As filed with the Securities and Exchange Commission on August 15, 1997
REGISTRATION STATEMENT NO. 333-26675
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
BARNETT AUTO RECEIVABLES CORP.
(Exact name of registrant as specified in its charter)
New York Application Pending
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
270 South Service Road
Melville, New York 11747
(516) 777-8100
(Address, including zip code, and
telephone number, including area code, of
Registrant's principal executive office)
----------------------------
CHRISTOPHER S. PASCUCCI
BARNETT AUTO RECEIVABLES CORP.
270 SOUTH SERVICE ROAD
MELVILLE, NEW YORK 11747
(516) 777-8100
(Address, including zip code, and telephone number,
area code, of agent for service)
----------------------------
Copies to:
Peter I. Cavallaro, Esq. REED D. AUERBACH, ESQ.
BARNETT AUTO RECEIVABLES CORP. STROOCK & STROOCK & LAVAN LLP
270 South Service Road 180 MAIDEN LANE
Melville, New York 11747 NEW YORK, NEW YORK 10038
----------------------------
Approximate Date of Commencement of Proposed Sale to Public:
From time to time after this Registration Statement becomes effective.
---------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. __
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional 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. __
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 15, 1997
Prospectus Supplement [Form 1]
(To Prospectus dated ________)
$------------
Barnett Auto Trust 199_-_
Issuer
$___ ____% Asset Backed Notes
$__ ___% Asset Backed Certificates
Barnett Dealer Financial Services, Inc.
Servicer And Sponsor
Barnett Auto Receivables Corp.
Depositor
Barnett Auto Trust 199_-_ (the "Trust") will be formed pursuant to an Amended
and Restated Trust Agreement to be dated as of ________, 199_, between Barnett
Auto Receivables Corp. (the "Depositor") and ______________ (the "Owner
Trustee") and will issue $________ aggregate principal amount of % Asset Backed
Notes (the "Notes"). The Notes will be issued pursuant to an Indenture to be
dated as of __________, 199_, between the Trust and ______________ (the
"Indenture Trustees"). 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 motor vehicle retail installment sale contracts and other motor vehicle
installment chattel paper (the "Receivables") secured by the motor vehicles
financed thereby, including certain monies due or received thereunder on or
after _________ (the "Cutoff Date"), transferred to the Trust by the Depositor
on or prior to the date of issuance of the Securities.
The Securities will be available for purchase in minimum denominations of $1,000
and integral multiples thereof. The Notes will be secured by the assets of the
Trust pursuant to the Indenture. Interest on the Notes will accrue at the fixed
per annum interest rates specified above. Interest on the Notes will generally
be payable on the fifteenth day of each month (each, a "Distribution Date"),
commencing _________ 15, ___. Principal on the Notes will be payable on each
Distribution Date to the extent described herein. The Final Scheduled
Distribution Date for the Notes will be the __________ Distribution Date. The
Final Scheduled Distribution Date for the Certificates will be the ________
Distribution Date. Capitalized terms used in this Prospectus Supplement are
defined herein on the pages indicated in the "Index of Terms" beginning on page
36 herein.
(Continued on following page)
--------------
The rights of the Certificateholders will be subordinated to the rights of the
Noteholders as described herein.
For a discussion of certain factors which should be considered by prospective
purchasers of the Securities, see "Risk Factors" beginning on page 13 herein and
on page 12 of the accompanying prospectus.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT FRACTIONAL
UNDIVIDED INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF
INTERESTS IN THE DEPOSITOR, THE SERVICER, THE SPONSOR, BARNET BANK, N.A., THE
ORIGINATORS OR ANY OF THEIR 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. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting
Price to Discounts and Proceeds to
Public Commissions the Depositor (1)
-------- ------------- ----------------
Per Note.................... ______% _________% ________%
Per Certificate............. ______% _________% ________%
Total....................... $__________ $__________ $___________
------------------------
(1) Before deducting expenses, estimated to be $__________.
The Notes and the Certificates are offered by the Underwriter when, as and if
issued by the Trust, delivered and accepted by the Underwriter and subject to
its right to reject orders in whole or in part. It is expected that delivery of
the Notes and the Certificates in book-entry form will be made
through the facilities of The Depository Trust Company ("DTC") on the Same Day
Funds Settlement System and, in the case of the Notes, Cedel Bank, societe
anonyme ("Cedel") and the Euroclear System ("Euroclear") on or about __________,
__.
The date of this Prospectus Supplement is ____ __, 1997.
<PAGE>
(Continued from previous page)
The Certificates represent fractional undivided interests in the Trust.
Interest, to the extent of the Certificate Rate of %___ per annum, will be
distributed to the Certificateholders on each Distribution Date. Distributions
of interest on the Certificates will be subordinated in priority of payment to
interest on the Notes and distributions of principal of the Certificates will be
subordinated in priority of payment to payment of principal of the Notes. No
principal will be paid on the Certificates until all of the Notes have been paid
in full.
However, payment in full of the Notes or of the Certificates could occur earlier
than such dates as described herein. In addition, the 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
Depositor exercises its option to purchase the Receivables or on the related
Distribution Date after the Auction Sale (as defined herein under "Summary of
Terms--Terms of the Notes--Auction Sale) occurs. The Depositor has the option to
purchase the Receivables when the aggregate principal balance of the Receivables
declines to 10% or less of the Initial Pool Balance. The Auction Sale of the
Receivables may occur, as described herein, after the aggregate principal
balance of the Receivables declines to 5% or less of the Initial Pool Balance.
Under certain circumstances it is likely that the Notes and the Certificates
will be repaid before their Final Scheduled Distribution Dates.
The Securities will be redeemed if the Depositor exercises its right to purchase
the Receivables or if an auction sale is successfully conducted. See
"Description of the Transfer and Servicing Agreements--Termination" in the
Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES AND THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET, SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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.
S-2
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the accompanying
Prospectus. Certain capitalized terms used in this summary are defined elsewhere
in this Prospectus Supplement on the pages indicated in the "Index of Terms"
beginning on page 36 herein or, to the extent not defined herein have the
meanings assigned to such terms in the accompanying Prospectus.
Issuer.............................Barnett Auto Trust 199_-_ (the "Trust" or the
"Issuer"), a Delaware business trust to be
established pursuant to an Amended and
Restated Trust Agreement to be dated as of
_________, 199_ (as amended and supplemented
from time to time, the "Trust Agreement")
between the Depositor and the Owner Trustee.
Depositor..........................Barnett Auto Receivables Corp. (the
"Depositor"), a wholly-owned indirect
subsidiary of Barnett Bank, N.A. See
"The Depositor" in the accompanying
Prospectus (the "Prospectus").
Servicer...........................Barnett Dealer Financial Services, Inc.
(in such capacity, the "Servicer" or
"BDFS"), a wholly-owned subsidiary of
Barnett Bank, N.A. See "The Servicer
and the Sponsor" herein and in the
Prospectus.
Sponsor............................BDFS (in such capacity, the "Sponsor").
See "The Servicer and the Sponsor" herein
and in the Prospectus.
Owner Trustee......................__________________, as trustee under the
Trust Agreement (the "Owner Trustee").
Indenture Trustee..................___________________, as trustee under the
Indenture (the "Indenture Trustee").
The Notes..........................The Trust will issue ____% Asset Backed
Notes (the "Notes") pursuant to an
Indenture to be dated as of _________ __,
199_ (as amended and supplemented from time
to time, the "Indenture"), between the
Issuer and the Indenture Trustee in the
aggregate principal amount of $__________.
The Notes will be available for purchase in
denominations of $1,000 and integral
multiples thereof in book-entry form only.
Noteholders will not be entitled to receive
a Definitive Note, except in the event that
Definitive Notes are issued in the limited
circumstances described herein. Persons
acquiring beneficial interests in the Notes
will hold their interests through The
Depository Trust Company ("DTC") in the
United States or Cedel Bank, societe anonyme
("Cedel") or the Euroclear System
("Euroclear") in Europe. See
"Certain Information Regarding the
Securities-Definitive Securities" in the
Prospectus.
S-3
<PAGE>
The Notes will be secured by the assets of
the Trust (other than the Certificate
Distribution Account) pursuant to the
Indenture to the extent described herein.
The Certificates...................Concurrently with the issuance of the Notes,
the Trust will issue ___% Asset Backed
Certificates (the "Certificates" and,
together with the Notes, the "Securities")
pursuant to the terms of the Trust
Agreement. The Certificates will bear
interest at the rate of ______% per annum
(the "Certificate Rate") and will have an
aggregate original principal balance of
$______. The Certificates will be available
for purchase in denominations of $1,000
and integral multiples of $_____ in excess
thereof in book-entry form only (other than
the Certificates sold to the Depositor, as
described under "Formation of the Trust"
herein). Certificateholders will not be
entitled to receive a Definitive Certificate,
except in the event that Definitive
Certificates are issued in the limited
circumstances described herein. Persons
acquiring beneficial ownership interests in
the Certificates will hold their interests
in the Certificates through DTC. See "Certain
Information Regarding the Securities-
Definitive Securities" in the Prospectus.
Cutoff Date........................With respect to each Receivable,
_______ 199_ (the "Cutoff Date").
The Trust.......................... The Trust is a business trust to
be established under the laws of Delaware
pursuant to the Trust Agreement. The
activities of the Trust are limited by the
terms of the Trust Agreement to purchasing,
owning and managing the Receivables and
other activities related thereto. The
property of the Trust includes (i) the
Receivables; (ii) all monies received under
the Receivables on and after the Cutoff
Date, and, with respect to Receivables which
are Actuarial Receivables, monies received
thereunder prior to the Cutoff Date that are
due on or after the Cutoff Date; (iii) the
Collection Account, the Reserve Account, the
Payahead Account, the Note distribution
account and the Certificate distribution
account, established and maintained by the
Servicer; (iv) security interests in the
vehicles securing the Receivables (the
"Financed Vehicles"); (v) the rights of the
Originators to receive proceeds from claims
under certain insurance policies; (vi) the
rights of the Trust under the Sale and
Servicing Agreement; (vii) the rights of the
Depositor under the Loan Purchase Agreement;
(viii) the rights of the Originators to
refunds for the costs of extended service
contracts and to refunds of unearned
premiums with respect to credit life and
credit accident and health insurance
policies covering the Financed Vehicles or
the retail purchasers of, or other persons
owing payments on, the Financed Vehicles
(the "Obligors"); (ix) all right, title and
interest of the Originators (other than with
respect to any Dealer commission) with
respect to the Receivables under the related
Dealer Agreements; and (x) all proceeds of
the foregoing.
S-4
<PAGE>
The Receivables....................The Receivables arise from retail installment
sale contracts originated indirectly by motor
vehicle dealers (the "Dealers") and
purchased by certain wholly-owned direct and
indirect subsidiaries of Barnett Bank, N.A.
(each, an "Originator") pursuant to
agreements with the Dealers ("Dealer
Agreements") and other motor vehicle
installment chattel paper originated directly
by the Originators. On or prior to the date
of issuance of the Securities (the "Closing
Date"), the Depositor will buy the
Receivables having an aggregate principal
balance of $_____ as of the Cutoff Date from
the Originators pursuant to a Loan Purchase
Agreement (the "Loan Purchase Agreement") to
be dated as of ________ __, 199_ between
the Depositor and the Originators.
Immediately following such sale, the Trust
will purchase such Receivables 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, the Servicer
and the Sponsor. See "Description of the
Transfer and Servicing Agreements--Sale and
Assignment of Receivables" herein and in the
Prospectus.
The Receivables have been selected from the
contracts and loans owned by the Originators
based on the criteria specified in the Sale
and Servicing Agreement and described
herein. As of the Cutoff Date, the weighted
average annual percentage rate (the "APR")
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. As of the
Cutoff Date, no Receivable has a scheduled
maturity later than _______ __, ____ (the
"Final Scheduled Maturity Date").
Approximately _____% of the aggregate
principal balance of the Receivables as of
the Cutoff Date represents financing of new
vehicles; the remainder represents financing
of used vehicles. As of the Cutoff Date,
approximately _____%, _____% and _____%
of the aggregate principal balance of
the Receivables have Obligors with billing
addresses in the states of __________,
__________, and _________, respectively.
Approximately _____% of the aggregate
principal balance of the Receivables as of
the Cutoff Date were Balloon Loans. See
"The Receivables Pool" and "Risk Factors--
Regional Economic Conditions" herein and
"Risk Factors--Balloon Loans" herein and in
the Prospectus.
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, Purchase Amounts and Advances
to be remitted by the Depositor, the Servicer
and the Sponsor, as the case may be, all for
such Collection Period, all losses realized
on Receivable that became Liquidated
S-5
<PAGE>
Receivables during such Collection Period
and all Cram Down Losses for such Collection
Period.
"Collection Period" means, with respect to a
Distribution Date, (i) in the case of the
initial Distribution Date, the period from
and including the Cutoff Date through and
including _________ __, ____ and
(ii) thereafter, the calendar month
preceding the related Distribution.
Terms of the Notes.................The principal terms of the Notes will be
described below:
A. Distribution Dates........Payments of interest and principal on the
Notes will be made on the 15th 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
__________. Payments will be made to holders
of record of the Notes (the "Noteholders")
as of the day immediately preceding such
Distribution Date or, in the event Definitive
Securities have been issued, at the close of
business on the last day of the month
immediately preceding the month in which
such Distribution Date occurs (a "Record
Date"). Each reference to a "Payment Date"
in the Prospectus shall refer to a
Distribution Date. A "Business Day" is any
day other than a Saturday, Sunday or any day
on which banking institutions or trust
companies in New York, New York, or
Wilmington, Delaware are authorized by law,
regulation or executive order to be closed.
B. Interest Rate...............Notes will bear interest at the rate of
_____% per annum (the "Interest Rate").
C. Interest.....................Interest on the outstanding principal
amount of the Notes will accrue at the
applicable Interest Rate from and including
the Closing Date (in the case of the first
Distribution Date) or from and including
the most recent Distribution Date on which
interest has been paid to but excluding the
following Distribution Date (each, an
"Interest Period"). Interest on the Notes
will be calculated on the basis of a 360
day year consisting of twelve 30 day months.
Interest on the Notes will be payable on
each Distribution Date after payment of the
Servicing Fee for the related Collection
Period and all accrued and unpaid Servicing
Fees for prior Collection Periods (the
"Total Servicing Fee"). Interest on
the Notes for any Distribution Date due
but not paid on such Distribution Date
will be due on the next Distribution Date
together with interest on such amount at the
Interest Rate. See "Description of the
Notes--The Notes--Payments of Interest"
herein.
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 related Collection Period to
the extent of funds available therefor
following payment of the Total Servicing Fee
S-6
<PAGE>
and distributions of interest in respect of
the Notes and the Certificates. The
Noteholders' Principal Distributable Amount
for a Collection Period will be based on the
Noteholders' Percentage of the Principal
Distribution Amount for such Collection
Period, as calculated by the Servicer as
described under "Description of the Transfer
and Servicing Agreements-Distributions"
herein. The Principal Distribution Amount
for a Collection Period will generally be
based upon the sum of all principal
collections (including Advances but
excluding Payaheads) received on the
Receivables plus losses on Receivables that
became liquidated Receivables during such
Collection Period and all Cram Down Losses
for such Collection Period. The Noteholder's
Percentage will be 100% until the Notes have
been paid in full and thereafter will be
zero. See "Description of the Notes--The
Notes--Payments of Principal" herein.
The outstanding principal amount of the
Notes, to the extent not previously paid,
will be payable on the ____________
Distribution Date (the "Note 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 Depositor exercises its option to
purchase the Receivables, which can occur
after the Pool Balance declines to 10% or
less of the Initial Pool Balance, at a
redemption price equal to the unpaid
principal amount of the then outstanding
Notes plus accrued and unpaid interest
thereon. See "Description of the Notes--
The Notes--Optional Redemption" herein. The
"Initial Pool Balance" will equal the Pool
Balance as of the Cutoff Date.
F. Auction Sale..............In the event that the Pool Balance has
declined to 5% or less of the Initial Pool
Balance, the Depositor has not exercised
its optional redemption with respect to the
Receivables, satisfactory bids are received
as described herein and the assets of the
Trust are sold pursuant to an auction
(the "Auction Sale"), the Notes will be
redeemed at a redemption price equal to the
unpaid principal amount of the then
outstanding Notes plus accrued and unpaid
interest thereon at the Interest Rate. See
"Description of the Notes-The Notes-Auction
Sale" 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 __________.
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.
B. Certificate Rate..........___% per annum, payable monthly on each
Distribution Date at one-twelfth of the
annual rate.
S-7
<PAGE>
C. Interest..................Interest on the outstanding Certificate
Balance will accrue at the Certificate Rate
from and including the Closing Date (in the
case of the first Distribution Date) or from
and including the most recent Distribution
Date on which interest has been distributed
to but excluding such Distribution Date.
Interest on the Certificates will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months. Payment
of interest on the Certificates is
subordinated to payment of interest on
the Notes. Upon the occurrence and during
the continuation of certain Events of Default
under the Indenture, an acceleration of the
Notes or an Insolvency Event, distribution
of any amounts on the Certificates will be
subordinated in priority of payment to
payment of principal of the Notes.
Interest on the Certificates for any
Distribution Date due but not paid on such
Distribution Date will be due on the next
Distribution Date together with interest on
such amount at the Certificate Rate.
D. Principal.................Commencing on the Distribution Date on
which all of the Notes have been paid
in full, principal of the Certificates
will be payable on each Distribution
Date in an amount equal to the
Certificateholders' Principal Distributable
Amount for the related Collection Period, to
the extent of funds available therefor
following payment of the Total Servicing Fee
and distributions of interest and principal
in respect of the Notes, if any, and the
distribution of interest in respect of the
Certificates. The Certificateholders'
Principal Distributable Amount will be based
on the Certificateholders' Percentage of
the Principal Distribution Amount, and
will be calculated by the Servicer in
the manner described under "Description of
the Transfer and Servicing Agreements-
Distributions" herein. The Certificate-
holders' Percentage will be 0% until the
Notes are paid in full and thereafter will
be 100%. See "Description of the
Certificates--The Certificates--Distribution
of Principal Payments" herein.
On and after any Distribution Date on
which the Notes have been paid in
full, funds in the Reserve Account will be
applied to reduce the Certificate Balance to
zero if, after giving effect to all
distributions to the Servicer, the
Noteholders and the Certificateholders on
such Distribution Date, the amount on
deposit in the Reserve Account is equal to
or greater than the Certificate Balance.
See "Description of the Certificates--The
Certificates--Distributions of Principal
Payments" herein.
The outstanding principal amount, if
any, of the Certificates will be payable in
full on the _________ Distribution Date (the
"Certificate Final Scheduled Distribution
Date").
E. Optional Prepayment.......If the Depositor exercises its option to
purchase the Receivables, which may occur
after the Pool Balance declines to 10% or
less of
S-8
<PAGE>
the Initial Pool Balance, the
Certificateholders will receive an amount in
respect of the Certificates equal to the
Certificate Balance together with
accrued and unpaid interest thereon.
See "Description of the Certificates--The
Certificates--Optional Prepayment"
herein.
F. Auction Sale..............In the event of an Auction Sale, the
Certificates will be redeemed at a
redemption price equal to the Certificate
Balance plus accrued and unpaid interest
thereon at the Certificate Rate. See
"Description of the Certificates--The
Certificates--Auction Sale" herein.
Reserve Account...................Pursuant to the Sale and Servicing Agreement,
a reserve account (the "Reserve Account")
will be created for the purpose of providing
funds for timely payment of principal of and
interest on the Notes and Certificates in
the event of shortfalls in the Trust's
receipt of payments on the Receivables. The
Reserve Account will be initially funded by
a deposit by the Depositor on the Closing
Date of cash or Eligible Investments having
a value of $____ (___% of the aggregate
initial principal balance of the
Notes and plus the initial Certificate
Balance). The amount deposited in the
Reserve Account on the Closing Date is
referred to as the "Reserve Account Initial
Deposit." The Reserve Account Initial
Deposit will be augmented on each
Distribution Date by the deposit in the
Reserve Account of amounts remaining after
distribution of the Total Servicing Fee and
amounts to be paid to the Noteholders and
Certificateholders. Amounts in the Reserve
Account on any Distribution Date (after
giving effect to all distributions to be
made to the Servicer, the Noteholders and the
Certificateholders on such Distribution Date)
in excess of the Specified Reserve Account
Balance for such Distribution Date will be
released to the Depositor. The "Specified
Reserve Account Balance" with respect to any
Distribution Date generally will be equal to
the greater of (i) ___% of the sum of the
aggregate outstanding principal balance of
the Notes plus the outstanding Certificate
Balance on such Distribution Date (after
giving effect to all payments on the Notes
and distributions with respect to the
Certificates on such Distribution Date) or
(ii) ___% of the aggregate initial principal
balance of the Notes plus the initial
Certificate Balance. See "Description of
the Transfer and Servicing Agreements-Credit
Enhancement-Reserve Account" herein.
Funds will be withdrawn from the Reserve
Account and deposited in the Collection
Account on each Distribution Date to pay the
Total Servicing Fee and to make required
payments on the Notes and distributions on
the Certificates in the event funds are not
otherwise available, as described herein.
However, in certain circumstances the
Reserve Account could be depleted with the
result that funds would not be available for
deposit in the Collection Account to make
such payments.
S-9
<PAGE>
Collection Account; Priority
of Payments........................Except under certain limited conditions
described herein, the Servicer will be
required to remit collections received with
respect to the Receivables within two
Business Days of receipt thereof to one or
more accounts in the name of the Indenture
Trustee (the "Collection Account").
Pursuant to the Sale and Servicing
Agreement, the Servicer will have the power,
which may be revoked by the Indenture
Trustee or by the Owner Trustee with the
consent of the Indenture Trustee, to
instruct the Indenture Trustee to withdraw
funds on deposit in the Collection Account
(including funds, if any, deposited
therein from the Reserve Account) and
to apply such funds on each Distribution
Date to the following (in the priority
indicated): (i) the Total Servicing Fee to
the Servicer, (ii) the Noteholders' Interest
Distributable Amount into the Note
Distribution Account, (iii) the
Certificateholders' Interest Distributable
Amount into the Certificate Distribution
Account, (iv) the Noteholders' Principal
Distributable Amount into the Note
Distribution Account, (v) commencing on the
Distribution Date on which the Notes have
been paid in full, the Certificateholders'
Principal Distributable Amount into the
Certificate Distribution Account; and (vi)
any amounts remaining after the application
of clauses (i)-(v) above, to the Reserve
Account up to the Specified Reserve Account
Balance and the remainder, if any, to the
Depositor. Notwithstanding the foregoing,
on each Distribution Date following the
occurrence and during the continuation of
certain Events of Default, an acceleration
of the Notes or an Insolvency Event,
the principal amount of the Notes must be
paid in full prior to the distribution of
any amounts on the Certificates.
Sale and Servicing Agreement..... Under the Sale and Servicing
Agreement, the Depositor will sell the
Receivables to the Trust. In addition, the
Servicer will agree with the Trust to be
responsible for servicing, managing,
maintaining custody of and making
collections on the Receivables. The
Depositor has made certain representations
and warranties relating to the Receivables
for the benefit of the Securityholders in
the Sale and Servicing Agreement. The Trust
will be entitled to require the Depositor or
the Sponsor, jointly and severally, to
purchase any Receivable if the interest of
the Securityholders is materially adversely
affected by a breach of any representation
or warranty made by the Depositor with
respect to such Receivable, if such breach
has not been cured by the applicable grace
period.
The Servicer shall receive a monthly
fee (the "Servicing Fee"), payable on
each Distribution Date (other than the
initial Distribution Date), equal to
one-twelfth (and in the case of the
initial Distribution Date,
______________________) of the
product of ___% and the Pool Balance
as of the first day of the related
Collection Period. In addition, the
"Servicing Fee" will
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<PAGE>
include certain late fees, prepayment
charges and other administrative fees or
similar charges. See "Description of the
Transfer and Servicing Agreements--Servicing
Compensation" herein and "Description of the
Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses" in the
Prospectus. The Servicer or the Owner
Trustee is obligated to provide to the other
and to the Indenture Trustee written notice
upon the discovery of a breach by the
Servicer of certain covenants made by the
Servicer in the Sale and Servicing Agreement.
If the breach is not cured, the Servicer
will be obligated to purchase any Receivable
materially and adversely affected by such
uncured breach.
Tax Status.........................Upon the issuance of the Securities,
Stroock & Stroock & Lavan LLP, special
Federal tax counsel to the Trust, will
deliver an opinion to the effect that,
for federal income tax purposes: (1)
the Notes will constitute indebtedness; and
(2) the Certificates will constitute
interests in a trust fund that will not be
treated as an association taxable as a
corporation or publicly traded partnership
taxable as a corporation. Each Noteholder,
by 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 tax purposes. See "Federal Income
Tax Consequences" herein and in the
Prospectus. Investors should consult
their own tax advisors regarding state
and local tax consequences. See
"State and Local Tax Consequences"
herein and in the Prospectus.
ERISA Considerations...............Subject to the conditions and considerations
discussed under "ERISA Considerations--The
Notes" herein and in the Prospectus, the
Notes are eligible for purchase by pension,
profit-sharing or other employee benefit
plans as well as individual retirement
accounts and certain types of Keogh Plans
(each, a "Benefit Plan"). The Certificates
may not be acquired (directly or indirectly)
by or on behalf of any Benefit Plan or any
entity (including an insurance company
general account) whose underlying
assets include plan assets of a Benefit
Plan by reason of a plan's investment in
the entity. See "ERISA Considerations--The
Certificates" 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 two
nationally recognized rating agencies. The
rating of the Notes is based primarily on
the creditworthiness of the Receivables,
the Reserve Account and the subordination
provided by the Certificates. 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
by a rating agency if circumstances so
warrant. See "Risk Factors-Ratings of
the Securities; Possibility of
Withdrawal or Downgrading" herein.
S-11
<PAGE>
Rating of the Certificates..........It is a condition to the issuance
of the Certificates that they be rated
at least "_" or its equivalent by at
least two nationally recognized rating
agencies. The rating of the Certificates
is based primarily on the creditworthiness
of the Receivables and the Reserve Account.
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 by a rating agency if
circumstances so warrant. See "Risk
Factors-Ratings of the Securities;
Possibility of Withdrawal or Downgrading"
herein.
S-12
<PAGE>
RISK FACTORS
Prospective investors should consider the following risk factors, in
connection with the purchase of the Securities as well as the Risk Factors
specified under the heading "Risk Factors" in the Prospectus.
Limited Liquidity
There is currently no secondary market for the Securities. The
Underwriter currently intends to make a market in the Securities, but 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.
[Regional Economic Conditions
Economic conditions in the states where Obligors reside may affect the
delinquency, loan loss and repossession experience of the Trust with respect to
the Receivables. As of the Cutoff Date, the billing addresses of the Obligors
with respect to approximately _____%, _____%, and _____% by principal balance of
the Receivables were located in __________, __________ and ________,
respectively.______ , _______,_______, and _______ have experienced economic
downturns from time to time and no predictions can be made regarding future
economic conditions in __________, __________ and __________ or in any of the
other states where the Obligors are located. See "The Receivables Pool" herein.]
Subordination of the Certificates
Distributions on the Certificates will be subordinated in priority of
payment to principal and interest due on the Notes to the extent described
below. The Certificateholders will not receive any distribution of interest with
respect to a Collection Period until the full amount of interest on the Notes
relating to such Collection Period has been deposited in the Note Distribution
Account. The Certificateholders will not receive any distributions of principal
with respect to a Collection Period until the full amount of principal of the
Notes relating to such Collection Period has been deposited in the Note
Distribution Account. Moreover, the Certificateholders will not receive any
distributions of principal until the Notes have been repaid in full. In
addition, the Trust does not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. The Certificates represent interests solely in the Trust and
neither the Certificates nor the Notes will be insured or guaranteed by the the
Depositor, the Servicer, the Sponsor, the Indenture Trustee, the Owner Trustee
or any other person or entity. Consequently, 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. If funds in the Reserve
Account are exhausted, the Trust will depend solely on current distributions on
the Receivables to make payments on the Securities. In addition, in such event,
delinquent payments on the Receivables may result in a shortfall in the
distributions on the Certificates on any Distribution Date due to the priority
of payments on the Notes. Although on each Distribution Date the
Certificateholders' Interest Distributable Amount ranks senior to the
Noteholders' Principal Distributable Amount, following the occurrence and during
the continuation of certain Events of Default, an acceleration of the Notes or
an Insolvency Event, the principal amount of the Notes must be paid in full
prior to the distribution of any amounts on the Certificates.
S-13
<PAGE>
Balloon Loans
As of the Cutoff Date, approximately _____% of the aggregate principal
balance of the Receivables, constituting _____% of the number of Receivables,
represent Balloon Loans. "Balloon Loans" are originated with a stated maturity
of less than the period of time of the corresponding amortization schedule. As a
result, upon the maturity of a Balloon Loan, the Obligor will be required to
make a balloon payment (a "Balloon Payment") which will be significantly larger
than such Obligor's other scheduled monthly payments. The ability of such an
Obligor to repay a Balloon Loan at maturity frequently will depend on such
Obligor's ability to refinance the Receivables. See "Risk Factors--Balloon
Loans" and "Maturity and Prepayment Considerations--Balloon Loans" in the
Prospectus.
Ratings of the Securities; Possibility of Withdrawal or Downgrading
It is a condition to the issuance of the Notes that they be rated
_________ by at least two nationally recognized rating agencies (the "Rating
Agencies"). It is a condition to the issuance of the Certificates that they be
rated at least "___" or its equivalent by the Rating Agencies. A rating is not a
recommendation to purchase, hold or sell the 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 receipt of
distributions due 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
circumstances so warrant. The ratings of the Securities are based primarily on
the creditworthiness of the Receivables and the availability of the Reserve
Account and, in the case of the Notes, on the subordination provided by the
Certificates.
FORMATION OF THE TRUST
The Trust
BDFS, as Sponsor, will cause Barnett Auto Trust 199_-_, a business
trust to be formed by the Depositor under the laws of the State of Delaware
pursuant to the Trust Agreement for the transactions described in this
Prospectus. 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 Certificates and the Notes,
(iii) making payments on the Certificates and the Notes 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 of $ __________,
excluding amounts deposited in the Reserve Account, representing the initial
principal balance of the Certificates. The Notes and Certificates will be
transferred by the Trust to the Depositor in exchange for the Receivables.
Certificates with an original Certificate Balance of $_______ (at least _____%
of the initial Certificate Balance) have been registered with the Securities and
Exchange Commission (the "Commission"), and will be registered in definitive
form in the name of the Depositor, and the remaining equity interest and the
Notes will be sold to the Underwriters for cash. The Servicer will initially
service the Receivables pursuant to the Sale and Servicing Agreement, and will
be compensated for acting as the Servicer. See "Description of the Transfer and
Servicing Agreements-- Servicing Compensation" herein and "--Servicing
Compensation and Payment of Expenses in the Prospectus. To facilitate servicing
and to minimize administrative burden and expense, the Servicer will be
S-14
<PAGE>
appointed custodian for the Receivables by the Trust, but will
not stamp the Receivables to reflect the sale and assignment of the Receivables
to the Trust, nor amend the certificates of title of the Financed Vehicles.
If the protection provided to the investment of the Securityholders in
the Trust by the Reserve Account is insufficient, the Trust will look to the
Obligors on the Receivables, and the proceeds from the repossession and sale of
Financed Vehicles which secure defaulted Receivables. In such event, there may
not be sufficient funds to make distributions with respect to the Securities.
The Trust's principal offices are in __________, in care of
_____________, as Owner Trustee, at the address listed below under "--The Owner
Trustee."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of
the Cutoff Date, as if the issuance and sale of the Notes and the Certificates
had taken place on such date:
Notes ...................$______
Certificates.............$______
Total................$______
THE OWNER TRUSTEE
_________________ is the Owner Trustee under the Trust
Agreement. _________________ is a __________________ and its
principal offices are located at __________, ___________________. The Owner
Trustee will perform limited administrative functions under the Trust Agreement,
including making distributions from the Certificate Distribution Account. The
Owner Trustee's liability in connection with the issuance and sale of the
Certificates and the Notes is limited solely to the express obligations of the
Owner Trustee set forth in the Trust Agreement.
THE TRUST PROPERTY
The Notes will be collateralized by the Trust Property (other than the
Certificate Distribution Account). Each Certificate represents a fractional
undivided interest in the Trust. The "Trust Property" will include the
Receivables, which were generally originated indirectly by Dealers and purchased
by the Originators pursuant to agreements with Dealers ("Dealer Agreements"). On
the Closing Date, the Depositor will buy the Receivables from the Originators
and the Depositor will sell the Receivables to the Trust. The Servicer will,
directly or through subservicers, service the Receivables. The Trust Property
also includes (i) all monies received under the Receivables on and after the
Cutoff Date and, with respect to Receivables which are Actuarial Receivables,
monies received thereunder prior to the Cutoff Date that are due on or after the
Cutoff Date, (ii) such amounts as from time to time may be held in the
Collection Account, the Reserve Account, the Payahead Account, the Note
distribution account and the Certificate distribution account, established and
maintained by the Servicer pursuant to the Sale and Servicing as described
below, (iii) security interests in the Financed Vehicles, (iv) the rights of the
Originators to receive proceeds from claims under certain insurance policies,
(v) the rights of the Trust under the Sale and Servicing Agreement; (vi) the
rights of the Depositor under the Loan Purchase Agreement; (vii) the rights of
the Originators to refunds for the costs of extended service contracts and to
refunds of unearned premiums with respect to credit life and credit accident and
health insurance policies covering the Financed Vehicles or the retail
purchasers of, or other persons owing payments on, the Financed Vehicles (the
"Obligors"); (viii) all right, title and interest of the Originators (other than
with respect to any Dealer commission) with respect to the Receivables under
<PAGE>
the related Dealer Agreements and (ix) all proceeds (within the meaning of the
UCC) of the foregoing. The Reserve Account shall be maintained in the name of
the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders.
THE RECEIVABLES POOL
POOL COMPOSITION
The Receivables were selected from the Originators' portfolio by
several criteria, including, as of the Cutoff Date, the following: each
Receivable has a scheduled maturity of not later than the Final Scheduled
Maturity Date; each Receivable was originated in the United States of America;
each Receivable has an original term to maturity of not more than ___ months and
a remaining term to maturity of __ months or less as of the Cutoff Date; each
Actuarial Receivable provides for level monthly payments which fully amortize
the amount financed (except for the last payment, which may be different from
the level payment); each Receivable is not more than ___ days contractually past
due as of the Cutoff Date and is not more than _______ months paid ahead; each
Receivable has an outstanding principal balance between $_____ and $____; and
each Receivable has an APR of no less than _____%. As of the Cutoff Date, no
Obligor on any Receivable was noted in the related records of the Servicer as
being the subject of any pending bankruptcy or insolvency proceeding. The latest
scheduled maturity of any Receivable is not later than _____. No selection
procedures believed by the Depositor to be adverse to Certificateholders or the
Noteholders were used in selecting the Receivables.
The composition, distribution by remaining term, distribution by APR,
geographic distribution and distribution by remaining principal of the
Receivables, in each case, as of the Cutoff Date are set forth in the tables
below.
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Weighted Average Aggregate Number of Weighted Average Weighted Average Average
APR of Receivables Principal Balance Receivables Remaining Term Original Term Principal Balance
<S> <C> <C> <C> <C> <C>
% $ $ months months $
</TABLE>
S-16
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
Remaining Principal Number of Aggregate Principal Percentage of Aggregate
Range of Balance Receivables Balance Principal Balance
<S> <C> <C> <C>
Less than 30 months............. $ %
30 to 35 months.................
36 to 41 months.................
42 to 47 months.................
48 to 53 months.................
54 to 59 months.................
60 to 65 months.................
66 to 71 months.................
72 to 77 months.................
78 to 89 months................. ---------- ----------- ----------
Total ========== $========== =========%
</TABLE>
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Remaining Principal Number of Aggregate Principal Percentage of Aggregate
Range of Balance Receivables Balance Principal Balance
<S> <C> <C> <C>
Less than 8.00%................. $ %
%8.00% to 8.99%.................
9.00% to 9.99%..................
10.00% to 10.99%................
11.00% to 11.99%................
12.00% to 12.99%................
13.00% to 13.99%................
14.00% to 14.99%................
15.00% to 15.99%................
16.00% to 16.99%................
17.00% to 17.99%................
18.00% to 18.99%................
19.00% to 19.99%................
20.00% to 20.99%................
21.00% to 21.99%................
22.00% and above................ ------------- ------------ --------%
Total ============ $=========== 100.00%
=======
</TABLE>
S-17
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Number of Aggregate Principal Percentage of Aggregate
State(1) Receivables Balance Principal Balance
<S> <C> <C> <C>
- ------------............. $ %
- ------------.............
- ------------.............
- ------------.............
- ------------.............
- ------------.............
- ------------.............
- ------------.............
Others (2)............... ---------- -------------- -------
Total.................... ========== $============= 100.00%
=======
</TABLE>
(1) Based on billing addresses of the Obligors as of the Cutoff Date,
which may differ from the state of origination of the Receivable.
(2) Includes __ other states and ____________. (none of which have a
concentration of Receivables in excess of ____% of the aggregate
principal balance).
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE
RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Remaining Principal Number of Aggregate Principal Percentage of Aggregate
Range of Balance Receivables Balance Principal Balance
<S> <C> <C> <C>
$ 2,500 to $ 4,999.............. $ %
$ 5,000 to $ 7,499..............
$ 7,500 to $ 9,999..............
$10,000 to $12,499..............
$12,500 to $14,999..............
$15,000 to $17,499..............
$17,500 to $19,999..............
$20,000 to $22,499..............
$22,500 to $24,999..............
$25,000 to $27,499..............
$27,500 to $29,999..............
$30,000 to $32,499..............
$32,500 to $34,999..............
$35,000 to $37,499..............
$37,500 to $39,999..............
$40,000 to $41,499..............
$42,500 to $44,999..............
$45,000 to $47,499..............
$47,500 to $49,999..............
$50,000 to $52,499..............
$52,500 to $54,999.............. ---------- ------------- ---------
Total.......................... ========== $============ 100.00%
=======
</TABLE>
S-18
<PAGE>
The Receivables were originated by Originators located in ___ states.
As of the Cutoff Date, approximately __% of the aggregate principal
balance of the Receivables, constituting ___% of the number of Receivables,
represents financing of motor vehicle loans thr ough the Indirect Program.
Approximately __% of the aggregate principal balance of the
Receivables, constituting ___% of the number of Receivables, as of the Cutoff
Date, represents financing of new vehicles; the remainder represents financing
of used vehicles. As of the Cutoff Date, approximately __% of the aggregate
principal balance of the Receivables, constituting ___% of the number of
Receivables, were between 1 payment and __ payments paid-ahead.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting ___% of the number of Receivables,
represents financing of Balloon Loans.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting __% of the number of Receivables, are
Actuarial Receivables. "Actuarial Receivables" are receivables that provide for
amortization of the amount financed 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 Annual Percentage Rate ("APR") of the
amount financed multiplied by the unpaid principal balance of the amount
financed, and an amount of principal equal to the remainder of the monthly
payment.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting ___% of the number of Receivables, are
Simple Interest Receivables. "Simple Interest Receivables" are receivables that
provide for the amortization of the amount financed under the receivable over a
series of fixed level monthly payments. However, unlike the monthly payment
under an Actuarial Receivable, each monthly payment includes an installment of
interest which is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated APR and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding payment of
interest was made. As payments are received under a Simple Interest Receivable,
the amount received is applied first to interest accrued to the date of payment
and the balance is applied to reduce the unpaid principal balance. Accordingly,
if an Obligor pays a fixed monthly installment before its scheduled due
date, the portion of the payment allocable to interest for the period since the
preceding payment was made will be less than it would have been had the payment
been made as scheduled, and the portion of the payment applied to reduce the
unpaid principal balance will be correspondingly greater. Conversely, if an
Obligor pays a fixed monthly installment after its scheduled due date, the
portion of the payment allocable to interest for the period since the preceding
payment was made will be greater than it would have been had the payment been
made as scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In either case, the Obligor
pays a fixed monthly installment until the final scheduled payment date, at
which time the amount of the final installment is increased or decreased as
necessary to repay the then outstanding principal balance.
If an Actuarial Receivable is prepaid in full, with minor variations
based upon state law, under the terms of the motor vehicle retail installment
sale contract or loan agreement, as the case may be, a "refund" or "rebate" will
be made to the borrower of the portion of the total amount of payments then due
and payable under such contract or agreement allocable to "unearned " interest,
calculated on the basis of a constant interest rate. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the borrower is required
to pay interest only to the date of prepayment. The amount of a rebate under an
Actuarial
S-19
<PAGE>
Receivable generally will be less than the remaining scheduled payments of
interest that would have been due under a Simple Interest Receivable for which
all payments were made on schedule.
The Servicer may accede to an Obligor's request to pay scheduled
payments in advance, in which event the Obligor will not be required to make
another regularly scheduled payment until the time a scheduled payment not paid
in advance is due. The amount of any payment (which are not amounts
representing Payaheads ) made in advance will be treated as a principal
prepayment and will be distributed as part of the Principal Distribution
Amount in the month following the Collection Period in which the prepayment was
made. See "Maturity and Prepayment Considerations" in the Prospectus.
DELINQUENCIES AND LOSS
Set forth below is certain information concerning the historical
delinquency and loss experience of Barnett Bank, N.A. and its subsidiaries
pertaining to new and used automobile (including passenger car, minivan,
sport/utility vehicle and light truck) receivables originated by Barnett Bank,
N.A. and its subsidiaries. There can be no assurance that the delinquency and
loss experience on the Receivables will be comparable to that set forth
below.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
At , At December 31,
------------------------------------------- --------------------------------------------------------
1996 1995 1994
------------------------------------------- --------------------------------------------------------
Dollars Percent Dollars Percent Dollars Percent Dollars Percent Dollars Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding (2) ... $ $ $ $ $
Delinquencies (3)....
30-59 Days......... % %
60-89 Days......... % %
90 Days or more.... % %
Total Delinquencies as a
Percentage of the Total
Amount Outstanding.. $===== ====% $====== ====%
</TABLE>
(1) Substantially all of the receivables consist of receivables originated
by Barnett Bank, N.A. and certain of its subsidiaries other than
Oxford Resources Corp. or its subsidiaries.
(2) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(3) The period of delinquency is based on the number of days
scheduled payments are contractually past due. Includes repossessions
on hand which have not been charged-off. A receivable is 30 days
contractually past due if a scheduled payment has not been received by
the subsequent calendar month's scheduled payment date.
S-20
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL LOSS EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
For ------ Months Ended , For Year Ended December 31,
1996 1995 1994
------------------ --------------- ------------ ----------------- --------------
<S> <C> <C> <C> <C> <C>
Principal Amount
Outstanding(2)........ $ $ $ $ $
Average Principal Amount
Outstanding(3)........ $ $ $ $ $
Number of Loans
Outstanding...........
Average Number of Loans
Outstanding(3)........
Gross Losses(4).............. $ $ $ $ $
Recoveries(5)................
Net Losses(6)................
Net Losses as a Percent of
Principal Amount
Outstanding........... % %
Net Losses as a Percentage of
Average Principal Amount
Outstanding........... % %
</TABLE>
(1) Substantially all of the receivables consist of receivables originated
by Barnett Bank, N.A. and certain of its subsidiaries other than
Oxford Resources Corp. or its subsidiaries.
(2) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(3) Average of the month-end balances for each of the twelve months in the
applicable calendar year.
(4) Gross losses is the aggregate remaining principal balance, including
accrued but unpaid interest.
(5) Recoveries is any proceeds from the liquidation of
the related vehicle and post-disposition monies received on previously
charged-off contracts including proceeds of liquidation of the related
vehicle after the related charge-off.
(6) Net Losses is equal to Gross Losses less Recoveries.
Delinquencies and net charge-offs are affected by a number of social
and economic factors, including changes in interest rates and unemployment
levels, and there can be no assurance as to the le vel of future total
delinquencies or the severity of future ne t charge-offs. As a result, the
delinquency and net charge-of f experience of the Receivables may differ from
those shown in the tables.
