . . . . . . . . . . . . . . . . . . 3
-----------
ARTICLE III
SECTION 3.01. Representations and Warranties of the
-------------------------------------
Purchaser . . . . . . . . . . . . . . . . . . . . . . 4
---------
SECTION 3.02. Representations and Warranties of Seller . . . 4
----------------------------------------------
ARTICLE IV
SECTION 4.01. Conditions to Obligation of the Purchaser . . 8
-------------------------------------------------
SECTION 4.02. Conditions to Obligation of the Seller . . . . . . . 9
--------------------------------------
ARTICLE V
SECTION 5.01. Protection of Right, Title and Interest . . . . . . . 9
---------------------------------------
SECTION 5.02. Other Liens or Interests . . . . . . . . . . . . . . 9
------------------------
SECTION 5.03. Costs and Expenses . . . . . . . . . . . . . . . . . 10
------------------
SECTION 5.04. Indemnification . . . . . . . . . . . . . . . . . . . 10
---------------
ARTICLE VI
SECTION 6.01. Obligations of Seller . . . . . . . . . . . . . . . . 10
---------------------
SECTION 6.02. Repurchase Events . . . . . . . . . . . . . . . . . . 10
-----------------
SECTION 6.03. Purchaser Assignment of Repurchased
-----------------------------------
Receivables . . . . . . . . . . . . . . . . . . . . . 10
-----------
SECTION 6.04. Transfer to the Issuer . . . . . . . . . . . . . . . 10
----------------------
SECTION 6.05. Amendment . . . . . . . . . . . . . . . . . . . . . . 10
---------
SECTION 6.06. Waivers . . . . . . . . . . . . . . . . . . . . . . . 11
-------
SECTION 6.07. Notices . . . . . . . . . . . . . . . . . . . . . . . 11
-------
SECTION 6.08. Costs and Expenses . . . . . . . . . . . . . . . . . 11
------------------
SECTION 6.09. Representations of the Seller and the
-------------------------------------
Purchaser . . . . . . . . . . . . . . . . . . . . . . 11
---------
SECTION 6.10. Confidential Information . . . . . . . . . . . . . . 11
------------------------
SECTION 6.11. Headings and Cross-References . . . . . . . . . . . . 12
-----------------------------
SECTION 6.12. Governing Law . . . . . . . . . . . . . . . . . . . . 12
-------------
SECTION 6.13. Counterparts . . . . . . . . . . . . . . . . . . . . 12
------------
EXHIBIT A Form of Assignment . . . . . . . . . . . . . . . . . . . . A-1
SCHEDULE I Schedule of Receivables . . . . . . . . . . . . . . . I-1
SCHEDULE II Location of Receivable Files . . . . . . . . . . . II-1
RECEIVABLES PURCHASE AGREEMENT dated as of ______________, 199_, between
_____________________, a _________ corporation, as seller (the "Seller"), and
MORGAN STANLEY ABS CAPITAL II INC., a Delaware corporation, as purchaser (the
"Purchaser").
RECITALS
WHEREAS in the regular course of its business, the Seller has purchased
certain (motor vehicle) (marine) (recreational vehicle) retail installment
sale contracts secured by new and used (automobiles, light-duty trucks)
(boats, boat motors and accompanying travellers) (recreational vehicle) from
(automotive) (marine) (recreational vehicle) dealers;
WHEREAS the Seller and the Purchaser wish to set forth the terms
pursuant to which such contracts are to be sold by the Seller to the
Purchaser; and
WHEREAS the Purchaser intends, concurrently with its purchases from time
to time hereunder, to convey all of its right, title and interest in and to
$______________ of such contracts to (______________) Trust 199_-_ (the
"Issuer") pursuant to a (Sale and Servicing Agreement dated as of
_____________, 199_ (the "Sale and Servicing Agreement"), by and among
(_________________) Trust 199_-_, as Issuer, Morgan Stanley ABS Capital II
Inc., as Depositor, ___________________, as Servicer and _______________, as
Indenture Trustee) (Pooling and Servicing Agreement dated as of ___________,
199_ (the "Pooling and Servicing Agreement") by and among Morgan Stanley ABS
Capital II Inc., as Depositor, ___________________, as Servicer, and
____________________, as Trustee).
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 meanings assigned
thereto in the (Sale and Servicing Agreement) (Pooling and Servicing
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):
"Agreement" shall mean this Receivables Purchase Agreement, as the same
---------
may be amended and supplemented from time to time.