[MDNA]
[WEIGHTED AVERAGE LIFE OF THE SECURITIES
Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus, the Absolute
Prepayment Model ("ABS"), represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool of receivables. ABS
further assumes that all the receivables are the same size and amortize at the
same rate and that each receivable in each month of its life will either be paid
as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
As the rate of payment of principal of the Notes and in respect of the
Certificate Balance will depend on the rate of payment (including prepayments)
of the principal balance of the Receivables, final payment of the Notes could
occur significantly earlier than the Final Scheduled Distribution Date for the
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Notes. The final distribution in respect of the Certificates also could occur
prior to the Certificate Final Scheduled Distribution Date. Reinvestment risk
associated with early payment of the Notes and the Certificates will be borne
exclusively by the Noteholders and the Certificateholders, respectively.
The table captioned "Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages" (the "ABS Table") has
been prepared on the basis of the characteristics of the Receivables. The ABS
Table assumes that (i) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases (ii) each
scheduled monthly payment on the Receivables is made on the last day of each
month and each monthly has 30 days, (iii) payments on the Notes and
distributions on the Certificates are made on each Distribution Date (and each
such date is assumed to be the 15th day of each applicable month), (iv) the
balance in the Reserve Account on each Distribution Date is equal to the
Specified Reserve Account Balance, and (v) the Seller does not exercise its
option to purchase the Receivables. The first two pools have an assumed cutoff
date of __________ and the remaining pools have an assumed cutoff date of
__________. The ABS Table indicates the projected weighted average life of the
Notes and the Certificates and sets forth the percent of the initial principal
amount of the Notes and the percent of the initial Certificate Balance that is
projected to be outstanding after each of the Distribution Dates shown at
various constant ABS percentages.
The ABS Table also assumes that the Receivables have been aggregated
into four hypothetical pools with all of the Receivables within each such pool
having the following characteristics and that the level scheduled monthly
payment for each of the four pools (which is based on its aggregate principal
balance, APR, original term to maturity as of the Cutoff Date) will be such that
each pool will fully amortize by the end of its remaining term to maturity.
<TABLE>
<CAPTION>
Original Term Remaining Term to
Aggregate to Maturity Maturity
Pool Principal Balance APR (in Months) (in Months)
<S> <C> <C>
1................ $ %
2................ $ %
3................ $ %
4................ $ %
</TABLE>
The actual characteristics and performance of the Receivabl es will
differ from the assumptions used in construct ing the ABS Table. The assumptions
used are hypotheti cal and have been provided only to give a general sense of
how the principal cash flows might behave under varying prepaymen t scenarios.
For example, it is very unlikely that the Recei vables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables within ea ch of
the four hypothetical pools could produce slower or faster principal
distributions than indicated in the ABS Table at the various constant
percentages of ABS specified, even if the or iginal and remaining terms to
maturity of the Receivabl es are as assumed. Any difference between such
assumptio ns and the actual characteristics and performance of the Recei vables,
or actual prepayment experience, will affect the perce ntages of initial
balances outstanding over time and the weigh ted average lives of the Notes and
the Certificates.]
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USE OF PROCEEDS
The net proceeds from the sale of the Securities will be applied by
the Trust to the purchase of the Receivables and the other Trust Property from
the Depositor. The Depositor will use the net proceeds paid to it by the Trust
to acquire the Receivables from the Originators and to make the Reserve Account
Initial Deposit in the amount of $__________ (___% of the aggregate initial
principal balance of the Notes plus the initial Certificate Balance).
THE SERVICER AND THE SPONSOR
As of _________________, BDFS serviced approximately [_____] retail
installments sale contracts, consisting primarily of new and used automobile
(including passenger car, minivan, sport/utility vehicles and light truck),
receivables, representing an outstanding balance of approximately [____]
million. As of ________________, BDFS serviced approximately [_____] automobile
leases equaling approximately $_____ billion of automobile lease receivables.
See "The Servicer and the Sponsor" in the Prospectus.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture,
substantially in the form filed as an exhibit to the Registration Statement. The
following information summarizes all material provisions of the Notes and the
Indenture. The summary is qualified by reference to the provisions of the Notes
and the Indenture. The following summary supplements 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.
THE NOTES
Payments of Interest. The Notes will constitute [Fixed Rate]
Securities, as such term is defined under "Certain Information Regarding the
Securities-Fixed Rate Securities" in the Prospectus. Interest on the outstanding
principal amount of the Notes will accrue at the Interest Rate and will be
payable to the Noteholders monthly on each Distribution Date, commencing
___________. Interest will accrue from and including the Closing Date (in the
case of the first Distribution Date), or from and including the most recent
Distribution Date on which interest has been paid to but excluding the following
Distribution Date (each representing an "Interest Period"). Interest on the
Notes will be calculated on the basis of a 360 day year consisting of twelve 30
day months. Interest accrued as of any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date, together with
interest on such amount at the Interest Rate. Interest payments on the Notes
will generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee for the related Collection Period and all accrued
and unpaid Servicing Fees for prior Collection Periods (the "Total Servicing
Fee"). See "Description of the Transfer and Servicing Agreements--Distributions"
and "--Credit Enhancement--Reserve Account" herein. Interest payments to the
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.
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Payments of Principal. Principal payments will be made to the
Noteholders on each Distribution Date in an amount equal to the Noteholders'
Percentage of the Principal Distribution Amount in respect of such Collection
Period, subject to certain limitations. Principal payments on the Notes will
generally be derived from the Total Distribution Amount remaining after the
payment of the Total Servicing Fee, the Noteholders' Interest Distributable
Amount and the Certificateholders' Interest Distributable Amount; provided,
however, that following the occurrence and during the continuation of certain
Events of Default, an acceleration of the Notes or an Insolvency Event, the
Noteholders will be entitled to be paid in full before the distributions may be
made on the Certificates. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Credit Enhancement--Reserve Account" herein.
The principal balance of the Notes, to the extent not previously paid,
will be due on the Note Final Scheduled Distribution Date. The actual date on
which the aggregate outstanding principal amount of the Notes is paid may be
earlier than the Note Final Scheduled Distribution Date based on a variety of
factors.
Optional Redemption. The Notes will be redeemed in whole, but not in
part, on any Distribution Date on which the Depositor exercises its option to
purchase the Receivables. The Depositor may purchase the Receivables when the
Pool Balance shall have declined to 10% or less of the Initial Pool Balance. The
redemption price will be equal to the unpaid principal amount of the Notes plus
accrued and unpaid interest thereon. See "Description of the Transfer and
Servicing Agreements--Termination" in the Prospectus.
Auction Sale. In the event of an Auction Sale, the Notes will be
redeemed in an amount equal to the unpaid principal amount of the then
outstanding Notes plus accrued and unpaid interest thereon at the Interest Rate.
See "Description of the Transfer and Servicing Agreements--Termination" in the
Prospectus.
The Indenture Trustee. ___________________ will be the Indenture
Trustee under the Indenture. The Depositor maintains normal commercial banking
relations with the Indenture Trustee.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, substantially in the form filed as an exhibit to the Registration
Statement. The following information summarizes all material provisions of the
Certificates and the Trust Agreement. The summary is qualified in its entirety
by reference to the provisions of the Certificates and the Trust Agreement. The
following summary supplements 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.
THE CERTIFICATES
Distributions of Interest Income. Certificateholders will be entitled
to distributions of interest in an amount equal to accrued interest on the
Certificate Balance at the Certificate Rate. Such amounts will be distributable
monthly on each Distribution Date commencing ___________. [The Certificates will
constitute Fixed Rate Securities, as such term is defined under "Certain
Information Regarding the Securities--Fixed Rate Securities"] in the Prospectus.
That interest entitlement will accrue from and including the Closing Date (in
the case of the first such Distribution Date) or from the most recent
Distribution Date on which interest distributions have been made to but
excluding such Distribution Date and will be calculated on the basis of a
360-day year of twelve 30-day months. Interest distributions with respect to the
Certificates will be funded from the portion of the Total Distribution Amount
remaining after
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the distribution of the Total Servicing Fee and the Noteholders' Interest
Distributable Amount. On any Distribution Date, the Certificateholders' Interest
Distributable Amount will equal 30 days' interest at the Certificate Rate on the
Certificate Balance (or, in the case of the first Distribution Date, interest
accrued from and including the Closing Date to but excluding the first
Distribution Date) plus any amounts due but not paid on previous Distribution
Dates with interest thereon at the Certificate Rate. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Credit
Enhancement--Reserve Account" herein.
Distributions of Principal Payments. Certificateholders will be
entitled to distributions of principal on each Distribution Date commencing on
the Distribution Date on which the Notes have been paid in full, in an amount
equal to the Certificateholders' Percentage of the Principal Distribution Amount
in respect of such Collection Period, subject to certain limitations.
Distributions with respect to principal payments will generally be funded from
the portion of the Total Distribution Amount remaining after the distribution of
the Total Servicing Fee, the Noteholders' Distributable Amount, if any, and the
Certificateholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreement--Distributions" and "Credit
Enhancement--Reserve Account" herein.
On and after any Distribution Date on which the Notes have been paid in
full, funds in the Reserve Account will be applied to reduce the Certificate
Balance to zero if, after giving effect to all distributions to the Servicer,
the Noteholders and the Certificateholders on such Distribution Date, the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance.
Subordination of Certificates. The rights of Certificateholders to
receive distributions of interest are subordinated to the rights of Noteholders
to receive payments of interest. In addition, the Certificateholders have no
right to receive distributions of principal until the principal amount of the
Notes has been paid in full. Consequently, funds on deposit in the Collection
Account (including amounts deposited therein from the Reserve Account) will be
applied to the payment of interest on the Notes before distributions of interest
on the Certificates and will be applied to the payment of principal on the Notes
before distributions of principal on the Certificates. In addition, following
the occurrence of certain Events of Default, an acceleration of the Notes or an
Insolvency Event, the Noteholders will be entitled to be paid in full before the
Certificateholders are entitled to any distributions.
Optional Prepayment. If the Depositor exercises its option to purchase
the Receivables when the Pool Balance declines to 10% or less of the Initial
Pool Balance, Certificateholders will receive an amount in respect of the
Certificates equal to the Certificate Balance together with accrued and unpaid
interest thereon, which distribution shall effect early retirement of the
Certificates. See "Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
Auction Sale. In the event of an Auction Sale, the Certificates will be
redeemed at a redemption price equal to the Certificate Balance plus accrued and
unpaid interest thereon at the Certificate Rate. See "Description of the
Transfer and Servicing Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following information summarizes all material provisions of the
Sale and Servicing Agreement, substantially in the form filed as an exhibit to
the Registration Statement, pursuant to which the Trust is purchasing and the
Servicer is undertaking to service the Receivables and the Trust Agreement
pursuant to which the Trust will be created and the Certificates will be issued
(collectively the "Transfer and Servicing
S-25
<PAGE>
Agreements"). This summary is qualified by reference to the provisions of the
Transfer and Servicing Agreements. The following summary supplements 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
Originators to the Depositor and 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."
ACCOUNTS
[The assets of the Trust will not include a Pre-Funding Account.] All
other Accounts referred to under "Description of the Transfer and Servicing
Agreements--Accounts" in the Prospectus, as well as a Reserve Account, will be
established by the Servicer and maintained with the Indenture Trustee in the
name of the Indenture Trustee on behalf of the Noteholders and the
Certificateholders.
SERVICING COMPENSATION
The Servicer will be entitled to receive a fee (the "Servicing Fee")
for each Collection Period in an amount equal to % per annum (the "Servicing Fee
Rate") of the Pool Balance as of the first day of the Collection Period. The
"Servicing Fee" will also include such other amounts to be paid to the Servicer
as described in the Prospectus. The Servicing Fee, together with any portion of
the Servicing Fee that remains unpaid from prior Distribution Dates (the "Total
Servicing Fee"), will be paid from the Total Distribution Amount. The Total
Servicing Fee will be paid prior to the distribution of any portion of the
Interest Distribution Amount to the Noteholders or the Certificateholders. See
"Description of the Transfer and Servicing Agreement--Servicing Compensation and
Payment of Expenses" in the Prospectus.
PAYMENTS ON RECEIVABLES
Prior to the issuance of the Securities, BDFS will obtain a _________
from Barnett Bank, N.A. and it anticipates that it will make deposits into the
Collection Account only on the business day preceding the related Distribution
Date.
DISTRIBUTIONS
Deposits to the Collection Account. On or before the earlier of the
eighth Business Day of the month in which a Distribution Date occurs and the
fourth Business Day preceding such Distribution Date (the "Determination Date"),
the Servicer will calculate the Total Distribution Amount, the Interest
Distribution Amount, the Available Principal, the Principal Distribution Amount,
the Total Servicing Fee, the Noteholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount, the Certificateholders' Interest
Distributable Amount, the Certificateholders' Principal Distributable Amount,
the Advances, if any, to be made by the Servicer of interest and principal due
on the Actuarial Receivables, the amount, if any, to be withdrawn from the
Payahead Account and deposited in the Collection Account, the amount, if any, to
be withdrawn from the Reserve Account and deposited in the Collection Account
and the amount, if any, to be withdrawn from the Reserve Account and paid to the
Depositor, in each case, with respect to such Distribution Date.
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On or before each Distribution Date, the Servicer will cause the
Indenture Trustee to withdraw from the Payahead Account and (i) deposit into the
Collection Account in immediately available funds, the portion of Payaheads
constituting scheduled payments on Actuarial Receivables or that are to be
applied to prepay Actuarial Receivable in full and (ii) distribute to the
Depositor, in immediately available funds, all investment earnings on funds in
the Payahead Account with respect to the preceding Collection Period. On or
before each Distribution Date the Servicer will deposit any Advances for such
Distribution Date into the Collection Account. On or before the Business Day
preceding each Distribution Date, the Servicer will cause the Interest
Distribution Amount and the Available Principal for such Distribution Date to be
deposited into the Collection Account. On or before each Distribution Date, the
Servicer shall cause the Indenture Trustee to withdraw from the Reserve Account
and deposit in the Collection Account an amount (the "Reserve Account Transfer
Amount") equal to the lesser of (i) the amount of cash or other immediately
available funds in the Reserve Account on such Distribution Date (before giving
effect to any withdrawals therefrom relating to such Distribution Date) or (ii)
the amount, if any, by which (x) the sum of the Total Servicing Fee, the
Noteholders' Interest Distributable Amount, the Certificateholders' Interest
Distributable Amount, the Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount for such Distribution Date
exceeds (y) the sum of the Interest Distribution Amount and the Available
Principal for such Distribution Date.
The "Interest Distribution Amount" for a Distribution Date shall be
the sum of the following amounts with respect to any Distribution Date,
computed, with respect to Simple Interest Receivables, in accordance with the
simple interest method, and with respect to Actuarial Receivables, in accordance
with the actuarial method: (i) that portion of all collections on the
Receivables allocable to interest in respect of the preceding Collection Period
(including, with respect to Actuarial Receivables, amounts withdrawn from the
Payahead Account and allocable to interest and excluding amounts deposited into
the Payahead Account and allocable to interest, in each case, in respect of the
preceding Collection Period); (ii) all proceeds (other than any proceeds from
any Dealer commission) ("Liquidation Proceeds" of the liquidation of 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, to the extent attributable to interest due thereon,
which became Liquidated Receivables during such Collection Period in accordance
with the Servicer's customary servicing procedures; (iii) all Advances made by
the Servicer of interest due on the Actuarial Receivables in respect of the
preceding Collection Period; (iv) the Purchase Amount of each Receivable that
was repurchased by the Depositor or the Sponsor or purchased by the Servicer
during the preceding Collection Period to the extent attributable to accrued
interest thereon; (v) all monies collected, from whatever source (other than any
proceeds from any Dealer commission), in respect to Liquidated Receivables
during any Collection Period following the Collection Period in which such
Receivable was written off, 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 ("Recoveries"); and (vi) Investment Earnings for such
Distribution Date; provided, however, that in calculating the Interest
Distribution Amount, all payments and proceeds (including Liquidation Proceeds)
of any Receivables (i) repurchased by the Depositor or the Sponsor or purchased
by the Servicer, the Purchase Amount of which has been included in the Interest
Distribution Amount on a prior Distribution Date and (ii) received on Actuarial
Receivables and distributed to the Servicer, with respect to such Distribution
Date, as reimbursement for any unreimbursed Advances in accordance with the Sale
and Servicing Agreement, shall all be excluded.
The "Available Principal" for a Distribution Date shall be the sum of
the following amounts with respect to any Distribution Date, computed, with
respect to Simple Interest Receivables, in accordance with the simple interest
method, and, with respect to Actuarial Receivables, in accordance with the
actuarial method: (i) that portion of all collections on the Receivables
allocable to principal in respect of the preceding Collection Period (including,
with respect to Actuarial Receivables, amounts withdrawn from the Payahead
Account and allocable to principal and excluding amounts deposited into the
Payahead Account
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and allocable to principal, in each case, in respect of the preceding Collection
Period); (ii) Liquidation Proceeds attributable to the principal amount of
Receivables which became Liquidated Receivables during the preceding Collection
Period in accordance with the Servicer's customary servicing procedures with
respect to such Liquidated Receivables; (iii) all Advances made by the Servicer
of principal due on the Actuarial Receivables in respect of the preceding
Collection Period; (iv) to the extent attributable to principal, the Purchase
Amount of each Receivable repurchased by the Depositor or the Sponsor or
purchased by the Servicer during the preceding Collection Period; and (v)
partial prepayments on Receivables in respect of the preceding Collection Period
relating to refunds of extended service contracts, or of physical damage, credit
life, credit accident or health insurance premium, disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above; provided,
however, that in calculating the Available Principal, all payments and proceeds
(including Liquidation Proceeds) of any Receivables (i) repurchased by the
Depositor or the Sponsor or purchased by the Servicer the Purchase Amount of
which has been included in the Available Principal on a prior Distribution Date,
and (ii) received on Actuarial Receivables and distributed to the Servicer, with
respect to such Distribution Date, as reimbursement for any unreimbursed
Advances in accordance with the Sale and Servicing Agreement, shall all be
excluded.
The "Principal Distribution Amount" for a Distribution Date shall be
the sum of the following amounts with respect to the preceding Collection
Period: (i) (a) with respect to Simple Interest Receivables, that portion of all
collections on the Receivable allocable to principal in respect of the preceding
Collection Period and (b) with respect to Actuarial Receivables the sum of (x)
the amount of all scheduled payments allocable to principal due during the
preceding Collection Period and (y) the portion of all prepayments in full
allocable to principal received during the preceding Collection Period, in the
case of both (a) and (b) without regard to any extensions or modifications
thereof effected after the Cutoff Date, other than with respect to any
extensions or modifications in connection with Cram Down Losses during such
Collection Period; (ii) the principal balance of each Receivable that was
repurchased by the Depositor or the Sponsor or purchased by the Servicer in each
case during the preceding Collection Period (except to the extent included in
(i) above); (iii) the principal balance of each Liquidated Receivable which
became such during the preceding Collection Period (except to the extent
included in (i) above); (iv) partial prepayments on Receivables in respect of
the preceding Collection Period relating to refunds of extended service
contracts, or of physical damage, credit life, credit accident or health
insurance premium, disability insurance policy premiums, but only if such costs
or premiums were financed by the respective Obligor and only to the extent not
included in clause (i) above; and (v) the aggregate amount of Cram Down Losses
during such Collection Period.
Monthly Withdrawals from Collection Account. On each Distribution Date,
the Servicer shall instruct the Indenture Trustee to withdraw from the
Collection Account and deposit in the Payahead Account in immediately available
funds, the aggregate Payaheads collected during the preceding Collection Period.
On each Distribution Date, the Servicer shall instruct the Indenture Trustee to
make the following withdrawals, based upon the calculations set forth in
"Deposits to the Collection Account" above, deposits and distributions, in the
amounts and in the order of priority specified below, to the extent of the sum
of the Interest Distribution Amount and the Available Principal in respect of
such Distribution Date and the Reserve Account Transfer Amount in respect of
such Distribution Date (the "Total Distribution Amount"):
(i) from the Collection Account to the Servicer, from the Total
Distribution Amount, the Total Servicing Fee;
(ii) from the Collection Account to the Note Distribution
Account, from the Total Distribution Amount remaining after the
application of clause (i), the Noteholders' Interest Distributable
Amount;
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(iii) from the Collection Account to the Certificate Distribution
Account, from the Total Distribution Amount remaining after the
application of clauses (i) and (ii), the Certificateholders' Interest
Distributable Amount;
(iv) from the Collection Account to the Note Distribution
Account, from the Total Distribution Amount remaining after the
application of clauses (i) through (iii), the Noteholders' Principal
Distributable Amount;
(v) from the Collection Account 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) from the Collection Account to the Reserve Account, any
amounts remaining after the application of clauses (i) through (v).
Notwithstanding the foregoing, following the occurrence and during the
continuation of certain Events of Default, an acceleration of the Notes or an
Insolvency Event, the Total Distribution Amount remaining after the application
of clauses (i) and (ii) above will be deposited in the Note Distribution Account
to the extent necessary to reduce the principal balance of the Notes to zero.
For purposes hereof, the following terms have the following meanings:
"Cram Down Loss" means, with respect to a Receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Realized Losses" means the excess of the principal balance of a
Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal.
"Liquidated Receivables" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"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.
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"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, the product of (i) one-twelfth of the Interest
Rate (or, in the case of the first Distribution Date, the Interest Rate
multiplied by a fraction, the numerator of which is the number of days elapsed
from and including the Closing Date to but excluding such Distribution Date and
the denominator of which is 360) and (ii) the outstanding principal balance of
the Notes on the immediately preceding Distribution Date, after giving effect to
all distributions of principal to the Noteholders on such Distribution Date (or,
in the case of the first Distribution Date, on the Closing 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 Interest Rate borne by the Notes from such
preceding Distribution Date through the 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, on the
Note 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
principal balance of the Notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means (i) for each Distribution Date until
the principal balance of the Notes is reduced to zero, 100%, and (ii) zero for
each Distribution Date thereafter.
"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.
"Certificate Rate" means, with respect to the Certificates, ____% per
annum.
"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, the product of (i) one-twelfth of the
Certificate Rate (or, in the case of the first Distribution Date, the
Certificate Rate multiplied by a fraction, the numerator of which is the number
of days elapsed from and including the Closing Date to but excluding such
Distribution Date) and the denominator of which is 360)
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<PAGE>
and (ii) the Certificate Balance on the immediately preceding Distribution Date,
after giving effect to all payments of principal to the Certificateholders 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 at the Certificate Rate 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 Certificate Rate from and including such preceding Distribution Date to
but excluding the 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 Certificate Final Scheduled Distribution Date, the principal
required to be distributed to Certificateholders will include the lesser of (a)
any payments of principal due and remaining unpaid on each Receivable in the
Trust as of the Final Scheduled Maturity Date or (b) the portion of 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, in either case after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to the
Servicer, the Noteholders and the Certificateholders on such Distribution Date,
(i) the outstanding principal balance of the Notes is zero and (ii) the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance, the Certificateholders' Principal Distributable Amount shall include an
amount equal to such Certificate Balance.
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount or, with respect to any Distribution Date on or
after the Distribution Date on which the outstanding principal balance of the
Notes is reduced to zero, 100% of the Principal Distribution Amount (less any
amount required on the first such Distribution Date to reduce the outstanding
principal balance of the Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.
"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 Distribution Date.
"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 will be paid in the following order of priority:
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(i) to the Noteholders, accrued and unpaid interest on the
outstanding principal balance of the Notes at the Interest Rate;
(ii) to the Noteholders in reduction of principal until the
principal balance of the 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 in the
following order of priority:
(i) to the Certificateholders, accrued and unpaid interest on the
Certificate Balance at the Certificate Rate; and
(ii) to the Certificateholders in reduction of principal until
the principal balance of the Certificates has been reduced to zero.
CREDIT ENHANCEMENT
Reserve Account. Pursuant to the Sale and Servicing Agreement, the
Reserve Account will be initially funded by a deposit by the Depositor on the
Closing Date in the amount of $_______ (____% of aggregate initial principal
balance of the Notes plus the initial Certificate Balance) (the "Reserve Account
Initial Deposit"). The Reserve Account Initial Deposit will be augmented on each
Distribution Date by the deposit in the Reserve Account of amounts remaining
after distribution of the Total Servicing Fee and amounts to be paid to the
Noteholders and Certificateholders. If the amount on deposit in the Reserve
Account on any 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 Servicer shall instruct
the Indenture Trustee to distribute the amount of the 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. In certain circumstances, funds in the Reserve Account
will be used to reduce the Certificate Balance to zero.
"Specified Reserve Account Balance" with respect to any Distribution
Date generally means the greater of (a) __% of the sum of the aggregate
outstanding principal amount of the Notes and the outstanding Certificate
Balance on such Distribution Date (after giving effect to all payments on the
Notes and distributions with respect to the Certificates to be made on such
Distribution Date) or (b) __% of the aggregate initial principal balance of the
Notes plus the initial Certificate Balance. In no circumstances will the
Depositor be required to deposit any amounts in the Reserve Account other than
the Reserve Account Initial Deposit to be made on the Closing Date.
Subordination of the Certificates. The rights of the
Certificateholders to receive distributions will be subordinated to the rights
of the Noteholders following the occurrence of certain Events of Default, an
acceleration of the Notes, or an Insolvency Event. The subordination of the
Certificates is intended to enhance the likelihood of receipt by Noteholders of
amounts 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 Noteholders and Certificateholders of amounts due them
and to decrease the likelihood that the Noteholders and 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 on deposit
in the Reserve Account a temporary shortfall in the amounts distributed to the
Noteholders or the Certificateholders could result. In addition, depletion of
the Reserve Account ultimately could result in losses to Noteholders and
Certificateholders.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Stroock & Stroock & Lavan LLP is of the opinion that, (x) based on the
terms of the Notes and the transactions relating to the Receivables as set forth
herein, the Notes will be treated as debt for Federal income tax purposes and
(y) based on the applicable provisions of the Trust Agreement and Related
Documents, for federal income tax purposes, (i) the Trust will not be classified
as an association taxable as a corporation and (ii) the Trust will not be
treated as a publicly traded partnership taxable as a corporation. The Notes
will not be issued will original issue discount ("OID"). See "Federal Income Tax
Consequences" in the Prospectus.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax consequences of
purchase, ownership or disposition of the Securities under any state or local
tax law. Investors should consult their own tax advisors regarding state and
local tax consequences.
ERISA CONSIDERATIONS
THE NOTES
A fiduciary of an employee benefit plan or other retirement
arrangement subject to Title I of ERISA, should consider the fiduciary standards
under ERISA in the context of the plan or arrangement's particular circumstances
before authorizing an investment of a portion of such plan or arrangement's
assets in the Certificate. Accordingly, pursuant to Section 404 of ERISA, such
fiduciary should consider among other factors (i) whether the investment is for
the exclusive benefit of participants and their beneficiaries; (ii) whether the
investment satisfies the applicable diversification requirements; (iii) whether
the investment is in accordance with the documents and instruments governing the
plan or arrangement; and (iv) whether the investment is prudent, considering the
nature of the investment.
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan or retirement arrangements,
including individual retirement accounts and certain types of Keogh Plans, as
well as any entity whose underlying assets include plan assets by reason of a
plan or arrangement investing in such entity (including an insurance company
general account), (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 the purchase, holding or transfer of
the Notes might be deemed to constitute prohibited transactions under ERISA and
the Code with respect to a Benefit Plan that purchases Notes 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, 29 C.F.R. Section 2510.3-101 (the "Plan
Assets Regulation"), the assets of the 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
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no substantial equity features. Assuming that the Notes are treated as
indebtedness under applicable local law without substantial equity features for
purposes of the Plan Assets Regulation, then the Notes will be eligible for
purchase by Benefit Plans.
However, without regard to whether the Notes are treated as an equity
interest for such purposes, the acquisition or holding of Notes by or on behalf
of a Benefit Plan could be considered to give rise to a prohibited transaction
if the Trust, the owner of collateral, or any of their respective affiliates is
or becomes a party in interest or a disqualified person with respect to such
Benefit Plan. In such case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and circumstances of the plan
fiduciary making the decision to acquire a Note. Included among these exemptions
are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding investments
by insurance company pooled separate accounts; PTCE 95-60, regarding investments
by insurance company general accounts; PTCE 91-38, regarding investments by bank
collective investment funds; PTCE 96-23, regarding transactions affected by
"in-house asset managers"; and PTCE 84-14, regarding transactions effected by
"qualified professional asset managers."
A Benefit Plan fiduciary considering the purchase of Notes should
consult its tax and/or legal advisors regarding whether the assets of the Trust
would be considered Plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other issues and their potential consequences.
THE CERTIFICATES
The Certificates may not be acquired (directly or indirectly) by or on
behalf of any Benefit Plan or any entity (including an insurance company general
account) whose underlying assets include plan assets of the Benefit Plan by
reason of a plan's investment in the entity. By acceptance of a Certificate,
each Certificateholder will be deemed to have represented and warranted that it
is not a Benefit Plan.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
agreement relating to the Notes and the Certificates (the "Underwriting
Agreement"), the Depositor has agreed to cause the Trust to sell to
____________________ (the "Underwriter"), and the Underwriter has agreed to
purchase, the Notes and the Certificates, subject to the satisfaction of certain
conditions precedent.
The Trust has been advised by the Underwriter that the Underwriter
proposes to offer the Notes to the public initially at the public offering
prices set forth on the cover page of this Prospectus, and to certain dealers at
such prices less a concession of __% per Note, that the Underwriter and such
dealers may allow a discount of ___% per Note on the sale to certain other
dealers; and that after the initial public offering of the Notes, the public
offering prices and the concessions and discounts to dealers may be changed by
the Underwriter.
The Trust has been advised by the Underwriter that the Underwriter
proposes to offer the Certificates to the public initially at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession of __% per Certificate; that the
Underwriter and such dealers may allow a discount of __% per Certificate on the
sale to certain other dealers; and that after the initial public offering of the
Certificates, the public offering price and the concession and discount to
dealers may be changed by the Underwriter.
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<PAGE>
The Depositor and the Sponsor have agreed to indemnify the Underwriter
against certain liabilities, including civil liabilities under the Securities
Act, or contribute to payments which the Underwriter may be required to make in
respect thereof. In the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and, may, therefore, be
unenforceable.
The Trust may, from time to time, invest the funds in the Trust
Accounts and the Certificate Distribution Account in Eligible Investments
acquired from the Underwriter.
The closing of the sale of the Notes is conditioned on the closing of
the sale of the Certificates, and the closing of the sale of the Certificates is
conditioned on the closing of the sale of the Notes.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Notes and Certificates will be passed upon for the
Underwriter and the Depositor by Stroock & Stroock & Lavan LLP, New York, New
York.
S-35
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
and the first page on which the definitions of such terms may be found herein.
ABS.........................................................22
ABS Table...................................................23
APR..........................................................6
Auction Sale.................................................8
Available Principal.........................................28
Balloon Loans...............................................15
Balloon Payment.............................................15
Benefit Plan................................................12
Business Day.................................................7
Cedel........................................................2
Certificate Balance.........................................32
Certificate Final Scheduled Distribution Date...............10
Certificate Rate.........................................5, 31
Certificateholders...........................................9
Certificateholders' Distributable Amount....................31
Certificateholders' Interest Carryover Shortfall............32
Certificateholders' Interest Distributable Amount...........31
Certificateholders' Monthly Interest Distributable Amount...31
Certificateholders' Monthly Principal Distributable Amount..32
Certificateholders' Percentage..............................32
Certificateholders' Principal Carryover Shortfall...........32
Certificateholders' Principal Distributable Amount..........32
Certificates.................................................1
Closing Date.................................................6
Collection Account..........................................11
Commission..................................................15
Cram Down Loss...............................................7
Cutoff Date..................................................1
Dealer Agreements............................................6
Dealers......................................................6
Depositor....................................................1
Determination Date..........................................27
disqualified persons........................................34
Distribution Date............................................1
DTC..........................................................2
equity interest.............................................34
ERISA.......................................................34
Euroclear....................................................2
Final Scheduled Maturity Date................................6
Financed Vehicles............................................5
Indenture....................................................4
Indenture Trustee............................................4
in-house asset managers.....................................35
Initial Pool Balance.........................................8
Interest Distribution Amount................................28
Interest Period..............................................7
Issuer.......................................................4
Liquidated Receivables......................................30
Liquidation Proceeds........................................28
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<PAGE>
Loan Purchase Agreement......................................5
Note Final Scheduled Distribution Date.......................8
Noteholder's Distributable Amount...........................30
Noteholder's Interest Carryover Shortfall...................31
Noteholder's Interest Distributable Amount..................30
Noteholder's Monthly Interest Distributable Amount..........31
Noteholders' Monthly Principal Distributable Amount.........31
Noteholders' Percentage.....................................31
Noteholders' Principal Carryover Shortfall..................31
Noteholder's Principal Distributable Amount.................31
Notes........................................................1
OID.........................................................34
Originators..................................................5
Owner Trustee................................................4
parties in interest.........................................34
Payment Date.................................................7
Plan Assets Regulation......................................34
Pool Balance.................................................6
Principal Distribution Amount...............................29
prohibited transaction......................................34
Prospectus...................................................4
PTCE........................................................35
qualified professional asset managers.......................35
Rating Agencies.............................................15
Realized Losses.............................................30
Receivables..................................................1
Record Date..................................................7
Recoveries..................................................28
Reserve Account.............................................10
Reserve Account Initial Deposit.............................10
Reserve Account Transfer Amount.............................28
Sale and Servicing Agreement.................................6
Securities...................................................1
Securityholders..............................................9
Servicer.....................................................4
Servicing Fee Rate..........................................27
Simple Interest Receivables.................................20
Specified Reserve Account Balance...........................10
Total Distribution Amount...................................29
Total Servicing Fee..........................................7
Transfer and Servicing Agreements...........................27
Trust........................................................1
Trust Agreement..............................................4
Trust Property..............................................16
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<PAGE>
Prospectus Supplement [Form 2]
(to Prospectus dated ____________)
$_____________
BARNETT AUTO TRUST 199_-_
ISSUER
$_____________CLASS A ____% ASSET BACKED CERTIFICATES
$_____________CLASS B _____% ASSET BACKED CERTIFICATES
BARNETT DEALER FINANCIAL SERVICES, INC.
SERVICER AND SPONSOR
BARNETT AUTO RECEIVABLES CORP.
DEPOSITOR
Barnett Auto Trust 199__-__ (the "Trust") will be formed pursuant to a Pooling
and Servicing Agreement dated as of ___________________, among Barnett Auto
Receivables Corp. (the "Depositor"), Barnett Dealer Financial Services, Inc.,
(in such capacity the "Servicer" or "BDFS"), BDFS (in such capacity, the
"Sponsor"), a wholly-owned subsidiary of Barnett Bank, N.A. and
__________________________ (the "Trustee"), and will issue $___________
aggregate principal balance of Class A ___% Asset Backed Certificates (the
"Class A Certificates") and $_________ aggregate principal balance of Class B
___% Asset Baked Certificates (the "Class B Certificates" and, together with the
Class A Certificates, the "Certificates").
The assets of the Trust will include a pool of motor vehicle retail installment
sale contracts and other motor vehicle installment chattel paper (the
"Receivables") secured by the motor vehicles financed thereby, including certain
monies due or received thereunder on or after _________ (the "Cutoff Date"),
transferred to the Trust by the Depositor on or prior to the date of issuance of
the Certificates.
The Certificates will be available for purchase in minimum denominations of
$1,000 and integral multiples thereof. The Class A Certificates will evidence in
the aggregate an undivided ownership interest in approximately ___% of the
Trust. The Class B Certificates will evidence in the aggregate an undivided
ownership interest in approximately ___% of the Trust. Principal and interest at
the applicable Class A or Class B Pass-Through Rate will be distributed to
Certificateholders on or about the fifteenth day of each month, commencing
__________. The outstanding principal balance, if any, of the Certificates will
be due and payable on the Distribution Date (the "Final Scheduled Distribution
Date"). Capitalized terms used in this Prospectus Supplement are defined herein
on the pages indicated in the "Index of Terms" beginning on page 35 herein.
The rights of the holders of the Class B Certificates are subordinated to the
rights of holders of the Class A Certificates to the extent described herein.
The Certificates will be redeemed if the Depositor exercises its right to
purchase the Receivables or if an auction sale is successfully conducted. See
"Description of the Transfer and Servicing Agreements--Termination" in the
Prospectus.
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE CERTIFICATES, SEE "RISK FACTORS" BEGINNING ON PAGE 11 HEREIN
AND ON PAGE 12 OF THE ACCOMPANYING PROSPECTUS.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN THE DEPOSITOR, THE SERVICER,
THE SPONSOR, BARNETT BANK, N.A., THE ORIGINATORS OR ANY OF THEIR
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.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting Proceeds to the
Price to Public Discounts Depositor(1)
Per Class A Certificate.......... -------% -----% -----%
Per Class B Certificate.......... -------% -----% -----%
Total............................ $--------- $-------- $-------
- --------------------------------
(1) Before deducting expenses, estimated to be $_________.
The Certificates are offered by the Underwriter when, as and if issued by the
Trust, delivered and accepted by the Underwriter and subject to its right to
reject orders in whole or in part. It is expected that delivery of the
Certificates in book-entry form will be made through the facilities of The
Depository Trust Company ("DTC") on the Same Day Funds Settlement System and
Cedel Bank, societe anonyme ("Cedel"), and the Euroclear System ("Euroclear") on
or about __________________.
--------------------
The date of this Prospectus Supplement is ______________________
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS, AND PROSPECTUS INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
S-2
<PAGE>
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 in this summary are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" beginning on page 35
herein or, to the extent not defined herein have the meanings assigned to such
terms in the Prospectus.
Issuer......................................Barnett Auto Trust
199__-__. (the "Trust" or the
"Issuer"), a Delaware business trust
to be established pursuant to the
Agreement.
Depositor...................................Barnett Auto Receivables
Corp. (the "Depositor"), a
wholly-owned indirect subsidiary of
Barnett Bank, N.A. See "The
Depositor" in the Prospectus.
Servicer....................................Barnett Dealer Financial
Services, Inc. (in such capacity,
the "Servicer" or "BDFS"), a
wholly-owned subsidiary of Barnett
Bank, N.A. See "The Servicer and the
Sponsor" herein and in the
Prospectus.
Sponsor.....................................BDFS (in such capacity,
the "Sponsor"). See "The Servicer
and the Sponsor" herein and in the
Prospectus.
Trustee and Collateral Agent................______________________, a
_______________ _____________, not
in its individual capacity, but
solely as trustee for the Trust (the
"Trustee") and as collateral agent
with respect to the Reserve Fund
(the "Collateral Agent").
Securities Offered..........................The Trust will issue two
classes of Certificates (each, a
"Class") with one class of senior
certificates (the "Class A
Certificates") and one class of
subordinated certificates (the
"Class B Certificates" and, together
with the Class A Certificates, the
"Certificates") pursuant to a
Pooling and Servicing Agreement to
be dated as of _____________ (the
"Agreement") among the Depositor,
the Servicer and the Sponsor and the
Trustee. Each Certificate will
represent a fractional undivided
interest in the assets of the Trust.
The Class A Certificates will be
issued in an initial aggregate
principal amount of $________ (the
"Original Class A Principal
Balance") and will evidence in the
aggregate an individual ownership
interest in approximately __% of the
Trust (the "Class A Percentage").
The Class B Certificates will be
issued in an initial aggregate
principal amount of
$_________________ (the "Original
Class B Principal Balance") and will
evidence in the aggregate an
undivided ownership interest in
approximately ____% of the Trust
(the "Class B Percentage"). The
Class B Certificates will be
subordinated to the Class A
Certificates to the extent described
herein. See "Risk
Factors--Subordination of the Class
B Certificates" and "The
Certificates--Subordination of the
Class B Certificates" herein.
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<PAGE>
Registration of the Certificates............The Certificates will be
available for purchase in
denominations of $1,000 and integral
multiples thereof and will be
available in book-entry form only.
Certificateholders will not be
entitled to receive a Definitive
Certificate, except in the event
that Definitive Certificates are
issued in the limited circumstances
described herein. Persons acquiring
beneficial interests in the
Certificates will hold their
interests through DTC in the United
States or Cedel or Euroclear in
Europe. See "Certain Information
Regarding the Securities--Definitive
Certificates" in the Prospectus.
Trust Property.............................. The property of the
Trust (the "Trust Property") will
include (i) the Receivables; (ii)
all monies received under the
Receivables on and after the Cutoff
Date, and, with respect to
Receivables which are Actuarial
Receivables, monies received
thereunder prior to the Cutoff Date
that are due on or after the Cutoff
Date; (iii) the Collection Account,
the Reserve Account, the Class A
distribution account and the Class
B distribution account, established
and maintained by the Servicer;
(iv) security interests in the
vehicles securing the Receivables
(the "Financed Vehicles"); (v) the
rights of the Originators to
receive proceeds from claims under
certain insurance policies; (vi)
the rights of the Trust under the
Agreement; (vii) the rights of the
Depositor under the Loan Purchase
Agreement; (viii) the rights of the
Originators to refunds for the
costs of extended service contracts
and to refunds of unearned premiums
with respect to credit life and
credit accident and health
insurance policies covering the
Financed Vehicles or the retail
purchasers of, or other persons
owing payments on, the Financed
Vehicles (the "Obligors"); (ix) all
right, title and interest of the
Originators (other than with
respect to any Dealer commission)
with respect to the Receivables
under the related Dealer
Agreements; and (x) all proceeds of
the foregoing. The Reserve Fund
will be maintained for the benefit
of the Certificateholders, but will
not be part of the Trust.
The Receivables.............................The Receivables arise
from retail installment sale
contracts originated indirectly by
motor vehicle dealers (the
"Dealers") and purchased by certain
wholly-owned direct and indirect
subsidiaries of Barnett Bank, N.A.
(each, an "Originator") pursuant to
agreements with the Dealers ("Dealer
Agreements") and other motor vehicle
installment chattel paper originated
directly by the Originators. On or
prior to the date of issuance of the
Securities (the "Closing Date"), the
Depositor will buy the Receivables
having an aggregate principal
balance of $_____ as of the Cutoff
Date from the Originators pursuant
to a Loan Purchase Agreement (the
"Loan Purchase Agreement") to be
dated as of ________ __, 199_
between the Depositor and the
Originators. Immediately following
such sale, the Trust will purchase
such Receivables from the Depositor
pursuant to a Pooling and Servicing
Agreement to be dated as of
_________ __, 199_ (as amended and
supplemented from time to time, the
"Agreement"), among the Trustee, the
Depositor, the Servicer and the
Sponsor. See "Description of the
Certificates--Sale and Assignment of
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<PAGE>
Receivables" herein and
"Description of the Transfer and
Servicing Agreements--Sale and
Assignment of Receivables" in the
Prospectus.
The Receivables have been
selected from the contracts owned by
the Originators based on the
criteria specified in the Pooling
and Servicing Agreement and
described herein. As of the Cutoff
Date, the weighted average annual
percentage rate (the "APR") 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. As
of the Cutoff Date, no Receivable
has a scheduled maturity later than
_______ __, ____ (the "Final
Scheduled Maturity Date").
Approximately _____% of the
aggregate principal balance of the
Receivables as of the Cutoff Date
represents financing of new
vehicles; the remainder represents
financing of used vehicles. As of
the Cutoff Date, approximately
_____%, _____%, and _____% of the
aggregate principal balance of the
Receivables have Obligors with
billing addresses in the state
_______, _____ and _______,
respectively. Approximately _____%
of the aggregate principal balance
of the Receivables as of the Cutoff
Date were Balloon Loans. See "The
Receivables Pool" and "Risk
Factors--Regional Economic
Conditions" herein and "Risk
Factors--Balloon Loans" herein and
in the Prospectus.
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,
Purchase Amounts and Advances to be
remitted by the Depositor, the
Servicer and the Sponsor, as the
case may be, all for such Collection
Period, all losses realized on
Receivables that became Liquidated
Receivables during such Collection
Period and all Cram Down Losses for
such Collection Period.
"Collection Period"
means, with respect to a
Distribution Date, (i) in the case
of the initial Distribution Date,
the period from and including the
Cutoff Date through and including
_________ __, ____ and (ii)
thereafter, the calendar month
preceding the related Distribution
Date.
Class A Pass-Through Rate................... _____% per annum,
calculated on the basis of a 360-day
year consisting of twelve 30-day
months (the "Class A Pass-Through
Rate").
Class B Pass-Through Rate................... _____% per annum,
calculated on the basis of a 360-day
year consisting of twelve 30-day
months (the "Class B Pass-Through
Rate").
Distribution Date.......................... Distributions of principal and
interest will be made on the
15th day of each month (or,
if such 15th day is not a Business
Day, the next succeeding Business
Day) (each, a "Distribution Date"),
commencing in
S-5
<PAGE>
__________. The final
scheduled Distribution Date is the
____________ Distribution Date (the
"Final Scheduled Distribution
Date"). A "Business Day" is a day
other than a Saturday, a Sunday or a
day on which banking institutions or
trust companies in New York, New
York or ______, _______ are
authorized by law, regulation,
executive order or governmental
decree to be closed.
Interest Payments........................ On each Distribution
Date, the Trustee will distribute,
to the extent of funds available
therefor, first (i) pro rata to the
holders of the Class A Certificates
(the "Class A Certificateholders")
as of the last day of the
immediately preceding calendar month
(each such date, a "Record Date"),
interest in an amount equal to
one-twelfth (or, in the case of the
first Distribution Date, a fraction,
the numerator of which is ____ and
the denominator of which is 360) of
the product of the Class A
Pass-Through Rate and the Class A
Principal Balance after giving
effect to distributions of principal
made on the preceding Distribution
Date or, in the case of the first
Distribution Date, the Original
Class A Principal Balance (the
"Class A Monthly Interest") plus any
unpaid Class A Monthly Interest from
any preceding Distribution Date that
remains unpaid and interest on such
amount to the extent permitted by
law at the Class A Pass-Through Rate
and then (ii) pro rata to the
holders of record of the Class B
Certificates (the "Class B
Certificateholders" and, together
with the Class A Certificateholders,
the "Certificateholders") as of the
Record Date, interest in an amount
equal to one-twelfth (or, in the
case of the first Distribution Date,
a fraction, the numerator of which
is ____ and the denominator of which
is 360) of the product of the Class
B Pass-Through Rate and the Class B
Principal Balance after giving
effect to all payments of principal
made on the preceding Distribution
Date, or, in the case of the first
Distribution Date, the Original
Class B Principal Balance (the
"Class B Monthly Interest") plus any
unpaid Class B Monthly Interest from
any preceding Distribution Date that
remains unpaid and interest on such
amount to the extent permitted by
law at the Class B Pass-Through
Rate.
The "Class A Principal
Balance" on any date of
determination shall equal the
Original Class A Principal Balance
reduced by all distributions
actually made to the Class A
Certificateholders and allocable to
principal. The "Class B Principal
Balance" on any date of
determination shall equal the
Original Class B Principal Balance
reduced by all distributions
actually made to the Class B
Certificateholders and allocable to
principal.
Principal............................... On each Distribution
Date, the Trustee will distribute,
to the extent of funds available
therefor, first (i) pro rata to
Class A Certificateholders of record
as of the related Record Date an
amount equal to the sum of (x) the
Class A Percentage of the Principal
Distribution Amount, (y) the Class A
Percentage of Realized Losses with
respect to Receivables which became
Liquidated Receivables during the
related Collection Period (the sum
of
S-6
<PAGE>
(x) and (y), the "Class A
Monthly Principal") and (z) any
unpaid Class A Monthly Principal
with respect to any preceding
Distribution Date and then (ii) pro
rata to Class B Certificateholders
of record as of the related Record
Date an amount equal to the sum of
(x) the Class B Percentage of the
Principal Distribution Amount, (y)
the Class B Percentage of Realized
Losses with respect to Receivables
which became Liquidated Receivables
during the related Collection Period
(the sum of (x) and (y), the "Class
B Monthly Principal") and (z) any
unpaid Class B Monthly Principal
with respect to any preceding
Distribution Date.
A "Collection Period" means, with
respect to any Distribution Date (i)
in the case of the initial
Distribution Date, the Period from
and including the Cutoff Date
through and including ________, 199_
and (ii) thereafter, the calendar
month preceding the related
Distribution Date.
Optional Purchase......................... The Certificates will be
redeemed in whole, but not in part,
on any Distribution Date on which
the Depositor exercises its option
to purchase the Receivables, which
can occur after the Pool Balance
declines to 10% or less of the
Initial Pool Balance, at a
redemption price equal to the unpaid
principal amount of the then
outstanding Certificates plus
accrued and unpaid interest thereon
at the applicable Pass-Through Rate.
See "Description of the
Certificates--Termination" herein.
The "Initial Pool Balance" will
equal the Pool Balance as of the
Cutoff Date.
Auction Sale.............................. In the event that the
Pool Balance has declined to 5% or
less of the Initial Pool Balance,
the Depositor has not exercised its
optional redemption with respect to
the Receivables, satisfactory bids
are received as described herein and
the assets of the Trust are sold
pursuant to an auction (the "Auction
Sale"), the Certificates will be
redeemed at a redemption price equal
to the unpaid principal amount
herein of the then outstanding
Certificates plus accrued and unpaid
interest thereon at the applicable
Pass-Through Rate. See "Description
of the Certificates--Termination"
herein.
Subordination of the Class B
Certificates.............................. The rights of the Class B
Certificateholders to receive
distributions to which they would
otherwise be entitled with respect
to the Trust Property will be
subordinated to the rights of the
Class A Certificateholders, as more
fully described under "Risk
Factors--Subordination of the Class
B Certificates" and "Description of
the Certificates--Subordination of
the Class B Certificates" herein.
This subordination is intended to
enhance the likelihood of timely
receipt by Class A
Certificateholders of the full
amount of interest and principal
required to be paid to them, and to
afford such Class A
Certificateholders limited
protection against losses in respect
of the Receivables.
S-7
<PAGE>
The protection afforded to the Class
A Certificateholders by the
subordination feature described
above will be effected both by the
preferential right of the Class A
Certificateholders to receive, to
the extent described below, current
distributions from collections on or
in respect of the Receivables and by
the establishment of a segregated
trust account held by the Collateral
Agent for the benefit of the
Certificateholders (the "Reserve
Fund"). Amounts on deposit in the
Reserve Fund will also be generally
available to cover shortfalls in
required distributions to the Class
B Certificateholders, in respect of
interest, after payment of interest
on the Class A Certificates and, in
respect of principal, after payment
of interest and principal of the
Class A Certificates and interest on
the Class B Certificates. The
Reserve Fund will be maintained for
the benefit of the
Certificateholders, but will not be
part of the Trust.
No interest distribution will be
made to the Class B
Certificateholders on any
Distribution Date until the full
amount of interest on the Class A
Certificates payable on such
Distribution Date has been
distributed to the Class A
Certificateholders. No principal
distribution will be made to the
Class B Certificateholders on any
Distribution Date until the full
amount of interest on and principal
of the Class A Certificates and
interest on the Class B Certificates
payable on such Distribution Date
has been distributed to the Class A
Certificateholders and Class B
Certificateholders, respectively.
Distributions of interest on the
Class B Certificates, to the extent
of collections on or in respect of
the Receivables allocable to
interest and certain available
amounts on deposit in the Reserve
Fund, will not be subordinated to
the payment of principal on the
Class A Certificates.
Reserve Fund............................ Pursuant to the Agreement, a reserve
fund (the "Reserve Fund") will be
created for the purpose of providing
funds for timely payment of
principal of and interest
on the Certificates in the
event of shortfalls in the Trust's
receipt of payments on the
Receivables. The Reserve Fund will
be initially funded by a deposit by
the Depositor on the Closing Date of
cash or Eligible Investments having
a value of $____ (___% of the
aggregate initial Certificate
Balance). The amount deposited in
the Reserve Fund on the Closing Date
is referred to as the "Reserve Fund
Initial Deposit." The Reserve Fund
Initial Deposit will be augmented on
each Distribution Date by the
deposit in the Reserve Fund of
amounts remaining after distribution
of the Total Servicing Fee and
amounts to be paid to Class A
Certificateholders and Class B
Certificateholders. Amounts in the
Reserve Fund on any Distribution
Date (after giving effect to all
distributions to be made on such
Distribution Date) in excess of the
Specified Reserve Balance for such
Distribution Date will be released
to the Depositor, on such
Distribution Date and upon such
release, the Certificateholders will
have no further rights in, or claims
to, such amounts. The "Specified
Reserve Balance" with respect to any
S-8
<PAGE>
Distribution Date generally will be
equal to the greater of (a) _____%
of the sum of the Class A Principal
Balance and the Class B Principal
Balance (after giving effect to all
distributions on the Certificates on
such Distribution Date) or (b)
_____% of the sum of the Original
Class A Principal Balance and the
Original Class B Principal Balance.
Funds will be withdrawn, to the
extent available, from the Reserve
Fund for distribution first to Class
A Certificateholders to the extent
of shortfalls in the amounts
available to make required
distributions of interest on the
Class A Certificates and then to
Class B Certificateholders to the
extent of shortfalls in the amounts
available to make required
distributions of interest on the
Class B Certificates. Thereafter,
funds will be withdrawn from the
Reserve Fund for distribution first
to Class A Certificateholders to the
extent of shortfalls in the amounts
available to make required
distributions of principal on the
Class A Certificates and then to
Class B Certificateholders to the
extent of shortfalls in the amounts
available to make required
distributions of principal on the
Class B Certificates. See
"Description of the
Certificates--Reserve Fund" herein.
The Agreement............................ Under the Agreement, the
Depositor will sell the Receivables
to the Trust. In addition, the
Servicer will agree with the Trust
to be responsible for servicing,
managing, maintaining custody of and
making collections on the
Receivables. The Depositor has made
certain representations and
warranties relating to the
Receivables for the benefit of the
Certificateholders in the Agreement.
The Trust will be entitled to
require the Depositor or the
Sponsor, jointly and severally, to
purchase any Receivable if the
interest of the Certificateholders
is materially adversely affected by
a breach of any representation or
warranty made by the Depositor with
respect to such Receivable, if such
breach has not been cured by the
applicable grace period.
The Servicer shall receive a monthly
fee (the "Servicing Fee"), payable
on each Distribution Date (other
than the initial Distribution Date),
equal to one-twelfth (and in the
case of the initial Distribution
Date, _______________) of the
product of ___% and the Pool Balance
as of the first day of the related
Collection Period. In addition, the
"Servicing Fee" will include certain
late fees, prepayment charges and
other administrative fees or similar
charges. See "Description of the
Certificates-Servicing Compensation"
herein and "Description of the
Transfer and Servicing
Agreements-Servicing Compensation
and Payment of Expenses" in the
Prospectus. The Servicer and the
Trustee is obligated to provide to
the other written notice upon the
discovery of a breach by the
Servicer of certain covenants made
by the Servicer in the Agreement. If
the breach is not cured, the
Servicer will be obligated to
purchase any Receivable materially
and adversely affected by such
uncured breach.
S-9
<PAGE>
Tax Status.............................. In the opinion of Stroock
& Stroock & Lavan LLP, special
Federal tax counsel to the Trust,
the Trust will be classified for
Federal income tax purposes as a
grantor trust and not as an
association taxable as a
corporation. Certificateholders must
report their respective allocable
shares of income earned on Trust
assets (excluding certain amounts
retained by the Depositor as
described herein) and, subject to
certain limitations applicable to
individuals, estates and trusts, may
deduct their respective allocable
shares of reasonable servicing and
other fees. See "Federal Income Tax
Consequences" herein and in the
Prospectus. Investors should consult
their own tax advisors regarding
state and local tax consequences.
See "State and Local Tax
Consequences" herein and in the
Prospectus.
ERISA Considerations...................... The Class A Certificates
may be purchased by or on behalf of
an employee benefit plan or other
retirement arrangement that is
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"), as
well as any entity whose source of
funds for the purchase of Class A
Certificates includes plan assets by
reason of a plan or account
investing in such entity (each, a
"Plan"), subject to the
considerations described herein.
Because the Class B Certificates are
subordinated to the Class A
Certificates, no Class B Certificate
may be purchased by or on behalf of
a Plan other than an "insurance
company general account" as defined
in, and which complies with the
provisions of, Prohibited
Transaction Exemption 95-60 which
may be deemed to be holding Plan
assets. See "ERISA Considerations"
herein and in the Prospectus.
Rating.................................... It is a condition to the
issuance of the Certificates that
the Class A Certificates be rated
__________ by at least two
nationally recognized rating
agencies (each, a "Rating Agency")
and the Class B Certificates be
rated at least "_" or its equivalent
by each such Rating Agency. The
ratings of the Certificates are
based primarily on the
creditworthiness of the Receivables
and the availability of the Reserve
Fund and, in the case of the Class A
Certificates, on the subordination
provided by the Class B
Certificates. A security rating is
not a recommendation to buy, sell or
hold securities and may be revised
or withdrawn at any time by the
assigning Rating Agency. See "Risk
Factors-Ratings of the
Certificates; Possibility of
Withdrawal or Downgrading" herein.
S-10
<PAGE>
RISK FACTORS
Prospective investors should consider the following risk factors, in
connection with the purchase of the Securities as well as the Risk Factors
specified under the heading "Risk Factors" in the Prospectus.
LIMITED LIQUIDITY
There is currently no secondary market for the Certificates. The
Underwriter currently intends to make a market in the Certificates, but 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.
[REGIONAL ECONOMIC CONDITIONS
Economic conditions in the states where Obligors reside may affect the
delinquency, loan loss and repossession experience of the Trust with respect to
the Receivables. As of the Cutoff Date, the billing addresses of the Obligors
with respect to approximately _____%, _____%, and _____% by principal balance of
the Receivables were located in _________, _________ and ________, respectively.
_________, _________, and _________ have experienced economic downturns from
time to time and no predictions can be made regarding future economic conditions
in _________, _________ and ________, or in any of the other states where the
Obligors are located. See "The Receivables Pool" herein.]
SUBORDINATION OF THE CLASS B CERTIFICATES
Amounts on deposit in the Reserve Fund will be available on any
Distribution Date first to cover shortfalls in distributions of interest on the
Class A Certificates and then to cover shortfalls in distributions of interest
on the Class B Certificates. As a result, shortfalls in distributions of
interest on the Class B Certificates will he covered (to the extent of amounts
available in the Reserve Fund after the payment of interest on the Class A
Certificates) prior to the use of the Reserve Fund to cover shortfalls of
principal on the Class A Certificates. After distributions of interest on both
the Class A Certificates and the Class B Certificates have been made, amounts on
deposit in the Reserve Fund will he available first to cover shortfalls in
distributions of principal on the Class A Certificates and then to cover
shortfalls in distributions of principal on the Class B Certificates. If the
Reserve Fund is exhausted, the Trust will depend solely on current payments on
the Receivables to make distributions on the Certificates.
The Class B Certificateholders will not receive any distributions of
interest with respect to a Collection Period until the full amount of interest
on the Class A Certificates relating to such Collection Period has been
deposited in the Class A Distribution Account. Class B Certificateholders will
not receive any distributions of principal with respect to such Collection
Period until the full amount of interest on and principal of the Class A
Certificates relating to such Collection Period has been deposited in the Class
A Distribution Account. However, distributions of interest on the Class B
Certificates, to the extent of collections on the Receivables allocable to
interest and the amount on deposit in the Reserve Fund available after the
payment of interest on the Class A Certificates has been made, will not be
subordinated to the payment of principal on the Class A Certificates. See
"Description of the Certificates-Distributions on Certificates" herein.
S-11
<PAGE>
BALLOON LOANS
As of the Cutoff Date, approximately _____% of the aggregate principal
balance of the Receivables, constituting _____% of the number of Receivables,
represent Balloon Loans. "Balloon Loans" are originated with a stated maturity
of less than the period of time of the corresponding amortization schedule. As a
result, upon the maturity of a Balloon Loan, the Obligor will be required to
make a balloon payment (a "Balloon Payment") which will be significantly larger
than such Obligor's other scheduled monthly payments. See "Risk Factors--Balloon
Loans" and "Maturity and Prepayment Considerations--Balloon Loans" in the
Prospectus.
FEDERAL INCOME TAXATION
It is expected that, for Federal income tax purposes, amounts otherwise
payable to the Class B Certificate Owners that are paid to the Class A
Certificate Owners pursuant to the subordination provisions described above
under "--Subordination of the Class B Certificates" will be deemed to have been
received by the Class B Certificate Owners and then paid by them to the Class A
Certificate Owners pursuant to a guaranty. Accordingly, the Class B Certificate
Owners could be liable for taxes on amounts not actually received. See "Federal
Income Tax Consequences" herein and "Federal Income Tax Consequences-Trusts
Treated as Grantor Trusts" in the Prospectus.
RATINGS OF THE CERTIFICATES; POSSIBILITY OF WITHDRAWAL OR DOWNGRADING
It is a condition to the issuance of the Certificates that the Class A
Certificates be rated ____________________ by at least two nationally recognized
rating agencies (each a "Rating Agency"). It is a condition to the issuance of
the Class B Certificates that they be rated at least "___" or its equivalent by
each such Rating Agency. A rating is not a recommendation to purchase, hold or
sell the Certificates, inasmuch as such rating does not comment as to market
price or suitability for a particular investor. The ratings of the Certificates
are based primarily on the creditworthiness of the Receivables and the
availability of the Reserve Fund and, in the case of the Class A Certificates,
on the subordination provided by the Class B Certificates. The ratings of the
Certificates address the likelihood of the receipt of distributions due 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 so
warrant. In the event that a rating is subsequently lowered or withdrawn, no
person or entity will be required to provide any additional credit enhancement.
There can be no assurance as to whether any additional rating agency will rate
the Certificates or, if one does, what rating would be assigned to either class
of Certificates by such rating agency.
FORMATION OF THE TRUST
BDFS, as Sponsor, will cause the Depositor to establish the Trust by
selling and assigning the Receivables and the other Trust Property to the Trust
in exchange for the Certificates. The Depositor will sell the Certificates to
the Underwriters in exchange for cash. All references herein to sales,
assignments and transfers to the Trust refer to sales, assignments and transfers
to the Trustee on behalf of the Trust for the benefit of the Certificateholders.
Prior to such sale and assignment, the Trust will have no assets or obligations
or any operating history. Upon formation, the Trust will not engage in any
business activities other than acquiring and holding the Receivables, issuing
the Certificates and distributing payments thereon.
The Servicer will, directly or through subservicers, hold the
Receivables and the certificates of title or ownership or other documents
evidencing the notation of the Originator's lien on the certificates of title or
ownership relating to the Financed Vehicles as custodian for the Trustee.
However, the Receivables will not be marked or
S-12
<PAGE>
stamped to indicate that they have been sold to the Trust, and the certificates
of title for the Financed Vehicles will not be endorsed or otherwise amended to
identify the Trustee as the new secured party. Under the foregoing circumstances
and in certain jurisdictions, the Trust's interest in the Receivables and the
Financed Vehicles may be defeated. See "Risk Factors-Risks of Unperfected
Security Interests in Financed Vehicles in Certain States" and "Certain Legal
Aspects of the Receivables" in the Prospectus.
The Trust will not acquire any contracts or assets other than the Trust
Property, and it is not anticipated that the Trust will have any need for
additional capital resources. Because the Trust will have no operating history
upon its establishment and will not engage in any business activity other than
acquiring and holding the Trust Property, issuing the Certificates and
distributing payments thereon, no historical or pro forma financial statements
or ratios of earnings to fixed charges with respect to the Trust have been
included herein.
THE TRUST PROPERTY
Each Certificate represents a fractional undivided interest in the
Trust. The Trust Property will include the Receivables, which were originated
indirectly by Dealers and purchased by the Originators pursuant to agreements
with Dealers ("Dealer Agreements") and other motor vehicle installment chattel
paper originated directly by the Originators. On the Closing Date, the Depositor
will buy the Receivables from the Originators and the Depositor will sell the
Receivables to the Trust. The Servicer will, directly or through subservicers,
service the Receivables. The Trust Property also includes (i) all monies
received under the Receivables on and after the Cutoff Date and, with respect to
Receivables which are Actuarial Receivables, monies received thereunder prior to
the Cutoff Date that are due on or after the Cutoff Date, (ii) such amounts as
from time to time may be held in the Collection Account, the Reserve Account,
the Payahead Account, the Class A distribution account and the Class B
distribution account established and maintained by the Servicer pursuant to the
Agreement as described below, (iii) security interests in the Financed Vehicles,
(iv) the rights of the Originators to receive proceeds from claims under certain
insurance policies, (v) the rights of the Trust under the Agreement; (vi) the
rights of the Depositor under the Loan Purchase Agreement; (vii) the rights of
the Originators to refunds for the costs of extended service contracts and to
refunds of unearned premiums with respect to credit life and credit accident and
health insurance policies covering the Financed Vehicles or the retail
purchasers of, or other persons owing payments on, the Financed Vehicles (the
"Obligors"); (viii) all right, title and interest of the Originators (other than
with respect to any Dealer commission) with respect to the Receivables under the
related Dealer Agreements and (ix) all proceeds of the foregoing.
The Reserve Fund will be maintained for the benefit of the
Certificateholders, but will not be part of the Trust.
THE RECEIVABLES POOL
POOL COMPOSITION
The Receivables were selected from the Originators' portfolio by
several criteria, including, as of the Cutoff Date, the following: each
Receivable has a scheduled maturity of not later than the Final Scheduled
Maturity Date; each Receivable was originated in the United States of America;
each Receivable has an original term to maturity of not more than __ months and
a remaining term to maturity of __ months or less as of the Cutoff Date; each
Actuarial Receivable provides for level monthly payments which fully amortize
the amount financed (except for the last payment, which may be different from
the level payment); each Receivable is not more than __ days contractually past
due as of the Cutoff Date and is not more than _______ months paid ahead; each
Receivable has an outstanding
S-13
<PAGE>
principal balance between $ and $ ; and each Receivable has an APR of no less
than _____%. As of the Cutoff Date, no Obligor on any Receivable was noted in
the related records of the Servicer as being the subject of any pending
bankruptcy or insolvency proceeding. The latest scheduled maturity of any
Receivable is not later than _____. No selection procedures believed by the
Depositor to be adverse to Certificateholders were used in selecting the
Receivables.
The composition, distribution by remaining term, distribution by APR,
geographic distribution and distribution by remaining principal of the
Receivables as of the Cutoff Date are set forth in the tables below.
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Weighted Average Aggregate Number of Weighted Average Weighted Average Average
APR of Receivables Principal Balance Receivables Remaining Term Original Term Principal Balance
<S> <C> <C> <C> <C> <C>
% $ $ months months $
</TABLE>
S-14
<PAGE>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Remaining Principal Number of Aggregate Principal Percentage of Aggregate
Range of Balance Receivables Balance Principal Balance
<S> <C> <C> <C>
Less than 30 months....... $ %
30 to 35 months...........
36 to 41 months...........
42 to 47 months...........
48 to 53 months...........
54 to 59 months...........
60 to 65 months...........
66 to 71 months...........
72 to 77 months...........
78 to 89 months...........
Total..................... -------- --------- ---------
100.00%
======== $======== =======
</TABLE>
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Annual Percentage Number of Aggregate Principal Percentage of Aggregate
Rate Range Receivables Balance Principal Balance
<S> <C> <C> <C>
Less than 8.00%............ $ %
8.00% to 8.99%.............
9.00% to 9.99%.............
10.00% to 10.99%...........
11.00% to 11.99%...........
12.00% to 12.99%...........
13.00% to 13.99%...........
14.00% to 14.99%...........
15.00% to 15.99%...........
16.00% to 16.99%...........
17.00% to 17.99%...........
18.00% to 18.99%...........
19.00% to 19.99%...........
20.00% to 20.99%...........
21.00% to 21.99%...........
22.00% and above...........
---------- ---------- -----------
Total...................... 100.00%
========== $========= =======
</TABLE>
S-15
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Number of Aggregate Principal Percentage of Aggregate
State(1) Receivables Balance Principal Balance
<S> <C> <C> <C>
- ------------............. $ %
- ------------.............
- ------------.............
- ------------.............
- ------------.............
- ------------.............
- ------------.............
- ------------.............
Others (2)............... ---------- -------------- -------
Total.................... ========== $============= 100.00%
=======
</TABLE>
(1) Based on billing addresses of the Obligors as of the Cutoff Date,
which may differ from the state of origination of the Receivable.
(2) Includes __ other states and Washington, D.C.. (none of which have a
concentration of Receivables in excess of 5.00% of the aggregate
principal balance).
S-16
<PAGE>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE
RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Remaining Principal Number of Aggregate Principal Percentage of Aggregate
Range of Balance Receivables Balance Principal Balance
<S> <C> <C> <C>
$ 2,500 to $ 4,999............ $ %
$ 5,000 to $ 7,499............
$ 7,500 to $ 9,999............
$10,000 to $12,499............
$12,500 to $14,999............
$15,000 to $17,499............
$17,500 to $19,999............
$20,000 to $22,499............
$22,500 to $24,999............
$25,000 to $27,499............
$27,500 to $29,999............
$30,000 to $32,499............
$32,500 to $34,999............
$35,000 to $37,499............
$37,500 to $39,999............
$40,000 to $41,499............
$42,500 to $44,999............
$45,000 to $47,499............
$47,500 to $49,999............
$50,000 to $52,499............
$52,500 to $54,999............ ------------- ------------ -------
100.00%
Total......................... ============ $========== =======
</TABLE>
The receivables were originated by Originators located in ____
states.
Approximately __% of the aggregate principal balance of the
Receivables, constituting __% of the number of Receivables, as of the Cutoff
Date, represents financing of new vehicles; the remainder represents financing
of used vehicles. As of the Cutoff Date, __% of the aggregate principal balance
of the Receivables, constituting __% of the number of Receivables, were more
than 30 days contractually past due. A Receivables is 30 days contractually past
due if a scheduled payment has not been received by the subsequent calendar
month's scheduled payment date.
As of the Cutoff Date, approximately ___% of the aggregate principal
balance of the Receivables, constituting ___% of the number of Receivables, are
Simple Interest Receivables. "Simple Interest Receivables" are receivables that
provide for the amortization of the amount financed under the receivable over a
series of fixed level monthly payments. However, unlike the monthly payment
under a Precomputed Receivable, each monthly payment includes an installment of
interest which is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated APR and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding payment of
interest was made. As payments are received under a Simple Interest Receivable,
the amount received is applied first to interest accrued to the date of payment
and the balance is applied to reduce the unpaid principal balance. Accordingly,
if an Obligor pays a fixed monthly installment before its scheduled due date,
the portion of the payment allocable to interest for the period since the
preceding payment was made will be less than it would have been had the payment
been made as scheduled, and the portion of the payment applied to reduce the
unpaid principal balance will be correspondingly greater. Conversely, if an
Obligor pays a fixed monthly installment after its scheduled
S-17
<PAGE>
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.
If an Actuarial Receivable is prepaid in full, with minor variations
based upon state law, under the terms of the motor vehicle retail installment
sale contract or loan agreement, as the case may be, a "refund" or "rebate" will
be made to the borrower of the portion of the total amount of payments then due
and payable under such contract or agreement allocable to "unearned" interest,
calculated on the basis of a constant interest rate. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the borrower is required to
pay interest only to the date of prepayment. The amount of a rebate under an
Actuarial Receivable generally will be less than the remaining scheduled
payments of interest that would have been due under a Simple Interest Receivable
for which all payments were made on schedule.
The Servicer may accede to an Obligor's request to pay scheduled
payments in advance, in which event the Obligor will not be required to make
another regularly scheduled payment until the time a scheduled payment not paid
in advance is due. The amount of any payment (which are not amounts
representing Payaheads) made in advance will be treated as a principal
prepayment and will be distributed as part of the Principal Distribution Amount
in the month following the Collection Period in which the prepayment was made.
See "Maturity and Prepayment Considerations" in the Prospectus.
DELINQUENCIES AND LOSS
Set forth below is certain information concerning the historical
delinquency and net loss experience of Barnett Bank, N.A. and its subsidiaries
pertaining to new and used automobile (including passenger car, minivan,
sport/utility vehicle and light truck) receivables originated by Barnett Bank,
N.A. and its subsidiaries. There can be no assurance that the delinquency and
net loss experience on the Receivables will be comparable to that set forth
below.
S-18
<PAGE>
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
At At December 31,
------------------------------------------- --------------------------------------------------------
1996 1995 1994
------------------------------------------- --------------------------------------------------------
Dollars Percent Dollars Percent Dollars Percent Dollars Percent Dollars Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding (2) ... $------ $-----
Delinquencies (3)....
30-59 Days......... % % % % %
60-89 Days......... % % % % %
90 Days or more.... % % % % %
Total Delinquencies as a
Percentage of the Total
Amount Outstanding.. $===== ====% $====== ====% $====== =====% $====== ====% $===== ====%
</TABLE>
(1) Substantially all of the receivables consist of receivables originated
by Barnett Bank, N.A. and certain of its subsidiaries other than
Oxford Resources Corp. and its subsidiaries.
(2) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(3) The period of delinquency is based on the number of days
scheduled payments are contractually past due. Includes repossessions
on hand which have not been charged-off. A receivable is 30 days
contractually past due if a scheduled payment has not been received by
the subsequent calendar month's scheduled payment date. S-19
<PAGE>
HISTORICAL LOSS EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For ------ Months Ended For Year Ended December 31,
1996 1995 1994
------------------ --------------- ------------ ----------------- --------------
<S> <C> <C> <C> <C> <C>
Principal Amount
Outstanding(2)........ $-------- $--------
Average Principal Amount
Outstanding(3)........ $-------- $--------
Number of Loans
Outstanding...........
Average Number of Loans
Outstanding(3)........
Gross Losses(4).............. $-------- $--------
Recoveries(5)...............
Net Losses(6)
Net Losses as a Percent of
Principal Amount
Outstanding........... ----- -------
Net Losses as a Percentage of
Average Principal Amount
Outstanding........... ----- --------
</TABLE>
(1) Substantially all of the receivables consist of receivables originated
by Barnett Bank, N.A. and certain of its subsidiaries other than
Oxford Resources Corp. and its subsidiaries.
(2) Principal Amount Outstanding is the aggregate remaining principal
balance of all Receivables serviced, net of unearned interest.
(3) Average of the month-end balances for each of the twelve months in the
applicable calendar year.
(4) Gross losses is the aggregate remaining principal balance, including
accrued but unpaid interest.
(5) Recoveries is any proceeds from the liquidation of the related
vehicle and post-disposition monies received on previously charged-off
contracts including proceeds of liquidation of the related vehicle
after the related charge-off.
(6) Net losses is equal to Gross Losses less Recoveries.
Delinquencies and net charge-offs are affected by a number of social
and economic factors, including changes in interest rates and unemployment
levels, and there can be no assurance as to the level of future total
delinquencies or the severity of future net charge-offs. As a result, the
delinquency and net charge-off experience of the Receivables may differ from
those shown in the tables.
[MDNA]
S-20
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be applied by
the Trust to the purchase of the Receivables and the other Trust Property from
the Depositor. The Depositor will use the net proceeds paid to it by the Trust
to acquire the Receivables from the Originators and to make the Reserve Account
Initial Deposit in the amount of $______ (____% of the aggregate initial
Certificate Balance).
THE SERVICER AND THE SPONSOR
As of _________________, BDFS serviced approximately [_____] retail
installments sale contracts, consisting primarily of new and used automobile
(including passenger car, minivan, sport/utility vehicle and light truck),
receivables, representing an outstanding balance of approximately [_____]
million. As of ________________, BDFS serviced approximately [_____] automobile
leases equaling approximately [____] billion of automobile lease receivables.
See "The Servicer and the Sponsor" in the Prospectus.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement,
substantially in the form filed as an exhibit to the Registration Statement.
Copies of the Agreement may be obtained by the Certificateholders upon written
request to the Servicer as described under "Incorporation of Certain Documents
by Reference" in the Prospectus. The following information summarizes all
material provisions of the Certificates and the Agreement. The summary is
subject to, and qualified in its entirety by reference to, the Certificates and
the Agreement. The following summary supplements the description of the general
terms and provisions of the Certificates of any given series and the related
Agreement set forth in the Prospectus, to which description reference is hereby
made.
GENERAL
The Certificates will evidence fractional undivided interests in the
assets of the Trust to be created pursuant to the Agreement. The Class A
Certificates will evidence in the aggregate an undivided ownership interest of
__% of the Trust and the Class B Certificates will evidence in the aggregate an
undivided ownership interest of __% of the Trust.
SALE AND ASSIGNMENT OF THE RECEIVABLES
Certain information regarding the conveyance of the Receivables by the
Originators to the Depositor and by the Depositor to the Trust on the Closing
Date pursuant to the Agreement is set forth in the Prospectus under "Description
of the Transfer and Servicing Agreements-Sale and Assignment of
Receivables."
ACCOUNTS
[The assets of the Trust will not include a Pre-Funding Account.] All
other Accounts referred to under "Description of the Transfer and Servicing
Agreements-Accounts" in the Prospectus, will be established by the Servicer
and maintained with the Trustee in the name of the Trustee on behalf of the
Certificateholders. The Reserve Fund will be established by the Servicer as a
segregated account with the Collateral Agent on behalf of the
Certificateholders.
SERVICING COMPENSATION
S-21
<PAGE>
The Servicer will be entitled to receive a fee (the "Servicing Fee")
for each Collection Period in an amount equal to ___% per annum (the "Servicing
Fee Rate") of the Pool Balance as of the first day of the Collection Period. The
"Servicing Fee" will also include amounts to be paid to the Servicer as
described in the Prospectus. The Servicing Fee, together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates (the "Total
Servicing Fee"), will be paid from the Total Distribution Amount. The Total
Servicing Fee will be paid prior to the distribution of any portion of the
Interest Distribution Amount to the Certificateholders. See "Description of the
Transfer and Servicing Agreements-Servicing Compensation and Payment of
Expenses" in the Prospectus.
PAYMENTS ON RECEIVABLES
Prior to the issuance of the Certificates, BDFS will obtain a
_________ from Barnett Bank, N.A. and it anticipates that it will make deposits
into the Collection Account only on the business day preceding the related
Distribution Date.
DISTRIBUTIONS ON CERTIFICATES
Deposits to Collection Account. On or before the earlier of the eighth
Business Day of the month in which a Distribution Date occurs and the fourth
Business Day preceding such Distribution Date (the "Determination Date"), the
Servicer will provide the Trustee with certain information with respect to the
preceding Collection Period, including the amount of aggregate Collections on
the Receivables, the aggregate amount of Liquidated Receivables, the Advances,
if any, to be made by the Servicer of interest and principal due on the
Actuarial Receivables, the amount, if any, to be withdrawn from the Payahead
Account and deposited in the Collection Account, the amount, if any, to be
withdrawn from the Reserve Fund and deposited in the Collection Account, the
amount, if any, to be withdrawn from the Reserve Fund and paid to the Depositor,
in each case, with respect to such Distribution Date and the aggregate Purchase
Amount of Receivables to be repurchased by the Depositor or the Sponsor or to be
purchased by the Servicer, in each case with respect to such Distribution Date.
On or before each Distribution Date, the Servicer will cause the
Trustee to withdraw from the Payahead Account and (i) deposit into the
Collection Account in immediately available funds, the portion of Payaheads
constituting scheduled payments on Actuarial Receivables or that are to be
applied to prepay Actuarial Receivables in full and (ii) distribute to the
Depositor, in immediately available funds, all investment earnings on funds in
the Payahead Account with respect to the preceding Collection Period. On or
before each Distribution Date the Servicer will deposit any Advances for such
Distribution Date into the Collection Account. On or before each Distribution
Date, the Servicer will cause the Interest Collections and the Principal
Collections for such Distribution Date to be deposited into the Collection
Account.
"Collections" for any Distribution Date will equal the sum of Interest
Collections and Principal Collections for the related Distribution Date.
"Interest Collections" for any Distribution Date will equal the sum of
the following amounts with respect to any Distribution Date, computed, with
respect to Simple Interest Receivables, in accordance with the simple interest
method, and with respect to Actuarial Receivables, in accordance with the
actuarial method: (i) that portion of all collections on the Receivables
allocable to interest in respect of the preceding Collection Period (including,
with respect to Actuarial Receivables, amounts withdrawn from (the Payahead
Account and allocable to interest and excluding amounts deposited into the
Payahead Account and allocable to interest, in each case, in respect of the
S-22
<PAGE>
preceding Collection Period): (ii) all proceeds (other than any proceeds from
any Dealer commission) of the liquidation of 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, which became Liquidated Receivables during such Collection Period in
accordance with the Servicer's customary servicing procedures, (iii) all
Advances made by the Servicer of interest due on the Actuarial Receivables in
respect of the preceding Collection Period; (iv) the Purchase Amount of each
Receivable that was repurchased by the Depositor or the Sponsor or purchased by
the Servicer during such Collection Period, to the extent attributable to
accrued interest thereon; (v) all monies collected, from whatever source (other
than any proceeds from any Dealer commission), in respect of Liquidated
Receivables during any Collection Period following the Collection Period in
which such Receivable was written off, 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 ("Recoveries") and (vi) Investment Earnings for such
Distribution Date; provided, however, that in calculating the Interest
Collections, all payments and proceeds (including Liquidation Proceeds) of any
Receivables (i) repurchased by the Depositor or the Sponsor or purchased by the
Servicer, the Purchase Amount of which has been included in the Interest
Collections on a prior Distribution Date and (ii) received on Actuarial
Receivables and distributed to the Servicer, with respect to such Distribution
Date, as reimbursement for any unreimbursed Advances in accordance with the
Agreement, shall all be excluded.
"Principal Collections" for any Distribution Date will equal the sum of
the following amounts with respect to any Distribution Date, computed, with
respect to Simple Interest Receivables, in accordance with the simple interest
method, and with respect to Actuarial Receivables, in accordance with the
actuarial method: (i) that portion of all collections on the Receivables
allocable to principal in respect of the preceding Collection Period (including,
with respect to Actuarial Receivables, amounts withdrawn from the Payahead
Account and allocable to interest and excluding amounts deposited into the
Payahead Account and allocable to interest, in each case, in respect of the
preceding Collection Period); (ii) Liquidation Proceeds attributable to the
principal amount of Receivables which became Liquidated Receivables during the
preceding Collection Period in accordance with the Servicer's customary
servicing procedures, with respect to such Liquidated Receivables; (iii) all
Advances made by the Servicer or interest due on the Actuarial Receivables in
respect to the preceding Collection Period; (iv) the Purchase Amount of each
Receivable repurchased by the Depositor or the Sponsor or purchased by the
Servicer during such Collection Period to the extent attributable to principal;
and (v) partial prepayments on Receivables in respect of such Collection Period
relating to refunds of extended service contracts, or of physical damage, credit
life, credit accident or health insurance premium, disability insurance policy
premium, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above, but only if
such costs or premiums were financed by the respective Obligor and only to the
extent not included in clause (i) above; provided, however, that in calculating
the Principal Collections, all payments and proceeds (including Liquidation
Proceeds) of any Receivables (i) repurchased by the Depositor or the Sponsor or
purchased by the Servicer the Purchase Amount of which has been included in the
Principal Collections on a prior Distribution Date, and (ii) received on
Actuarial Receivables and distributed to the Servicer, with respect to such
Distribution Date, as reimbursement for any unreimbursed Advances in accordance
with the Agreement, shall all be excluded.
The "Principal Distribution Amount" for a Distribution Date shall be
the sum of the following amounts with respect to the preceding Collection
Period: (i) (a) with respect to Simple Interest Receivables, that portion of all
collections on the Receivable allocable to principal in respect of the preceding
Collection Period and (b) with respect to Actuarial Receivables the sum of (x)
the amount of all scheduled payments allocable to principal due during the
preceding Collection Period and (y) the portion of all prepayments in full
allocable to principal received during the preceding Collection Period, in the
case of both (a) and (b) without regard to any extensions or
S-23
<PAGE>
modifications thereof effected alter the Cutoff Date, other than with respect to
any extensions or modifications in connection with Cram Down Losses during such
Collection Period; (ii) the principal balance of each Receivable that was
repurchased by the Depositor or the Sponsor or purchased by the Servicer in each
case during the preceding Collection Period (except to the extent included in
(i) above); (iii) the principal balance of each Liquidated Receivable which
became such during the preceding Collection Period (except to the extent
included in (i) above); (iv) partial prepayments on Receivables in respect of
the preceding Collection Period relating to refunds of extended service
contracts, or of physical damage, credit life, credit accident or health
insurance premium, disability insurance policy premiums, but only if such costs
or premiums were financed by the respective Obligor and only to the extent not
included in clause (i) above; and (v) the aggregate amount of Cram Down Losses
during such Collection Period.
Interest Collections and Principal Collections on any Distribution
Date shall exclude all payments and proceeds (including Liquidation Proceeds) of
any Receivables the Purchase Amount of which has been included in Collections in
a prior Collection Period.
Monthly Withdrawals from the Collection Account. On each Distribution
Date, the Servicer shall instruct the Trustee to withdraw from the Collection
Account and deposit in the Payahead Account in immediately available funds, the
aggregate Payaheads collected during the preceding Collection Period. On each
Distribution Date, the Servicer shall instruct the Trustee to make the following
deposits and distributions, to the extent of Interest Collections (and, in the
case of shortfalls occurring under clause (ii) below in the Class A Interest
Distribution, the Class B Percentage of Principal Collections to the extent of
such shortfalls):
(i) to the Servicer, the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods (to the extent not retained by the
Servicer as described under "-Net Deposits" below);
(ii) to the Class A Distribution Account, after the application
of clause (i), the Class A Interest Distribution; and
(iii) to the Class B Distribution Account, after the application of
clauses (i) and (ii), the Class B Interest Distribution.
On each Distribution Date, the Servicer shall instruct the Trustee to
make the following deposits and distributions, to the extent of Principal
Collections and Interest Collections remaining after the application of clauses
(i), (ii) and (iii) above:
(iv) to the Class A Distribution Account, the Class A Principal
Distribution;
(v) to the Class B Distribution Account, after the application
of clause (iv), the Class B Principal Distribution; and
(vi) to the Reserve Fund, any amounts remaining after the application
of clauses (i) through (v).
To the extent necessary to satisfy the distributions described above,
the Servicer shall instruct the Trustee to withdraw from the Reserve Fund and
deposit in the Class A Distribution Account or the Class B Distribution Account
as described below in the following order of priority on each Distribution Date:
S-24
<PAGE>
(i) an amount equal to the excess of the Class A Interest Distribution
over the sum of Interest Collections and the Class B Percentage of
Principal Collections will be deposited into the Class A Distribution
Account:
(ii) an amount equal to the excess of the Class B Interest Distribution
over the portion of Interest Collections remaining after the
distribution of the Class A Interest Distribution will be deposited
into the Class B Distribution Account;
(iii) an amount equal to the excess of the Class A Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution and the Class B Interest Distribution will be deposited
into the Class A Distribution Account; and
(iv) an amount equal to the excess of the Class B Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution, the Class B Interest Distribution and the Class A
Principal Distribution will be deposited into the
Class B Distribution Account.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders and
all amounts on deposit in the Class B Distribution Account will be distributed
to the Class B Certificateholders.
"Cram Down Loss" means, with respect to a Receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Interest 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 is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any Distribution
Date, the sum of Class A Monthly Interest for such Distribution Date and the
Class A Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, with respect to any Distribution
Date, the product of (i) one-twelfth (or, in the case of the first Distribution
Date a fraction, the numerator of which is equal to __ and the denominator of
which is 360) of the Class A Pass-Through Rate and (ii) the Class A Principal
Balance as of the Distribution Date occurring in the preceding Collection Period
(after giving effect to any payments made on such Distribution Date) or, in the
case of the first Distribution Date, the Original Class A Principal Balance.
S-25
<PAGE>
"Class A Monthly Principal" means, with respect to any Distribution
Date, the Class A Percentage of the Principal Distribution Amount for such
Distribution Date plus the Class A Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"Class A Principal Balance" equals the Original Class A Principal
Balance, as reduced by all amounts allocable to principal on the Class A
Certificates previously distributed to Class A Certificateholders.