"Assignment" shall mean the document of assignment substantially in the
----------
form attached to this Agreement as Exhibit A.
"Conveyance Date" shall mean the Cutoff Date.
---------------
("Pooling and Servicing Agreement" shall have the meaning set forth in
-------------------------------
the recitals.)
"Purchaser" shall mean Morgan Stanley ABS Capital II Inc., a Delaware
---------
corporation, its successors and assigns.
"Receivables" shall mean any Contract listed on Schedule I hereto (which
-----------
Schedule may be in the form of microfiche).
"Repurchase Event" shall have the meaning specified in Section 6.02.
----------------
("Sale and Servicing Agreement" shall have the meaning set forth in the
----------------------------
recitals.)
"Schedule of Receivables" shall mean the list of Receivables annexed
-----------------------
hereto as Schedule I.
"Seller" shall mean ________________________, a _____________
------
corporation, its successors and assigns.
"Transfer Date" shall mean the Closing Date.
-------------
ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.01. Conveyance of Receivables. (a) In consideration of the
-------------------------
Purchaser's delivery to or upon the order of the Seller on the Closing Date
of $______________, the Seller does hereby sell, transfer, assign, set over
and otherwise convey to the Purchaser, without recourse (subject to the
obligations herein) all right, title, and interest of the Seller in and to:
(i) the Receivables and all moneys received thereon on or after
________________, 199_;
(ii) the security interests in the Financed Assets and any accessions
thereto granted by Obligors pursuant to the Receivables and any other
interest of the Seller in such Financed Assets;
(iii) any Liquidation Proceeds and any other proceeds with respect
to the Receivables claims on any physical damage, credit life or disability
insurance policies covering Financed Assets or Obligors, including any
vendor's single interest or other collateral protection insurance policy;
(iv) any property that shall have secured a Receivable and that shall
have been acquired by or on behalf of the Seller;
(v) all documents and other items contained in the Receivable Files;
and
(vi) the proceeds of any and all of the foregoing.
(b) The Seller and the Purchaser intend that the transfer of assets by
the Seller to the Purchaser pursuant to this Agreement be a sale of the
ownership interest in such assets to the Purchaser, rather than the mere
granting of a security interest to secure a borrowing. In the event,
however, that such transfer is deemed not to be a sale but to be of a mere
security interest to secure a borrowing, the Seller shall be deemed to have
hereby granted to the Purchaser a perfected first priority security interest
in all such assets, and this Agreement shall constitute a security agreement
under applicable law. Pursuant to the (Sale and Servicing Agreement)
(Pooling and Servicing Agreement) and Section 6.04 hereof, the Purchaser may
sell, transfer and reassign to the Issuer (i) all or any portion of the
assets assigned to the Purchaser hereunder, (ii) all or any portion of the
Purchaser's rights against the Seller under this Agreement and (iii) all
proceeds thereof. Such reassignment may be made by the Purchaser with or
without a reassignment by the Purchaser of its rights under this Agreement,
and without further notice to or acknowledgement from the Seller. The Seller
waives, to the extent permitted under applicable law, all claims, causes of
action and remedies, whether legal or equitable (including any right of
setoff), against the Purchaser or any assignee of the Purchaser relating to
such action by the Purchaser in connection with the transactions contemplated
by the (Sale and Servicing Agreement) (Pooling and Servicing Agreement).
SECTION 2.02. The Closing. The sale and purchase of the Receivables
-----------
shall take place at a closing at the offices of ___________,
____________________________ on the Closing Date, simultaneously with the
closing under ((a) the Sale and Servicing Agreement and (b) the Indenture)
(the Pooling and Servicing Agreement).
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of the Purchaser. The
-----------------------------------------------
Purchaser hereby represents and warrants as follows to the Seller as of the
date hereof and the Transfer Date:
(a) Organization and Good Standing. The Purchaser has been duly
------------------------------
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the 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) Due Qualification. The Purchaser is duly qualified to do business
-----------------
as a foreign corporation 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.
(c) Power and Authority. The Purchaser has the power and authority to
-------------------
execute and deliver this Agreement and to carry out its terms; the Purchaser
had at all relevant times, and has, the power, authority and legal right to
acquire and own the Receivables; and the execution, delivery and performance
of this Agreement have been duly authorized by the Purchaser by all necessary
corporate action.
(d) No Violation. 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 or both) a default under,
the articles of incorporation or bylaws of the Purchaser, or any indenture,
agreement or other instrument to which the Purchaser is a party or by which
it is bound, or 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), or violate any
law or, to the best of the Purchaser's knowledge, any order, rule or
regulation applicable to the Purchaser of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Purchaser or its properties.
(e) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Purchaser's knowledge, threatened against the Purchaser
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Purchaser or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might materially
and adversely affect the performance by the Purchaser of its obligations
under, or the validity or enforceability of, this Agreement.
SECTION 3.02. Representations and Warranties of Seller. (a) The
----------------------------------------
Seller hereby represents and warrants as follows to the Purchaser as of the
date hereof and as of the Transfer Date:
(1) Organization and Good Standing. The Seller has been duly
------------------------------
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted.
(2) Due Qualification. The Seller is duly qualified to do
-----------------
business as a foreign corporation 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.
(3) Power and Authority. The Seller has the power and authority
-------------------
to execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out their respective terms; the Seller had at all
relevant times, and has, full power, authority and legal right to sell,
transfer and assign the property sold, transferred and assigned to the
Purchaser hereby and has duly authorized such sale, transfer and assignment
to the Purchaser by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the other Basic Documents to
which the Seller is a party have been duly authorized by the Seller by all
necessary corporate action.
(4) No Violation. Upon giving effect to the consent described in
------------
Section 3.02(b)(14), the consummation of the transactions contemplated by
this Agreement and the other Basic Documents to which the Seller is a party
and the fulfillment of their respective terms 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 or both) a default under, the articles of
incorporation or bylaws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it is bound, or 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), or violate any law or, to the best of the Seller's
knowledge, any order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or its
properties.
(5) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Seller's knowledge, threatened against the Seller before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties (i)
asserting the invalidity of this Agreement or any other Basic Document to
which the Seller is a party, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or any other Basic
Document to which the Seller is a party or (iii) seeking any determination or
ruling that might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of, this
Agreement or any other Basic Document to which the Seller is a party.
(6) Valid Sale, Binding Obligations. This Agreement and the other
-------------------------------
Basic Documents to which the Seller is a party, when duly executed and
delivered by the other parties hereto and thereto, shall constitute legal,
valid and binding obligations of the Seller, enforceable against the Seller
in accordance with their respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization and similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and to general principles of equity (whether applied in a
proceeding at law or in equity).
(7) Chief Executive Office. The chief executive office of the
----------------------
Seller is located at _____________________________________.
(8) No Consents. The Seller is not required to obtain the consent
-----------
of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau
or agency in connection with the execution, delivery, performance, validity,
or enforceability of this Agreement or any other Basic Document to which it
is a party that has not already been obtained.
(b) The Seller makes the following representations and warranties with
respect to the Receivables, on which the Purchaser relies in accepting the
Receivables and in transferring the Receivables to the (Issuer under the Sale
and Servicing Agreement, and on which the Issuer relies in pledging the same
to the Indenture Trustee) (Trustee under the Pooling and Servicing
Agreement). Such representations and warranties speak as of the execution
and delivery of this Agreement as of the Closing Date.
(1) Characteristics of Receivables. Each Receivable (A) was
------------------------------
originated in the United States by a Dealer for the retail sale of a Financed
Asset in the ordinary course of such Dealer's business in accordance with the
Seller's credit policies, was fully and properly executed by the parties
thereto, was purchased by the Seller from such Dealer under an existing
Dealer Agreement and was validly assigned by such Dealer to the Seller, (B)
has created or shall create a valid, subsisting and enforceable first
priority security interest in favor of the Seller in the Financed Asset,
which security interest is assignable by the Seller to the Purchaser, and by
the Purchaser to the Issuer, (C) contains customary and enforceable
provisions such that the rights and remedies of the holder thereof are
adequate for realization against the collateral of the benefits of the
security and (D) provides for level monthly payments (provided that the
payment in the last month of the term of the Receivable may be different from
the level payments) that fully amortize the Amount Financed by maturity and
yield interest at the APR.