"Class A Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
"Class A Principal Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Principal for such Distribution
Date and the Class A Principal Carryover Shortfall for such Distribution Date;
provided, however, that the Class A Principal Distribution shall not exceed the
Class A Principal Balance immediately prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the principal required to be
deposited in the Class A Distribution Account will include the lesser of (a) any
principal due and remaining unpaid on each Receivable in the Trust as of the
Final Scheduled Maturity Date or (b) the portion of the amount required to be
deposited under clause (a) above that is necessary (after giving effect to the
other amounts to be deposited in the Class A Distribution Account on such
Distribution Date and allocable to principal) to reduce the Class A Principal
Balance to zero.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Interest 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 is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any Distribution
Date, the sum of Class B Monthly Interest for such Distribution Date and the
Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any Distribution
Date, the product of (i) one-twelfth (or, in the case of the first Distribution
Date a fraction, the numerator of which is equal to __ and the denominator of
which is 360) of the Class B Pass-Through Rate and (ii) the Class B Principal
Balance as of the Distribution Date occurring in the preceding Collection Period
(after giving effect to any payments made on such Distribution Date) or, in the
case of the first Distribution Date, the Original Class B Principal Balance.
"Class B Monthly Principal" means, with respect to any Distribution
Date, the Class B Percentage of the Principal Distribution Amount for such
Distribution Date plus the Class B Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"Class B Principal Balance" equals the Original Class B Principal
Balance, as reduced by all amounts allocable to principal on the Class B
Certificates previously distributed to Class B Certificateholders.
"Class B Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
S-26
<PAGE>
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
"Class B Principal Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Principal for such Distribution
Date and the Class B Principal Carryover Shortfall for such Distribution Date;
provided, however, that the Class B Principal Distribution shall not exceed the
Class B Principal Balance immediately prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the principal required to be
distributed to Class B Certificateholders will include the lesser of (a) any
principal due and remaining unpaid on each Receivable in the Trust as of the
Final Scheduled Maturity Date or (b) the portion of the amount required to be
deposited under clause (a) above that is necessary (after giving effect to the
other amounts to be deposited in the Class B Distribution Account on such
Distribution Date and allocable to principal) to reduce the Class B Principal
Balance to zero, and, in the case of clauses (a) and (b), remaining after any
required distribution of the amount described in clause (a) to the Class A
Distribution Account.
"Liquidated Receivables" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Realized Losses" means, for any period, the excess of the principal
balance of a Liquidated Receivable over Liquidation Proceeds to the extent
allocable to principal.
SUBORDINATION OF THE CLASS B CERTIFICATES
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables will be subordinated to the rights of the Class
A Certificateholders to the extent described below. This subordination is
intended to enhance the likelihood of timely receipt by Class A
Certificateholders of the full amount of interest and principal required to he
paid to them, and to afford such Class A Certificateholders limited protection
against losses in respect of the Receivables.
No interest distribution will be made to the Class B
Certificateholders on any Distribution Date in respect of interest until the
full amount of interest on the Class A Certificates payable on such Distribution
Date has been distributed to the Class A Certificateholders. No principal
distribution will be made to the Class B Certificateholders on any Distribution
Date in respect of principal until the full amount of interest on and principal
of the Class A Certificates and interest on the Class B Certificates payable on
such Distribution Date has been distributed to the Class A Certificateholders
and the Class B Certificateholders, respectively. Distributions of interest on
the Class B Certificates, however, to the extent of collections on or in respect
of the Receivables allocable to interest and certain available amounts on
deposit in the Reserve Fund, will not be subordinated to the payment of
principal of the Class A Certificates.
RESERVE FUND
In the event of delinquencies or losses on the Receivables, the
protection afforded to the Class A Certificateholders will be effected both by
the preferential right of the Class A Certificateholders to receive current
distributions with respect to the Receivables, to the extent described above
under "-Subordination of the Class B Certificates," prior to any
distribution being made on a Distribution Date to the Class B
Certificateholders, and to
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receive amounts on deposit in the Reserve Fund. Amounts on deposit in the
Reserve Fund will also be generally available to cover shortfalls in required
distributions to the Class B Certificateholders, in respect of interest, after
payment of interest on the Class A Certificates and, in respect of principal,
after payment of interest on and principal of the Class A Certificates and
interest on the Class B Certificates. The Reserve Fund will not be a part of or
otherwise includible in the Trust and will be a segregated trust account held by
the Collateral Agent for the benefit of the Certificateholders.
Pursuant to the Agreement, the Reserve Fund will be created with an
initial deposit by the Depositor on the Closing Date in the amount of $_______
(___% of the Initial Pool Balance) (the "Reserve Fund Initial Deposit"), and
will be augmented on each Distribution Date by deposit therein of Collections
remaining after distribution of the Servicing Fee and amounts to be paid to
Class A Certificateholders and Class B Certificateholders as described above
under "--Distributions on Certificates." Amounts on deposit in the Reserve Fund
will be released to the Depositor on each Distribution Date to the extent that
the amount on deposit in the Reserve Fund exceeds the Specified Reserve Balance.
Upon any such release to the Depositor of amounts from the Reserve Fund, neither
the Class A Certificateholders nor the Class B Certificateholders will have any
further rights in, or claims to, such amounts.
"Specified Reserve Balance" with respect to any Distribution Date
generally means the greater of (a) ___% of the sum of the Class A Principal
Balance and Class B Principal Balance on such Distribution Date (after giving
effect to all distributions with respect to the Certificates to be made on such
Distribution Date), or (b) ___% of the sum of the Original Class A Principal
Balance and Original Class B Principal Balance. In no circumstances will the
Depositor be required to deposit any amounts in the Reserve Fund other than the
Reserve Fund Initial Deposit to be made on the Closing Date.
Amounts held from time to time in the Reserve Fund will continue to be
held for the benefit of the Certificateholders and may be invested in Eligible
Investments. Any loss on such investment will be charged to the Reserve Fund.
Any investment earnings (net of losses) will be paid to the Depositor.
The time necessary for the Reserve Fund to reach and maintain the
Specified Reserve Balance at any time after the date of issuance of the
Certificates will be affected by the delinquency, credit loss and repossession
and prepayment experience of the Receivables and, therefore, cannot be
accurately predicted.
If on any Distribution Date the protection afforded the Class A
Certificates by the Class B Certificates and by the Reserve Fund is exhausted,
the Class A Certificateholders will directly bear the risks associated with
ownership of the Receivables. If on any Distribution Date amounts on deposit in
the Reserve Fund have been depleted, the protection afforded the Class B
Certificates by the Reserve Fund will be exhausted and the Class B
Certificateholders will directly bear the risks associated with ownership of the
Receivables.
None of the Class B Certificateholders, the Trustee, the Servicer, the
Sponsor or the Depositor will be required to refund any amounts properly
distributed or paid to them, whether or not there are sufficient funds on any
subsequent Distribution Date to make full distributions to the Class A
Certificateholders.
TERMINATION
The Depositor will be permitted, at its option, in the event that the
Pool Balance as of the first day of a Collection Period has declined to 10% or
less of the Initial Pool Balance, to purchase from the Trust, on any
Distribution Date occurring in a subsequent Collection Period, all remaining
Receivables in the Trust at a purchase
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price equal to the sum of the Class A Principal Balance and the Class B
Principal Balance plus accrued and unpaid interest thereon at the applicable
Pass-Through Rate. The exercise of this right will effect an early retirement of
the Certificates. See "Description of the Transfer and Servicing
Agreements-Termination" in the Prospectus.
AUCTION SALE
In the event of an Auction Sale, the Certificates will be redeemed at a
redemption price equal to the Certificate Balance plus accrued and unpaid
interest thereon at the Pass-Through Rate. See "Description of the Transfer and
Servicing Agreements-Termination" in the Prospectus.
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or
sufficiency of the Agreement, the Certificates (other than the execution and
authentication of the Certificates), the Receivables or any related documents,
and will not be accountable for the use or application by the Depositor or the
Servicer of any funds paid to the Depositor or the Servicer in respect of the
Certificates or the Receivables, or the investment of any monies by the Servicer
before such monies are deposited into the Collection Account. The Trustee will
not independently verify the Receivables. If no Event of Servicing Termination
has occurred and is continuing, the Trustee will be required to perform only
those duties specifically required of it under the Agreement. Generally, those
duties are limited to the receipt of the various certificates, reports or other
instruments required to be furnished to the Trustee under the Agreement, in
which case it will only be required to examine them to determine whether they
conform to the requirements of the Agreement. The Trustee will not be charged
with knowledge of a failure by the Servicer to perform its duties under the
Agreement which failure constitutes an Event of Servicing Termination unless a
responsible officer of the Trustee obtains actual knowledge of such failure as
specified in the Agreement.
The Trustee will be under no obligation to exercise any of the rights
or powers vested in it by the Agreement or to make any investigation of matters
arising thereunder or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby. No Class A
Certificateholder or Class B Certificateholder will have any right under the
Agreement to institute any proceeding with respect to the Agreement, unless such
holder has given the Trustee written notice of default and unless, with respect
to the Class A Certificates, the holders of Class A Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the Class
A Certificates or, with respect to the Class B Certificates, the holders of
Class B Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class B Certificates, have made a written
request to the Trustee to institute such proceeding in its own name as Trustee
thereunder and have offered to the Trustee reasonable indemnity, and the Trustee
for 30 days has neglected or refused to institute any such proceedings.
THE TRUSTEE
___________________, a ___________________, will act as Trustee under
the Agreement. The Trustee, in its individual capacity or otherwise, and any of
its affiliates, may hold Certificates in their own names or as pledgee. In
addition, for the purpose of meeting the legal requirements of certain
jurisdictions, the Servicer and the Trustee, acting jointly (or in some
instances, the Trustee, acting alone), will have the power to appoint
co-trustees or separate trustees of all or any part of the Trust. In the event
of such appointment, all rights, powers, duties and obligations conferred or
imposed upon the Trustee by the Agreement will be conferred or imposed upon the
Trustee and such co-
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<PAGE>
trustee or separate trustee jointly, or, in any jurisdiction where the Trustee
is incompetent or unqualified to perform certain acts, singly upon such
co-trustee or separate trustee who shall exercise and perform such rights,
powers, duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to serve, becomes legally unable to
act, is adjudged insolvent or is placed in receivership or similar proceedings.
In such circumstances, the Servicer will be obligated to appoint a successor
trustee. However, any such resignation or removal of the Trustee and appointment
of a successor trustee will not become effective until acceptance of the
appointment by the successor trustee.
The Agreement will provide that the Servicer will pay the Trustee's
fees. The Agreement will also provide that the Trustee will be entitled to
indemnification by the Depositor for, and will be held harmless against, any
loss, liability or expense incurred by the Trustee not resulting from the
Trustee's own willful misfeasance, bad faith or negligence. Indemnification will
be unavailable to the Trustee to the extent that any such loss, liability or
expense results from a breach of any of the Trustee's representations or
warranties set forth in the Agreement, and for any tax, other than those for
which the Depositor or the Servicer is required to indemnify the Trustee.
The Trustees Corporate Trust Office is located at
_________________________. The Depositor, the Servicer, Barnett Bank, N.A. and
their respective affiliates may have other banking relationships with the
Trustee and its affiliates in the ordinary course of their business.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Stroock & Stroock & Lavan LLP, special tax counsel,
the Trust will be classified as a grantor trust and not as an association
taxable as a corporation for federal income tax purposes. Accordingly, each
Certificate Owner will be subject to federal income taxation as if it owned
directly its interest in each asset owned by the Trust and paid directly its
share of reasonable expenses paid by the Trust. Each Certificate Owner therefore
must report on its federal income tax return the gross income from the portion
of the assets of the Trust that is allocable to such Certificate and may deduct
the portion of the expenses incurred or accrued by the Trust that is allocable
to such Certificate, at the same time and to the same extent as such items
would be reported by such Certificate Owner if it had purchased and held
directly an interest in such assets and received or accrued directly its share
of the payments with respect to such assets and incurred or accrued directly its
share of expenses incurred or accrued by the Trust when those amounts are
received, incurred or accrued by the Trust.
If the Class B Certificate Owners receive distributions of less than
their share of the Trust's receipts of principal or interest (the "Shortfall
Amount") because of the subordination of their Certificates, it is believed that
such Class B Certificate Owners would probably be treated for federal income tax
purposes as if they had (1) received as distributions their full share of such
receipts, (2) paid over to the Class A Certificate Owners an amount equal to
such Shortfall Amount, and (3) retained the right to reimbursement of such
amounts from certain funds in the Reserve Account. Under this treatment, Class B
Certificate Owners would be required to accrue as current income any interest,
original issue discount income, or (to the extent paid on the Trust's assets)
accrued market discount of the Trust that was a component of the Shortfall
Amount, even though such amount was in fact paid to the Class A Certificate
Owners, (2) a loss would only be allowed to the Class B Certificate Owners when
their right to receive reimbursement of such Shortfall Amount became worthless,
and (3) reimbursement of such Shortfall Amount prior to such a claim of
worthlessness would not be taxable income to a Class B Certificate
S-30
<PAGE>
Owner because such amount was previously included in income. Those results
should not significantly affect the inclusion of income for Class B Certificate
Owners on the accrual method of accounting, but could accelerate inclusion of
income to Class B Certificate Owners on the cash method of accounting by, in
effect, placing them on the accrual method. All Class B Certificate Owners
should consult their tax advisers regarding the character and timing of loss
deductions.
Each Certificate Owner should see "Federal Income Tax Consequences" in
the Prospectus for a more detailed discussion of the material federal income tax
consequences of the purchase, ownership and disposition of the Certificates.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the Certificates under any state or local tax law.
Investors should consult their own tax advisors regarding state and local tax
consequences.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing, retirement or other employee
benefit plan subject to Title I of ERISA, should consider the fiduciary
standards under ERISA in the context of the plan's particular circumstances
before authorizing an investment of a portion of such plan's assets in the
Certificates. Accordingly, pursuant to Section 404 of ERISA, such fiduciary
should consider among other factors: (i) whether the investment is for the
exclusive benefit of plan participants and their beneficiaries; (ii) whether the
investment satisfies the applicable diversification requirements; (iii) whether
the investment is in accordance with the documents and instruments governing the
plan; and (iv) whether the investment is prudent, considering the nature of the
investment. Fiduciaries of plans also should consider ERISA's prohibition on
improper delegation of control over, or responsibility for, plan assets.
In addition, benefit plans subject to ERISA, as well as individual
retirement accounts or certain types of Keogh plans not subject to ERISA but
subject to Section 4975 of the Code and any entity whose source of funds for the
purchase of Certificates includes plan assets by reason of a plan or account
investing in such entity (each, a "Plan"), are prohibited from engaging in a
broad range of transactions involving Plan assets and persons having certain
specified relationships to a Plan ("parties in interest" and "disqualified
persons"). Such transactions are treated as "prohibited transactions" under
Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by
Section 4975 of the Code.
An investment in Certificates by a Plan might result in the assets of
the Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the Trust, might
be prohibited transactions under ERISA and the Code. Neither ERISA nor the Code
defines the term "plan assets." Under Section 2510.3-101 of the United States
Department of Labor ("DOL") regulations (the "Regulation"), a Plan's assets may
include an interest in the underlying assets of an entity (such as a trust) for
certain purposes, including the prohibited transaction provisions of ERISA and
the Code, if the Plan acquires an "equity interest" in such entity, unless
certain exceptions apply. The Depositor believes that the Certificates will give
Certificateholders an equity interest in the Trust for purposes of the
Regulation and can give no assurance that the Certificates will qualify for any
of the exceptions under the Regulation. As a result, the assets of the Trust may
be considered the assets of any Plan which acquires a Certificate.
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<PAGE>
The DOL has issued an individual exemption, Prohibited Transaction
Exemption ("PTE") _________________________________________________________,
___________, Exemption Application No. D-_______________, to ___________ (the
"Exemption"). The Exemption generally exempts from the application of the
prohibited transaction provisions of Section 406 of ERISA and the excise taxes
imposed on such prohibited transactions pursuant to Section 4975(a) and (b) of
the Code and Section 502(i) of ERISA certain transactions relating to the
initial purchase, holding and subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements set forth in the
Exemption. The receivables covered by the Exemption include motor vehicle
installment obligations such as the Receivables. The Depositor believes that the
Exemption will apply to the acquisition, holding and resale of the Class A
Certificates by a Plan and that all conditions of the Exemption other than those
within the control of the investors have been or will be met.
The Exemption sets forth six general conditions that must be satisfied
for a transaction involving the acquisition of the Class A Certificates by a
Plan to be eligible for the exemptive relief thereunder:
(1) the acquisition of the Class A Certificates by a Plan is on terms
(including the price for the Class A Certificates) that are at least as
favorable to the Plan as they would be in an arm's-length transaction
with an unrelated party;
(2) the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interest
evidenced by other certificates of the Trust;
(3) the Class A Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three
highest generic rating categories from any one of four rating entities;
(4) the Trustee is not an affiliate of any other member of
the "Restricted Group", which consists of the Underwriters, the
Depositor, the Trustee, the Servicer, each subservicer, each insurer
and any Obligor with respect to the Receivables included in the Trust
constituting more than 5% of the aggregate unamortized principal
balance of the assets of the Trust as of the date of initial issuance
of the Class A Certificates, and any affiliate of such parties.
(5) the sum of all payments made to and retained by the Underwriters in
connection with the offering of the Class A Certificates represents not
more than reasonable compensation for placing the Class A Certificates.
The sum of all payments made to and retained by the Servicer represents
not more than the reasonable compensation for the Servicer's services
under the Agreement and reimbursement of the Servicer's reasonable
expenses in connection therewith; and
(6) the Plan investing in the Class A Certificates must be an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Securities and Exchange Commission (the "Commission") under the
Securities Act.
Because the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interests evidenced by
other certificates of the Trust, the second general condition set forth above is
satisfied. It is a condition of the issuance of the Class A Certificates that
they be rated in the highest rating category by a nationally recognized rating
agency and thus the third general condition should be satisfied. The Depositor
and the Servicer expect that the fourth general condition set forth above will
be satisfied with respect to the Class A
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<PAGE>
Certificates. A fiduciary of a Plan contemplating purchasing a Class A
certificate must make its own determination that the first, fifth and sixth
general conditions set forth above will be satisfied with respect to the Class A
Certificates.
If the general conditions of the Exemption are satisfied, the Exemption
may provide relief from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA as well as the excise taxes imposed by Section 4975(a) and (b) of the
Code by reason of Section 4975(c)(1)(A) through (D) of the Code, in connection
with the direct or indirect sale, exchange, transfer or holding of the Class A
Certificates by a Plan. However, no exemption is provided from the restrictions
of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or
holding of a Class A Certificate on behalf of an "Excluded Plan" by any person
who has discretionary authority or renders investment advice with respect to the
assets of such Excluded Plan. For purposes of the Class A Certificates an
Excluded Plan is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide relief from the restrictions imposed by Sections 406(b)(l)
and (b)(2) and 407(a) of ERISA and the taxes imposed by Section 4975(a) and (b)
of the Code by reason of Section 4975(c)(1)(E) of the Code in connection with
the direct or indirect sale, exchange, transfer or holding of Class A
Certificates in the initial issuance of Class A Certificates between the
Depositor or the Underwriters and a Plan other than an Excluded Plan when the
person who has discretionary authority or renders investment advice with respect
to the investment of Plan assets in the Class A Certificates is (a) an Obligor
with respect to 5% or less of the fair market value of the Receivables or (b) an
affiliate of such person.
The Exemption also may provide relief from the restriction imposed by
Sections 406(a) and 407(a) of ERISA and the taxes imposed by Section
4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to
otherwise apply merely because a person is deemed to be a party in interest or a
disqualified person with respect to an investing Plan by virtue of providing
services to a Plan (or by virtue of having certain specified relationships to
such a person) solely as a result of such Plan's ownership of Class A
Certificates.
Before purchasing a Class A Certificate, a fiduciary of a Plan should
itself confirm (a) that the Class A Certificates constitute "certificates" for
purposes of the Exemption and (b) that the specific conditions set forth in
Section II of the Exemption and the other requirements set forth in the
Exemption will be satisfied.
Any Plan fiduciary considering whether to purchase a Class A
Certificate on behalf of a Plan should consult with its counsel regarding the
applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Code to such investment.
Because the Class B Certificates are subordinate interests, the
Exemption will not be available for Class B Certificates. Accordingly, no Class
B Certificate may be purchased by or otherwise transferred to a Plan other than
an "insurance company general account" as defined in, and which complies with
the provisions of, PTE 95-60 which may be deemed to be holding Plan assets.
Furthermore, each purchaser of Class B Certificates will be deemed to have
represented that it is not acquiring Class B Certificates, directly or
indirectly, for or on behalf of a Plan other than an "insurance company general
account" as defined in, and which complies with the provisions of, PTE 95-60. If
Definitive Certificates are issued, each transferee of a Class B Certificate
will be required to deliver to the Trustee a certificate to such effect. Any
purchaser whose source of funds for the purchase of Class B Certificates
includes such assets of an insurance company general account should itself
confirm that all applicable requirements set forth in PTE 95-60 will be
satisfied, particularly the requirement (set forth in Section IV(c) of PTE
95-60) that neither the insurance company nor an affiliate thereof will be a
party in interest or disqualified person in connection with the purchase and
holding of Class B Certificates or the servicing, management and operation of
the Trust.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement relating to the Certificates (the "Underwriting Agreement"), the
Depositor has agreed to sell to________ (the "Underwriter"), and the Underwriter
has agreed to purchase, the Certificates.
The Depositor has been advised by the Underwriter that it proposes to
offer the Certificates to the public initially at the public offering prices set
forth on the cover page of this Prospectus, and to certain dealers at such
prices less a concession of _____% per Class A Certificate and _____% per Class
B Certificate; that the Underwriter and such dealers may allow a discount of
_____% per Class A Certificate and _____% per Class B Certificate on the sale to
certain other dealers; and that after the initial public offering of the
Certificates, the public offering prices and the concessions and discounts to
dealers may be changed by the Underwriter.
The Depositor has agreed to indemnify the several Underwriter against
certain liabilities, including civil liabilities under the Securities Act, or
contribute to payments which the Underwriter may be required to make in respect
thereof. In the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and, may, therefore, be
unenforceable.
The Trustee or the Collateral Agent, as applicable, may, from time to
time, invest the funds in the Accounts in Eligible Investments acquired from the
Underwriter.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Certificates will be passed upon for the Depositor
and for the Underwriter by Stroock & Stroock & Lavan LLP, New York, New York.
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<PAGE>
INDEX OF TERMS
accredited investor................................................33
Agreement...........................................................4
APR.................................................................6
Auction Sale........................................................8
Balloon Loans......................................................13
Balloon Payment....................................................13
BDFS................................................................4
Business Day........................................................7
Cedel...............................................................2
Class...............................................................4
Class A Certificateholders..........................................7
Class A Certificates................................................1
Class A Interest Carryover Shortfall...............................26
Class A Interest Distribution......................................26
Class A Monthly Interest........................................7, 26
Class A Monthly Principal.......................................8, 27
Class A Pass-Through Rate...........................................6
Class A Percentage..................................................4
Class A Principal Balance.......................................7, 27
Class A Principal Carryover Shortfall..............................27
Class A Principal Distribution.....................................27
Class B Certificateholders..........................................7
Class B Interest Carryover Shortfall...............................27
Class B Interest Distribution......................................27
Class B Monthly Interest........................................7, 27
Class B Monthly Principal.......................................8, 27
Class B Pass-Through Rate...........................................6
Class B Percentage..................................................4
Class B Principal Balance.......................................7, 27
Class B Principal Carryover Shortfall..............................27
Class B Principal Distribution.....................................28
Closing Date........................................................5
Code...............................................................11
Collateral Agent....................................................4
Collection Period...................................................8
Collections........................................................23
Commission.........................................................33
Cram Down Loss......................................................6
Cutoff Date.........................................................1
Dealer Agreements...................................................5
Dealers.............................................................5
Depositor...........................................................4
Determination Date.................................................23
disqualified persons...............................................32
Distribution Date...................................................6
DOL................................................................32
DTC.................................................................2
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<PAGE>
equity interest....................................................32
ERISA..............................................................11
Euroclear...........................................................2
Excluded Plan......................................................34
Exemption..........................................................33
Final Scheduled Distribution Date...................................1
Final Scheduled Maturity Date.......................................6
Financed Vehicles...................................................5
insurance company general account..................................34
Interest Collections...............................................23
Issuer..............................................................4
Liquidated Receivables.........................................24, 28
Liquidation Proceeds...............................................24
Loan Purchase Agreement.............................................5
Obligors...........................................................14
Original Class A Principal Balance..................................4
Original Class B Principal Balance..................................4
Originator..........................................................5
parties in interest................................................32
Plan...............................................................11
Pool Balance........................................................6
PTE................................................................33
Rating Agency......................................................11
Realized Losses....................................................28
Receivables.........................................................1
Record Date.........................................................7
Recoveries.........................................................24
Regulation.........................................................32
Reserve Fund........................................................9
Restricted Group...................................................33
Servicer............................................................4
Simple Interest Receivables........................................18
Specified Reserve Balance...........................................9
Total Servicing Fee................................................23
Trust...............................................................1
Trust Property......................................................5
Trustee.............................................................4
Underwriter........................................................35
Underwriting Agreement.............................................35
S-36
<PAGE>
PROSPECTUS
BARNETT AUTO TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
------------
BARNETT DEALER FINANCIAL SERVICES, INC.
SERVICER AND SPONSOR
------------
BARNETT AUTO RECEIVABLES CORP.
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
clases 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 among Barnett Auto Receivables Corp., a
wholly-owned indirect subsidiary of Barnett Bank, N.A. (the "Depositor"), as
seller, the trustee specified in the related Prospectus Supplement (the
"Trustee") and an entity which will be specified in the related Prospectus
Supplement (such entity, which may be the Depositor, as identified in the
related Prospectus Supplement, the "Company"), or (ii) a Pooling and Servicing
Agreement to be entered into among the Trustee, the Depositor and Barnett Dealer
Financial Services, Inc., as sponsor (the "Sponsor" or "BDFS") and, as servicer
(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
motor vehicle retail installment sale contracts and other motor vehicle
installment chattel paper acquired by the Depositor (the "Receivables"), all
monies received under the Receivables on and after the applicable Cutoff Date
set forth in the related Prospectus Supplement, and, with respect to Receivables
which are Actuarial Receivables, monies received thereunder prior to the Cutoff
Date that are due on or after the Cutoff Date and security interests in the
vehicles securing the Receivables (the "Financed Vehicles"), all as described
herein or 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 Trustee or the Indenture Trustee, as the case may be, which will be used to
purchase additional motor vehicle retail installment sale contracts and other
motor vehicle installment chattel paper (the "Subsequent Receivables") from the
Depositor from time to time during the period specified in the related
Prospectus Supplement, not to exceed six months (the "Funding Period"). The
aggregate principal balance of the Subsequent Receivables that may be
transferred to any Trust will be specified in the related Prospectus Supplement
but will not exceed 50% of the aggregate initial principal balance of the Notes
and Certificates of the related series of Securities. Capitalized terms used in
this Prospectus are defined herein on the pages indicated in the "Index of
Terms" beginning on page 68 herein.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" BEGINNING ON PAGE 12 HEREIN AND AS MAY BE SET FORTH IN THE RELATED
PROSPECTUS SUPPLEMENT.
Each class of Securities of any series will represent the right to
receive a specified amount of payments of principal and interest on the related
Receivables, at the rates, on the dates and in the manner described herein and
in the related Prospectus Supplement. If 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
<PAGE>
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.
EXCEPT AS OTHERWISE SPECIFIED 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 BARNETT
BANK, N.A., BARNETT AUTO RECEIVABLES CORP., BARNETT DEALER FINANCIAL SERVICES,
INC., THE ORIGINATORS, THE APPLICABLE COMPANY OR ANY OF THEIR RESPECTIVE
AFFILIATES. NONE OF THE SECURITIES 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. 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.
---------------
The date of this Prospectus is __________, 199__
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<PAGE>
AVAILABLE INFORMATION
The Depositor, as creator of each Trust, 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,
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. In addition, the Registration
Statement may be accessed electronically at the Commission's site on the World
Wide Web located at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer, on behalf 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 and to be a part
hereof. See "Certain Information Regarding the Securities-Reports to
Securityholders." However, in accordance with the Exchange Act and the rules and
regulations of the Commission thereunder, the Depositor expects that each
Trust's obligation to file such reports will be terminated following the end of
the year in which such Trust is formed. Any statement contained 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 Servicer 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 (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents). Written requests for
such copies should be directed to BARNETT DEALER FINANCIAL SERVICES, INC.,
___________________________, Attention: Secretary. Telephone requests for such
copies should be directed to BARNETT DEALER FINANCIAL SERVICES, INC., at
________________.
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. Securityholders may
elect to hold their securities through any of DTC in the United States and Cedel
Bank, societe anonyme ("Cedel") and the Euroclear System ("Euroclear") in
Europe. DTC will forward such reports to Participants, Indirect Participants,
Cedel Participants and Euroclear Participants. See "Certain Information
Regarding the Securities--Book Entry Registration." 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 Commission such periodic reports as are required under the Exchange Act and
the rules and regulations of the Commission thereunder. The Trust intends to
suspend the filing of such reports under the Exchange Act when and if the filing
of such reports is no longer statutorily required.
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<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in this summary
are defined elsewhere in this Prospectus on the pages indicated in the "Index of
Terms" beginning on page 68 herein.
Issuer............................... With respect to each series of
Securities, the trust (the "Trust" or
the "Issuer") to be formed pursuant to
either a Trust Agreement (a "Trust
Agreement") among the Depositor, the
Company for such Trust and the Trustee
for such Trust or a Pooling and
Servicing Agreement (a "Pooling and
Servicing Agreement") among the Trustee,
the Depositor, the Servicer and the
Sponsor.
Depositor............................ Barnett Auto Receivables Corp.
(the "Depositor"), a wholly-owned
indirect subsidiary of Barnett Bank,
N.A. See "The Depositor."
Servicer............................. Barnett Dealer Financial
Services, Inc. (in such capacity, the
"Servicer" or "BDFS"). See "The Servicer
and the Sponsor."
Sponsor.............................. BDFS (in such capacity, the
"Sponsor"), a wholly-owned subsidiary of
Barnett Bank, N.A. See "The Servicer and
the Sponsor."
Trustee.............................. With respect to each series of
Securities, the Trustee specified in the
related Prospectus Supplement.
Indenture Trustee.................... With respect to any applicable
series of Securities, the Indenture
Trustee 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 (an "Indenture"). The
related Prospectus Supplement will
specify which class or classes, if any,
of Notes of the related series are being
offered thereby.
Payments of interest on and
principal of the Notes will be payable
on the dates specified in the related
Prospectus Supplement (each, a "Payment
Date").
Unless otherwise specified in the
related Prospectus Supplement, Notes
will be available for purchase in
denominations of $1,000 and integral
multiples thereof and will be available
in book-entry form only. Unless the
related Prospectus Supplement specifies
that the Notes are offered in definitive
form, 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."
Unless otherwise specified in the
related Prospectus Supplement, persons
acquiring beneficial ownership interests
in the Notes will hold their interests
in the Notes through DTC in the United
States and Cedel and Euroclear in
Europe. See "Certain Information
Regarding the Securities" and "Annex I"
hereto.
Each class of Notes will be
secured by the assets of the related
Trust (other than the Certificate
Distribution Account) pursuant to the
related Indenture.
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.
-4-
<PAGE>
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 relating
to the performance of the Receivables
(including loss, delinquency and
prepayment experience), the related
subordination and/or the lapse of time
or on the basis of collections from
designated portions of the pool of
Receivables related to such series (each
a "Receivables Pool"). See "Description
of the Notes-Principal and Interest on
the Notes."
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.
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.
Payments in respect of the
Certificates will be payable on the
dates specified in the related
Prospectus Supplement (each, a
"Distribution Date").
Unless otherwise specified in
the related Prospectus Supplement,
Certificates will be available for
purchase in a minimum denomination of
$1,000 and in integral multiples thereof
and will be available in book-entry form
only (other than the Certificates sold
to the related Company, as described in
the related Prospectus Supplement).
Unless the related Prospectus Supplement
specifies that the Certificates are
offered in definitive form,
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." Unless otherwise specified
in the related Prospectus Supplement,
persons acquiring beneficial ownership
interests in the Certificates will hold
their interests in the Certificates
through DTC. See "Certain Information
Regarding the Securities."
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 relating to the performance of
the Receivables (including loss,
delinquency and prepayment experience),
the related subordination and/or the
lapse of time or on the basis of
collections from designated portions of
the Receivables related to such series.
See "Description of the
Certificates--Distributions of Principal
and Interest."
In addition, a series may
include one or more classes of
Certificates ("Strip Certificates," and,
together with Strip Notes, "Strip
Securities") 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.
-5-
<PAGE>
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.
Cutoff Date......................... With respect to each
receivable, as specified in the related
Prospectus Supplement (the "Cutoff
Date").
The Trust Property................... The property of each Trust
will include: (i) a pool of motor
vehicle retail installment sale
contracts and other motor vehicle
installment chattel paper (the
"Receivables"); (ii) all monies received
under the related Receivables on and
after the Cutoff Date, as specified in
the related Prospectus Supplement, and,
with respect to Receivables which are
Actuarial Receivables, monies received
thereunder prior to the Cutoff Date that
are due on or after the Cutoff Date;
(iii) certain bank accounts established
and maintained by the Servicer; (iv)
security interests in the vehicles
securing the Receivables (the "Financed
Vehicles"); (v) the rights of the
Originators to receive proceeds from
claims under certain insurance policies;
(vi) the rights of the Trust under the
related Sale and Servicing Agreement
among the Depositor, the Sponsor, the
Servicer and the Trust (a "Sale and
Servicing Agreement") or Pooling and
Servicing Agreement, as specified in the
related Prospectus Supplement; (vii) the
rights of the Depositor under the
related Loan Purchase Agreement; (viii)
the rights of the Originators to refunds
for the costs of extended service
contracts and to refunds of unearned
premiums with respect to credit life and
credit accident and health insurance
policies covering the Financed Vehicles
or the retail purchasers of, or other
persons owing payments on, the Financed
Vehicles (the "Obligors"); (ix) all
right, title and interest of the
Originators (other than with respect to
any Dealer commission) with respect to
the Receivables under the related Dealer
Agreements; and (x) all proceeds of the
foregoing. On the Closing Date specified
in the related Prospectus Supplement
with respect to a Trust, the Depositor
will, if so specified in such Prospectus
Supplement, 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 such Trust
pursuant to either a Sale and Servicing
Agreement or the related Pooling and
Servicing Agreement. The property of
each Trust will 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
Depositor will be obligated (subject
only to the availability thereof) to
sell, and the related Trust will 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 period
specified in the related Prospectus
Supplement, not to exceed six months
(the "Funding Period"), 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. The aggregate principal balance of
the Subsequent Receivables that may be
transferred to any Trust will be
specified in the related Prospectus
Supplement but will not exceed 50% of
the aggregate initial principal balance
of the Notes, if any, and Certificates
of the related series.
The Receivables arise or will
arise from retail installment sale
contracts originated directly or
indirectly by motor vehicle dealers (the
"Dealers") and purchased by certain
wholly-owned direct or indirect
subsidiaries of Barnett Bank, N.A.
(each, an "Originator") pursuant to
agreements with the Dealers (the "Dealer
Agreements") and other motor vehicle
installment chattel paper originator
directly by the related Originator. On
or prior to the Closing Date, the
Depositor will buy the Receivables of
the related series from the Originators
pursuant to a Loan Purchase Agreement
dated as of the Cutoff Date among the
Originators and the Depositor (a "Loan
Purchase
-6-
<PAGE>
Agreement"). Immediately
following such sale, the Trust will
purchase such Receivables from the
Depositor pursuant to a Sale and
Servicing Agreement or Pooling and
Servicing Agreement, as the case may be.
The Receivables for any given
Receivables Pool will be selected from
the contracts owned by the Originators
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.
Balloon Loans........................ Certain of the Receivables in
the related Trust may consist of Balloon
Loans. "Balloon Loans" are originated
with a stated maturity of less than the
period of time of the corresponding
amortization schedule. As a result, upon
the maturity of most of the Balloon
Loans, most of the Obligors will be
required to make a balloon payment (a
"Balloon Payment") which will be
significantly larger than such Obligor's
other scheduled monthly payments. The
ability of such an Obligor to repay a
Balloon Loan at maturity frequently will
be affected by a number of factors,
including the prevailing available
automobile interest rates at the time,
the value of the related Financed
Vehicle, the financial condition of the
Obligor, and the general economic
conditions at the time. See "Risk
Factors--Risk Associated with Balloon
Loans." See also "Maturity and
Prepayment Assumptions Balloon Loans"
for a discussion of the maturity and
prepayment assumptions of Balloon Loans.
Credit and Cash Flow
Enhancement.......................... If and to the extent specified
in the related Prospectus Supplement,
credit 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, 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 enhancement will have
certain limitations and exclusions from
coverage thereunder, which will be
described in the related Prospectus
Supplement.
Reserve Account...................... Unless otherwise specified in
the related Prospectus Supplement, a
Reserve Account will be created for each
Trust with an initial deposit by the
Depositor of cash or certain investments
having a value equal to the amount
specified in the related Prospectus
Supplement. To the extent specified in
the related Prospectus Supplement, funds
in the Reserve Account will thereafter
be supplemented by the deposit of
amounts remaining on any Distribution
Date or Payment Date after making all
other distributions required on such
date and any amounts deposited from time
to time from the Pre-Funding Account in
connection with a purchase of Subsequent
Receivables. Amounts in the Reserve
Account may be available to cover losses
on the Receivables, interest and or
principal on the Securities and certain
prepayment interest shortfalls to the
extent funds are not available from
excess interest collections on the
Receivables. The related Prospectus
Supplement will specify which of the
foregoing uses will be made of funds on
deposit in the Reserve Account and which
classes of Securities will be entitled
to receive such funds. Amounts on
deposit in the Reserve Account (after
giving effect to all other required
distributions to be made by the
applicable Trust) in excess of the
Specified Reserve Account Balance (as
defined in the related Prospectus
Supplement) will not be available for
distribution to Securityholders. See
"Description of the Transfer and
Servicing Agreements--Credit and Cash
Flow Enhancements--Reserve Account."
Transfer and Servicing
Agreements........................... The rights and benefits of any
Trust under a Sale and Servicing
Agreement and of the Depositor under the
Loan Purchase Agreement will be assigned
to the Indenture Trustee as collateral
for the Notes of the related series. The
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<PAGE>
Servicer will agree with such Trust to
be responsible for servicing, managing,
maintaining custody of and making
collections on the Receivables.
Under a Pooling and Servicing
Agreement or a Sale and Servicing
Agreement, the Depositor will make
representations and warranties relating
to the Receivables for the benefit of
the Securityholders, including
representations and warranties relating
to (i) the schedule of Receivables, (ii)
physical damage insurance, (iii) rights
of rescission, (iv) perfection, (v)
compliance with laws and (vi) liens.
Unless otherwise provided in the related
Prospectus Supplement, if the breach is
not cured, the Depositor and the
Sponsor, jointly and severally, will be
obligated to repurchase any Receivable
in which the interests of the applicable
Securityholders are materially adversely
affected if such breach has not been
cured by the applicable grace period.
See "Description of the Transfer and
Servicing Agreements--Sale and
Assignment of Receivables."
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. In addition, the "Servicing
Fee" will include 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. The Servicer or the Trustee
is obligated to provide to the other and
to the Indenture Trustee, if applicable,
written notice upon the discovery of a
breach by the Servicer of covenants
relating to extensions and security
interests in the Financed Vehicles made
by the Servicer in the Sale and
Servicing Agreement or the Pooling and
Servicing Agreement as the case may be.
If the breach is not cured, the Servicer
will be obligated to purchase any
Receivable materially and adversely
affected by such uncured breach. See
"Description of the Transfer and
Servicing Agreements-Sale and Assignment
of Receivables."
Revolving Period and
Amortization Period;
Retained Interest.................... If the related Prospectus
Supplement so provides, there may be a
period commencing on the date of
issuance of a class or classes of Notes
or Certificates of a series and ending
on the date set forth in the related
Prospectus Supplement (the "Revolving
Period") during which no principal
payments will be made to one or more
classes of Notes or Certificates of the
related series as are identified in such
Prospectus Supplement. All collections
of principal otherwise allocated to such
classes of Notes or Certificates may be
(i) utilized by the Trust during the
Revolving Period to acquire additional
Receivables which satisfy the standards
described in the second paragraph under
"Description of the Transfer and
Servicing Agreements--Sale and
Assignment of Receivables" herein and
the criteria required by the related
Rating Agencies and credit enhancer, if
any, (ii) held in an account and
invested in Eligible Investments for
later distribution to Securityholders,
(iii) applied to those Notes or
Certificates for such series or another,
if any, specified in the related
Prospectus Supplement as then are in
amortization.
An "Amortization Period" is
the period during which an amount of
principal is payable to holders of a
series of Securities which, during the
Revolving Period, were not entitled to
such payments. If so specified in the
related Prospectus Supplement, during an
Amortization Period all or a portion of
principal collections on the Receivables
may be applied as specified above for a
Revolving Period and, to the extent not
so applied, will be distributed to the
classes of Notes or Certificates
specified in the related Prospectus
Supplement as then being entitled to
payments of principal. In addition, if
so specified in the related Prospectus
Supplement, amounts deposited in certain
accounts for the benefit of one or more
classes of Notes or Certificates may be
released from time to time or on a
specified date and applied as a payment
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<PAGE>
of principal on such classes of Notes
or Certificates. The related Prospectus
Supplement will set forth the
circumstances which will result in the
commencement of an Amortization Period.
Each Trust which has a Revolving Period
may also issue to the Depositor a
certificate evidencing an undivided
beneficial interest (the "Retained
Interest") in the Trust not represented
by the other Securities issued by such
Trust. As further described in the
related Prospectus Supplement, the
value of such Retained Interest will
fluctuate as the amount of Trust
property fluctuates and the amount of
Notes and Certificates of the related
series of Securities outstanding is
reduced.
Advances............................. Unless otherwise specified in the
related Prospectus Supplement, the
Servicer will advance scheduled
payments of interest and principal
under each Actuarial Receivable which
shall not have been timely made (each,
an "Advance"), to the extent that the
Servicer, in its sole discretion,
expects to recoup such Advance from
subsequent payments on or with respect
to such Receivable or from other
Actuarial Receivables. 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. See
"Description of the Transfer and
Servicing Agreements--Advances."
Optional Purchase.................... The Depositor may purchase all the
Receivables on any Distribution Date as
of which the Pool Balance of such
series is 10% or less of the Initial
Pool Balance of a series at a purchase
price determined as described under
"Description of the Transfer and
Servicing Agreements--Termination."
Auction Sale......................... Unless otherwise provided in the
related Prospectus Supplement, in the
event that the Pool Balance has
declined to 5% or less of the Initial
Pool Balance of a series, satisfactory
bids are received as described herein
and in the related Prospectus
Supplement and the assets of the
related Trust are sold pursuant to an
auction (the "Auction Sale"), the
Notes, if any and the Certificates of
the related series will be redeemed as
described under "Description of the
Transfer and Servicing
Agreements--Termination."
Mandatory
Prepayment........................... If any Pre-Funded Amount remains on
deposit in the Pre-Funding Account at
the end of the Funding Period, such
amount, in the amounts and in the
manner specified in the related
Prospectus Supplement, will be used to
prepay some or all classes of the Notes
and/or Certificates. [In the event of
such prepayment, the Securityholders
may be entitled to receive a prepayment
premium in the amount and to the extent
provided in the related Prospectus
Supplement.] See "Description of the
Transfer and Servicing
Agreements--Mandatory Prepayment."
Prepayment
Considerations....................... If the Depositor 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 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.]
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Federal Tax Status................... Unless the Prospectus
Supplement specifies that the related
Trust will be treated as a grantor trust
and, except as otherwise provided in
such Prospectus Supplement, upon the
issuance of the related series of
Securities, Federal Tax Counsel is of
the opinion, as of the date hereof,
that, for federal income tax purposes:
(i) any 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 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 and except as
otherwise provided in such Prospectus
Supplement, upon the issuance of the
related series of Certificates, Federal
Tax Counsel is of the opinion, as of the
date hereof, 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."
Investors should consult their own tax
advisors regarding state and local tax
consequences. See "State and Local Tax
Consequences." A tax opinion of Federal
Tax Counsel to the related Trust will be
filed in a current report on Form 8-K
with respect to each Trust.