(2) Compliance with Law. Each Receivable and the sale of the
-------------------
related Financed Asset complied at the time it was originated or made, and at
the time of execution of this Agreement complies, in all material respects
with all requirements of applicable federal, state and local laws and
regulations thereunder, including usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair
Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve
Board's Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief Act
of 1940, and 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.
(3) Binding Obligation. Each Receivable represents the genuine,
------------------
legal, valid and binding payment obligation of the Obligor thereon,
enforceable by the holder thereof in accordance with its terms, except (A) as
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law and (B) as such Receivable may be modified by
the application after the Transfer Date of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended.
(4) No Government Obligor. No Receivable is due from the United
---------------------
States of America or any State or any agency, department, subdivision or
instrumentality thereof.
(5) Obligor Bankruptcy. No Obligor had been identified on the
------------------
records of the Seller as being the subject of a current bankruptcy
proceeding.
(6) Schedule of Receivables . The information set forth in
------------------------
Schedule I to this Agreement is true and correct in all material respects as
of the close of business on the Cutoff Date.
(7) Marking Records. By the Transfer Date, the Seller will have
---------------
caused its records relating to each Receivable, including any computer
records, to be clearly and unambiguously marked to show that the Receivables
have been sold to the Purchaser by the Seller and transferred and assigned by
the Purchaser to the Issuer in accordance with the terms of the (Sale and
Servicing Agreement and pledged by the Issuer to the Indenture Trustee in
accordance with the terms of the Indenture) (Pooling and Servicing
Agreement).
(8) Computer Tape. The computer tape regarding the Receivables
-------------
made available by the Seller to the Purchaser is complete and accurate in all
respects as of the Conveyance Date.
(9) No Adverse Selection. No selection procedures believed by the
--------------------
Seller to be adverse to the (Noteholders) (or Certificateholders) were
utilized in selecting the Receivables.
(10) Chattel Paper. The Receivables constitute chattel paper
-------------
within the meaning of the UCC as in effect in the State of ______________.
(11) One Original. There is only one original executed copy of
------------
each Receivable.
(12) Receivables in Force. No Receivable has been satisfied,
--------------------
subordinated or rescinded, nor has any Financed Asset been released from the
lien of the related Receivable in whole or in part. None of the terms of any
Receivable has been waived, altered or modified in any respect since its
origination, except by instruments or documents identified in the related
Receivable File. No Receivable has been modified as a result of the
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
(13) Lawful Assignment. No Receivable has been originated in, or
-----------------
is subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such
Receivable under this Agreement or (the Sale and Servicing Agreement or the
pledge of such Receivable under the Indenture) (the Pooling and Servicing
Agreement).
(14) Title. It is the intention of the Seller that the transfers
-----
and assignments herein contemplated constitute sales of the Receivables from
the Seller to the Purchaser and that the beneficial interest in and title to
the Receivables not be part of the debtor's estate in the event of the filing
of a bankruptcy petition by or against the Seller under any bankruptcy law.
No Receivable has been sold, transferred, assigned or pledged by the Seller
to any Person other than to the Purchaser or pursuant to this Agreement ((or
by the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement))
((or by the Purchaser to the Trustee pursuant to the Pooling and Servicing
Agreement)). Immediately prior to the transfers and assignments herein
contemplated, the Seller has good and marketable title to each Receivable
free and clear of all Liens and, immediately upon the transfer thereof, the
Purchaser shall have good and marketable title to each Receivable, free and
clear of all Liens.
(15) Security Interest in Financed Asset. Immediately prior to its
-----------------------------------
sale, assignment and transfer to the Purchaser pursuant to this Agreement,
each Receivable shall be secured by a validly perfected first priority
security interest in the related Financed Asset in favor of the Seller as
secured party, or all necessary and appropriate actions have been commenced
that will result in the valid perfection of a first priority security
interest in such Financed Asset in favor of the Seller as secured party.
(16) All Filings Made. All filings (including UCC filings)
----------------
required to be made in any jurisdiction to give the Purchaser a first
perfected ownership interest in the Receivables have been made.
(17) No Defenses. No Receivable is subject to any right of
-----------
rescission, setoff, counterclaim or defense, and no such right has been
asserted or threatened with respect to any Receivable.
(18) No Default. There has been no default, breach, violation or
----------
event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than __ days), and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or
both would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable, and there has been no waiver
of any of the foregoing. As of the Cutoff Date, no Financed Asset has been
repossessed.
(19) Insurance. The Seller, in accordance with its customary
---------
procedures, has determined that the Obligor has obtained physical damage
insurance covering each Financed Asset and, under the terms of the related
Contract, the Obligor is required to maintain such insurance.
(20) Final Scheduled Maturity Date. No Receivable has a final
-----------------------------
scheduled payment date after ___________________.
(21) Certain Characteristics of the Receivables. As of the
------------------------------------------
Conveyance Date, (A) each Receivable had an original maturity of not more
than __ months; (B) no Receivable was more than __ days past due; and (C) no
funds have been advanced by the Seller, any Dealer or anyone acting on behalf
of either of them in order to cause any Receivable to qualify under clause
(B) above.
ARTICLE IV
Conditions
----------
SECTION 4.01. Conditions to Obligation of the Purchaser. The
-----------------------------------------
obligation of the Purchaser to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties of the Seller hereunder shall be true and correct on the Transfer
Date with the same effect as if then made, and the Seller shall have
performed all obligations to be performed by it hereunder on or prior to the
Transfer Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on
---------------------
or prior to the Transfer Date, indicate in its computer files that the
Receivables have been sold to the Purchaser pursuant to this Agreement and
deliver to the Purchaser the Schedule of Receivables, certified by the
Seller's President, a Vice President or the Treasurer to be true, correct and
complete.
(c) Documents To Be Delivered by the Seller on the Transfer Date.
------------------------------------------------------------
(1) The Assignment. On the Transfer Date, the Seller will execute
--------------
and deliver an Assignment with respect to the Receivables, substantially in
the form of Exhibit A hereto.
(2) Evidence of UCC Filing. On or prior to the Transfer Date, the
----------------------
Seller shall record and file, at its own expense, a UCC-1 financing statement
in each jurisdiction in which required by applicable law, executed by the
Seller, as seller or debtor, and naming the Purchaser, as purchaser or
secured party, describing the Receivables and the other assets assigned to
the Purchaser pursuant to Section 2.01 hereof, meeting the requirements of
the laws of each such jurisdiction and in such manner as is necessary to
perfect the sale, transfer, assignment and conveyance of the Receivables and
such other assets to the Purchaser. The Seller shall deliver to the
Purchaser a file-stamped copy or other evidence satisfactory to the Purchaser
of such filing on or prior to the Transfer Date.
(3) Other Documents. Such other documents as the Purchaser may
---------------
reasonably request.
(d) Other Transactions. The transactions contemplated by the (Sale and
------------------
Servicing Agreement, the Indenture and the Trust Agreement( (Pooling and
Servicing Agreement) to be consummated on the Transfer Date shall be
consummated on such date.
SECTION 4.02. Conditions to Obligation of the Seller. The obligation
--------------------------------------
of the Seller to sell the Receivables to the Purchaser is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties of the Purchaser hereunder shall be true and correct on the
Transfer Date with the same effect as if then made, and the Seller shall have
performed all obligations to be performed by it hereunder on or prior to the
Transfer Date.
(b) Receivables Purchase Price. On the Transfer Date, the Purchaser
--------------------------
shall have delivered to the Seller the purchase price specified in Section
2.01.
ARTICLE V
Covenants of the Seller
-----------------------
The Seller agrees with the Purchaser as follows:
SECTION 5.01. Protection of Right, Title and Interest. (a) Filings.
--------------------------------------- -------
The Seller shall cause all financing statements and continuation statements
and any other necessary documents covering the right, title and interest of
the Seller and the Purchaser, respectively, in and to the Receivables and the
other property included in the Owner Trust Estate 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 Purchaser hereunder in and to the
Receivables and the other property included in the Owner Trust Estate. The
Seller shall deliver to the Purchaser 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
Purchaser shall cooperate fully with the Seller in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this paragraph.
(b) Name Change. If the Seller makes any change in its name, identity
-----------
or corporate structure that 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 Seller shall give the Purchaser, the Indenture Trustee and the Owner
Trustee written notice thereof at least 5 days prior to such change and shall
promptly file such financing statements or amendments as may be necessary to
continue the perfection of the Purchaser's interest in the property included
in the Owner Trust Estate.