ERISA Considerations................. Subject to the considerations discussed
under "ERISA Considerations" herein and
in the related Prospectus Supplement,
and to the extent specified in the
related Prospectus Supplement, any
Notes of a series will be eligible for
purchase by employee benefit plans or
other retirements arrangements that are
subject to either Title I of the
Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or
Section 4975 of the Internal Revenue
Code of 1986, as amended (such plans or
arrangements, "Plans"), Certain
Certificates may be eligible for
purchase by Plans as specified in the
related Prospectus Supplement. See
"ERISA Considerations" herein and in
the related Prospectus Supplement.
Risk Factors........................ Investors should consider the factors
set forth under "Risk Factors" in
connection with a purchase of
securities.
Ratings.............................. As a condition of issuance, the offered
Securities of each series will be rated
an investment grade, that is, in one of
its four highest rating categories, by
at least one nationally recognized
rating agency (a "Rating Agency") as
specified in the related Prospectus
Supplement. Ratings on the offered
Securities of each series address the
likelihood of receipt by the related
Securityholders of all distributions on
the underlying Receivables. These
ratings address the structural, legal
and issuer-related aspects associated
with the Securities of such series, the
nature of the underlying Receivables of
such series, the subordination and any
credit enhancement provided therefor,
including the credit quality of the
third party credit enhancement
provider, if any. Ratings on offered
Securities of each series do not
represent any assessment of the
likelihood of principal prepayments by
Obligors or of the degree by which
prepayments might differ from those
originally anticipated. As a result,
the related Securityholders might
suffer a lower than anticipated yield,
and, in addition, holders of Strip
Securities in extreme cases might fail
to recoup their underlying investments.
Each security rating should be
evaluated independently of any other
security rating. A security rating is
not a recommendation to buy, sell or
hold securities. There is no assurance
that the ratings initially assigned to
the Securities will not be subsequently
lowered or withdrawn by the Rating
Agencies. In the event the rating
initially assigned to any Securities is
subsequently lowered for any reason, no
person or entity will be obligated to
provide any credit enhancement unless
otherwise specified in the related
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Prospectus Supplement. [The ratings of
any Securities with respect to which a
prepayment premium may be payable do
not evaluate such prepayment premium
payable to such Securityholders or the
likelihood that such prepayment premium
will be paid.] See "Ratings."
Liquidity............................ The related Prospectus Supplement will
specify whether a Series of Securities
will be listed on an exchange. If a
Series is not so registered, the
liquidity of the related Securities may
be adversely affected. See "Risk
Factors--Limited Liquidity of
Securities."
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RISK FACTORS
LIMITED LIQUIDITY OF SECURITIES
There is currently no market for the Securities of any series. There can be
no assurance that a secondary market for the Securities will develop or, if such
a market does develop, that it will provide Securityholders with liquidity of
investment or that it will continue for the life of the Securities. See "Plan of
Distribution."
RISK OF UNPERFECTED SECURITY INTEREST IN RECEIVABLES
Pursuant to the Loan Purchase Agreement, each Originator will cause
financing statements to be filed with the appropriate governmental authorities
to perfect the interest of the Depositor in its purchase of the related
Receivables in accordance with the requirements of the Uniform Commercial Code
in effect in the State of New York or any other applicable state law (the
"UCC"), which each Originator will represent in the Loan Purchase Agreement is
its principal place of business. Pursuant to the Sale and Servicing Agreement,
the Depositor will cause financing statements to be filed with the appropriate
governmental authorities to perfect the interest of the Trust in its purchase of
the Receivables in accordance with the requirements of the UCC, and the Servicer
will hold the related Receivables, either directly or through subservicers, as
custodian for the Trust following the sale and assignment of the related
Receivables to the applicable Trust. The related Receivables will not be
segregated, stamped or otherwise marked to indicate that they have been sold to
the applicable Trust. If, through inadvertence or otherwise, another party
purchases (or takes a security interest in) the related Receivables for new
value in the ordinary course of business and takes possession of the related
Receivables without actual knowledge of such Trust's interest, the purchaser (or
secured party) will acquire an interest in the related Receivables superior to
the interest of such Trust, the Trust will not be able to realize any
liquidation proceeds on the related Receivables and Securityholders may suffer a
loss.
RISKS OF UNPERFECTED SECURITY INTERESTS IN FINANCED VEHICLES IN
CERTAIN STATES
Each Originator will assign its security interests in the related Financed
Vehicles along with the sale and assignment of the related Receivables to the
Depositor. The Depositor will assign its security interests in the related
Financed Vehicles along with the sale and assignment of the related Receivables
to a Trust, and the Servicer will hold the certificates of title or ownership or
other documents evidencing the notation of the Originator's lien on the
certificates of title or ownership relating to the related Financed Vehicles,
either directly or through subservicers, as custodian for such Trust following
the sale and assignment of the related Receivables to such Trust. Due to the
administrative burden and expense, the certificates of title or ownership will
not be endorsed or otherwise amended to identify the Trust as the new secured
party. In most states, in the absence of fraud or forgery by the vehicle owner
or of fraud, forgery, negligence or error by the applicable Originator, the
Servicer or the Depositor or administrative error by state or local agencies,
the notation of the applicable Originator's lien on the certificates of title or
ownership and/or possession of such certificates with such notation will be
sufficient to protect the related Trust against the rights of subsequent
purchasers of a Financed Vehicle or subsequent lenders who take a security
interest in a Financed Vehicle. There exists a risk, however, in not identifying
the Trust or the related Indenture Trustee as the new secured party on the
certificate of title that the security interest of the Trust or related
Indenture Trustee may not be enforceable. In the event the Trust has failed to
obtain or maintain a perfected security interest in a Financed Vehicle, its
security interest would be subordinate to, among others, a bankruptcy trustee of
the retail purchasers of, or other persons owing payments on the related
Financed Vehicle (the "Obligors"), a subsequent purchaser of the Financed
Vehicle or a holder of a perfected security interest in the Financed Vehicle or
a bankruptcy trustee of such holder. Accordingly, in such event, there is a risk
that the Trust, if it elects to attempt to seek to repossess the related
Financed Vehicles, will not be able to realize any liquidation proceeds on such
Financed Vehicles and, as a result, Securityholders may suffer a loss.
INSOLVENCY RISKS
The Depositor intends that the sale of the Receivables by it to such Trust
is a valid sale and assignment of the Receivables to such Trust. Notwithstanding
the foregoing, if the Depositor were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of the Depositor or the Depositor itself
were to take the position that the sale of Receivables by the Depositor to such
Trust should instead be treated as a pledge of such Receivables to secure a
borrowing of such debtor, delays in payments of collections of Receivables to
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 to a Trust is treated as a pledge
instead of a sale, a tax or government lien on the property of the Depositor
arising before the transfer of a Receivable to such Trust 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
Depositor's bankruptcy estate and would not be available to the Depositor's
creditors.
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In a recent case decided by the U.S. Court of Appeals for the Tenth
Circuit, Octagon Gas System, Inc. v. Rimmer, the court 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, however, even if the transfer of
Receivables to the Trust were treated as a sale, the Receivables would be part
of the Depositor's bankruptcy estate and would be subject to claims of certain
creditors, and delays and reductions in payments to the Securityholders could
result.
With respect to each Trust that is not a grantor trust, if an Insolvency
Event occurs with respect to the related Company, 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 Payahead 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 Certificateholders
will be reduced and such Noteholders and Certificateholders will incur a loss.
See "Description of the Transfer and Servicing Agreements Insolvency Event."
LIMITED OBLIGATIONS OF THE SPONSOR, THE ORIGINATORS, BARNETT
BANK, N.A. AND THE SERVICER
None of the Sponsor, the Depositor, the Originators, Barnett Bank, N.A. or
the Servicer (other than with respect to any Advances) is obligated to make any
payments in respect of any Notes, Certificates or the Receivables of a given
Trust. In addition, if BDFS 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.
POSSIBLE CONFLICTS OF INTEREST
In connection with the sale of Receivables by the Depositor to a given
Trust, the Depositor makes representations and warranties with respect to the
characteristics of such Receivables. In certain circumstances, the Depositor and
the Sponsor, jointly and severally, are required to repurchase Receivables with
respect to which such representations and warranties have been breached. If the
Servicer fails to cure certain breaches of the covenants made by it with respect
to a Receivable, the Servicer may be required to purchase the affected
Receivable. Because the Servicer is initially BDFS and the Depositor, the
Servicer and the Sponsor are affiliates, certain conflicts of interest may arise
with respect to such obligations. For example, the Servicer may discover a
breach of one of the representations that would cause the Depositor (or itself)
to have to repurchase a Receivable. Since both the Depositor and the Servicer
are obligated to give notices of any breaches of representations to the related
Trustee or Indenture Trustee, failure by the Servicer to give such notice could
give rise to an Event of Default. Neither the Depositor, the Sponsor nor the
Servicer is otherwise obligated with respect to any Receivables, Notes or
Certificates. See "Description of the Transfer and Servicing Agreements Sale and
Assignment of Receivables" and "Servicing--Procedures."
SUBORDINATION OF THE CERTIFICATES
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 principal and interest due on the
Notes, if any, of such series or one or more classes of Certificates of such
series to the extent described below.
LIMITED ASSETS
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
Collection Account, a Payahead 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 BDFS, the Sponsor, the Depositor, the Servicer, the related
Company, 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), a Reserve
Account (if any) and any other credit enhancement, all as specified in the
related Prospectus Supplement. Amounts to be deposited in a Reserve Account are
limited in amount and will be reduced, subject to a specified minimum, as the
Pool Balance is reduced. In addition, funds in a
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Reserve Account will first be made available to cover shortfalls in
distributions of interest and principal on the Notes, if any, of a series. If a
Reserve Account is exhausted, the Trust will depend solely on payments with
respect to the Receivables to make payments on the Notes, if any, and
distributions on the Certificates of the related series. See "Description of the
Transfer and Servicing Agreements." Any credit enhancement will not cover all
contingencies, and losses in excess of such coverage will be required to be
borne directly by the affected Securityholders.
PREPAYMENTS ON RECEIVABLES AFFECT ON YIELD
The weighted average life of the Securities of the related series will be
reduced by full or partial prepayments on the related Receivables. All the
Receivables are prepayable at any time. For this purpose the term "prepayments"
includes prepayments by the Obligors in full or in part, certain partial
prepayments relating to liquidations due to default, including rebates of
extended warranty contract costs and insurance premiums, as well as receipts of
proceeds from physical damage, credit life, theft and disability insurance
policies and certain other Receivables purchased or repurchased pursuant to the
terms of a Sale and Servicing Agreement or Pooling and Servicing Agreement, as
the case may be. The rate of prepayments on the Receivables may be influenced by
a variety of economic, social, competitive and other factors, including changes
in interest rates and the fact that an Obligor generally may not sell or
transfer the related Financed Vehicle securing a Receivable without the consent
of the secured party which generally results in the repayment of the remaining
principal balance of the related Receivable. In addition, under certain
circumstances, the Depositor and the Sponsor, jointly and severally, will be
obligated to repurchase Receivables pursuant to a Sale and Servicing Agreement
or Pooling and Servicing Agreement as a result of 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." See also "Description of the Transfer and Servicing
Agreements--Termination" regarding the Depositor's option to purchase the
Receivables of a given Receivables Pool and regarding an Auction Sale of a given
Receivables Pool by the Applicable Trustee 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 applicable Company occurs. 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 "Maturity and Prepayment Assumptions."
RISK OF SERVICER COMMINGLING FUNDS
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 Collection Account of such
Trust within two business days of receipt thereof. However, in the event that
BDFS satisfies certain requirements for monthly remittances and none of the
related Rating Agencies, after 10 days prior notice, shall have notified the
Depositor, the Servicer, the related Trustee or the Indenture Trustee in writing
that monthly deposits by the Servicer in and of itself will result in a
reduction or withdrawal of the then-current ratings of the Securities of a
series, then for so long as BDFS is the Servicer, and provided that (i) there
exists no Servicer Default and (ii) each other condition to making monthly
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, the applicable 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 guaranty, letter of credit,
surety bond or other security, from Barnett Bank, N.A. or otherwise, 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.
LIMITED RIGHTS OF CERTIFICATEHOLDERS UPON SERVICER DEFAULT
Unless otherwise provided in the related Prospectus Supplement with respect
to a series of Securities that includes 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. Moreover,
only the Indenture Trustee or the Noteholders, and not the Certificateholders,
with respect to such series will 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."
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INABILITY OF INDENTURE TRUSTEE TO LIQUIDATE RECEIVABLES
Although each Trust will covenant to sell the related Receivables if
directed to do so by the related Indenture Trustee in accordance with the
related Indenture following an acceleration of the related Notes upon an Event
of Default or in connection with an Insolvency Event, there is no assurance that
the market value of such Receivables will at any time be equal to or greater
than the aggregate outstanding principal of the related Notes. Therefore, upon
an Event of Default with respect to the related Notes or the occurrence of an
Insolvency Event, there can be no assurance that sufficient funds will be
available to repay the related Noteholders in full. In addition, the amount of
principal required to be distributed to Noteholders under the Indenture is
generally limited to amounts available to be deposited in the applicable Note
Distribution Account. Therefore, the failure to pay principal on a class of the
related Notes of a series may not result in the occurrence of an Event of
Default until the Final Scheduled Distribution Date for such class of Notes.
RISK ASSOCIATED WITH BALLOON LOANS
Certain of the Receivables in the related Trust may consist of Balloon
Loans. "Balloon Loans" are originated with a stated maturity of less than the
period of time of the corresponding amortization schedule. As a result, upon the
maturity of most of the Balloon Loans, most of the Obligors will be required to
make a balloon payment (a "Balloon Payment") which will be significantly larger
than such Obligor's other scheduled monthly payments. The ability of such an
Obligor to repay a Balloon Loan at maturity frequently will depend on such
Obligor's ability to refinance the Receivables. The ability of an Obligor to
refinance such a Receivable will be affected by a number of factors, including
the prevailing available automobile interest rates at the time, the value of the
related Financed Vehicle, the financial condition of the Obligor, and the
general economic conditions at the time. Under certain of the Balloon Loans, the
Obligor may be able to return the related Financed Vehicle to the related
Originator in satisfaction of the Balloon Loan.
Although a low interest rate environment may facilitate the refinancing of
a Balloon Payment, the receipt and reinvestment by Securityholders of the
proceeds in such an environment may produce a lower return than that previously
received in respect of the related Receivables. Conversely, a high interest rate
environment may make it more difficult for the Obligor to accomplish a
refinancing and may result in delinquencies or defaults. See "Maturity and
Prepayment Assumptions Balloon Loans."
EFFECT OF 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 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 Sponsor will cause a
separate Trust to be formed by the Depositor 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 motor
vehicle retail installment sales contracts and other motor vehicle installment
chattel paper which were or will be originated either directly by one of the
Originators or indirectly by the Dealers and purchased by one of the Originators
pursuant to the Dealer Agreements and all monies received thereunder on and
after the Cutoff Date (as such term is defined in the related Prospectus
Supplement, a "Cutoff Date"), and, with respect to Receivables which are
Actuarial Receivables, monies received thereunder prior to the Cutoff Date that
are due on or after the Cutoff Date. On or prior to the Closing Date, the
Originators will sell the Receivables of the applicable Receivables Pool to the
Depositor pursuant to a Loan Purchase Agreement. On the applicable Closing Date,
after the issuance of the Certificates and any Notes of a given series, the
Depositor will sell the Initial Receivables of the applicable Receivables Pool
to the Trust to the extent 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, as described herein and in the
related Prospectus Supplement; (ii)
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security interests in the vehicles securing the Receivables (the "Financed
Vehicles"); (iii) the rights of the Originators to receive proceeds from claims
under certain insurance policies; (iv) the rights of the Trust under either a
Sale and Servicing Agreement or a Pooling and Servicing Agreement, as specified
in the related Prospectus Supplement; (v) the rights of the Depositor under a
Loan Purchase Agreement; (vi) the rights of the Originators to refunds for the
costs of extended service contracts and to refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies
covering the Financed Vehicles or the retail purchasers of, or other persons
owing payments on, the Financed Vehicles (the "Obligors"); (vii) all right,
title and interest of the Originators (other than with respect to any Dealer
commission) with respect to the Receivables under the related Dealer Agreements;
and (viii) all proceeds (within the meaning of the UCC) 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.
The Servicer will service the Receivables held by each Trust and will
receive fees for such services. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" herein. To
facilitate the servicing of the Receivables, 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 to the Financed
Vehicles will not be amended to reflect the sale and assignment of the security
interest in the Financed Vehicles to each Trust. In the absence of such an
amendment, any Trust may not have a perfected security interest in the Financed
Vehicles in all states. See "Risk Factors Risks of Unperfected Security
Interests in Financed Vehicles in Certain States," "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 given 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 Vehicles 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
Vehicles in all states, 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.
If so specified in the related Prospectus Supplement, a Trust may make an
election to be treated as a "financial asset securitization investment trust" (a
"FASIT"). The applicable Transfer and Servicing Agreement for such a Trust may
contain any such terms and provide for the issuance of Notes or Certificates of
such series on such terms and conditions as are permitted to a FASIT and
described in the related Prospectus Supplement. See "Federal Income Tax
Consequences FASIT Legislation."
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 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 Servicer 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 legally unable to act, is
judged insolvent or is placed in receivership or similar proceedings. In such
circumstances, the Servicer, 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 PORTFOLIO OF MOTOR VEHICLE LOANS
MOTOR VEHICLE LENDING
The Receivables will consist of motor vehicle retail installment sale
contracts and other motor vehicle installment chattel paper owned by the
Originators. On or prior to the Closing Date, the Depositor will buy the
Receivables from the Originators pursuant to the Loan Purchase Agreement.
Each of the Originators has at least one program for the origination of new
and used automobiles (including passenger cars, minivans, sport utility vehicles
and light trucks (the "Motor Vehicle Loans"). The Originators purchase Motor
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Vehicle Loans derived from motor vehicle sales from Dealer-owned motor vehicle
inventories (as described below) in their indirect program (the "Indirect
Program"). Certain subsidiaries of Barnett Bank, N.A. are engaged in the
business of leasing new and used automobiles to individuals and businesses,
servicing such leases, and remarketing the automobiles upon expiration of the
leases. Consequently, certain of the Originators originate a portion of the
Motor Vehicle Loans through sales of certain of Barnett Bank, N.A.'s
subsidiaries own automobiles at the termination of the leases, either by sales
to the lessees or related parties (the "Off-Lease Program" or by consignment
sales through Dealers (the "Consignment Program," and, together with the
Indirect Program and the Off Lease Program, the "Programs"). Uniform credit
underwriting criteria are utilized on behalf of each of the Originators under
each of the Programs. See "--Underwriting."
DEALER AGREEMENTS
The Originators generally purchase through Dealers motor vehicle retail
installment sales contracts and other installment chattel paper secured by Motor
Vehicle Loans. The Originators purchase Motor Vehicle Loans in accordance with
their respective established underwriting procedures and subject to the terms of
the Dealer Agreements. A Dealer Agreement, among other things, obligates a
Dealer to repurchase any Motor Vehicle Loan for its outstanding principal
balance (including accrued but unpaid interest) if the Dealer breaches the
representations and warranties contained therein. The representations and
warranties typically relate to the origination of the Motor Vehicle Loan and the
security interest in the related Financed Vehicle and not to the collectability
of the Motor Vehicle Loan or the creditworthiness of the Obligor thereunder.
The Originators audit the Dealers with varying frequencies depending on
performance and stability. However, the Originators audit all transactions with
new Dealers. While the Originators do not have financial requirements for new
Dealers, most of the Dealers consist of manufacturer franchised dealerships and
the related manufacturers do have financial requirements. The Originators have
the right to audit the books and records of all Dealers.
UNDERWRITING
All of the Motor Vehicle Loans will be underwritten or, in the case of bulk
purchases, re-underwritten to the Originators' underwriting standards. The
underwriting standards emphasize each prospective obligor's ability to pay and
creditworthiness, based on employment and residential stability, as well as the
asset value of the motor vehicle that secures the Motor Vehicle Loan. Although
the Originators do not have minimum policy requirements on the length of time an
applicant has been an employee of a particular employer or resident at a
particular address, generally, an applicant must be employed for not less than
one year with the same employer or have established comparable stability in a
particular field. The Originators look favorably on applicants with three years
of employment with the same employer and on applicants with three years at the
same residence. Applicants without employment and/or residential stability may
require greater levels of authority for approval.
Each Originator's credit review process takes into account factors such as
credit bureau information, past analogous borrowing experience, income
requirements and a ratio of total debt to income. Prior to the purchase of a
Motor Vehicle Loan, the related Originator reviews the credit application from
each applicant, including information about each obligor's income, credit
obligations, and other personal information. Upon receipt of an application, the
related Originator obtains a credit report from an independent credit bureau,
including a Fair, Issaac Auto Enhanced bureau score, which the related
Originator reviews to determine the applicant's current credit status and past
credit performance. Where necessary, the related Originator may obtain more than
one credit report. The Originators consider the following information contained
in the credit report: length of time in file, number of trade lines, level of
obligations maintained, breadth of credit experience, previous automobile
financing experience and other credit. The Originator then compares the amount
requested to be financed in the application to the applicant's credit history.
Generally, the Originators require an applicant to have a minimum of three years
history in the file and comparable borrowing experience (like amount of
installment and/or revolving credit) for a minimum of 18 months. The Originators
do not have minimum income qualification requirements. Instead, they consider,
the source of the income, the likelihood that the income stream will continue
and outstanding obligations listed on the credit report. The maximum allowed
payment to income ratio ranges from 15% to 25%, depending on the income and
level of outstanding debt of an applicant. The maximum allowed total debt to
income ratio ranges from 40% to 60% depending on all of the characteristics of
an applicant.
The Originators utilize credit scoring systems to assist in the processing
of the applications. While BDFS uses the Fair, Issaac Auto Enhanced bureau score
in determining credit scores, other of Barnett Bank, N.A. subsidiaries utilize a
custom built scorecards derived from the Fair, Issaac Auto Enhanced bureau
score. The credit scores are used to increase the productivity of the
underwriters, automatically approve and decline applications, recommend approve
or reject decisions and to route applications to more experienced underwriters.
Applications identified by score as less creditworthy may either be
automatically declined or routed to more experienced underwriters for their
concurrence before an approval is rendered to the Dealer. Conversely,
applications identified by score as creditworthy may either be automatically
approved or routed to less experienced underwriters for their concurrence before
an acceptance is rendered to the Dealer. Applications scoring below the
establishes score guidelines, regardless of other circumstances, require senior
management concurrence/approval.
The Originator may also conduct an additional investigation, which may
consist of some or all of the following steps: requiring written proof of
employment (on all applicants with curent employer for less than one year), and
income, direct telephone verification of an applicant's employment, and
discussions with the applicant and originating Dealer to resolve concerns about
the applicant's creditworthiness. The Originator then analyzes the application
under its underwriting criteria, and, for those applications that are approved,
determines the amount and terms of the financing the applicable Originator will
offer in the Motor Vehicle Loan. Once the decision to approve or disapprove an
application is made, the Originators assign a maximum advance rate based on
credit score. Underwriters are allowed to override the assigned advance rate
with the concurrence of a more senior underwriter or manager. All overrides are
monitored for performance and reported to management on a regular basis. The
decision is communicated to the Dealer. In the case of a declined application,
the Originators' practice is to explain the reason for the declination to the
Dealer and send a declination letter to the applicant.
The Originator determines the asset value of a motor vehicle based on the
manufacturer's suggested retail price, if the vehicle is new, or the National
Automobile Dealers Association Guide on Retail and Wholesale Values if the
vehicle is used. The amount that the applicable Originator will advance against
the value of the vehicle ranges from 90-130% of the vehicle's asset value plus
service and warranty contracts, plus any premium for credit life and credit
accident and health insurance obtained in connection with such Motor Vehicle
Loan, and depends on the creditworthiness of the applicant, the terms of the
Motor Vehicle Loan and the age of the related motor vehicle. Generally, the
Originators employ the following ratio of advance rates to the Fair, Issac Auto
Enhanced bureau scores: less than 600, 90%; 600-639, 100%; 640-679%, 110%;
680-719, 120%; greater than 720, 130%. Underwriters are allowed to override the
assigned advance rate with the concurrence of a more senior underwriter or
manager. All overrides are monitored for performance and reported to management
on a regular basis. Underwriters override the indicated advance rate on
approximately 20% of applications. The decision is communicated to the Dealer.
In the case of a declined application, the Originator's practice to explain the
reason for the declination to the Dealer and send a declination letter to the
applicant.
The maximum term for a Motor Vehicle Loan on new cars is 84 months. The
maximum term for used vehicles ranges from 84 months to 36 months, with shorter
terms for older vehicles.
Exceptions to the above credit parameters are made at the discretion of the
underwriter and/or credit manager with the appropriate decision authority.
Underwriters are assigned specific dollar and decision (policy) authority based
on experience, performance and position. If an exception is made, the reason(s)
must be disclosed in detail by the underwriter and/or credit manager in the
appropriate application, establishing a permanent record.
The interest rate charged on each Motor Vehicle Loan reflects the related
Originator's evaluation of the applicant's creditworthiness and relative risk
associated with an individual's application.
The Originators do not originate receivables that fall outside of the
parameters described above. A credit review department reviews all receivables
to make sure that there are no material variances.
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CONTRACT MODIFICATION
The Servicer will follow specific procedures with respect to contract
extensions and modifications. Extensions may be granted to a current or
delinquent customer to cure a short term cash flow problem and an extension fee
may be charged. Extensions are granted on an individual basis and are reported
and monitored closely. Generally, the extension policy includes: (i) at least
six monthly payments must be made before an account is eligible for extension,
(ii) one extension is allowed for every 12 month period, (iii) extensions will
not be granted if the loan is deemed to be uncollectible and (iv) extensions
will not be granted if the obligor has not made at least one payment in the last
30 days. Approval by the collection's supervisor must be obtained before any
extension is granted.
The Servicer may also change a payment date once during the term of the
Motor Vehicle Loan as an accommodation to the obligor if the new payment date is
within 20 days of the original scheduled payment date. Such change of payment
date is not deemed to be an extension and no extension fee is charged.
The Sale and Servicing Agreement prohibits BDFS, except as provided or
required under applicable law, from making modifications to the Motor Vehicle
Loans that (i) reduce the original rates of interest on the Motor Vehicle Loans,
(ii) reduce the amount of the regularly scheduled payments on the Motor Vehicle
Loans or (iii) extend the final payment dates on such Motor Vehicle Loans beyond
the Collection Period relating to the Certificate Final Scheduled Distribution
Date.
INSURANCE
Each Motor Vehicle Loan requires the obligor to obtain physical damage
insurance covering loss or damage to the motor vehicle naming the related
Originator as loss payee, with a maximum deductible amount of $500.00. As a
prerequisite to acquiring a Motor Vehicle Loan, the obligor must provide the
related Originator with evidence of insurance acceptable to the related
Originator, in the form of either a certificate of insurance, a binder or an
agreement evidencing a commitment to provide insurance to the obligor. The
Servicer will not force place insurance. However, in the event that an obligor's
insurance coverage lapses, the Servicer may foreclose on the Motor Vehicle Loan.
SERVICING AND COLLECTION
BDFS, as the Servicer, either directly or through subservicers, will be
responsible for managing, administering, servicing and making collections on the
Receivables held by the Trust. Although a 10-day grace period is provided before
the assessment of a late charge, BDFS considers a Motor Vehicle Loan delinquent
when the obligor fails to make a contractual payment by the due date. BDFS's
policy is to begin collection activities with respect to delinquent Motor
Vehicle Loans on the sixth day following the due date, at which time a
system-generated notification prompts a collection representative to make
telephone contact with the obligor to request payment whether a collector
attempts to contact the delinquent obligor by telephone or by letter is
determined by the term of the delinquency and the history of the account. If
attempts to contact the delinquent obligor have failed, the collection officer
may attempt to contact the obligor's references. Repossession procedures begin
when all other collection efforts are exhausted.
BDFS follows specific procedures with respect to repossessions and uses
unaffiliated independent contractors to perform repossessions. Once a motor
vehicle is repossessed, a notice of repossession is sent to the obligor,
detailing the requirements that must be met for the obligor to redeem the
financed vehicle. Motor vehicles that remain unredeemed beyond the required
state law notice period are remarketed through various channels, including
auction sales, consignment sales and direct sales to Dealers.
The current policy of BDFS is to write-off a Motor Vehicle Loan on or
before the date on which the contract becomes 150 days delinquent. If the motor
vehicle securing the Motor Vehicle Loan is repossessed, BDFS's current policy is
to write-off the contract amount upon the earlier of the sale of the motor
vehicle or before the date on which the contract becomes 150 days delinquent.
Any deficiencies remaining after the full write-off of the related Motor Vehicle
Loan or deficiencies remaining after repossession and sale of the related motor
vehicle are pursued by BDFS, when practicable and legally permitted. Collection
officers generally continue to contact the obligors to establish repayment
schedules or to repossess until a final resolution is achieved.
DELINQUENCIES AND LOSSES
Certain information concerning the historical delinquency and net loss
experience of Barnett Bank, N.A. and its subsidiaries pertaining to retail new
and used automobile (including passenger car, minivan, sport/utility vehicle and
light truck) receivables originated by Barnett Bank, N.A. and its subsidiaries
will be set forth below and may be supplemented as 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.
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<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE(1)
(DOLLARS IN THOUSANDS)
At December 31,
Dollars Percent Dollars Percent Dollars Percent
<S> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding(2)
Delinquencies(3)
30-59 Days...........
60-89 Days...........
90 Days or more
Total Delinquencies as a
Percentage of the Total
Amount Outstanding
----------------------------------
(1) Substantially all of the receivables consist of receivables originated by
Barnett Bank, N.A. and certain of its subsidiaries other than Oxford
Resources Corp. or its subsidiaries.
(2) Principal Amount Outstanding is the aggregate remaining principal balance
of all receivables serviced, net of unearned interest.
(3) The period of delinquency is based on the number of days scheduled
payments are contractually past due. Includes repossessions on hand which
have not been charged-off. A receivable is 30 days contractually past due
if a scheduled payment has not been received by the subsequent calendar
month's scheduled payment date.
</TABLE>
HISTORICAL GROSS LOSS EXPERIENCE(1)
(DOLLAR AMOUNTS IN THOUSANDS)
For Year Ended December 31,
1996 1995 1994
Principal Amount Outstanding(2)
Average Principal Amount
Outstanding(3)......................
Number of Loans Outstanding
Average Number of Loans
Outstanding(3)......................
Gross Losses(4)............................
Recoveries(5)..............................
Net Losses(6)..............................
Net Losses as a Percent of
Principal Amount Outstanding.............
Net Losses as a Percentage of
Average Principal Amount
Outstanding.........................
- ---------------------------------------
(1) Substantially all of the receivables consist of receivables originated by
Barnett Bank, N.A. and certain of its subsidiaries other than Oxford
Resources Corp. or its subsidiaries.
(2) Principal Amount Outstanding is the aggregate remaining principal balance
of all receivables serviced, net of unearned interest.
(3) Average of the month-end balances for each of the twelve months in the
applicable calendar year.
(4) Net Gross Losses is the aggregate remaining principal balance,
including accrued but unpaid interest.
(5) Recoveries is any proceeds from the liquidation of the related
vehicle and post-disposition monies received on previously charged-off
contracts including proceeds of liquidation of the related vehicle after
the related charge-off.
(6) Net Losses is Gross Losses less Recoveries.
THE RECEIVABLES POOLS
General
The Receivables to be held by each Trust will be selected from each
Originator's portfolio of Motor Vehicle Loans for inclusion in a Receivables
Pool by several criteria, including that, unless otherwise provided in the
related Prospectus Supplement, each Receivable (i) is secured by a new or used
vehicle, (ii) was originated in the United States, (iii) provides for level
monthly payments which fully amortize the amount financed (except for the last
payment, which may be different from the level payments), (iv) is a Actuarial
Receivable or a Simple Interest Receivable and (v) satisfies the other criteria,
if any, 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.
No Trust's assets will include (i) 5% or more of Receivables that are
between 30 and 60 days delinquent as of the related Cutoff Date or (ii) any
Receivables that are greater than 60 days delinquent as of the related Cutoff
Date.
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"Actuarial Receivables" are receivables that provide for amortization of
the amount financed 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 Annual Percentage Rate (the "APR") of the amount financed multiplied by
the unpaid principal balance of the amount financed, and an amount of principal
equal to the remainder of the monthly payment.
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of fixed
level monthly payments. However, unlike the monthly payment under a Actuarial
Receivable, each monthly payment consists of an installment of interest which is
calculated on the basis of the outstanding principal balance of the receivable
multiplied by the stated APR and further multiplied by the period elapsed (as a
fraction of a calendar year) since the preceding payment of interest was made.
As payments are received under a Simple Interest Receivable, the amount received
is applied first to interest accrued to the date of payment and the balance is
applied to reduce the unpaid principal balance. Accordingly, if an obligor pays
a fixed monthly installment before its scheduled due date, the portion of the
payment allocable to interest for the period since the preceding payment was
made will be less than it would have been had the payment been made as
scheduled, and the portion of the payment applied 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.
In the event of the prepayment in full (voluntarily or by acceleration) of
an Actuarial Receivable, with minor variations based upon state law, the
Actuarial Receivable requires that a "rebate" will be made to the obligor of the
portion of the total amount of payments then due and payable under the contract
allocable to "unearned" add-on interest, calculated on the basis of a constant
interest rate. If a Simple Interest Receivable is prepaid, rather than receive a
rebate, the obligor is required to pay interest only to the date of prepayment.
The amount of a rebate on an Actuarial Receivable generally will be less than
the remaining scheduled payments of interest that would have been due under a
Simple Interest Receivable for which all payments were made on schedule.
The Servicer may accede to an Obligor's request to pay scheduled payments
in advance, in which event the Obligor will not be required to make another
regularly scheduled payment until the time a scheduled payment not paid in
advance is due. The amount of any payment (which are not amounts representing
Payaheads) made in advance will be treated as a principal prepayment and will be
distributed as part of the Principal Distribution Amount in the month following
the Collection Period in which the prepayment was made. See "Maturity and
Prepayment Assumptions."
Information with respect to each Receivables Pool will be set forth in the
related Prospectus Supplement, including, the composition, the distribution by
APR and by the states of origination, the portion of such Receivables Pool
consisting of Actuarial Receivables and of Simple Interest Receivables and the
portion of such Receivables Pool secured by new vehicles and by used vehicles.
MATURITY AND PREPAYMENT ASSUMPTIONS
General
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The weighted average life of the Notes, if any, and the Certificates 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. All of the Receivables are prepayable at
any time without penalty to the Obligor. For this purpose, the term
"prepayments" includes prepayments by Obligors in full or in part, certain
partial prepayments related to liquidations due to default, including rebates of
extended warranty contract costs and insurance premiums, as well as proceeds
received from physical damage, credit life, theft and disability insurance
policies and certain other Receivables, purchased or repurchased pursuant to the
terms of a Sale and Servicing Agreement or Pooling and Servicing Agreement, as
the case may be. The rate of prepayments on the related Receivables may be
influenced by a variety of economic, social and other factors, including changes
in interest rates and the fact that an Obligor generally may not sell or
transfer the Financed Vehicle securing a Receivable without the consent of the
secured party, which generally results in repayment of the remaining principal
balance of the related Receivable. In addition, under certain circumstances, the
Depositor and the Sponsor, jointly and severally, will be obligated to
repurchase Receivables from a given Trust 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.
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 Depositor's option
to purchase the Receivables from a given Trust or regarding the Auction Sale of
the Receivables by the Applicable Trustee if so specified in the related
Prospectus Supplement if satisfactory bids for the purchase of Receivables are
received 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
Company applicable to such Trust occurs.
There can be no assurance as to the amount of principal payments to be made
on the Notes, if any, or the Certificates 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. In addition,
the extent to which the yield to maturity of a class of Securities may vary from
the anticipated yield may depend upon the degree to which it is purchased at a
discount or premium, and the degree to which the timing of payments thereon is
sensitive to prepayments, liquidations and purchases of the Receivables.
Further, an investor should consider the risk that, in the case of any class of
Securities purchased at a discount, a slower than anticipated rate of principal
payments (including prepayments) on the Receivables could result in an actual
yield to such investor that is lower than the anticipated yield and, in the case
of a class of Securities purchased at a premium, a faster than anticipated rate
of principal payments on the Receivables could result in an actual yield to such
investor that is lower than the anticipated yield. See "Risk Factors--
Prepayments on Receivables Affect on Yield."
PAID-AHEAD RECEIVABLES
If an Obligor on a Simple Interest Receivable pays more than one scheduled
payment at a time, the entire amount of the additional payment will be treated
as a principal prepayment and distributed as part of the principal collections
in the month following the month of receipt and the Originators do not generally
require the Obligor on a Simple Interest Receivable to make any scheduled
payment in respect of such Receivable (a "Paid-Ahead Receivable") for the number
of due dates corresponding to the number of such additional scheduled payments
(the "Paid-Ahead Period"). Although the terms of the retail installment contract
require the Obligor on a Simple Interest Receivable to make its next scheduled
payments, the Obligor's Receivable is not considered delinquent for purposes of
the related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
the case may be, during the Paid-Ahead Period and, interest will continue to
accrue on the principal balance of the Receivable, as reduced by the application
of the early payment. When the Obligor on a Simple Interest Receivable pays the
next required payment, although such payment may be insufficient to cover the
interest that has accrued since the last payment by the Obligor on a Simple
Interest Receivable, the Obligor's Receivable would be considered to be current.
This situation will continue until the installments are once again sufficient to
cover all accrued interest and to reduce the principal balance of the Simple
Interest Receivable. Depending on the principal balance and the APR of the
related Simple Interest Receivable and on the number of installments that were
paid early, there may be extended periods of time during which Simple Interest
Receivables that are current are not amortizing. During such periods, no
distributions in respect of principal will be made to the Securityholders with
respect to such Receivables.
Paid-Ahead Receivables will affect the weighted average life of the Notes
and Certificates of any series. The distribution of the paid-ahead amount on the
Distribution Date following the Collection Period in which such amount was
received will generally shorten the weighted average life of the Notes and
Certificates of any series. However, depending on the length of time during
which a Paid-Ahead Receivable is not amortizing as described above, the weighted
average life of such Notes and Certificates may be extended.
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<PAGE>
The Originators' portfolio of Motor Vehicle Loans has historically included
contracts which have been paid-ahead by one or more scheduled monthly payments.
There can be no assurance as to the number of Receivables which may become
Paid-Ahead Receivables or the number or the principal amount of the scheduled
payments which may be paid-ahead.
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.
BALLOON LOANS
Under certain of the Balloon Loans, the Obligor may be able to return the
related Financed Vehicle to the related Originator in satisfaction of the
Balloon Loan, subject to certain charges. The ability of Obligors to make
Balloon Payments, if any, will normally depend on the Obligor's ability to
obtain refinancing of their Balloon Loans. The ability to obtain refinancing
will depend on a number of factors prevailing at the time refinancing is
required, including, without limitation, the value of the related motor vehicle,
the Obligor's financial situation, prevailing automobile loan interest rates and
general economic conditions. The Originators sometimes provide refinancing of
Balloon Loans and in certain limited circumstances must at the option of the
Obligor refinance the related Receivable. Delinquencies, if any, in the payment
of Balloon Payments may delay the date on which the principal balance of the
Notes and the Certificate Balance is reduced to zero, and may increase the
weighted average lives of such Notes and Certificates. Although a low interest
rate environment may facilitate the refinancing of a Balloon Loan, the receipt
and reinvestment by Securityholders of the proceeds in such an environment may
produce a lower return than that previously received in respect of the related
Balloon Loan. Conversely, a high interest environment may make it more difficult
for the Obligor to accomplish a refinancing and may result in delinquencies or
defaults. See "Risk Factors--Balloon Loans."
BDFS believes that the experience of certain of its affiliates in the
automobile leasing business enables the Originators to (i) establish Balloon
Payments approximating what the value of the related motor vehicle will be at
the time the Balloon Payment becomes due and (ii) obtain the optimal price for
any repossessed motor vehicles through its vehicle remarketing strategies.
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 each Trust, the Noteholders, if any, and the Certificateholders will receive
monthly reports pursuant to the Indenture, the Trust Agreement or the Pooling
and Servicing Agreement, as the case may be, concerning 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. 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.
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USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Securities of a given series will be applied by
the applicable Trust to the purchase of the Receivables and other Trust property
from the Depositor. The Depositor will use the net proceeds paid to it by the
Trust to acquire the Receivables from the Originators to make the Reserve
Account Initial Deposit, if any, and to make the deposit of the Pre-Funded
Amount into the Pre-Funding Account, if any.
THE DEPOSITOR
The Depositor is a wholly-owned indirect subsidiary of Barnett Dealer
Financial Services, Inc., a wholly-owned subsidiary of Barnett Bank, N.A. The
Depositor was incorporated in the State of New York on May 7, 1997. The
principal executive offices of the Depositor are located at 270 South Service
Road, Melville, New York 11747, and its telephone number is (516) 777-8100.
The Depositor has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by any Originator under Insolvency Laws will not result in
consolidation of the assets and liabilities of the Depositor with those of any
Originator. These steps include the creation of the Depositor as a separate,
limited purpose subsidiary pursuant to a certificate of incorporation containing
certain limitations (including restrictions on the nature of the Depositor's
business and a restriction on the Depositor's ability to commence a voluntary
case or proceeding under any Insolvency Law without the prior unanimous
affirmative vote of all of its directors). However, there can be no assurance
that the activities of the Depositor would not result in a court's concluding
that the assets and liabilities of the Depositor should be consolidated with
those of any Originator in a proceeding under any Insolvency Law. See "Risk
Factors--Insolvency Risk."
In addition, the Indenture Trustee, the Trustee, all Noteholders and all
Certificateholders of each Trust will covenant that they will not at any time
institute against the Depositor any bankruptcy, reorganization or other
proceeding under any Federal or state bankruptcy or similar law.
Each of the Originators is a subsidiary of Barnett Bank, N.A. The
Receivables have been originated by the related Originator as described under
"Motor Vehicle Portfolio."
THE SERVICER AND THE SPONSOR
Barnett Dealer Financial Services, Inc., a wholly-owned subsidiary of
Barnett Bank, N.A. , is engaged in the business of leasing new and used
automobiles (including passenger cars, minivans, sport/utility vehicles and
light trucks) to individuals and businesses, servicing such leases during their
term and remarketing the automobiles upon the expiration of the leases. Barnett
Dealer Financial Services, Inc. services motor vehicle retail installment sales
contracts secured by new and used motor vehicles originated indirectly by
certain of the Originators as described in the related Prospectus Supplement.
Barnett Dealer Financial Services, Inc.'s executive offices are located at
______________________ and its telephone number is _____________.
As of _________, BDFS serviced approximately [______] retail installments
sale contracts, consisting primarily of new and used automobile (including
passenger car, minivan, sport/utility vehicle and light truck), receivables,
representing an outstanding balance of approximately [$_____.] As of _______,
BDFS serviced approximately [______] automobile leases equaling approximately
[______] billion of automobile lease receivables.
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 describes the material
terms of the Notes and the Indenture but does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the related
Prospectus Supplement all the provisions of the Notes and the Indenture.
Unless otherwise specified in the related Prospectus Supplement, the Notes
will initially be represented by one or more Notes, in each case registered in
the name of the nominee of DTC, except as set forth below. Unless otherwise
specified in the related Prospectus Supplement, persons acquiring beneficial
ownership interests in the Notes will hold their interests in the Notes through
DTC in the United States and Cedel Bank, societe anonyme ("Cedel") and the
Euroclear System ("Euroclear") in Europe. See "Certain Information Regarding the
Securities" and "Annex I" hereto.
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Unless the related Prospectus Supplement specifies that the Notes are offered in
definitive form, 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 given 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 given 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."
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 relating
to the performance of the Receivables (including loss, delinquency and
prepayment experience), the related subordination and/or the lapse of time or on
the basis of collections from designated portions of the related Receivables
Pool. Generally, the related Rating Agencies, the credit enhancer, if any, and
the prevailing market conditions at the time of issuance of the Notes of a
series dictate the applicable specified events with respect to such series.