SECTION 5.02. Other Liens or Interests. Except for the conveyances
------------------------
hereunder and pursuant to the Basic Documents, the Seller shall not sell,
pledge, assign or transfer to any Person, or grant, create, incur, assume, or
suffer to exist any Lien on, or any interest in, to or under the Receivables,
and the Seller shall defend the right, title and interest of the Purchaser
in, to and under the Receivables against all claims of third parties claiming
through or under the Seller; provided, however, that the Seller's obligations
under this Section shall terminate upon the termination of the Issuer
pursuant to the Trust Agreement.
SECTION 5.03. Costs and Expenses. The Seller agrees to pay all
------------------
reasonable costs and disbursements in connection with the perfection, as
against all third parties, of the Purchaser's and the Issuer's right, title
and interest in and to the Receivables.
SECTION 5.04. Indemnification. The Seller shall indemnify the
---------------
Purchaser and the Issuer for any liability resulting from the failure of a
Receivable to be originated in compliance with all requirements of law and
for any breach of any of its representations and warranties contained herein.
These indemnity obligations shall be in addition to any obligation that the
Seller may otherwise have.
ARTICLE VI
Miscellaneous Provisions
------------------------
SECTION 6.01. Obligations of Seller. The obligations of the Seller
---------------------
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
SECTION 6.02. Repurchase Events. The Seller hereby covenants and
-----------------
agrees with the Purchaser for the benefit of the Purchaser, the (Indenture
Trustee, the Owner Trustee, (the Certificateholders) and the Noteholders)
(the Trustee and the Certificateholders) that the occurrence of a breach of
any of the Seller's representations and warranties contained in Section
3.02(b) shall constitute an event obligating the Seller to repurchase the
Receivables to which the breach is applicable ("Repurchase Events"), at the
Purchase Amount, from the Purchaser or from the Issuer, as applicable, unless
any such breach shall have been cured by the last day of the first Collection
Period following the discovery or notice thereof by or to the Seller or the
Servicer. The repurchase obligation of the Seller shall constitute the sole
remedy available to the Purchaser, (the Indenture Trustee, the Owner Trustee,
the Issuer and the Noteholders (or the Certificateholders) (the Trustee or
the Certificateholders) against the Seller with respect to any Repurchase
Event.
SECTION 6.03. Purchaser Assignment of Repurchased Receivables. With
-----------------------------------------------
respect to all Receivables repurchased by the Seller pursuant to this
Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all of the Purchaser's right, title and interest in
and to such Receivables and all security and documents relating thereto.
(SECTION 6.04. Transfer to the Issuer. The Seller acknowledges and
----------------------
agrees that (a) the Purchaser will, pursuant to the Sale and Servicing
Agreement, transfer and assign the Receivables and assign its rights under
this Agreement with respect thereto to the Issuer and the Issuer will pledge
the Receivables to the Indenture Trustee and (b) the representations and
warranties contained in this Agreement and the rights of the Purchaser under
this Agreement, including under Section 6.02, are intended to benefit the
Issuer, the Noteholders (and the Certificateholders). The Seller hereby
consents to such transfers and assignments.)
(SECTION 6.04. Transfer to the Trust. The Seller acknowledges and
---------------------
agrees that (a) the Purchaser will, pursuant to the Pooling and Servicing
Agreement transfer and assign the Receivables and assign its rights under
this Agreement with respect thereto to the Trustee and (b) the
representations and warranties contained in this Agreement and the rights of
the Purchaser under this Agreement, including under Section 6.02, are
intended to benefit the Certificateholders. The Seller hereby consents to
such transfers and assignments.)
SECTION 6.05. Amendment. This Agreement may be amended from time to
---------
time, with prior written notice to the Rating Agencies and by a written
amendment duly executed and delivered by the Seller and the Purchaser, 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 (Noteholders) (or Certificateholders); provided that
such amendment shall not, as evidenced by an Opinion of Counsel, materially
and adversely affect the interest of any (Noteholder) (or Certificateholder).
This Agreement may also be amended by the Seller and the Purchaser, with
prior written notice to the Rating Agencies and the prior written consent of
(Holders of Notes evidencing at least a majority of the Outstanding Amount of
the Notes) and (Holders of Certificates) evidencing at least a majority of
the Certificate Balance (excluding, for purposes of this Section 6.05,
Certificates held by the Seller or any of its affiliates) 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
(Noteholders) (or Certificateholders); provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that are required to be made for the benefit of (Noteholders)
(or Certificateholders) or (ii) reduce the aforesaid percentage of the
(Notes) or the (Certificates) that is required to consent to any such
amendment, without the consent of the Holders of all the outstanding (Notes)
and (Certificates).
SECTION 6.06. Waivers. No failure or delay on the part of the
-------
Purchaser in exercising any power, right or remedy under this Agreement or
the Assignment shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other or
further exercise thereof or the exercise of any other power, right or remedy.
SECTION 6.07. Notices. All demands, notices and communications under
-------
this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, to: (a) in the case of the Seller,
_______________________, _____________________________________, Attention:
_________________; (b) in the case of the Purchaser, Morgan Stanley ABS
Capital II Inc., 1585 Broadway, New York, New York 10036 Attention:
______________; (c) in the case of Moody's, Moody's Investors Service, Inc.,
ABS Monitoring Department, 99 Church Street, New York, New York 10007; (d) in
the case of Standard & Poor's, Standard & Poor's Ratings Service, 26 Broadway
(20th Floor), New York, New York 10004, Attention: Asset Backed Surveillance
Department; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 6.08. Costs and Expenses. The Seller shall pay all expenses
------------------
incident to the performance of its obligations under this Agreement and the
Seller agrees to pay all reasonable out-of-pocket costs and expenses of the
Purchaser, excluding fees and expenses of counsel, in connection with the
perfection as against third parties of the Purchaser's right, title and
interest in and to the Receivables and the enforcement of any obligation of
the Seller hereunder.
SECTION 6.09. Representations of the Seller and the Purchaser. The
-----------------------------------------------
respective agreements, representations, warranties and other statements by
the Seller and the Purchaser 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 and the transfers and assignments referred to in Section 6.04.
SECTION 6.10. Confidential Information. The Purchaser 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 Purchaser's rights
hereunder, under the Receivables, under the (Sale and Servicing Agreement)
(Pooling and Servicing Agreement) (Pooling and Servicing Agreement) or any
other Basic Document, or as required by any of the foregoing or by law.
SECTION 6.11. 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 6.12. Governing Law. This Agreement and the Assignment 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 or thereunder shall be determined in
accordance with such laws.
SECTION 6.13. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date and year
first above written.
(___________________________________)
By:___________________________________
Name:
Title:
MORGAN STANLEY ABS CAPITAL II INC.
By:___________________________________
Name:
Title:
EXHIBIT A
Form of Assignment
ASSIGNMENT
For value received, in accordance with the Receivables Purchase
Agreement dated as of ____________, 199_ (the "Receivables Purchase
Agreement"), between the undersigned and Morgan Stanley ABS Capital II Inc.
(the "Purchaser"), the undersigned does hereby sell, assign, transfer and
otherwise convey unto the Purchaser, without recourse, all right, title and
interest of the undersigned in and to (i) the Receivables and all moneys
received thereon on or after ______________, 199_; (ii) the security
interests in the Financed Assets and any accessions thereto granted by
Obligors pursuant to the Receivables and any other interest of the Seller in
such Financed Assets; (iii) any Liquidation Proceeds and any other proceeds
with respect to the Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Assets or Obligors,
including any vendor's single interest or other collateral protection
insurance policy; (iv) any property that shall have secured a Receivable and
that shall have been acquired by or on behalf of the Seller; (v) all
documents and other items contained in the Receivable Files; and (vi)
proceeds of any and all of the foregoing. The foregoing sale does not
constitute and is not intended to result in any assumption by the Purchaser
of any obligation of the undersigned to the Obligors, insurers or any other
person in connection with the Receivables, the Receivable Files, 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 Purchase Agreement and is to be governed by the Receivables
Purchase Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meaning assigned to them in the Receivables Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of ________________, 199_.
(______________________________),
By:___________________________________
Name:
Title:
SCHEDULE I
Schedule of Receivables
-----------------------
SCHEDULE II
Location of Receivable Files
----------------------------