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
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 more in the payment of any interest on any such Note
when the same becomes due and payable; (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 aggregate
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
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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 from the applicable Collection Account (including
amounts deposited therein from the Reserve Account, if any) 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, in its
discretion, either require the applicable Trust to 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
directing the Trust to sell the related Receivables following an Event of
Default, other than a default in the payment of any principal 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 collections on 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 amount of such Notes then outstanding. In the
event the Notes are accelerated and the Receivables are sold, no distributions
will be made on the Certificates until all of the interest on and principal of
the Notes has been paid in full. In such event, all the funds, if any, on
deposit in the applicable Reserve Account, if any, will be available to first
pay interest on and principal of the 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 such provisions for indemnification and
certain limitations contained in the related Indenture, the holders of a
majority in aggregate 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 aggregate 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 aggregate principal amount of
the outstanding Notes of such series have made written request to such Indenture
Trustee to institute such aggregate 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 after its
receipt of such written request 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. Notwithstanding the foregoing, 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 and to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the consent of
such holder.
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 Depositor, the related Company or 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 the Sponsor, the Depositor,
the related Company, the Originators nor the Servicer nor any of their
respective owners, beneficiaries, agents, officers, directors,
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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 or merge with or 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 on
the Notes of the related series and the performance or observance of every
agreement and covenant of such Trust under the related Indenture, (iii) no Event
of Default shall have occurred and is continuing immediately after such
transaction, (iv) neither of the Rating Agencies, after 10 days' prior notice,
shall have notified the Depositor, the Sponsor, the Servicer or such Trust in
writing that such transaction will result in a reduction of withdrawal of the
then current ratings of any class of Notes of such series, (v) such Trust has
received an opinion of counsel to the effect that such transaction would have no
material adverse federal or state tax consequence to such Trust or to any
Certificateholder or Noteholder, (vi) any action necessary to maintain the lien
and security interest created by the related Indenture has been taken and (vii)
that such Trust has delivered to the related Indenture Trustee an officers'
certificate of such Trust and an opinion of counsel each stating that such
transaction and the supplemental indenture executed in connection with such
transaction comply with such Indenture and that all conditions precedent
relating to the transaction have been complied with (including any filing
required by the Exchange Act).
Also, the related Trust may not convey or transfer all or substantially all
its properties or assets to any other entity, unless (i) the entity that
acquires the assets of such Trust (A) agrees that all right, title and interest
conveyed or transferred shall be subject and subordinate to the rights of the
related Noteholders, (B) unless otherwise agreed, expressly agrees to indemnify,
defend and hold harmless such Trust against and from any loss, liability or
expense arising under or related to the applicable Indenture and the Notes of
such series, (C) expressly agrees to make all filings with the Commission and
any other appropriate entity) required by the Exchange Act in connection with
the Notes of such series and (D) is organized under the laws of the United
States, any state, or the District of Columbia; and (ii) the criteria specified
in clauses (ii) through (vii) of the preceding paragraph have been complied
with.
Each Trust will not, among other things, (i) except as expressly permitted
by the applicable Indenture, the applicable Trust Agreement, the applicable Sale
and Servicing Agreement 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 the collateral for such
Notes, (iii) except as contemplated in the Related Documents, 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, (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 collateral for such Notes, or
any part thereof, or any interest therein or the proceeds thereof, except as
expressly permitted by the Related Documents or (vi) permit the lien of the
applicable Indenture not to constitute a valid first priority security interest
in the collateral for the related Receivables.
No Trust may engage in any activity other than financing, purchasing,
owning, selling and managing the related Receivables, in each case as
contemplated by the Related Documents and activities incidental thereto. 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, among other things, 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.
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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, without the consent of the holder of each such
outstanding Note affected thereby, however, 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, change the provisions of the
related Indenture relating to the application of collections on or the proceeds
of the sale of, the collateral for the Notes to payment of principal of or
interest on the Notes of such series 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 principal 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, the Depositor or an affiliate of any of them or any
obligor on such Notes; (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; (vii) modify any of
the provisions of the related Indenture in such manner as to affect the
calculation of the amount of any payment of interest on any Distribution Date or
principal due on any Note of such series on any Distribution Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the related Noteholders to the benefit of any provision for
the mandatory redemption of the Notes of such series contained in the related
Indenture; or (viii) 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; so long
as such action will not, in the opinion of counsel satisfactory to the
applicable Indenture Trustee adversely affect in any material respect the
interest of any such Noteholder.
The Indenture Trustee. The Indenture Trustee for any series of Notes will
be specified in the related Prospectus Supplement.
Trust Indenture Act. The related Indenture will comply with the applicable
provisions of the Trust Indenture Act of 1939, as amended.
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 describes the material terms of
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each Trust Agreement and Pooling and Servicing Agreement but does not purport to
be complete and is subject to, and is qualified in its entirety by reference to
the related Prospectus Supplement and 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 applicable
Company, 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 the related Prospectus Supplement specifies that Certificates are
offered in definitive form and except for the Certificates, if any, of a given
series purchased by the applicable Company, the Certificates will be available
for purchase in minimum denominations of $1,000 and integral multiples thereof
in book-entry form only (other than the Certificates sold to the Depositor, as
described in the related Prospectus Supplement). 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 related Company. Unless and until Definitive Certificates are issued under
the limited circumstances described herein or in the related Prospectus
Supplement, no Certificateholder (other than the applicable Company) 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."
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." 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.
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 in respect of any such class or classes may or may not
be made upon the occurrence of specified events relating to the performance of
the Receivables (including loss, delinquency and prepayment experience), the
related subordination and/or the lapse of time or on the basis of collections
from designated portions of the related Receivables Pool. Generally the related
Rating Agencies, the credit enhancer, if any, and the prevailing market
conditions at the time of issuance of the Certificates of a series dictate the
applicable specified events with respect to such series.
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,
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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 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 (as defined below) 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.
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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
(as defined below) 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 (as defined below)
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:
Money Market Yield = D X 360 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 (as
defined below) 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(5l9) 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 day.
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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 the Reuters Screen LIBO Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. 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 and
"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). If
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.
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO
Page 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 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 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 Period will be the rate for the auction held
on the Treasury Rate Determination Date (as defined below) 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 (as defined below) 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
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"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.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities") in
which the principal amount payable at the final scheduled Payment Date or
Distribution Date, as the case may be, for such class (the "Indexed Principal
Amount") is determined by reference to a measure (the "Index") which will be
related to (i) the difference in the rate of exchange between United States
dollars and a currency or composite currency (the "Indexed Currency") specified
in the applicable Prospectus Supplement (such Indexed Securities, "Currency
Indexed Securities"); (ii) the difference in the price of a specified commodity
(the "Indexed Commodity") on specified dates (such Indexed Securities,
"Commodity Indexed Securities"); or (iii) the difference in the level of a
specified stock index (the "Stock Index"), which may be based on U.S. or foreign
stocks, on specified dates (such Indexed Securities, "Stock Indexed
Securities"); or (iv) such other objective price or economic measures as are
described in the applicable Prospectus Supplement. The manner of determining the
Indexed Principal Amount of an Indexed Security and historical and other
information concerning the Indexed Currency, the Indexed Commodity, the Stock
Index or other price or economic measures used in such determination will be set
forth in the applicable Prospectus Supplement, together with information
concerning tax consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the applicable Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such Index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Unless otherwise specified in the applicable Prospectus Supplement,
interest on an Indexed Security will be payable based on the amount designated
in the applicable Prospectus Supplement as the "Face Amount" of such Indexed
Security. The applicable Prospectus Supplement will describe whether the
principal amount of the related Indexed Security, if any, that would be payable
upon redemption or repayment prior to the applicable final scheduled Payment
Date or Distribution Date, as the case may be, will be the Face Amount of such
Indexed Security, the Indexed Principal Amount of such Indexed Security at the
time of redemption or repayment or another amount described in such Prospectus
Supplement. Investors should carefully evaluate the Index related to each
Indexed Security since the return of principal and the payment of interest on
the related Indexed Securities is based on such Index. One Index might move in a
favorable direction to investors while another could move in the opposite
direction. The related Prospectus Supplement will contain the material risks of
the applicable Index related to each Indexed Security, if any.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, persons
acquiring beneficial ownership interests in the Securities of each series (other
than the related Company ) may hold their interests through DTC in the United
States or, in the case of any series of Notes, Cedel or Euroclear in Europe.
Each Class of Securities will be registered in the name of Cede & Co. ("Cede")
as nominee for DTC. Cedel and Euroclear will hold omnibus positions with respect
to the Notes and, if the related Prospectus Supplement so provides, the
Certificates on behalf of Cedel Participants and Euroclear Participants,
respectively, through customers' securities accounts in Cedel's and Euroclear's
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name on the books of their respective depositories (collectively, the
"Depositories") which in turn will hold such positions in customers' securities
accounts in the Depositories' names on the books of DTC. For additional
information regarding clearance and settlement procedures see "Annex I" hereto.
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 Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC accepts securities for deposit from its participating
organizations ("Participants") and facilitates the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of Participants, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks and trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system is also
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"). The rules applicable to DTC
and its participants are on file with the Commission.
Securityholders who are not Participants but desire to purchase, sell or
otherwise transfer ownership of Securities may do so only through Participants
(unless and until Definitive Certificates or Definitive Notes, each as defined
below, are issued). In addition, Securityholders will receive all distributions
of principal of, and interest on, the Securities, from the applicable Trustee or
any Indenture Trustee, as applicable (the "Applicable Trustee"), through DTC and
Participants. Securityholders will not receive or be entitled to receive
certificates representing their respective interests in the Securities, except
under the limited circumstances described below and such other circumstances, if
any, as may be specified in the related Prospectus Supplement.
Unless and until Definitive Securities are issued, it is anticipated that
the only Certificateholder of the Certificates and the only Noteholder of the
Notes, if any, will be Cede (other than the related Company, as described in the
related Prospectus Supplement) as nominee of DTC. Securityholders will not be
recognized by the Applicable Trustee as Certificateholders or as Noteholders, as
the case may be, as those terms are used in the Related Documents.
Securityholders will be permitted to exercise the rights of Certificateholders
or Noteholders, as the case may be, only indirectly through Participants and
DTC.
With respect to any series of Securities issued in book-entry form, while
such Securities are outstanding (except under the circumstances described
below), under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Securities and is
required to receive and transmit distributions of principal of, and interest on,
the Securities. Participants with whom Securityholders have accounts with
respect to Securities are similarly required to make book-entry transfers and
receive and transmit such distributions on behalf of their respective
Securityholders. Accordingly, although Securityholders will not possess
Securities, the Rules provide a mechanism by which Securityholders will receive
distributions and will be able to transfer their interests.
Transfers between Participants will occur in accordance with DTC Rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Because of time zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date, and any such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of Notes and, if the related Prospectus
Supplement so provides, Certificates by or through a Cedel Participant or
Euroclear Participant to a DTC Participant will be received with value on the
DTC settlement date but will be available in the relevant Cedel or Euroclear
cash account only as of the business day following settlement in DTC.
Cross-market transfers between persons directly holding Notes and, if the
related Prospectus Supplement so provides, Certificates 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 Depository; 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 deadline (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depository 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 to the Depositories.
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With respect to any series of Securities, Certificates and Notes (if any)
will be issued in registered form to Securityholders, or their nominees, rather
than to DTC (such Certificates and Notes being referred to herein as "Definitive
Certificates" and "Definitive Notes," respectively), only if (i) the Depositor
advises the applicable Trustee or Indenture Trustee, as the case may be, in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as nominee and depository with respect to the Certificates or
the Notes and the Depositor is unable to locate a qualified successor, (ii) the
Depositor at its sole option has advised any Trustee or the applicable Indenture
Trustee, as the case may be, in writing that it elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Default, the holders representing a majority of the Certificate Balance (a
"Certificate Majority") or a Note Majority advises any Trustee or the applicable
Indenture Trustee, as the case may be, through DTC that continuation of a
book-entry system is no longer in their best interests. Upon issuance of
Definitive Certificates or Definitive Notes to Securityholders, such
Certificates or Notes will be transferable directly (and not exclusively on a
book-entry basis) and registered holders will deal directly with any Trustee or
the applicable Indenture Trustee, as the case may be, with respect to transfers,
notices and distributions.
DTC has advised the Depositor that, unless and until Definitive
Certificates or Definitive Notes are issued, DTC will take any action permitted
to be taken by a Certificateholder or a Noteholder under the related Trust
Documents or Indenture only at the direction of one or more Participants to
whose DTC accounts the Certificates or Notes are credited. DTC has advised the
Depositor that DTC will take such action with respect to any fractional interest
of the Certificates or the Notes only at the direction of and on behalf of such
Participants beneficially owning a corresponding fractional interest of the
Certificates or the Notes. DTC may take actions, at the direction of the related
Participants, with respect to some Certificates or Notes which conflict with
actions taken with respect to other Certificates or Notes.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for its participants
("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 be settled in any of 32 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York the "Euroclear Operator"), under contract
with Euroclear Clearance Systems, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear 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 Euroclear, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear 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 and, if the related Prospectus
Supplement so provides, Certificates held through Cedel or Euroclear will be
credited to the cash accounts of Cedel Participants or Euroclear Participants in
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accordance with the relevant system's rules and procedures, to the extent
received by its Depository. Such distributions will be subject to tax reporting
in accordance with relevant United States tax laws and regulations. Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a beneficial holder of Notes and, if the related Prospectus
Supplement so provides, Certificates under the Agreement on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to its Depository'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 interests in the Notes and, if the related
Prospectus Supplement so provides, the Certificates among Direct 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.
NEITHER THE TRUST, THE SPONSOR, BARNETT BANK, N.A., THE DEPOSITOR, THE
SERVICER, THE RELATED COMPANY, ANY OF THE ORIGINATORS, THE APPLICABLE TRUSTEE,
ANY INDENTURE TRUSTEE, NOR ANY OF THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY
OR OBLIGATION TO ANY PARTICIPANTS, CEDEL PARTICIPANTS OR EUROCLEAR PARTICIPANTS
OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO (1) THE ACCURACY OF
ANY RECORDS MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT, (2) THE
PAYMENT BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY
BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL BALANCE OF, OR INTEREST ON, THE
NOTES AND, IF THE RELATED PROSPECTUS SUPPLEMENT SO PROVIDES, THE CERTIFICATES,
(3) THE DELIVERY BY ANY PARTICIPANT, CEDEL PARTICIPANT OR EUROCLEAR PARTICIPANT
OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE
TERMS OF THE AGREEMENT TO BE GIVEN TO NOTEHOLDERS AND, IF THE RELATED PROSPECTUS
SUPPLEMENT SO PROVIDES, CERTIFICATEHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC
OR ITS NOMINEE AS THE NOTEHOLDER AND, IF THE RELATED PROSPECTUS SUPPLEMENT SO
PROVIDES, THE CERTIFICATEHOLDER.
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the Notes,
if any, and the Certificates of a given series (other than the Certificates sold
to the related Company, as described in the related Prospectus Supplement 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 Servicer
advises the Applicable Trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as depository with respect to such
Securities and the Servicer is unable to locate a qualified successor, (ii) the
Servicer, 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 Trust 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
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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.
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 the Indenture
Trustee and 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 the Trustee and 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, net of Recoveries,
if any, for such 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 under "Description of the Transfer and Servicing
Agreements" or "Description of the Certificates", as the case may
be), 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 paid by the Depositor, the Sponsor
or the Servicer 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;
(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
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Subsequent Receivables and is being passed through as payments of
principal on the Securities of such series;
(xiii)the amounts collected by the Servicer;
(xiv) the amounts received by the related Trust from the Servicer; and
(xv) delinquency information relating to Receivables which are 30, 60
or 90 days delinquent.
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 "Federal Income
Tax Consequences."
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes the material terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement, as the case may be,
pursuant to which a Trust will purchase Receivables from the Depositor and the
Servicer will agree to service such Receivables and each Trust Agreement or
Pooling and Servicing Agreement, as the case may be, pursuant to which a Trust
will be created and Certificates will be issued (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 the related Prospectus Supplement and
all the provisions of the Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On or prior to the Closing Date specified with respect to any given Trust
in the related Prospectus Supplement (the "Closing Date"), the Originators will,
if so specified in such Prospectus Supplement, sell and assign to the Depositor,
without recourse, pursuant to a Loan Purchase Agreement, their respective
interest in the Initial Receivables of the related Receivables Pool, including
their respective security interests in the related Financed Vehicles and all
collections received or to be received on or after the Cutoff Date and, with
respect to Receivables which are Actuarial Receivables, monies received prior to
the Cutoff Date that are due on or after the Cutoff Date, and the Depositor
will, if so specified in such Prospectus Supplement, transfer and assign to such
Trust, without recourse, pursuant to a Sale and Servicing Agreement or a Pooling
and Servicing Agreement, as applicable, its entire interest in the Initial
Receivables of the related Receivables Pool, including its security interests in
the related Financed Vehicles and all collections received or to be received
with respect thereto on or after the Cutoff Date and, with respect to
Receivables which are Actuarial Receivables, monies received prior to the Cutoff
Date that are due on or after the Cutoff Date. Each such Receivable will be
identified in a schedule, as may be amended to reflect any Subsequent
Receivables, 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 sale and assignment, execute and deliver
the related Notes and/or Certificates. 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 Depositor and, to the extent specified in the
related Prospectus Supplement, to the deposit of the Pre-Funded Amount into the
Pre-Funding Account and certain amounts in the Reserve 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
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 Sale and Servicing Agreement or Pooling and Servicing Agreement,
the Depositor will represent and warrant to the applicable Trust, among other
things, that: (i) as of the related Cutoff Date, the information provided in the
related Schedule of Receivables is correct in all material respects and the
computer tape supplied to the Applicable Trustee describing certain
characteristics of the related Receivables is correct in all material respects
as of the related Cutoff Date; (ii) the Obligor on each related Receivable has
obtained physical damage insurance covering the Financed Vehicle in accordance
with the related Originator's normal requirements; (iii) at the Closing Date, or
with respect to any Subsequent Receivables, the applicable Subsequent Transfer
Date, no right of rescission, setoff, counterclaim or defense exists or has been
asserted or threatened with respect to any related Receivable; (iv) as of the
Closing Date or the applicable Subsequent Transfer Date, if any, as applicable,
each of such Receivables is or will be secured by a validly perfected
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priority first security interest in favor of the applicable Originator or
appropriate action has been taken to obtain the same; (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;
(vi) as of the related Cutoff Date, there are no liens or claims, including
liens for work, labor, materials or unpaid state or federal taxes relating to
any Financed Vehicle securing the related Receivable that are or may be prior to
or equal to the lien granted by such Receivable; and (vii) any other
representations and warranties with respect to the related Receivables that may
be set forth in the related Prospectus Supplement.
If the related Prospectus Supplement specifies that Subsequent Receivables
are to be acquired by a Trust, then during the related Funding Period, pursuant
to the related Loan Purchase Agreement, the Depositor will be obligated to
purchase from the related Originator and, pursuant to the Pooling and Servicing
Agreement or the Sale and Servicing Agreement, sell to the Trust the related
Subsequent Receivables. The aggregate principal balance of the Subsequent
Receivables will be in an amount that the related Originator anticipates will
equal the amount deposited in the Pre-Funding Account on the date of the
issuance of the related series. On each Subsequent Transfer Date, the related
Originator will sell and assign to the Depositor, without recourse, its entire
interest in the Subsequent Receivables identified in a schedule attached to a
supplemental conveyance relating to such Subsequent Receivables executed on such
date by the related Originator and the Seller. In connection with each purchase
of Subsequent Receivables, the Trust will be required to pay to the Depositor a
cash purchase price equal to the outstanding principal balance of each
Subsequent Receivable as of its Cutoff Date, which price the Depositor will pay
to the related Originator. The purchase price will be withdrawn form the
Pre-Funding account and paid to the Depositor for payment to the related
Originator so long as the representations and warranties set forth in the
preceding paragraph and under "The Receivables Pools General" apply to each
Subsequent Receivable to be conveyed, and the conditions set forth below are
satisfied. The related Originator will convey Subsequent Receivables to the
Depositor on each such Subsequent Transfer Date pursuant to the Loan Purchase
Agreement and the applicable Subsequent Transfer Agreement (each, a "Subsequent
Transfer Agreement") executed by the related Originator and the Depositor on the
Subsequent Transfer date and including as an exhibit a schedule identifying the
Subsequent Receivables transferred on such date. The Seller will convey the
Subsequent Receivables to the Trust on such Subsequent Transfer Date pursuant to
the Pooling and Servicing Agreement or the Sale and Servicing Agreement and the
applicable Subsequent Transfer Assignment (each, a "Subsequent Transfer
Assignment") executed by the Depositor and the Applicable Trustee on the
Subsequent Transfer Date and including as an exhibit a schedule identifying the
Subsequent Receivables transferred on such date.
Any conveyance of Subsequent Receivables will be subject to the following
conditions, among others specified in the related Prospectus Supplement: (i)
each such Subsequent Receivable must satisfy the eligibility criteria specified
in the second preceding paragraph as of its Subsequent Cutoff Date and such
additional criteria as may be specified in the related Prospectus Supplement;
(ii) if and to the extent specified in the related Prospectus Supplement, the
third-party credit enhancement provider, if any, shall have approved the
transfer of such Subsequent Receivables to the Trust; (iii) neither the related
Originator nor the Depositor will have selected such Subsequent Receivables in a
manner that either believes is adverse to the interests of the Securityholders;
(iv) the related Originators and the Depositor will deliver certain opinions of
counsel to the Applicable Trustee and the Rating Agencies with respect to the
validity of the conveyance of such Subsequent Receivables; and (v) the Rating
Agencies shall confirm that the ratings on the Securities of such series have
not been withdrawn or reduced as a result of the transfer of such Subsequent
Receivables to the Applicable Trustee.
Following the end of the Funding Period, a current report on Form 8-K
containing a description of the Receivables, including the information with
respect to the Subsequent Receivables represented in the tables under "The
Receivables Pool" in the related Prospectus Supplement, acquired by the Trust as
of their respective Cutoff Dates will be filed with the Commission. As described
under "Certain Information Regarding the Securities--Reports to
Securityholders," the monthly statement to Securityholders will disclose the
remaining Pre-Funded Amount during any Funding Period and the remaining
Pre-Funded Amount following the end of the Funding Period.
Unless otherwise provided in the related Prospectus Supplement, pursuant to
a Sale and Servicing Agreement or Pooling and Servicing Agreement, the
Depositor, the Servicer or the applicable Trustee must promptly advise the
others and the Indenture Trustee in writing upon a discovery of a breach of any
of the Depositor's representations and warranties with respect to the related
Receivables. Unless any such breach shall have been cured by the last day of the
Collection Period following the discovery of such breach by the applicable
Trustee or receipt by the applicable Trustee of written notice from the
Depositor or the Servicer of such breach, the Depositor and the Sponsor, jointly
and severally, will be obligated to repurchase any Receivable from the Trust in
which the interests of the Securityholders are materially and adversely affected
by such breach as of the last day of such Collection Period 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"). The repurchase obligation 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.
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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, the related Trust will appoint the Servicer as custodian
of the Receivables. The Servicer, in its capacity as custodian, will hold the
Receivables and all electronic entries, documents, instruments and writings
relating thereto (each, a "Receivable File"), either directly or through one or
more subservicers, on behalf of the Trust for the benefit of Certificateholders.
The Servicer will covenant, among other things, that it grant extensions only in
accordance with the Sale and Servicing Agreement or Pooling and Servicing
Agreement and maintain the security interest in the related Financed Vehicles.
The Servicer will be required to purchase the related Financed Vehicles for
which such covenants are breached.
The Receivables will not be stamped or otherwise marked to reflect the sale
and assignment of the Receivables to the Trust and will not be segregated from
other receivables held by the Servicer. The Depositor will cause the accounting
records and computer systems used by the Depositor as a master record of the
Receivables conveyed by it to the Trust to be marked to reflect the sale and
assignment of the Receivables to the Trust, and will file UCC financing
statements reflecting such sale and assignment with appropriate governmental
authorities. Pursuant to the Loan Purchase Agreement, the Depositor will cause
the accounting records and computer systems used by each Originator of the
related Receivables conveyed by it to the Depositor to be marked to reflect the
sale and assignment of the related Receivables to the Depositor, and will cause
the Originators to file UCC financing statements reflecting such sale and
assignment, with appropriate governmental authorities. The Obligors under the
Receivables will not be notified of the sale and assignment of the Receivables
to the Trust. See "The Trusts" and "Certain Legal Aspects of the Receivables."
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 on behalf of the Noteholders, into which,
to the extent required by the Sale and Servicing Agreement or Pooling and
Servicing Agreement, early payments by or on behalf of Obligors on 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") and the Certificate Distribution Account will be invested
as provided in the related Sale and Servicing Agreement or Pooling and Servicing
Agreement in Eligible Investments. "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 (including the Depositor or any affiliate of the
Depositor) or trust company incorporated under the laws of the United States of
America or any state thereof or the District of Columbia (or any domestic branch
of a foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or portion of such
obligation for the benefit of the holders of such depository receipts);
PROVIDED, HOWEVER, that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial paper or other
short-term senior 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
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company) of such depository institution or trust company shall have a
credit rating from Standard & Poor's of A-1+ and from Moody's of P-1; (c)
commercial paper (including commercial paper of the Depositor or any affiliate
of the Depositor) having, at the time of the investment or contractual
commitment to invest therein, a rating from Standard & Poor's of A-1+ and from
Moody's of P-1; (d) investments in money market funds (including funds for which
the Depositor, the Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor) having a rating from Standard &
Poor's Structured Ratings Group of AAA-m or AAAm-G and from Moody's Investors
Service, Inc. of Aaa; (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) referred to in
clause (b) above; and (g) any other investment which would not cause any Rating
Agency to downgrade or withdraw its then current rating of the Securities of a
series. Investments will consist of Eligible Investments only to the extent that
the investments would not require registration of the related Trust as an
"investment company" under the Investment Company Act of 1940, as amended.
Subject to certain conditions, Eligible Investments may include securities or
other obligations issued by the Depositor or its affiliates or trusts originated
by the Depositor or its affiliates. Except as described below or in the related
Prospectus Supplement, Eligible Investments are limited to obligations or
securities that mature not later than the business day before the date on which
the funds invested in such Eligible Investments are required to be withdrawn
from the Trust Accounts or the Certificate Distribution Account. 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. Except as otherwise specified in the related Prospectus Supplement,
investment earnings on funds deposited in the Trust Accounts and the Certificate
Distribution Account, net of losses and investment expenses (collectively,
"Investment Earnings"), shall be deposited in the applicable Collection Account
on each Distribution Date or Payment Date and shall be treated as collections of
interest on the related Receivables.
The Trust Accounts and the Certificate Distribution Account will be
maintained as Eligible Deposit Accounts. "Eligible Deposit Account" means either
(a) a segregated account with an Eligible Institution satisfying the criteria
set forth in clause (b) of the definition thereof below or (b) a segregated
trust account with the corporate trust department of a depository institution
(other than the Depositor or any affiliate of the Depositor) 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 (an "Eligible Trust Company"). "Eligible
Institution" means, with respect to a Trust (a) the corporate trust department
of the related Indenture Trustee or 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 senior unsecured debt rating
acceptable to the Rating Agencies or (B) a short-term senior 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, in a manner, consistent
with the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, apply such collection procedures as it follows with respect to other
automobile retail installment sale contracts it services. 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, subject to certain
limitations contained in any Sale and Servicing Agreement or Pooling and
Servicing Agreement. Pursuant to any Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Servicer or the applicable Trustee shall inform the
other party and the Indenture Trustee in writing promptly upon the discovery of
the breach by the Servicer of certain covenants made by it. If the Servicer
fails to cure the breaches with respect to a related Receivable by the last day
of the second Collection Period following such discovery (or, at the Servicer's
option, the last day of the first following Collection Period), the Servicer
shall purchase for the Purchase Amount any Receivable in which the interests of
the Securityholders are materially and adversely affected by the breach. See
"Certain Legal Aspects of the Receivables."
PAYMENTS ON RECEIVABLES
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With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source), other than any late fees, prepayment
charges and other administrative fees or similar charges retained by the
Servicer as part of its compensation, 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, in the event that BDFS
satisfies certain requirements for monthly remittances and none of the related
Rating Agencies, after 10 days prior notice, shall have notified the Depositor,
the Servicer, the related Trustee or the Indenture Trustee in writing that
monthly deposits by the Servicer in and of itself will result in a reduction or
withdrawal of the then-current ratings of the Securities of a series, then for
so long as BDFS is the Servicer and provided that (i) there exists no Servicer
Default and (ii) each other condition to making monthly deposits 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 business day
preceding 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. In such event, BDFS will also deposit the aggregate Purchase Amount of
Receivables repurchased by the Depositor or the Sponsor or purchased by the
Servicer into the applicable Collection Account on or before the business day
preceding the applicable Distribution Date or Payment Date. Pending deposit into
the applicable 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. To the extent set forth in the related Prospectus Supplement,
the Servicer may, in order to satisfy the requirements described above, obtain a
guaranty, letter of credit, surety bond or other security, from Barnett Bank,
N.A. or otherwise, 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 an Actuarial Receivable made during a Collection Period
shall be applied first to repay any outstanding Advances on Actuarial
Receivables made by the Servicer with respect to such Receivable (as described
below), and to the extent that collections on an Actuarial Receivable during a
Collection Period exceed the outstanding Advances on Actuarial Receivables, 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 Actuarial 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. The scheduled payment with respect
to an Actuarial Receivable is that portion of the payment required to be made by
the related Obligor during each calendar month sufficient to amortize the
principal balance thereof under the actuarial method over the term of the
Receivable (except in the case of a Balloon Loan to the extent of the Balloon
Payment) and to provide interest at the APR of such Receivable.
ADVANCES
Unless otherwise provided in the related Prospectus Supplement, to the
extent the collections of interest and principal on an Actuarial Receivable with
respect to a Collection Period fall short of the respective scheduled payment,
the Sale and Servicing Agreement or Pooling and Servicing Agreement will require
the Servicer to make an Advance in the amount of such shortfall. The Servicer
will be obligated to make an Advance on an Actuarial 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 Actuarial
Receivables in the related Receivables Pool. The Servicer will deposit the
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 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 Advance from any collections
made on other Actuarial Receivables in the related Receivables Pool.
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, payable on each Distribution Date (other than the initial
Distribution Date), in an amount equal to specified percentage per annum (as set
forth in the related Prospectus Supplement, the "Servicing Fee Rate") and 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 (the
"Total Servicing Fee") will be paid solely to the extent of the Total
Distribution Amount. The Total 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.
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Unless otherwise provided in the related Prospectus Supplement with respect
to a given Trust, the "Servicing Fee" will also include 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 expenses. 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 automobile 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 or coupon books to Obligors, paying costs of disposition of
defaults and policing the collateral. The Servicing Fee also will compensate the
Servicer for administering the particular Receivables Pool, 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, accounting fees, outside auditor fees, data processing costs and
other costs incurred in connection with administering the applicable Receivables
Pool.
MANDATORY PREPAYMENT
To the extent a Pre-Funding Account is specified in the related Prospectus
Supplement, the Securities will be prepaid in part on the Payment Date or
Distribution Date on which the Funding Period ends (or on the Payment Date or
Distribution Date immediately following the last day of the Funding Period, if
the Funding Period does not end on a Payment Date or Distribution Date) in the
event that any amount remains on deposit in the Pre-Funding Account after giving
effect to the purchase of Subsequent Receivables, if any, on such Payment Date
or Distribution Date. The aggregate principal amount of Securities to be prepaid
will be an amount equal to the amount then on deposit in the Pre-Funding Account
in such portions as specified in the related Prospectus Supplement. [In such
event, if and to the extent specified in the related Prospectus Supplement, a
limited recourse mandatory prepayment premium (the "Prepayment Premium") may be
payable by the Trust to the offered Securityholders if the aggregate principal
amount of the offered Securities to be prepaid pursuant to such mandatory
prepayment exceeds such threshold amount as will be specified in the related
Prospectus Supplement. The amount of such Prepayment Premium, if any, will be
specified in the related Prospectus Supplement. A Trust's obligation to pay the
Prepayment Premium shall be limited to funds which are received from the
Depositor under the Purchase Agreement as liquidated damages for the failure to
deliver Subsequent Receivables. No other assets of the Trust will be available
for the purpose of making such payment. The ratings of any series of Securities
with respect to which a Prepayment Premium is payable does not evaluate the
Prepayment Premium or the likelihood that the Prepayment Premium will be paid.]
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.
REVOLVING PERIOD AND AMORTIZATION PERIOD; RETAINED INTEREST
If the related Prospectus Supplement so provides, there may be a period
commencing on the date of issuance of a class or classes of Notes or
Certificates of a series and ending in the date set forth on the related
Prospectus Supplement (the "Revolving Period") during which no principal
payments will be made to one or more classes of Notes or Certificates of the
related series as are identified in such Prospectus Supplement. All collections
of principal otherwise allocated to such classes of Notes or Certificates may be
(i) utilized by the Trust during the Revolving Period to acquire additional
Receivables which satisfy the criteria described in the second paragraph under
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" herein and the criteria required by
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the related Rating Agencies and credit enhancer, if any, (ii) held in an account
and invested in Eligible Investments for later distribution to Securityholders,
or (iii) applied to those Notes or Certificates for such series or another, if
any, specified in the related Prospectus Supplement as then are in amortization.
An "Amortization Period" is the period during which an amount of principal
is payable to holders of a series of Securities which, during the Revolving
Period, were not entitled to such payments. If so specified in the related
Prospectus Supplement, during an Amortization Period all or a portion of
principal collections on the Receivables may be applied as specified above for a
Revolving Period and, to the extent not so applied, will be distributed to the
classes of Notes or Certificates specified in the related Prospectus Supplement
as then being entitled to payments of principal. In addition, if so specified in
the related Prospectus Supplement, amounts deposited in certain accounts for the
benefit of one or more classes of Notes or Certificates may be released from
time to time or on a specified date and applied as a payment of principal on
such classes of Notes or Certificates. The related Prospectus Supplement will
set forth the circumstances which will result in the commencement of an
Amortization Period.
Each Trust which has a Revolving Period may also issue to the Depositor a
certificate evidencing a Retained Interest in the Trust not represented by the
other Securities issued by such Trust. As further described in the related
Prospectus Supplement, the value of such Retained Interest will fluctuate as the
amount of Trust Property fluctuates and the amount of Notes and Certificates of
the related series of Securities outstanding is reduced.
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. Unless otherwise specified in the
related Prospectus Supplement, the credit enhancement for a class or series of
Securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and interest thereon. If
losses occur which exceed the amount covered by any credit enhancement or which
are not covered by any credit enhancement, Securityholders of any class or
series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of credit enhancement
covers more than one series of Securities, Securityholders of any such series
will be subject to the risk that such credit enhancement will be exhausted by
the claims of Securityholders of other series.
Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pool 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 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 under "Summary
of Terms--Reserve Account" or "--Reserve Fund," as the case may be) 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 or to the applicable Company.
NET DEPOSITS
As an administrative convenience, if the Servicer is not required to remit
collections within two business days of receipt thereof (see "-Payments on
Receivables" above), the Servicer will be permitted to make the deposit of
collections,
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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, on or before
October 31 of each year a statement as to compliance by the Servicer during the
preceding twelve months ended June 30 (or, in the case of the first such
certificate with respect to each Trust, the period from the applicable Closing
Date to June 30 of such calendar year), with certain standards relating to the
servicing of the Receivables under the Sale and Servicing Agreement or Pooling
and Servicing Agreement, as the case may be.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
also provide for delivery to the related Indenture Trustee or Trustee, as
applicable, concurrently with the delivery of the statement of compliance
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 ended June 30 (or, in the case of the first such
certificate, from the Closing Date to June 30 of such calendar year) 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 at
the address specified in the related Prospectus Supplement.
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 or if such
resignation is required by regulatory authorities. Such resignation will become
effective on the earlier of the date the Servicer is required by regulatory
authorities to resign or the date on which 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; provided, however,
that neither the Servicer nor any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of its 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 incidental to its 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 or which corporation or other
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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.
The Servicer may appoint one or more subservicers to perform all or any
portion of its obligations under the Pooling and Servicing Agreement or Sale and
Servicing Agreement; however, the Servicer shall remain obligated and be liable
to the Trust, the related Trustee and any Indenture Trustee and the
Securityholders for the servicing and administering of the related Receivables
as if the Servicer alone were servicing and administering such Receivables.
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 is received by
the Servicer from the Applicable Trustee, 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 30 days after the giving of
written notice of such failure (1) to the Servicer by the Applicable Trustee or
(2) to the Servicer and to the Applicable Trustee by holders of Notes or
Certificates of such series, as applicable, evidencing not less than 25% in
aggregate outstanding principal amount of such 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 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. 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 a majority of the
aggregate outstanding principal balance of such Certificates 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. If, however, a conservator
or receiver has been appointed for the Servicer, and no Servicer Default other
than such appointment has occurred, such conservator or receiver 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 $50,000,000 and whose regular business
includes the servicing of automotive receivables. In no event may the servicing
compensation to be paid to such successor be greater than the servicing
compensation payable 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 aggregate 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 aggregate outstanding Certificate Balance, in the
case of any 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 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, in the
case of any default which does not adversely affect the related Trustee may, on
behalf of all such Certificateholders, waive any default by the Servicer in the
performance of its obligations under the related Pooling and Servicing Agreement
and its consequences, except a default in making any required deposits to or
payments
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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 Sponsor, the related Trustee
and any related Indenture Trustee with the consent of the holders of Notes
evidencing at least a majority in aggregate 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 aggregate 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 aggregate
outstanding principal balance 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.
INSOLVENCY EVENT
With respect to a Trust that is not a grantor trust, if an Insolvency Event
occurs with respect to the related Company, the related Receivables of such
Trust will be liquidated and the Trust will be terminated 90 days after the date
of such Insolvency Event, unless, before the end of such 90-day period, the
related Trustee shall have received written instructions from (i) holders of
each class of the Certificates (other than such related Company) with respect to
such Trust representing more than a majority of the aggregate outstanding
principal amount of each such class (not including the principal amount of such
Certificates held by such related Company), (ii) holders of each class of Notes,
if any, with respect to such Trust representing more than a majority of the
aggregate outstanding principal balance of each such class] to the effect that
each such party disapproves of the liquidation of such Receivables and
termination of such Trust. Promptly after the occurrence of an Insolvency Event
with respect to such related Company's, notice thereof is required to be given
to such Noteholders and Certificateholders; provided, however, that any failure
to give such required notice will not prevent or delay termination of such
Trust. Upon termination of any Trust (except in the circumstances described
above) the related Trustee shall, or shall direct the related Indenture Trustee
to, promptly sell the assets of such Trust (other than the Trust Accounts and
the Certificate Distribution Account) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from any such sale, disposition or
liquidation of the Receivables of such Trust will be treated as collections on
such Receivables and deposited in the related Collection Account. With respect
to any Trust, if the proceeds from the liquidation of the related Receivables
and any amounts on deposit in the Reserve Account (if any), the Payahead Account
(if any), the Note Distribution Account (if any) and the Certificate
Distribution Account are not sufficient to pay the Notes, if any, and the
Certificates of the related series in full, the amount of principal returned to
Noteholders and Certificateholders will be reduced and some or all of such
Noteholders and Certificateholders will incur a loss. See "Risk
Factors--Insolvencey Risks."
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 applicable Company) of such Trust and the delivery to such
Trustee by each such Certificateholder (including such Company) 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 and duties 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.
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COMPANY LIABILITY
Under each Trust Agreement, the applicable Company with respect to the
related Trust will agree to be liable directly to an injured party for the
entire amount of any losses, claims, damages or liabilities (other than those
incurred by a Noteholder or a Certificateholder in the capacity of an investor
with respect to such Trust) arising out of or based on the arrangement created
by such Trust Agreement as though such arrangement created a partnership under
the Delaware Revised Uniform Limited Partnership Act in which such Company were
a general partner.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Depositor,
the Sponsor, the related Company, 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 Depositor 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 10% or less of the initial Pool Balance (the "Initial Pool
Balance"), all remaining related Receivables at a price equal to an amount
which, when added to the amounts on deposit in the Collection Account for such
series for such Distribution Date, equals the unpaid principal balances of the
Securities of such series, plus accrued and unpaid interest thereon. The
optional termination provision allows the Servicer administrative convenience.
Once the outstanding principal balance of the Receivables are less than 10% of
the Initial Pool Balance, it is often not economical for the Servicer to service
the Receivables for the Trust.
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 5% of the Initial Pool Balance and the Depositor has not exercised its
option to repurchase the Receivables, conduct an Auction sale by soliciting bids
for the purchase of the Receivables remaining in such Trust, in the manner and
subject to the terms and conditions set forth below. An Auction sale could be
included in the structure of a series in order to provide investors a more
identifiable final maturity.
In the event that satisfactory bids are received as described below, the
sale proceeds will be distributed to Securityholders on the second Distribution
Date succeeding such Record date. Any purchaser of the Receivables must agree to
the continuation of BDFS as Servicer on terms substantially similar to those in
the related Sale and Servicing Agreement or Pooling and Servicing Agreement. Any
such sale will effect early retirement of the Securities. The Applicable Trustee
must receive at least two bids from prospective purchasers that are considered
at the time to be competitive participants in the market for motor vehicle
retail installment sale contracts. The highest bid may not be less than the fair
market value of such Receivables and must equal the greater of (a) the aggregate
purchase price for the Receivables (including liquidated receivables), plus the
appraised value of any other property held by the Trust (less liquidation
expenses) or (b) an amount that when added to amounts on deposit in the
Collection Account for such series available for distribution to Securityholders
for such second succeeding Determination Date would result in proceeds
sufficient to distribute the amount of monthly principal and interest for such
Distribution Dates, and the Total Servicing Fee payable on such final
Distribution Date. The Applicable Trustee may consult with financial advisors,
including any underwriter, to determine if the fair market value of such
Receivables has been offered. Upon the receipt of such bids, the Applicable
Trustee shall sell and assign such Receivables to the highest bidder and the
Securities shall be retired on such Distribution Date. If any of the foregoing
conditions are not met, the Applicable Trustee shall decline to consummate such
sale and shall not be under any obligation to solicit any further bids or
otherwise negotiate any future sale of Receivables remaining in the Trust. In
such event, however, the Applicable Trustee may from time to time solicit bids
in the future for the purchase of such Receivables upon the same terms described
above.
In the event that an Auction Sale is consummated, the Applicable Trustee
will give written notice of termination to each Securityholder of record. The
final distribution to each Securityholder will be made only upon surrender and
cancellation of such holder's Securities at any office or agency of the
Applicable Trustee specified for such purpose. Any funds remaining in the Trust,
after the applicable Trustee has taken certain measures to locate a
Securityholder and such measures have failed, will be distributed to the
Depositor.
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.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the UCC. Pursuant to the
UCC, for most purposes, a sale of chattel paper is treated in a manner similar
to a transaction creating a security interest in chattel paper. The Depositor
will cause appropriate financing statements to be filed with the appropriate
governmental authorities in the State of New York to perfect the interest of the
Trust in its purchase of the Receivables from the Depositor and in the
Depositor's purchase of the Receivables from the Originators.
Pursuant to the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, the Servicer will hold the Receivables, either directly or
through subservicers, as custodian for the Trust and Indenture Trustee following
the sale and assignment of the Receivables to the Trust. The Depositor will take
such action as is required to perfect the rights of the Trust and the Indenture
Trustee in the Receivables. The Receivables will not be segregated, stamped or
otherwise marked to indicate that they have been sold to the 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 Trust's interest,
the purchaser (or secured party) will acquire an interest in the Receivables
superior to the interest of the Trust.
Under the related Pooling and Servicing Agreement or Sale and Servicing
Agreement, the Servicer will be obligated from time to time to take such actions
as are necessary to protect and perfect the Trust's interest in the Receivables
and their proceeds.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Generally, motor vehicle retail installment sale contracts such as the
Receivables evidence loans to obligors to finance the purchase of such motor
vehicles. The Receivables also constitute personal property security agreements
and include grants of security interests in the vehicles under the UCC.
Perfection of security interests in motor vehicles is generally governed by the
motor vehicle registration laws of the state in which the vehicle is located. In
most states, a security interest in the vehicle is perfected by notation of the
secured party's lien on the vehicle's certificate of title.
Each Originator's practice is to take such action as is required in order
to perfect its security interest in a Financed Vehicle under the laws of the
jurisdiction in which the Financed Vehicle is registered. If an Originator,
because of clerical error or otherwise, has failed to take such action with
respect to a Financed Vehicle, it will not have a perfected security interest in
the Financed Vehicle and its security interest may be subordinate to the
interests of, among others, subsequent purchasers of the Financed Vehicle that
give value without notice of an Originator's security interest and to whom a
certificate of ownership is issued in such purchaser's name, holders of
perfected security interests in the Financed Vehicle, and the trustee in
bankruptcy of the Obligor. An Originator's 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 in the
circumstances noted below. As described more fully below, the Depositor will
warrant in the related Pooling and Servicing Agreement or Sale and Servicing
Agreement that an enforceable first priority perfected security interest with
respect to each Financed Vehicle on the Closing Date has been created in favor
of the related Originator, and that the Depositor and the Sponsor, jointly and
severally, will be required to repurchase the related Receivable in the event of
an uncured breach of such warranty in accordance with the related Pooling and
Servicing Agreement or Sale and Servicing Agreement.
Pursuant to the Loan Purchase Agreement, each related Originator will
assign its respective security interest in any related Financed Vehicles, along
with the sale and assignment of the related Receivables to the Depositor and
pursuant to the related Pooling and Servicing Agreement or Sale and Servicing
Agreement, the Depositor will assign its security interests in the Financed
Vehicles, along with the sale and assignment of the Receivables, to the Trust,
and the Servicer will hold the certificates of title relating to the Financed
Vehicles, either directly or through subservicers, as custodian for the Trust
following such sale and assignment. The certificates of title will not be
endorsed or otherwise amended to identify the Trust or the related Trustee or
Indenture Trustee as the new secured party, however, because of the
administrative burden and expense involved in connection therewith.
In most states, an assignment of a security interest in a Financed Vehicle
along with the applicable Receivable is effective without amendment of any lien
noted on a vehicle's certificate of title or ownership, and the assignee
succeeds thereby to the assignor's rights as secured party. In most states, in
the absence of fraud or forgery by the vehicle owner or of fraud, forgery,
negligence or error by an Originator or administrative error by state or local
agencies, the notation of such Originator's lien on the certificates of title or
ownership and/or possession of such certificates with such notation will be
sufficient to protect the Trust against the rights of subsequent purchasers of a
Financed Vehicle or subsequent lenders who take a security interest in a
Financed Vehicle. There exists a risk, however, in not identifying the Trust and
the
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Indenture Trustee, if applicable, as the new secured party on the
certificate of title, that the security interest of the Trust or the Indenture
Trustee may not be enforceable. In the event the Trust has failed to obtain or
maintain a perfected security interest in a Financed Vehicle, its security
interest would be subordinate to, among others, a bankruptcy trustee of the
Obligor, a subsequent purchaser of the Financed Vehicle or a holder of a
perfected security interest.
The Depositor will warrant in the related Pooling and Servicing Agreement
or Sale and Servicing Agreement as to each Receivable conveyed by it to the
Trust that, on the Closing Date, the related Originator has a valid, subsisting,
and enforceable first priority perfected security interest in the Financed
Vehicle securing the Receivable (subject to administrative delays and clerical
errors on the part of the applicable government agency and to any statutory or
other lien arising by operation of law after the Closing Date which is prior to
such security interest) and such security interest will be assigned to the
Depositor and, by the Depositor to the Trust and the Indenture Trustee, if
applicable. In the event of an uncured breach of such warranty, the Depositor
and the Sponsor, jointly and severally, will be required to repurchase such
Receivable for its Purchase Amount in accordance with the related Pooling and
Servicing Agreement or Sale and Servicing Agreement. This repurchase obligation
will constitute the sole remedy available to the Trust, the related Trustee, any
Indenture Trustee, the Noteholders and the Certificateholders in respect of a
given Trust for such breach. The Depositor's warranties with respect to
perfection and enforceability of a security interest in a Financed Vehicle will
not cover statutory or other liens arising after the Closing Date by operation
of law which have priority over such security interest. Accordingly, any such
lien would not by itself give rise to a repurchase obligation on the part of the
Depositor or the Sponsor.
In the event that an Obligor moves to a state other than the state in which
the Financed Vehicle is registered, under the laws of most states, a perfected
security interest in a motor vehicle continues for four months after such
relocation and thereafter, in most instances, until the Obligor re-registers the
motor vehicle in the new state, but in any event not beyond the surrender of the
certificate. A majority of states require surrender of a certificate of title to
re-register a motor vehicle and require that notice of such surrender be given
to each secured party noted on the certificate of title. In those states that
require a secured party to take possession of a certificate of title to perfect
a security interest, the secured party would learn of the re-registration
through the request from the Obligor to surrender possession of the certificate
of title. In those states that require a secured party to note its lien on a
certificate of title to perfect a security interest but do not require
possession of the certificate of title, the secured party would learn of the
re-registration through the notice from the applicable state department of motor
vehicles that the certificate of title had been surrendered. The requirements
that a certificate of title be surrendered and that notices of such surrender be
given to each secured party also apply to re-registrations effected following a
sale of a motor vehicle. The related Originator would therefore have the
opportunity to re-perfect its security interest in a Financed Vehicle in the
state of re-registration following relocation of the Obligor and would be able
to require satisfaction of the related Receivable following a sale of the
Financed Vehicle. In states that do not require a certificate of title for
registration of a motor vehicle, re-registration could defeat perfection. In the
ordinary course of servicing motor 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. However, there is a risk that an
Obligor could relocate without notification to the Servicer, then file a false
affidavit with the new state to cause a new certificate of title to be issued
without notation of the related Originator's lien.
Under the laws of many states, certain possessory liens for repairs
performed on or storage of a motor vehicle and liens for unpaid taxes as well as
certain rights arising from the use of a motor vehicle in connection with
illegal activities, may take priority over a perfected security interest in the
motor vehicle. The Depositor will warrant in the related Pooling and Servicing
Agreement or Sale and Servicing Agreement that, as of the Closing Date, the
Depositor has not received notice that any such liens are pending. In the event
of a breach of such warranty which has a material and adverse effect on the
interests of the Trust, the related Trustee, any Indenture Trustee, the
Noteholders and the Certificateholders in respect of a given Trust, the
Depositor and the Sponsor, jointly and severally, will be required to repurchase
the Receivable secured by the Financed Vehicle involved. This repurchase
obligation will constitute the sole remedy available to the Trust, the related
Trustee, any Indenture Trustee, the Noteholders and the Certificateholders in
respect of a given Trust for such breach. Any liens for repairs or taxes arising
at any time after the Closing Date during the term of a related Receivable would
not give rise to a repurchase obligation on the part of the Depositor or the
Sponsor.
REPOSSESSION
In the event of a default by an Obligor, the holder of a Receivable has all
the remedies of a secured party under the UCC, except where specifically limited
by other state laws or by contract. The remedies of a secured party under the
UCC include the right to repossession by means of self-help, unless such means
would constitute a breach of the peace. Self-help repossession is the method
employed by the Originators in most cases, and is accomplished simply by taking
possession of the motor vehicle. Generally, where the obligor objects or raises
a defense to repossession, a court order must be obtained from the appropriate
state court and the motor vehicle must then be repossessed in accordance with
that order. In the event of a default by an obligor, many jurisdictions require
that, absent a waiver, the obligor be notified of the
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default and be given a time period within which he may cure the default
prior to repossession except such notice need not be given in emergency
situations pursuant to an order from the appropriate state court.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide an
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor generally has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus, in
most cases, reasonable expenses for repossessing, holding and preparing the
collateral for disposition and arranging for its sale plus, in some
jurisdictions, reasonable attorneys' fees. In some states, the obligor has the
right, prior to actual sale, to reinstatement of the original loan terms and to
return of the collateral by payment of delinquent installments of the unpaid
balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
indebtedness on the related Receivable. 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. Any such deficiency
judgment would be a personal judgment against the Obligor for the shortfall,
however, a defaulting Obligor may have very little capital or sources of income
available following repossession. Other statutory provisions, including state
and federal bankruptcy laws, may interfere with a lender's ability to enforce a
deficiency judgment or to collect a debt owed or realize upon collateral.
Therefore, in many cases, it may not be useful to seek a deficiency judgment or,
if one is obtained, it may be settled at a significant discount or not paid at
all.
Occasionally, after resale of a repossessed motor vehicle and payment of
all expenses and indebtedness, there is a surplus of funds. In that case, the
UCC requires the secured party to remit the surplus to any other holder of a
lien with respect to the motor vehicle or, if no such lienholder exists or funds
remain after paying such other lienholder, to the Obligor.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth In Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B, Z and AA,
and other similar acts and regulations, state adoptions of the Uniform Consumer
Credit Code and other similar laws, and state usury laws. Also, state laws
impose other restrictions on consumer transactions, may require contract
disclosures in addition to those required under Federal law and may limit the
remedies available in the event of default by an Obligor. These requirements
impose specific statutory liabilities upon creditors who fail to comply with
their provisions where applicable. In most cases, this liability could affect
the ability of an assignee, such as the Trust, to enforce secured loans such as
the Receivables.
The FTC's holder-in-due-course rule (the "FTC Rule") has the effect of
subjecting any assignee of the seller of the vehicle to all claims and defenses
which the purchaser could assert against such seller of the vehicle. Liability
under the FTC Rule is limited to the amounts paid by the purchaser under the
contract, and the holder of the contract may also be unable to collect any
balance remaining due thereunder from the purchaser. The FTC Rule may be
duplicated by state statutes or the common law in certain states. Although the
Originators are not sellers of motor vehicles and are not subject to the
jurisdiction of the FTC, the retail installment sale contracts evidencing the
Receivables contain provisions which contractually apply the FTC Rule.
Accordingly, the Originators, the Depositor, and the Trust as holders of the
Receivables, may be subject to claims or defenses, if any, that the purchaser of
a Financed Vehicle may assert against the seller of such vehicle.
Under the motor vehicle dealer licensing laws of most states, sellers of
motor vehicles are required to be licensed to sell such vehicles at retail sale.
In addition, with respect to used motor vehicles, the FTC's Rule on Sale of Used
Vehicles requires that all sellers of used motor vehicles prepare, complete and
display a "Buyer's Guide" which explains the warranty coverage for such
vehicles. Federal Odometer Regulations promulgated under the Motor Vehicle
Information and Cost Savings Act require that all sellers of used motor vehicles
furnish a written statement signed by the seller certifying the accuracy of the
odometer reading. If a seller is not properly licensed or if either a Buyer's
Guide or Odometer Disclosure Statement was not properly provided to the
purchaser of a Financed Vehicle, such purchaser may be able to assert a claim
against the seller of such vehicle. Although the Originators are not sellers of
motor vehicles and are not
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subject to these laws, a violation thereof may form the basis for a claim
or defense against the related Originator, the Depositor, the Trust and the
Indenture Trustee as holders of the Receivables.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
Each Originator will warrant in the Loan Purchase Agreement as to each
Receivable conveyed by it to the Depositor that such Receivable complied at the
time it was originated and as of the Closing Date in all material respects with
all requirements of applicable law. The Depositor will warrant in the related
Pooling and Servicing Agreement or Sale and Servicing Agreement as to each
Receivable conveyed by it to the Trust that such Receivable complied at the time
it was originated and as of the related Closing Date in all material respects
with all requirements of applicable law. If, as of the related Cutoff Date, an
Obligor had a claim against the Trust for violation of any law and such claim
materially and adversely affected the Trust's interest in a Receivable, such
violation would create an obligation of the Depositor and the Sponsor, jointly
and severally, to repurchase the Receivable unless the breach was cured. This
repurchase obligation will constitute the sole remedy of the Trust, the related
Trustee, any Indenture Trustee, the Noteholders and the Certificateholders in
respect of a given Trust against the Depositor in respect of any such uncured
breach. See "Description of the Transfer and Servicing Agreements-Sale and
Assignment of Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the Bankruptcy Code, a court may prevent a lender
from repossessing a motor vehicle and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of such
vehicle at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness. In such a case, the amount collected on the related Receivable and
payable to the Securityholders on account thereof, may be less than the amount
anticipated.
The Depositor intends that the transfer of the Receivables by it to the
Trust under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement constitutes a valid sale and assignment of such Receivables.
Notwithstanding the foregoing, if the Depositor were to become a debtor in a
bankruptcy case and a creditor or trustee-in- bankruptcy of the Depositor or the
Depositor itself were to take the position that the sale of the Receivables by
the Depositor to the Trust should instead be treated as a pledge of Receivables
to secure a borrowing of the Depositor, delays in payments or collections of
Receivables 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 the Depositor to the Trust is treated as a pledge
instead of a sale, a tax or government lien on the property of the Depositor
arising before the transfer of the Receivables to the Trust may have priority
over the Trust's interest in such Receivables.
FEDERAL INCOME TAX CONSEQUENCES
This section sets forth (i) certain federal income tax opinions of Stroock
& Stroock & Lavan LLP, special counsel to the Seller ("Federal Tax Counsel"),
and (ii) a summary, based on the advice of Federal Tax Counsel, of the material
federal income tax consequences of the purchase, ownership and disposition of
Securities. The summary does not purport to deal with federal income tax
consequences of special rules that are applicable to certain categories of
holders. Furthermore, this summary does not deal with the tax consequences to
individuals holding Securities directly or indirectly through partnerships,
trusts, estates, or corporations. Moreover, there are no cases or Internal
Revenue Service ("IRS") rulings on all of the issues discussed below. 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. The opinion of Federal 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.
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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.
OPINIONS
Federal Tax Counsel is of the opinion, as of the date of this
Prospectus, that:
(i) If a Prospectus Supplement indicates that one or more classes
of Notes of the related series are to be treated as indebtedness for
federal income tax purposes, assuming that all of the provisions of the
applicable Indenture are complied with, the Notes so designated will be
considered indebtedness of the Trust for federal income tax purposes;
(ii) If a Prospectus Supplement indicates that a Trust will be
treated as a grantor trust for federal income tax purposes, assuming
compliance with all of the provisions of the applicable Pooling and
Servicing Agreement, (a) the Trust will be considered to be a grantor
trust under Subpart E, Part 1 of Subchapter J of the Code and will not
be considered to be an association taxable as a corporation and (b) an
owner of the related Certificates (referred to herein as "Grantor Trust
Certificates") will be treated for federal income tax purposes as the
owner of an undivided interest in the Trust's assets;
(iii) If a Prospectus Supplement indicates that a Trust is to be
treated as a partnership for federal income tax purposes, assuming that
all of the provisions of the applicable Trust Agreement or Pooling and
Servicing Agreement are complied with, such Trust will be considered to
be a partnership for federal income tax purposes and will not be
considered to be an association or publicly traded partnership taxable
as a corporation;
(iv) If a Prospectus Supplement indicates that one or more classes
of Certificates of the related series are to be treated as indebtedness
for federal income tax purposes, assuming all of the provisions of the
applicable Pooling and Servicing Agreement are complied with, the
Certificates so designated will be considered indebtedness of the Trust
for federal income tax purposes.
Each such opinion is an expression of an opinion only, is not a
guarantee of results and is not binding on the Internal Revenue Service or any
third-party.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
If a Trust is intended to be a partnership for federal income tax purposes,
the applicable Pooling and Servicing Agreement or Trust Agreement will provide
that the nature of the income of the Trust will exempt it from the rule that
certain publicly traded partnerships are taxable as corporations or the issuance
of the Securities will be structured as a private placement under an IRS safe
harbor, so that the Trust will not be characterized as a publicly traded
partnership taxable as a corporation.
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. The discussion below assumes this
characterization of the Notes is correct, 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" within
the meaning of Section 1273 of the Code ("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., 3% of their principal amount
multiplied by the number of full years included in their term), all within the
meaning of the OID regulations. If these conditions are not satisfied with
respect to any given series of Notes, additional tax considerations with respect
to such Notes will be disclosed in the applicable Prospectus Supplement.
Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of a
Note issued with 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,
but Federal Tax Counsel is unable to opine, 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.
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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,
if any, 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 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 Applicable
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 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 generally will be exempt from
United States federal income and withholding tax, provided that such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person.
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 or individual retirement account 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 Federal Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust. If so treated, the Trust might be
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to reduce its taxable income by deductions
for interest expense on Notes recharacterized as equity). Alternatively, the
Trust might be treated as a publicly traded partnership that would not be
taxable as a corporation if it met 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, and the
Notes, if any, being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates, the
Notes, if any, the Depositor and the Servicer is not clear because there is no
authority on transactions closely comparable to that contemplated herein.
For example, because the Certificates have certain features characteristic
of debt, the Certificates might be considered debt of the Depositor or the
Trust. Generally, provided such Certificates are issued at or close to face
value, any 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. If
Certificates are issued at a
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substantial discount, a discussion of the relevant tax consequences will be
set forth in the related Prospectus Supplement. The following discussion assumes
that the Certificates represent equity interests in a partnership.
The following discussion assumes that all payments on the Certificates are
denominated in U.S. dollars, none of the Certificates are Indexed Securities or
Strip Certificates, and that a series of Securities includes a single class of
Certificates. If these conditions are not satisfied with respect to any given
series of Certificates, additional tax considerations with respect to such
Certificates will be disclosed in the applicable Prospectus Supplement.
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. In certain instances, however, the
Trust could have an obligation to make payments of withholding tax on behalf of
a Certificateholder. See "Backup Withholding" and "Tax Consequences to Foreign
Certificateholders" below. 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
related documents). The related Trust Agreement or Pooling and Servicing
Agreement will provide, in general, that the Certificateholders will be
allocated taxable income of the Trust for each month equal to the sum of (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 amount of Trust income 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 related Company. Based on the economic arrangement of the
parties, this approach for allocating Trust income should be permissible under
applicable Treasury regulations, although Federal Tax Counsel is unable to opine
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.
Substantially 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.
Except as provided in the following paragraph 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 will not be
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 will be allocated to Certificateholders if the
related Trust Agreement or Pooling and Servicing Agreement so provides. Any such
allocation will be disclosed in the related Prospectus Supplement.
Section 708 Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a 12-
month period. If such a termination occurs, the partnership will be considered
to have transferred its assets and liabilities
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to a new partnership in exchange for interests in that new partnership
which it would then be treated as transferring to its partners. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
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 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 related
Company 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 (or loss), the purchasing Certificateholder will have a
higher (or lower) basis in the Certificates than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust 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 timely 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
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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 related Company will be designated as the tax matters partner in the
related Trust Agreement or Pooling and Servicing 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. As discussed below, an
investment in a Certificate is not suitable for any non-U.S. person which is not
eligible for a complete exemption from U.S. withholding tax on interest under a
tax treaty with the United States. Accordingly, no interest in a Certificate
should be acquired by or on behalf of any such non-U.S. person.
No regulations, published rulings or judicial decisions exist that would
discuss the characterization for Federal withholding tax purposes with respect
to non-U.S. persons of a partnership with activities substantially the same as
the Trust. Depending upon the particular terms of the related Trust Agreement
and Sale and Servicing Agreement or Pooling and Servicing Agreement, a trust may
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. If the
Trust is considered to be engaged in a trade or business in the United States
for such purposes, the income of the Trust distributable to a non-U.S. person
would be subject to Federal withholding tax at a rate of 35% for persons taxable
as a corporation. Also, in such cases, a non-U.S. Certificateholder that is a
corporation may be subject to the branch profits tax. Subsequent adoption of
Treasury regulations or the issuance of other administrative pronouncements may
require the Trust to change its withholding procedures.
If a Trust is engaged in a trade or business, each foreign
Certificateholder will be required to file a U.S. income tax return (including
in the case of a corporation, the branch profits tax) on its share of the
Trust's income. A foreign holder generally would be entitled to file with the
IRS a claim for refund with respect to withheld taxes, 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 to (or accrued by) a Certificateholder who is a
foreign person may be considered guaranteed payments to the extent such payments
are determined without regard to the income of the Trust and for that reason or
because of the nature of the Receivables, the interest will likely not be
considered "portfolio interest." See "--Tax Consequences with respect to Holders
of the Notes Foreign Holders." As a result, even if the Trust is not considered
to be engaged in a U.S. trade or business, Certificateholders would be subject
to United States Federal income tax which must be withheld at a rate of 30% on
their share of the Trust's income (without reduction for interest expense),
unless reduced or eliminated pursuant to an applicable income tax treaty. If the
Trust is notified that a Certificateholder is a foreign person, the Trust may be
required to withhold and pay over such tax, which can exceed the amounts
otherwise available for distribution to such a Certificateholder. A foreign
holder would generally be entitled to file with the IRS a refund claim for such
withheld taxes, taking the position that the interest was portfolio interest and
therefore not subject to U.S. tax. However, the IRS may disagree and no
assurance can be given as to the appropriate amount of tax liability. As a
result, each potential foreign Certificateholder should consult its tax advisor
as to whether the tax consequences of holding an interest in a Certificate make
it an unsuitable investment.
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
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Characterization. Each Grantor Trust Certificateholder will be treated as
the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables in the Trust represented by Grantor Trust Certificates,
including interest, OID, if any, prepayment fees, assumption fees, any gain
recognized upon an assumption and late payment charges received by the Servicer.
Under Sections 162 or 212 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 or other amounts paid to the Servicer exceed reasonable servicing
compensation, the amount of such excess would be considered as an ownership
interest retained by the Servicer (or any person to whom the Servicer assigned
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 stripped bond
rules of the Code discussed below.
The first two subsections below describe certain federal income tax
consequences dependent on whether or not the stripped bond rules apply and the
third subsection below describes certain federal income tax consequence which
are not dependent on the applicability of the stripped rules.
TAXATION OF HOLDERS IF STRIPPED BOND RULES APPLY
In the absence of comprehensive regulations, Federal Tax Counsel is unable
to opine as to the tax treatment of stripped bonds. The preamble to certain
stripped bond regulations suggests that each purchaser of a Grantor Trust
Certificate will be treated with respect to each Receivable as the purchaser of
a single stripped bond consisting of all of the stripped portions of the
applicable Receivable (such portions with respect to a Receivable are referred
to herein as 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 Treasury regulations relating to
Stripped Bonds (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" herein. Based on the preamble to
the Section 1286 Treasury Regulations, Federal 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. When Stripped Bonds have more than a de minimis
amount of OID, the special rules of the Code relating to "original issue
discount" (currently Sections 1271 through 1275) will be applicable to a Grantor
Trust Certificateholder's interest in those Stripped Bonds. Generally, a Grantor
Trust Certificateholder that acquires an interest in a Stripped Bond issued or
acquired with OID must include in gross income the sum of the "daily portions,"
as defined below, of the OID on such Stripped Bond for each day on which it owns
a Certificate, including the date of purchase but excluding the date of
disposition. The daily portions of OID with respect to a Stripped Bond generally
would be determined as follows. A calculation will be made of the portion of OID
that accrues on the Stripped Bond during each successive monthly accrual period
(or shorter period in respect of the date of original issue or the final
Distribution Date). This will be done, in the case of each full monthly accrual
period, by adding (i) the present value of all remaining payments to be received
on the Stripped Bond under the prepayment assumption, if any, used in respect of
the Stripped Bonds and (ii) any payments received during such accrual period,
and subtracting from that total the "adjusted issue price" of the Stripped Bond
at the beginning of such accrual period. No representation is made that the
Stripped Bonds will prepay at any prepayment assumption. The "adjusted issue
price" of a Stripped Bond at the beginning of the first accrual period is its
issue price (as determined for purposes of the OID rules of the Code) and the
"adjusted issue price" of a Stripped Bond at the beginning of a subsequent
accrual period is the "adjusted issue price" at the beginning of the
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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 Stripped Bonds, 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 Stripped Bonds.
TAXATION OF HOLDERS IF STRIPPED BOND RULES DO NOT APPLY
Premium. The price paid for a Grantor Trust Certificate by a holder will be
allocated to such holder's undivided interest in each Receivable based on each
Receivables 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.
There is no law as to 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 Receivables that are
construed to be 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 or it prepays faster than the 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.
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
Receivable will be considered to be zero if the amount allocable to the
Receivable is less than 0.25% of the Receivable'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. Because the
regulations described above have not been issued, Federal Tax Counsel is unable
to opine as to what effect those regulations might have on the tax treatment of
a Grantor Trust Certificate purchased at a discount or premium.
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 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.
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,
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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.
TAXATION OF HOLDERS REGARDLESS OF WHETHER STRIPPED BOND RULES
APPLY
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 generally
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. 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 (as defined below) 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
the beneficial owner, 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 or trust, 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.
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.
CERTAIN CERTIFICATES TREATED AS INDEBTEDNESS
Upon the issuance of Certificates that are intended to be treated as
indebtedness for federal income tax purposes, Federal Tax Counsel will opine
that, based upon its analysis of the factors discussed below and certain
assumptions and qualifications, the Certificates will be treated as indebtedness
for federal income tax purposes. However, opinions of counsel are not binding on
the IRS and there can be no assurance that the IRS could not successfully
challenge this conclusion. Such Certificates that are intended to be treated as
indebtedness are herein referred to as "Debt Certificates" and holders of such
Certificates are herein referred to as "Debt Certificateholders."
The Seller will express in the Trust Documents its intent that for
federal, state and local income and franchise tax purposes, the Debt
Certificates will be indebtedness secured by the Receivables. The Seller agrees
and each Debt Certificateholder, by acquiring an interest in a Debt Certificate,
agrees or will be deemed to agree to treat the Debt
Certificates as indebtedness for federal, state and local income or franchise
tax purposes. However, because different criteria are used to determine the
non-tax accounting characterization of the transactions contemplated by the
Trust Documents, the Seller expects to treat such transactions, for regulatory
and financial accounting purposes, as a sale of ownership interests in the
Receivables and not as debt obligations.
In general, whether for federal income tax purposes, a transaction
constitutes a sale of property or a loan the repayment of which is secured by
the property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction. The form of a transaction, while a
relevant factor, is not conclusive evidence of its economic substance. In
appropriate circumstances, the courts have allowed taxpayers, as well as the IRS
to treat a transaction in accordance with its economic substance, as determined
under federal income tax laws, notwithstanding that the participants
characterize the transaction differently for non-tax purposes. In some
instances, however, courts have held that a taxpayer is bound by a particular
form it has chosen for a transaction, even if the substance of the transaction
does not accord with its form. It is expected that Federal Tax Counsel will
advise that the rationale of those cases will not apply to the transactions
evidenced by a series of Debt Certificates.
While the IRS and the courts have set forth several factors to be taken
into account in determining whether the substance of a transaction is a sale of
property or a secured indebtedness for federal income tax purposes, the primary
factor in making this determination is whether the transferee has assumed the
risk of loss or other economic burdens relating to the property and has obtained
the economic benefits of ownership thereof. Federal Tax Counsel will analyze and
rely on several factors in reaching its opinion that the weight of the benefits
and burdens of ownership of the Receivables has not been transferred to the Debt
Certificateholders and that the Debt Certificates are properly characterized as
indebtedness for federal income tax purposes. Contrary characterizations that
could be asserted by the IRS are described below under "--Possible
Characterization of the Transaction as a Partnership or as an Association
Taxable as a Corporation."
TAXATION OF INCOME OF DEBT CERTIFICATEHOLDERS
As set forth above, it is expected that Federal Tax Counsel will advise
the Seller that the Debt Certificates will constitute indebtedness for federal
income tax purposes, and accordingly, holders of Debt Certificates generally
will be taxed in the manner described above in "Trusts Treated as
Partnerships--Tax Consequences to Holders of Notes Issued By a Partnership."
If the Debt Certificates are issued with OID that is more than a de
minimis amount as defined in the Code and Treasury regulations (see "Trusts
Treated as Partnerships--Tax Consequences to Holders of Notes Issued By a
Partnership"), a United States holder of a Debt Certificate (including a cash
basis holder) generally would be required to accrue the OID on its interest in a
Certificate in income for federal income tax purposes on a constant yield basis,
resulting in the inclusion of OID in income in advance of the receipt of cash
attributable to that income. Under section 1272(a)(6) of the Code, special
provisions apply to debt instruments on which payments may be accelerated due to
prepayments of other obligations securing those debt instruments. However, no
regulations have been issued interpreting those provisions, and the manner in
which those provisions would apply to the Debt Certificates is unclear.
Additionally, the IRS could take the position based on Treasury regulations that
none of the interest payable on a Debt Certificate is "unconditionally payable"
and hence that all of such interest should be included in the Debt Certificate's
stated redemption price at maturity. Accordingly, Federal Tax Counsel is unable
to opine as to whether interest payable on a Debt Certificates constitutes
"qualified stated interest" that is not included in a Certificate's stated
redemption price at maturity. Consequently, prospective investors in Debt
Certificates should consult their own tax advisors concerning the impact to them
in their particular circumstances. The Prospectus Supplement will indicate
whether the Trust intends to treat the interest on the Certificates as
"qualified stated interest."
TAX CHARACTERIZATION OF TRUST
Consistent with the treatment of the Debt Certificates as indebtedness,
the Trust will be treated as a security device to hold Receivables securing the
repayment of the Debt Certificates. In connection with the issuance of Debt
Certificates of any series, Federal Tax Counsel will render an opinion that,
based on the assumptions and qualifications set forth therein, under
then-current law, the issuance of the Debt Certificates of such series will not
cause the applicable Trust to be characterized for federal income tax purposes
as an association (or publicly traded partnership) taxable as a corporation.
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP OR
AS AN ASSOCIATION TAXABLE AS A CORPORATION
The opinion of Federal Tax Counsel with respect to Debt Certificates
will not be binding on the courts or the IRS. It is possible that the IRS could
assert that, for federal income tax purposes, the transactions contemplated
constitute a sale of the Receivables (or an interest therein) to the Debt
Certificateholders and that the proper classification of the legal relationship
between the Seller and some or all of the Debt Certificateholders resulting from
the transactions is that of a partnership (including a publicly traded
partnership), a publicly traded partnership taxable as a corporation, or an
association taxable as a corporation. The Seller currently does not intend to
comply with the federal income tax reporting requirements that would apply if
any Classes of Debt Certificates were treated as interests in a partnership or
corporation.
If a transaction were treated as creating a partnership between the
Seller and the Debt Certificateholders, the partnership itself would not be
subject to federal income tax (unless it were characterized as a publicly traded
partnership taxable as a corporation); rather, the partners of such partnership,
including the Debt Certificateholders, would be taxed individually on their
respective distributive shares of the partnership's income, gain, loss,
deductions and credits. The amount and timing of items of income and deductions
of a Debt Certificate could differ if the Debt Certificates were held
to constitute partnership interests, rather than indebtedness. Moreover, unless
the partnership were treated as engaged in a trade or business, an individual's
share of expenses of the partnership would be miscellaneous itemized deductions
that, in the aggregate, are allowed as deductions only to the extent they exceed
two percent of the individual's adjusted gross income, and would be subject to
reduction under Section 68 of the Code if the individual's adjusted gross income
exceeded certain limits. As a result, the individual might be taxed on a greater
amount of income than the stated rate on the Debt Certificates. Finally, all or
a portion of any taxable income allocated to a Debt Certificateholder that is a
pension, profit-sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) may, under certain circumstances,
constitute "unrelated business taxable income" which generally would be taxable
to the holder under the Code.
If it were determined that a transaction created an entity classified
as an association or as a publicly traded partnership taxable as a corporation,
the Trust would be subject to federal income tax at corporate income tax rates
on the income it derives from the Receivables, which would reduce the amounts
available for distribution to the Debt Certificateholders. Such classification
may also have adverse state and local tax consequences that would reduce amounts
available for distribution to Debt Certificateholders. Moreover, distributions
on Debt Certificates that are recharacterized as equity in an entity taxable as
a corporation would not be deductible in computing the entity's taxable income,
and cash distributions on such Debt Certificates generally would be treated as
dividends for tax purposes to the extent of such deemed corporation's earnings
and profits.
FOREIGN INVESTORS
If the IRS were to contend successfully that the Debt Certificates are
interest in a partnership and if such partnership were considered to be engaged
in a trade or business in the United States, the partnership would be subject to
a withholding tax on income of the Trust that is allocable to a Foreign Investor
and such Foreign Investor would be credited for his or her share of the
withholding tax paid by the partnership. In such case, the holder generally
would be subject to United States federal income tax at regular income tax
rates, and possibly a branch profits tax in the case of a corporate holder.
Alternatively, although there may be arguments to the contrary, if such
partnership is not considered to be engaged in a trade or business within the
United States and if income with respect to the Debt Certificates is not
otherwise effectively connected with the conduct of a trade or business in the
United States by the Foreign Investor, the Foreign Investor would be subject to
United States income tax and withholding at a rate of 30% (unless reduced by an
applicable tax treaty) on the holder's distributive share of the partnership's
interest income. See "Trusts Treated as Partnerships--Tax Consequences to
Holders of the Certificates Issued by the Partnership--Tax Consequences to
Foreign Certificateholders" for a more detailed discussion of the consequences
of an equity investment by a Foreign Investor in an entity characterized as a
partnership.
If the Trust were taxable as a corporation, distribution to foreign
investors, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30% unless such rate were reduced or eliminated by an
applicable income tax treaty.
FASIT LEGISLATION
In August, 1996, the United States Congress passed and President Clinton
signed into law the "Small Business Job Protection Act of 1996," H.R. 3448 (the
"Act"). The Act creates a new type of entity for federal income tax purposes
called a "financial asset securitization investment trust" or "FASIT." The
effective date of the FASIT provisions of the Act is September 1, 1997. The Act
enables certain arrangements similar to a Trust to elect to be treated as a
FASIT. Under the FASIT provisions of 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 specified in the related Prospectus
Supplement, a Trust may make an election to be treated as a FASIT. The
applicable Transfer and Servicing Agreement for such a Trust may contain any
such terms and provide for the
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issuance of Notes or Certificates on such terms and conditions as are
permitted to a FASIT and described in the related Prospectus Supplement. In
addition, upon satisfying certain conditions set forth in the Transfer and
Servicing Agreements, the Depositor, the Sponsor and Servicer will be permitted
to amend the Transfer and Servicing Agreements in order to enable all or a
portion of a Trust to qualify as a FASIT and to permit a FASIT election to be
made with respect thereto, and to make such modifications to a "Description of
the Transfer and Servicing Agreements--Amendment." However, there can be no
assurance that the Depositor will or will not cause any permissible FASIT
election to be made with respect to a Trust or amend a Transfer and Servicing
Agreement in connection with any election. In addition, if such an election is
made, it may cause a holder to recognize gain (but not loss) with respect to any
Notes or Certificates held by it, even though Federal Tax Counsel will deliver
its opinion that a Note will be treated as debt for federal income tax purposes
without regard to the election and the Note or Certificate would be treated as
debt following the election. Additionally, any such election and any related
amendments to a Transfer and Servicing Agreement may have other tax and non-tax
consequences to Securityholders. Accordingly, prospective Securityholders should
consult their tax advisors with regard to the effects of any such election and
any permitted related amendments on them in their particular circumstances.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the Securities under any state or local tax law.
Investors should consult their own tax advisors regarding state and local tax
consequences.
ERISA CONSIDERATIONS
A fiduciary of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), should consider
the fiduciary standards under ERISA in the context of the plan's particular
circumstances before authorizing an investment of a portion of such plan's
assets in the Securities. Accordingly, among other factors, such fiduciary
should consider (i) whether the investment is for the exclusive benefit of plan
participants and their beneficiaries; (ii) whether the investment satisfies the
diversification requirements of Section 404 of ERISA; (iii) whether the
investment is in accordance with the documents and instruments governing the
plan; and (iv) whether the investment is prudent, considering the nature of the
investment. Fiduciaries of such plans also should consider ERISA's prohibition
on improper delegation of control over, or responsibility for, plan assets.
In addition, fiduciaries of employee benefit plans subject to Title I of
ERISA, as well as certain plans or other retirement arrangements not subject to
ERISA, but which are subject to Section 4975 of the Code (such as individual
retirement accounts and Keogh plans covering only a sole proprietor or
partners), or any entity (including an insurance company general account) whose
underlying assets include plan assets by reason of a plan or account investing
in such entity (collectively, "Plans(s)") are prohibited from engaging in a
broad range of transactions involving Plan assets and persons having certain
specified relationships to a Plan ("parties in interest" and "disqualified
persons"). Such transactions are treated as "prohibited transactions" under
Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by
Section 4975 of the Code. The Depositor, the related Trustee, the related
Indenture Trustee and any underwriter of the offered Securities and certain of
their affiliates might be considered "parties in interest" or "disqualified
persons" with respect to a Plan. If so, the acquisition, holding or transfer of
Securities by, or on behalf of, such Plan could be considered to give rise to a
"prohibited transaction" within the meaning of ERISA and the Code unless a
regulatory exception or administrative exemption is available. In addition, the
Department of Labor ("DOL") has issued a regulation (29 C.F.R. Section
2510.3-101) (the "Plan Assets Regulation") concerning the definition of what
constitutes the assets of a Plan, which provides that, as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a Plan makes an "equity" investment will be
deemed for purposes of ERISA to be assets of the investing Plan unless certain
exceptions apply. If an investing Plan's assets were deemed to include an
interest in the Trust Property and not merely an interest in the Securities,
transactions occurring in connection with the servicing, management and
operation of the Trust between the Depositor, the related Trustee, the related
Indenture Trustee, the Servicer (or any other servicer), any insurer or any of
their respective affiliates might constitute prohibited transactions, and the
Trust Property would become subject to the fiduciary investment standards of
ERISA, unless a regulatory exception or administrative exemption applies.
With respect to offered Securities which are Certificates, the DOL has
issued to a number of underwriters of pass-through certificates, similar to the
Certificates, administrative exemptions (collectively, the "Exemption"), which
generally exempt from the application of the prohibited transaction provisions
of Section 406(a), Section 406(b)(1) and Section 406(b)(2) of ERISA, and the
excise taxes imposed pursuant to Section 4975(a) and (b) of the Code, the
initial purchase, holding and subsequent resale of mortgage-backed or
asset-backed pass-through certificates representing a beneficial undivided
interest in certain fixed pools of assets held in a trust (as defined in
paragraph III. B of Section III of the Exemption), along with certain
transactions relating to the servicing and operation of such asset pools,
provided that certain conditions set forth in the Exemption are satisfied.
Paragraph III. B of Section III of the Exemption provides in part that a trust
means an investment pool the corpus of which is held in trust and consists
solely of: (1) secured consumer
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receivables, (2) secured credit instruments, (3) obligations secured by
residential or commercial real property, (4) obligations secured by motor
vehicles or equipment or qualified motor vehicle leases, (5) guaranteed
governmental mortgage pool certificates or (6) an undivided fractional interest
in any of the obligations listed in clauses (1) - (5) above.
If the general conditions of Section II of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Section
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code) in connection with the direct or indirect sale, exchange or transfer
of Certificates by Plans in the initial issue of Certificates, the holding of
Certificates by Plans or the direct or indirect acquisition or disposition in
the secondary market of Certificates by Plans. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a Certificate on behalf of an "Excluded Plan" by
any person who has discretionary authority or renders investment advice with
respect to the assets of such Excluded Plan. For purposes of the Certificates,
an Excluded Plan is a Plan sponsored by (1) an underwriter which has been
granted an Exemption (or certain specified entities affiliated or associated
with such underwriter) ("Underwriter"), (2) the Depositor, (3) the Servicer (or
any other servicer), (4) the related Trustee or the related Indenture Trustee,
(5) any obligor with respect to Receivables constituting more than 5 percent of
the aggregate unamortized principal balance of the Receivables as of the date of
initial issuance, (6) any insurer and (7) any affiliate or successor of a person
described in (1) to (6) above (the "Restricted Group").
If the specific conditions of paragraph I.B of Section I of the Exemption
are also satisfied, the Exemption may provide an exemption from the restrictions
imposed by Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c)(I)(E) of the
Code in connection with (1) the direct or indirect sale, exchange or transfer of
Certificates in the initial issuance of Certificates between the Depositor or
Underwriter and a Plan when the person who has discretionary authority or
renders investment advice with respect to the investment of Plan assets in
Certificates is (a) an obligor with respect to 5 percent or less of the fair
market value of the Receivables or (b) an affiliate of such a person, (2) the
direct or indirect acquisition or disposition in the secondary market of
Certificates by Plans and (3) the holding of Certificates by Plans.
If the specified conditions of paragraph I.C of Section I of the Exemption
are satisfied, the Exemption may provide an exemption from the restrictions
imposed by Sections 406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code
for transactions in connection with the servicing, management and operation of
the Trust and the Trust Property.
The Exemption may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a "party in interest" or a "disqualified person" with respect to an
investing Plan by virtue of providing services to the Plan (or by virtue of
having certain specified relationships to such a person) solely as a result of
such Plan's ownership of Certificates.
The Exemption sets forth the following seven general conditions which must
be satisfied for a transaction to be eligible for exemptive relief thereunder.
(1) The acquisition of the Certificates by a Plan is on terms
(including the price for the Certificates) that are at least
as favorable to the Plan as they would be in an arm's length
transaction with an unrelated party;
(2) The rights and interests evidenced by the Certificates
acquired by the Plan are not subordinated to the
rights and interests evidenced by other Securities
issued by the Trust;
(3) The Certificates acquired by the Plan have received a
rating at the time of such acquisition that is one of
the three highest generic rating categories from
either Standard & Poor's Structured Ratings Group,
Moody's Investors Service, Inc., Duff & Phelps Credit
Rating Co. or Fitch Investors Service, L.P.
("National Credit Rating Agencies");
(4) Neither the Trustee or the related Indenture Trustee
is an affiliate of any other member of the Restricted
Group (as defined above);
(5) The sum of all payments made to and retained by the
Underwriter in connection with the distribution of
Certificates represents not more than reasonable
compensation for underwriting the Certificates. The
sum of all payments made and retained by the Depositor
pursuant to the assignment of the loans to the trust
fund represents not more than the fair market value of
such loans. The sum of all payments made to and
retained by the Servicer or any other servicer
represents not more than reasonable compensation for
such person's services under the pooling and servicing
agreement and reimbursement of such person's
reasonable expenses in connection therewith; and
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(6) The Plan investing in the certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D under
the Securities Act of 1933. The Depositor assumes that only
Plans which are accredited investors under the federal
securities laws will be permitted to purchase the
Certificates.
(7) The trust fund must also meet the following
requirements:
(i) the corpus of the trust fund must consist solely of
assets of the type that have been included in other
investment pools;
(ii) certificates in such other investment pools must have been
rated in one of the three highest rating categories of one of
the National Credit Rating Agencies for at least one year
prior to the Plan's acquisition of Certificates; and
(iii) certificates evidencing interests in such other
investment pools must have been purchased by investors
other than Plans for at least one year prior to any
Plan's acquisition of certificates.
The Exemption may apply to a Plan's purchase, holding and transfer of
Certificates and the operation, management and servicing of the Trust and the
Trust Property as specified in the related Prospectus Supplement. In addition,
in the event the Exemption is not available, certain exemptions from the
prohibited transaction rules may be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a
Certificate. Included among these exemptions are: Prohibited Transaction Class
Exemption ("PTCE") 90-1, regarding investments by insurance company pooled
separate accounts; PTCE 91-38 regarding investments by bank collective
investment funds PTCE 95-60, regarding investments by insurance company general
accounts; PTCE 96-23, regarding transactions affected by in-house asset
managers; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers".
Certain transactions involving the purchase of Securities which are Notes
might be deemed to constitute prohibited transactions under ERISA and the Code
if the Trust Property were deemed to be assets of a Plan. Under the Plan Assets
Regulation, the Trust Property would be treated as plan assets of a Plan for the
purposes of ERISA and the Code only if the Plan acquires an "Equity Interest" in
the Trust and none of the exceptions contained in the Plan Assets Regulation is
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 Depositor
believes that the Notes should be treated as indebtedness without substantial
equity features for purposes of the Plan Assets Regulation. In addition, even in
the event that the Notes are deemed to be an Equity Interest in the Trust, the
Exemption may be applicable to both a Plan's purchase, holding and transfer of
Notes (which in this situation are considered Certificates for purposes of the
Exemption) and the operation, management and servicing of the Trust and the
Trust Property, if so specified in the related Prospectus Supplement.
Without regard to whether the Notes are characterized as Equity Interests,
the acquisition, transfer or holding of Notes by or on behalf of a Plan could be
considered to give rise to a prohibited transaction if the Trust, the related
Trustee or the related Indenture Trustee or any of their respective affiliates
is or becomes a party in interest or a disqualified person with respect to such
Plan. In such case, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 and PTCE 84-14
may be applicable depending on the type and circumstances of the plan fiduciary
making the decision to acquire a Note.
Investors that are insurance companies should consult with their legal
counsel with respect to the United States Supreme Court case, John Hancock
Mutual Life Insurance co. v. Harris Trust and Savings Bank, 114 S.Ct. 517
(1993). In Harris Trust, the Supreme Court ruled that assets held in an
insurance company's general account may be deemed plan assets under certain
circumstances. Accordingly, such insurance company general accounts would be
subject to the same considerations under ERISA and would be eligible for the
same relief under the Exemption that would apply to any other Plan investor. In
the event the Exemption is not applicable to the purchase, holding and transfer
of Securities and the operation, management and servicing of the Trust and Trust
Property, PTCE 95-60 may be applicable depending on the circumstances.
Any Plan fiduciary considering the purchase of Securities should consult
with its counsel with respect to the potential applicability of the fiduciary
responsibility and prohibited transaction provisions of ERISA and the Code to
such investment.
RATINGS
As a condition of issuance, the offered Securities of each series will be
rated an investment grade, that is, in one of its four highest rating
categories, by at least one nationally recognized rating agency (a "Rating
Agency") as specified in the related Prospectus Supplement. Ratings on the
offered Securities of each series address the likelihood of receipt by the
related Securityholders of all distributions on the underlying Receivables.
These ratings address the structural, legal and
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issuer-related aspects associated with the Securities of such series, the
nature of the underlying Receivables of such series, the subordination and any
credit enhancement provided therefor, including the credit quality of the third
party credit enhancement provider, if any. Ratings on offered Securities of each
series do not represent any assessment of the likelihood of principal
prepayments by Obligors or of the degree by which prepayments might differ from
those originally anticipated. As a result, the related Securityholders might
suffer a lower than anticipated yield, and, in addition, holders of Strip
Securities in extreme cases might fail to recoup their underlying investments.
Each security rating should be evaluated independently of any other security
rating. A security rating is not a recommendation to buy, sell or hold
securities. There is no assurance that the ratings initially assigned to the
Securities will not be subsequently lowered or withdrawn by the Rating Agencies.
In the event the rating initially assigned to any Securities is subsequently
lowered for any reason, no person or entity will be obligated to provide any
credit enhancement unless otherwise specified in the related Prospectus
Supplement. [The ratings of any Securities with respect to which a prepayment
premium may be payable do not evaluate such prepayment premium payable to such
Securityholders or the likelihood that such prepayment premium will be paid.]
See "Ratings."
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 (the
"Underwriters"), 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. In the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and,
is, therefore unenforceable.
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.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of any series of Securities in Canada ("Canadian
Securities") is being made only on a private placement basis exempt from the
requirement that the Trust prepare and file a prospectus with the securities
regulatory authorities in each province where trades of any Canadian Securities
are effected. Accordingly, any resale of any Canadian Securities must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made in accordance
with available statutory exemptions or pursuant to a
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discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of any Canadian Securities.
REPRESENTATIONS OF PURCHASERS
Each purchaser of any Canadian Securities who receives a purchase
confirmation will be deemed to represent to the Depositor, the Trust and the
dealer from whom such purchase confirmation is received that (i) such purchaser
is entitled under applicable provincial securities laws to purchase such
Canadian Securities without the benefit of a prospectus qualified under such
securities laws, (ii) where required by law, that such purchaser is purchasing
as principal and not as agent, and (iii) such purchaser has reviewed the text
above under "Resale Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
The Trust, the Originators, the Depositor, the related Company, the
Sponsor, the Servicer, any Trustee, the applicable Indenture Trustee and their
respective directors and officers, if any, as well as the experts named herein,
may be located outside of Canada and, as a result, it may not be possible for
Ontario purchasers to effect service of process within Canada upon the Issuer or
such persons. All or a substantial portion of the assets of the Issuer and such
persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the Issuer or such persons in Canada or
to enforce a judgment obtained in Canadian courts against such Issuer or persons
outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of any Canadian Securities to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any of the Securities acquired by such purchaser pursuant to this offering. Such
report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #88/5. Only one such report must be filed in respect of any
Canadian Securities acquired on the same date and under the same prospectus
exemption.
LEGAL OPINIONS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters relating to the issuance of the Securities of any series and the
income tax consequences thereof will be passed upon for the Underwriters and the
Depositor by Stroock & Stroock & Lavan LLP, New York, New York.
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES
Except in certain limited circumstances, any globally offered series of
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 and, if the related Prospectus Supplement so
provides, Certificates will be effected on a delivery-against-payment basis
through the respective Depositories of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their Participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede 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 Depositories,
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 specified by the Underwriters. Investor securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global securities
and no "lock- up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to insure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled in same-day funds.
Trading between 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 Depositor 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
will instruct the respective Depository, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of the actual number of days in such
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accrual period and year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
respective Depository of the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt 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 debt
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 preposition 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 preposition
funds and allow that credit line to be drawn upon to finance the 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 European Depository 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 Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear Depositor 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 system, through the
respective Depository, 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 the respective Depository, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
interest payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. 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 respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft 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.
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CERTAIN U.S. FEDERAL WITHHOLDING TAXES AND DOCUMENTATION
REQUIREMENTS
A beneficial owner of Global Securities through Cedel or Euroclear (or
through DTC if the holder has an address outside the U.S.) will be subject to
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 owners take one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons 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. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are beneficial owners of Global Securities
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
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
Certificateholder or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The holder of a Global
Securities or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
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 (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary of documentation requirements
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.
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INDEX OF TERMS
Act....................................................................65
Actuarial Receivables..................................................21
Advance.................................................................9
Amortization Period.....................................................9
Applicable Trustee.....................................................34
APR....................................................................21
Auction Sale............................................................9
Balloon Loans.......................................................7, 15
Balloon Payment.....................................................7, 15
Base Rate..............................................................30
BDFS....................................................................4
Calculation Agent......................................................30
Calculation Date.......................................................31
Canadian Securities....................................................69
CD Rate................................................................30
CD Rate Determination Date.............................................31
CD Rate Security.......................................................30
Cede................................................................3, 15
Cedel...................................................................3
Cedel Participants.....................................................36
Certificate Balance.....................................................5
Certificate Distribution Account.......................................41
Certificate Majority...................................................35
Certificate Pool Factor................................................23
Certificateholders.....................................................15
Certificates............................................................1
Closing Date...........................................................39
Code...................................................................54
Collection Account.....................................................41
Collection Period......................................................14
Commercial Paper Rate..................................................31
Commercial Paper Rate Determination Date...............................31
Commercial Paper Rate Security.........................................30
Commission..............................................................3
Commodity Indexed Securities...........................................34
Company.................................................................1
Composite Quotations...................................................30
Consignment Program....................................................17
Cooperative............................................................36
Currency Indexed Securities............................................34
Cutoff Date............................................................16
Dealer Agreements.......................................................6
Dealers.................................................................7
Definitive Certificates................................................35
Definitive Notes.......................................................35
Definitive Securities..................................................37
Depositor...............................................................1
Depositories...........................................................34
Distribution Date.......................................................5
DOL....................................................................66
DTC.....................................................................3
DTC's Nominee..........................................................15
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Eligible Deposit Account...............................................42
Eligible Institution...................................................42
Eligible Trust Company.................................................42
Equity Interest........................................................67
ERISA..................................................................10
ERISA Considerations...................................................10
Euroclear...............................................................3
Euroclear Operator.....................................................36
Euroclear Participants.................................................36
Events of Default......................................................26
Exchange Act............................................................3
Excluded Plan..........................................................66
Exemption..............................................................66
Face Amount............................................................34
FASIT..................................................................16
Federal Funds Rate.....................................................30
Federal Funds Rate Determination Date..................................32
Federal Funds Rate Security............................................30
Financed Vehicles.......................................................1
Fixed Rate Securities..................................................30
Floating Rate Securities...............................................30
FTC Rule...............................................................53
Funding Period..........................................................1
Global Securities......................................................71
H.15(519)..............................................................30
Indenture...............................................................4
Indenture Trustee.......................................................1
Index..................................................................33
Index Maturity.........................................................30
Indexed Commodity......................................................34
Indexed Currency.......................................................33
Indexed Principal Amount...............................................33
Indexed Securities.....................................................33
Indirect Participants..................................................34
Indirect Program.......................................................17
Initial Cutoff Date.....................................................6
Initial Pool Balance...................................................49
Initial Receivables.....................................................6
Insolvency Event.......................................................47
Interest Rate...........................................................4
Interest Reset Date....................................................30
Interest Reset Period..................................................30
Investment Earnings....................................................42
IRS....................................................................54
Issuer..................................................................4
LIBOR..................................................................32
LIBOR Determination Date...............................................32
LIBOR Security.........................................................30
Loan Purchase Agreement.................................................6
London Banking Day.....................................................32
Money Market Yield.....................................................31
Motor Vehicle Loans....................................................17
National Credit Rating Agencies........................................67
Note Distribution Account..............................................41
Note Pool Factor.......................................................23
Noteholders............................................................13
Notes...................................................................1
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Obligors...............................................................12
Off-Lease Program......................................................17
OID....................................................................55
OID Regulations........................................................55
Originators.............................................................7
Paid-Ahead Period......................................................22
Paid-Ahead Receivable..................................................22
Participants...........................................................25
Pass-Through Rate.......................................................5
Payahead Account.......................................................41
Payaheads..............................................................43
Payment Date...........................................................25
Plan Assets Regulation.................................................66
Plans..................................................................10
Pool Balance...........................................................23
Pooling and Servicing Agreement.........................................4
Pre-Funded Amount.......................................................6
Pre-Funding Account.....................................................1
Prepayment Premium.....................................................44
Prospectus Supplement...................................................1
PTCE...................................................................67
Purchase Amount........................................................40
Rating Agency......................................................11, 68
Receivable File........................................................41
Receivables.............................................................1
Receivables Pool........................................................5
Registration Statement..................................................3
Related Documents......................................................27
Related Person.........................................................56
Resale Restrictions....................................................69
Reserve Account........................................................45
Restricted Group.......................................................66
Retained Interest.......................................................9
Reuters Screen LIBO Page...............................................32
Revolving Period........................................................8
Rules..................................................................35
Sale and Servicing Agreement............................................6
Schedule of Receivables................................................39
Section 1286 Treasury Regulations......................................60
Securities..............................................................1
Securities Act..........................................................3
Securityholders........................................................15
Servicer................................................................1
Servicer Default.......................................................47
Servicing Fee..........................................................44
Servicing Fee Rate.....................................................43
Short-Term Note........................................................55
Simple Interest Receivables............................................21
Spread.................................................................30
Spread Multiplier......................................................30
Stock Index............................................................34
Stock Indexed Securities...............................................34
Strip Notes.............................................................5
Stripped Bond..........................................................60
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Subsequent Receivables..................................................1
Subsequent Transfer Date...............................................39
Terms and Conditions...................................................36
Total Servicing Fee....................................................44
Transfer and Servicing Agreements......................................39
Treasury Bills.........................................................33
Treasury Rate..........................................................33
Treasury Rate Determination Date.......................................33
Treasury Rate Security.................................................30
Trust...................................................................1
Trust Accounts.........................................................41
Trust Agreement.........................................................4
Trustee.................................................................1
U.S. Person............................................................73
UCC....................................................................12
Underwriter............................................................66
Underwriters...........................................................68
Underwriting Agreements................................................68
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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 REPRESENTATIONS MUST NOT BE RELIED UPON. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF 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
PROSPECTUS SUPPLEMENT PAGE
Summary of Terms....................................................S-
Risk Factors........................................................S-
Formation of the Trust.............................................S-
The Trust Property..................................................S-
The Receivables Pool................................................S-
Weighted Average Life of the Securities.............................S-
Use of Proceeds.....................................................S-
The Servicer and the Sponsor ........................................
Description of the Notes............................................S-
Description of the Certificates.....................................S-
Description of the Transfer and Servicing
Agreements........................................................S-
Federal Income Tax Consequences.....................................S-
State and Local Tax Consequences....................................S-
ERISA Considerations................................................S-
Underwriting........................................................S-
Legal Opinions......................................................S-
Index of Terms......................................................S-
PROSPECTUS
Available Information.....................................................
Incorporation of Certain Documents by
Reference...............................................................
Reports to Securityholders................................................
Summary of Terms..........................................................
Risk Factors..............................................................
The Trusts................................................................
The Portfolio of Motor Vehicle Loans .....................................
The Receivables Pools.....................................................
Maturity and Prepayment Assumptions.......................................
Pool Factors and Trading Information......................................
Use of Proceeds...........................................................
The Depositor.............................................................
The Servicer and the Sponsor..............................................
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..................................
Federal Income Tax Consequences...........................................
State and Local Tax Consequences.........................................
ERISA Considerations......................................................
Ratings...................................................................
Plan of Distribution......................................................
Notice to Canadian Residents..............................................
Legal Opinions............................................................
Annex I...................................................................
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 UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
BARNETT AUTO TRUST
199_-_
[FORM 1]
$------------
$-------------
____% ASSET BACKED NOTES
$----------
____% ASSET BACKED CERTIFICATES
BARNETT DEALER FINANCIAL SERVICES, INC.
SERVICER AND THE SPONSOR
BARNETT AUTO RECEIVABLES CORP.
DEPOSITOR
------------------
PROSPECTUS SUPPLEMENT
------------------
Dated _______________
-72-
<PAGE>
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 REPRESENTATIONS MUST NOT BE RELIED UPON. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF 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
PROSPECTUS SUPPLEMENT PAGE
Summary of Terms....................................................S-
Risk Factors........................................................S-
Formation of the Trust.............................................S-
The Trust Property..................................................S-
The Receivables Pool................................................S-
Use of Proceeds.....................................................S-
The Servicer and the Sponsor.........................................
Description of the Certificates.....................................S-
Federal Income Tax Consequences.....................................S-
State and Local Tax Consequences....................................S-
ERISA Considerations................................................S-
Underwriting........................................................S-
Legal Opinions......................................................S-
Index of Terms......................................................S-
PROSPECTUS
Available Information.....................................................
Incorporation of Certain Documents by
Reference...............................................................
Reports to Securityholders................................................
Summary of Terms..........................................................
Risk Factors..............................................................
The Trusts................................................................
The Portfolio of Motor Vehicle Loans .....................................
The Receivables Pools.....................................................
Maturity and Prepayment Assumptions.......................................
Pool Factors and Trading Information......................................
Use of Proceeds...........................................................
The Depositor.............................................................
The Servicer and the Sponsor..............................................
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..................................
Federal Income Tax Consequences...........................................
State and Local Tax Consequences..........................................
ERISA Considerations......................................................
Ratings...................................................................
Plan of Distribution......................................................
Notice to Canadian Residents..............................................
Legal Opinions............................................................
Annex I...................................................................
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 UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
BARNETT AUTO TRUST
199_-_
[FORM 2]
------------
$---------
CLASS A __% ASSET BACKED CERTIFICATES
$----------
CLASS B __% ASSET BACKED CERTIFICATES
BARNETT DEALER FINANCIAL SERVICES, INC.
SPONSOR AND THE SPONSOR
BARNETT AUTO RECEIVABLES CORP.
DEPOSITOR
------------------
PROSPECTUS SUPPLEMENT
------------------
Dated _______________
-73-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
SEC Registration Fee........................................ $303.04
Printing and Engraving...................................... $ *
Trustee's Fees.............................................. $ *
Legal Fees and Expenses..................................... $ *
Blue Sky Fees and Expenses.................................. $ *
Accountant's Fees and Expenses.............................. $ *
Rating Agency Fees.......................................... $ *
Miscellaneous Fees and Expenses............................. $ *
----
Total Expenses.............................................. $ *
- -------------------
* To be completed by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 12 of the Certificate of Incorporation of the Depositor provides for the
indemnification of any person who is or was an officer or director of the
Depositor with respect to actions taken or omitted by such person in any
capacity in which such person serves or served the Issuer, to the full extent
authorized or permitted by Section 722 of the New York Business Corporation Law.
Reference is made to the Certificate of Incorporation filed as an exhibit to
this Registration Statement for the complete text of Article 12 of the
Certificate of Incorporation.
The Registrant maintains liability insurance policies such that each of the
directors and officers of the Registrant is insured against certain liabilities
which they might incur in their capacity as a director or officer.
The Underwriting Agreement filed as Exhibit 1.1 hereto provides for
indemnification by the Underwriters of the Registrant and its directors,
officers and controlling persons for certain liabilities arising under the
Securities Act of 1933 or otherwise.
The general effect of any statute, charter provision, by-law, contract
or other arrangement under which any controlling person, director or officer of
the Registrant is insured or indemnified against liability when acting on behalf
of the Registrant is to reduce the deterrent effect for such indemnified
individuals for violating the Securities Act of 1933.
The Registrant is aware that the Securities and Exchange Commission
takes the position that indemnification of directors and officers is against
public policy and is therefore unenforceable.
ITEM 16. EXHIBITS
1.1. Form of Underwriting Agreement
3.1. Articles of Incorporation Barnett Auto Receivables
Corp.**
3.2. By-laws of Barnett Auto Receivables Corp.**
4.1. Form of Pooling and Servicing Agreement
4.2. Form of Certificate (included as part of Exhibit 4.1)
4.3 Form of Indenture
4.4 Form of Trust Agreement
II-1
<PAGE>
5.1. Opinion of Stroock & Stroock & Lavan LLP with
respect to legality
8.1. Opinion of Stroock & Stroock & Lavan LLP with respect
to federal income tax matters (contained in Exhibit
5.1)
10.1 Form of Sale and Servicing Agreement
10.2 Form of Loan Purchase Agreement
23.1. Consent of Stroock & Stroock & Lavan LLP
(contained in Exhibit 5.1)
24.1. Powers of Attorney (included as part of signature
page)**
25.1 Statement of Eligibility and Qualification of
Indenture Trustee (Form T-1)
- -------------------------
**Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended (the "Securities Act"), the information omitted
from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(4) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") 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.
(5) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.
(6) 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-2
<PAGE>
(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; and
(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.
(7) 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.
(8) 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Barnett Auto
Receivables Corp. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3, it believes that the
securities rating requirement for use of Form S-3 will be met by the time of
sale of the securities and it has duly caused this Amendment No. 2 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York and State of New York on
August 15, 1997.
BARNETT AUTO RECEIVABLES CORP.
By: ________________*_________________
Name: Christopher S. Pascucci
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 2
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
* President and Director
Christopher S. Pascucci (principal executive,
financial and accounting
officer) August 15, 1997
*
Marc Gelman Director August 15, 1997
*
Thomas Hartman Director August 15, 1997
* By: /s/ Peter Cavallaro
Attorney-in-Fact
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit
NUMBER EXHIBIT PAGE
1.1. Form of Underwriting Agreement
3.1. Articles of Incorporation of Barnett Auto
Receivables Corp.**
3.2. By-laws of Barnett Auto Receivables Corp.**
4.1. Form of Pooling and Servicing Agreement
4.2. Form of Certificate (included as part of
Exhibit 4.1)
4.3. Form of Indenture
4.4 Form of Amended and Restated Trust Agreement
5.1. Opinion of Stroock & Stroock & Lavan LLP with
respect to legality
8.1 Opinion of Stroock & Stroock & Lavan LLP with
respect to federal income tax matters
(contained in Exhibit 5.1)
10.1 Form of Sale and Servicing Agreement
10.2 Form of Loan Purchase Agreement
23.1. Consent of Stroock & Stroock & Lavan LLP
(contained in Exhibit 5.1)
24.1. Powers of Attorney (included as part of
signature page)**
25.1. Statement of Eligibility and Qualification
of Indenture Trustee (Form T-1)
- ---------------------
**Previously filed.
EXHIBIT 1.1
BARNETT AUTO TRUST 199_-_
$_______ ___% CLASS A ASSET BACKED CERTIFICATES
$_______ ___% CLASS B ASSET BACKED CERTIFICATES
Barnett Auto Receivables Corp.
(DEPOSITOR)
FORM OF UNDERWRITING AGREEMENT
_______ __, 199_
- ----------------------,
as Representative of the Several
Underwriters (the "Representative")
======================
- ----------------------
Ladies and Gentlemen:
1. Introductory. Barnett Auto Receivables Corp. (the "Depositor")
has previously filed a registration statement with the Securities and Exchange
Commission relating to the issuance and sale from time to time of up to $____ of
asset backed notes and/or asset backed certificates. The Depositor proposes to
cause BARNETT AUTO TRUST 199_-_ (the "Trust") to issue and sell $___ principal
amount of its ___% Class A Asset Backed Certificates (the "Class A
Certificates") and $___ principal amount of its Class B ___% Asset Backed
Certificates (the "Class B Certificates" and, together with the Class A
Certificates, the "Certificates"). The assets of the Trust will include, among
other things, a pool of motor vehicle retail installment sale contracts and
other motor vehicle installment chattel paper (the "Receivables") secured by new
and used automobiles (including passenger cars, minivans, sport/utility vehicles
and light trucks) financed thereby (the "Financed Vehicles"), and certain monies
received thereunder on or after , ______ __, 199_-_ (the "Cutoff Date"), and the
other property and the proceeds thereof to be conveyed to the Trust pursuant to
the Pooling and Servicing Agreement to be dated as of , ______ __, 199_-_ (the
"Pooling and Servicing Agreement") among ________, a ______ (the "Trustee"), the
Depositor, Barnet Dealer Financial Services, Inc. ("BDFS"), as servicer (the
"Servicer") and as sponsor (the "Sponsor"). Pursuant to the Pooling and
Servicing Agreement, the Depositor will sell the Receivables to the Trust and
the Servicer will service the Receivables on behalf of the Trust. In addition,
pursuant to the Pooling and Servicing Agreement, the Servicer will agree to
perform certain administrative tasks on behalf of the Trust.
<PAGE>
The Receivables were originated by certain wholly-owned direct and
indirect subsidiaries (each, an "Originator") of Barnett Bank, N.A. Each
Originator other than BDFS will sell the Receivables to BDFS pursuant to the
terms of the Loan Sale Agreement (the "Loan Sale Agreement") dated as of
_________ __, 199_-_ among the Originators and BDFS. BDFS will sell the
Receivable to the Depositor pursuant to the terms of the Loan Purchase Agreement
(the "Loan Purchase Agreement") dated as of ______ __, 199_-_ among the
Depositor and BDFS.
Capitalized terms used and not otherwise defined herein shall have the
meanings given them in the preliminary prospectus or, if not defined therein, as
defined in the Pooling and Servicing Agreement. As used herein, the term "Basic
Documents" refers to the Pooling and Servicing Agreement, Loan Purchase
Agreement, Loan Sale Agreement and Certificate Depository Agreement.
2. Representations and Warranties of the Depositor and the Sponsor.
Each of the Depositor and the Sponsor jointly and severally represents and
warrants to and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (No. 333-26675), including a
prospectus, relating to the Certificates has been filed with the Securities and
Exchange Commission (the "Commission") and has become effective. Such
registration statement, as amended as of the date of the Agreement is
hereinafter referred to as the "Registration Statement," and the prospectus
included in such Registration Statement, as supplemented to reflect the terms of
the Certificates as first filed with the Commission after the date of this
Agreement pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under
the Securities Act of 1933, as amended (the "Act"), including all material
incorporated by reference therein, is hereinafter referred to as the
"Prospectus," a "preliminary prospectus" means any form of prospectus, including
any prospectus supplement, relating to the Certificates used prior to date of
this Agreement that is subject to completion.
(b) On the effective date of the registration statement relating to
the Certificates, such registration statement conformed in all respects to the
requirements of the Act and the rules and regulations of the Commission
promulgated under the Act (the "Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and on the date of this Agreement the Registration Statement and the preliminary
prospectus conform, and at the time of the filing of the Prospectus in
accordance with Rule 424(b), the Registration Statement and the Prospectus will
conform in all respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents includes or will include any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. The preceding sentence does not apply to statements in or omissions
from such documents based upon (i) written information furnished to the
Depositor by the Representative specifically for use therein, it being
understood that the only such information consists of the Underwriters'
Information (as defined in Section 7(i) or (ii) the Derived Information (as
defined in Section 7 below) contained in the Current Report (as defined in
Section 5(a) below) or in any amendment thereof or supplement thereto,
-2-
<PAGE>
incorporated by reference in such Registration Statement or such Prospectus (or
any amendment thereof or supplement thereto). The Depositor acknowledges that
any information furnished by the Representative specifically for use in the
Registration Statement, any preliminary prospectus or the Prospectus is the
Underwriters' Information.
(c) The Depositor meets the requirements for use of Form S-3 under the
Act.
(d) The documents incorporated by reference in the Registration
Statement and Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder.
(e) Each of the Depositor, BDFS and each Originator is a corporation
duly organized, validly existing and in good standing under the laws of its
respective state of incorporation, is duly qualified to transact business as a
foreign corporation in each jurisdiction in which it is required to be so
qualified and has all necessary licenses, permits and consents to conduct its
business as presently conducted and as described in the Prospectus and to
perform its obligations under the Basic Documents.
(f) This Agreement has been duly authorized, executed and delivered by
the Depositor and BDFS and constitutes a valid and binding agreement of each of
the Depositor and BDFS, enforceable against the Depositor and BDFS in accordance
with its terms, subject as to the enforcement of remedies (x) to applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting creditors' rights generally, (y) to general principles of equity
(regardless of and whether the enforcement of such remedies is considered in a
proceeding in equity or at law) and (z) with respect to rights of indemnity
under this Agreement, to limitations of public policy under applicable
securities laws.
(g) None of the Depositor, BDFS or any of the Originators is in breach
or violation of any credit or security agreement or other agreement or
instrument to which it is a party or by which it or its properties may be bound,
or in violation of any applicable law, statute, regulation or ordinance or any
governmental body having jurisdiction over it, which breach or violation would
have a material and adverse effect on its ability to perform its obligations
under this Agreement or any of the Basic Documents, in each case, to which it is
a party.
(h) Other than as contemplated by this Agreement or as disclosed in
the Prospectus, there is no broker, finder or other party that is entitled to
receive from the Depositor, BDFS, any Originator or any affiliate thereof or the
Underwriters, any brokerage or finder's fee or other fee or commission as a
result of any of the transactions contemplated by this Agreement.
(i) Neither BDFS nor the Depositor has entered into, nor will it enter
into, any contractual arrangement with respect to the distribution of the
Certificates except for this Underwriting Agreement
-3-
<PAGE>
(j) The Trust is not an "investment company" and is not required to be
registered as an "investment company," as such term is defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(k) As of the Closing Date (as defined below), the representations and
warranties of BDFS, the Depositor and each of the Originators, in each of its
capacities under each of the Basic Documents, to which it is a party will be
true and correct in all material respects and each such representation and
warranty is so incorporated herein by this reference.
(l) The Depositor has filed the preliminary prospectus supplement
relating to the Certificates pursuant to and in accordance with Rule 424(b).
(m) On or before the Closing Date, the Basic Documents will have been
duly authorized, executed and delivered by each of the parties thereto.
(n) Each Originator's assignment and sale of the Receivables it will
sell to BDFS pursuant to the Loan Sale Agreement on the Closing Date will vest
in the BDFS all of such Originator's right, title and interest to such
Receivables
(o) The BDFS's assignment and sale of the Receivables to the Depositor
on the Closing Date will vest in the Depositor all of BDFS's right, title and
interest therein.
(p) The Depositor's assignment and sale of the Receivables to the
Trust on the Closing Date will vest in the Trust all the Depositor's right,
title and interest therein, or will result in a first priority perfected
security interest therein, in either case subject to no other outstanding Lien.
(q) The Certificates, when duly and validly executed by the Trustee,
authenticated and delivered in accordance with the Pooling and Servicing
Agreement, and delivered to and paid for pursuant hereto will be validly issued
and outstanding and entitled to the benefits of the Pooling and Servicing
Agreement.
(r) Neither the execution, delivery or performance of any of the Basic
Documents by the Depositor, BDFS or any of the Originators, nor the issuance,
sale and delivery of the Certificates, nor the fulfillment of the terms of the
Certificates, will conflict with, or result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of the
organizational documents of the Depositor, BDFS or any of the Originators, any
material indenture or other material agreement or instrument to which the
Depositor, BDFS or any of the Originators is a party or by which any of them or
their properties is bound or result in a violation of or contravene the terms of
any statute, order or regulation applicable to the Depositor, BDFS or any of the
Originators of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Depositor, BDFS or any of the
Originators, or will result in the creation of any lien upon any material
property or assets of the Depositor, BDFS or any of the Originators (other than
pursuant to the Basic Documents).
-4-
<PAGE>
(s) There are no legal or governmental proceedings pending to which
the Depositor, BDFS or any Originator is a party or of which any of its
properties is the subject, which if determined adversely to the Depositor, BDFS
or any Originator would individually or in the aggregate have a material adverse
effect on the financial position, shareholders' equity or results of operations
of any of them; and to the best of the Depositor's or BDFS's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
others.
(t) No consent, license, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance or sale of the Certificates or the consummation of the other
transactions contemplated by this Agreement or the Basic Documents, except such
as have been duly made or obtained.
(u) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any material
adverse change, or any development which could reasonably be expected to result
in a material adverse change, in or affecting the financial position,
shareholders' equity or results of operations of the Depositor, BDFS or any
Originator or the Depositor's, BDFS's or any Originator's ability to perform its
obligations under this Agreement or any of the Basic Documents to which it is a
party.
(v) Any taxes, fees and other governmental charges due on or prior to
the Closing Date (including, without limitation, sales taxes) in connection with
the execution, delivery and issuance of this Agreement, the Basic Documents and
the Certificates have been or will have been paid at or prior to the Closing
Date.
(w) The Receivables are chattel paper as defined in the Uniform
Commercial Code as in effect in the State of [Florida].
(x) Under generally accepted accounting principles, each Originator
will report its transfer of the Receivables transferred by it to BDFS pursuant
to the Loan Sale Agreement as a Sale of the Receivables, BDFS will report its
transfer of the Receivables transferred by it to the Depositor pursuant to the
Loan Purchase Agreement as a sale of the Receivables, and the Depositor will
report its transfer of the Receivables to the Trustee pursuant to the Pooling
and Servicing Agreement as a sale of the Receivables. Each of BDFS, each of the
Originators and the Depositor has been advised by ___________ that the transfer
will be so classified under generally accepted accounting principles in
accordance with Statement No. 77 of the Financial Accounting Standards Board.
Each of BDFS, each of the Originators and the Depositor will also report such
transfer in all financial statements and reports prepared by it in accordance
with applicable regulatory accounting principles.
(y) The Originators, pursuant to the Loan Sale Agreement, are
transferring to the BDFS ownership of the Receivables, the security interest in
the Financed Vehicles securing the Receivables and the proceeds of each of the
foregoing, and, immediately prior to the transfer thereof to BDFS, BDFS will be
the sole owner of all right, title and interest in, and will have good and
marketable title to, the Receivables and the other property to be transferred by
it to BDFS. BDFS, pursuant to the Loan Purchase Agreement, is transferring to
the Depositor ownership of the Receivables, the security interest in the
-5-
<PAGE>
Financed Vehicles securing the Receivables and the proceeds of each of the
foregoing, and, immediately prior to the transfer thereof to the Depositor, BDFS
will be the sole owner of all right, title and interest in, and will have good
and marketable title to, the Receivables and the other property to be
transferred by it to the Trust. The assignment of the Receivables, all documents
and instruments relating thereto and all proceeds thereof to the Trust, pursuant
to the Pooling and Servicing Agreement, vests in the Trust all interests which
are purported to be conveyed thereby, free and clear of any liens, security
interests or encumbrances.
(z) Immediately prior to the transfer of the Receivables to the Trust,
BDFS's interest in the Receivables and the proceeds thereof shall be perfected
upon the filing of UCC-1 financing statements (the "Financing Statements") in
the offices specified in Schedule I, the Depositor's interest in the Receivables
and the proceeds thereof shall be perfected upon the filing of UCC-1 financing
statements (the "Financing Statements") in the offices specified in Schedule I,
and there shall be no unreleased statements affecting the Receivables filed in
such offices other than the Financing Statements. If a court concludes that the
transfer of the Receivables from (i) BDFS to the Depositor is a sale, the
interest of the Depositor in the Receivables and the proceeds thereof will be
perfected upon the filing of the Financing Statements in the office of the
Secretary of State of the State of [New York] and (ii) the Depositor to the
Trust is a sale, the interest of the Trust in the Receivables and the proceeds
thereof will be perfected upon the filing of the Financing Statements in the
office of the Secretary of State of the State of New York. If a court concludes
that each such transfer is not a sale, the Pooling and Servicing Agreement and
the transactions contemplated thereby constitute a grant by BDFS to the
Depositor and the Depositor to the Trust of a valid security interest in the
Receivables and the proceeds thereof, which security interest will be perfected
upon the filing of the Financing Statements in the office of the Secretary of
State of the State of New York and [Florida]. No filing or other action, other
than the filing of the Financing Statements in the office of the Secretary of
State of the State of New York [and Florida] referred to above, is necessary to
perfect and maintain the interest or the security interest of the Trust in the
Receivables and the proceeds thereof against third parties.]
(aa) As of the Closing Date, each of the respective representations
and warranties of the Depositor, BDFS, and each of the Originators set forth in
the Basic Documents will be true and correct, and the Underwriters may rely on
such representations and warranties as if they were set forth herein in full.
(bb) In connection with the offering of the Certificates in the State
of Florida, the Depositor hereby certifies that it has complied with all
provisions of Section 5.17.075 of the Florida Securities and Investor Protection
Act.
3. Purchase, Sale and Delivery of the Certificates. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Depositor agrees to cause the
Trust to sell to the Underwriters, and the Underwriters agree, severally and not
jointly, to purchase from the Trust, the principal amount of each class of
Certificates set forth opposite the name of such Underwriter on Schedule I
hereto at a purchase price equal to "Price %" as specified on Schedule II
hereto.
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The Depositor will deliver the Certificates to the Representative for
the account of the Underwriters, against payment of the purchase price to or
upon the order of the Depositor by wire transfer or check in Federal (same day)
Funds, at the office of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York 10038, at 10:00 a.m., New York time on ______ __, 199_-_, or at
such other time not later than seven full business days thereafter as the
Representative and the Depositor determine, such time being herein referred to
as the "Closing Date." The Certificates to be so delivered will be initially
represented by one or more Certificates registered in the name of Cede & Co.,
the nominee of The Depository Trust Company ("DTC"). The interests of beneficial
owners of the Certificates will be represented by book entries on the records of
DTC and participating members thereof. Definitive Certificates will be available
only under the limited circumstances specified in the Pooling and Servicing
Agreement.
4. Offering by Underwriters. It is understood that, after the
Registration Statement becomes effective, the Underwriters propose to offer the
Certificates for sale to the public (which may include selected dealers), on the
terms set forth in the Prospectus.
5. Covenants of the Depositor and the Sponsor. Each of the Depositor
and the Sponsor covenants and agrees with the Underwriters that:
(a) The Depositor will file the Prospectus, properly completed, with
the Commission pursuant to and in accordance with subparagraph (2) (or, if
applicable and if consented to by the Representative, subparagraph (5)) of Rule
424(b) no later than the second business day following the earlier of the date
of determination of the offering price or the date it is first used. The
Depositor and the Sponsor will advise the Representative promptly of any such
filing pursuant to Rule 424(b). Subject to the Underwriters compliance with its
obligations set forth in Section 7(h) hereof, the Depositor shall file with the
Commission a current report on Form 8-K (the "Current Report") including any
Derived Information (as defined herein) provided to it by the Representative
pursuant to Section 7(h) hereof (i) no later than the date that the Prospectus
Supplement is filed with respect to "computational materials" and "structural
terms sheets" (as such terms are interpreted in the No-Action letters addressed
to Kidder, Peabody Acceptance Corporation I, et al. and the Public Securities
Association dated May 20, 1994 and February 17, 1995, respectively
(collectively, the "PSA Letters") or (ii) no later than two days following their
date of first use with respect to "collateral term sheets" (as such term is
interpreted in the PSA Letters).
(b) The Depositor and the Sponsor will advise the Representative
promptly of any proposal to amend or supplement the Registration Statement or
the Prospectus and will not effect such amendment or supplementation without the
consent of the Representative, which consent shall not be unreasonably withheld
or delayed; and the Depositor and the Sponsor will advise the Representative
promptly of any amendment or supplementation of the Registration Statement or
the Prospectus and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
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<PAGE>
(c) If, at any time when a prospectus relating to the Certificates is
required to be delivered by an Underwriter or dealer either (i) any event occurs
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made not misleading, or (ii) for any other
reason it shall be necessary to amend or supplement the Prospectus to comply
with the Act, the Depositor and the Sponsor promptly will notify the
Representative of such event and promptly will prepare, at their own expense, an
amendment or supplement which will correct such statement or omission. Neither
the Representative's consent to, nor the Underwriters distribution of any
amendment or supplement to the Prospectus shall constitute a waiver of any of
the conditions set forth in Section 6 hereof.
(d) The Depositor and the Sponsor will furnish to the Underwriters
copies of any preliminary prospectus, the Prospectus, the Registration Statement
and all amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Representative reasonably requests.
(e) The Sponsor will take all actions which are reasonably necessary
to arrange for the qualification of the Certificates for offering and sale under
the laws of such jurisdictions as the Representative designates and will
continue such qualifications in effect so long as required under such laws for
the distribution of the Certificates; provided, however, that in no event shall
the Depositor be obligated to qualify as a foreign corporation or to execute a
general or unlimited consent to service of process in any such jurisdiction.
(f) The Depositor and the Sponsor shall furnish or make available to
the Representative or its counsel such additional documents and information
regarding the Depositor and their respective affairs as the Representative may
from time to time reasonably request, including any and all documentation
reasonably requested in connection with its due diligence efforts regarding
information in the Registration Statement and the Prospectus and in order to
evidence the accuracy or completeness of any of the conditions contained in this
Underwriting Agreement; and all actions taken by the Depositor to authorize the
sale of the Certificates shall be reasonably satisfactory in form and substance
to the Representative.
(g) The Depositor and the Sponsor shall, at all times upon request of
the Representative or its advisors, or both, from the date hereof through the
Closing Date, (i) make available to the Underwriters or their advisors, or both,
prior to acceptance of its purchase, such information (in addition to that
contained in the Registration Statement and the Prospectus) concerning the
offering, the Depositor and any other relevant matters as they possess or can
acquire without unreasonable effort or expense and (ii) provide the Underwriters
or their advisors, or both, prior to acceptance of its subscription, the
opportunity to ask questions of, and receive answers from, the Depositor and the
Sponsor with respect to such matters.
(h) The Depositor and the Sponsor will cause the Trust to make
generally available to Certificateholders, as soon as practicable, but no later
than sixteen months after the date hereof, an earnings statement of the Trust
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covering a period of at least twelve consecutive months beginning after the
later of (i) the effective date of the registration statement relating to the
Certificates and (ii) the effective date of the most recent post-effective
amendment to the Registration Statement to become effective prior to the date of
this Agreement and, in each case, satisfying the provisions of Section 11(a) of
the Act (including Rule 158 promulgated thereunder).
(i) The Depositor, and the Sponsor shall not, and shall not permit any
of its affiliates to, publish or disseminate any material in connection with the
offering of the Certificates unless the Representative shall have consented to
the publication or use thereof. The Representative hereby confirms its consent
to the use of the Prospectus in connection with the offering of the
Certificates.
(j) For a period from the date of this Agreement until the retirement
of the Certificates, or until such time as the Underwriters shall cease to
maintain a secondary market in the Certificates, whichever occurs first, the
Depositor will deliver to the Representative the annual statements of compliance
and the annual independent certified public accountants' reports furnished to
the Trustee pursuant to the Pooling and Servicing Agreement, as soon as such
statements and reports are furnished to the Trustee.
(k) So long as any of the Certificates are outstanding, the Depositor
will furnish to the Representative (i) as soon as practicable after the end of
the fiscal year all documents required to be distributed to Certificateholders
or filed with the Commission on behalf of the Trust pursuant to the Exchange
Act, or any order of the Commission thereunder and (ii) from time to time, any
other information concerning the Depositor or the Sponsor as the Representative
may reasonably request only insofar as such information reasonably relates to
the Registration Statement or the Prospectus or the transactions contemplated by
the Basic Documents.
(l) On or before the Closing Date, the Depositor and the Sponsor shall
cause the computer records of the Depositor, BDFS and each of the Originators
relating to the Receivables to show the absolute ownership by the Trustee on
behalf of the Trust of the Receivables, and from and after the Closing Date the
Depositor shall not take any action inconsistent with the ownership by the
Trustee on behalf of the Trust of such Receivables, other than as permitted by
the Pooling and Servicing Agreement.
(m) To the extent, if any, that any of the ratings provided with
respect to the Certificates by the rating agency or agencies that initially rate
any of the Certificates are conditional upon the furnishing of documents or the
taking of any other actions by the Depositor or the Sponsor on or prior to the
Closing Date, the Depositor and the Sponsor shall furnish such documents and
take any such other actions. A copy of any such document shall be provided to
the Representative at the time it is delivered to the rating agencies.
(n) The Sponsor will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the printing and filing of
the documents (including the Registration Statement and the Prospectus), (ii)
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the preparation, issuance and delivery of the Certificates to the
Representative, (iii) the fees and disbursements of the Sponsor's, the
Depositor's and BDFS's counsel (including without limitation, local counsel in
the States of ___, ___and ___) and accountants, (iv) the qualification of the
Certificates under state securities laws, including filing fees and the fees and
disbursements of counsel for the Representative in connection therewith and in
connection with the preparation of any blue sky or legal investment survey, if
any is requested, (v) the printing and delivery to the Underwriters of copies of
the Registration Statement and the Prospectus and each amendment thereto, (vi)
the printing and delivery to the Underwriters of copies of any blue sky or legal
investment survey prepared in connection with the Certificates, (vii) any fees
charged by rating agencies for the rating of the Certificates, (viii) the fees
and expenses of the Trustee and its counsel and (ix) the fees and expenses of
Stroock & Stroock & Lavan LLP.
6. Conditions of the Obligations of the Underwriters. The obligations
of the Underwriters to purchase and pay for the Certificates will be subject to
the accuracy, as of the date hereof and as of the Closing Date, of the
representations and warranties on the part of the Depositor and the Sponsor
herein, to the accuracy of the written statements of officers of the Depositor
and the Sponsor made pursuant to the provisions of this Section, to the
performance by the Depositor and the Sponsor of its obligations hereunder and to
the following additional conditions precedent:
(a) The Representative shall have received a letter, dated the date
hereof, of ________________ with respect to certain agreed-upon procedures,
confirming that such accountants are independent public accountants within the
meaning of the Act and the Rules and Regulations, and substantially in the form
of the draft to which the Representative has previously agreed and otherwise in
form and substance reasonably satisfactory to the Representative and counsel for
the Underwriters.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) hereof. On or prior
to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Depositor or the
Sponsor, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the Receivables or particularly the business
or properties of the Trust, the Depositor or the Sponsor which, in the
reasonable judgment of a majority in interest of the Underwriters (including the
Representative), materially impairs the investment quality of the Certificates;
(ii) any downgrading in the rating of any [DEBT] securities of [Barnett Banks,
Inc.] by any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any such debt
securities (other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such rating); (iii)
any suspension or limitation of trading in securities generally on the New York
[OR AMERICAN] Stock
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<PAGE>
Exchanges, or any setting of minimum prices for trading on such
exchange; [(IV) ANY SUSPENSION OF TRADING OF ANY SECURITIES OF [BARNETT BANKS,
INC.] ON ANY EXCHANGE, THE NASDAQ NATIONAL MARKET OR IN THE OVER-THE-COUNTER
MARKET;] (v) any banking moratorium declared by Federal, New York or Florida
authorities; or (vi) any outbreak or escalation of major hostilities in which
the United States is involved, any declaration of war by Congress, or any other
substantial national or international calamity or emergency if, in the judgment
of a majority in interest of the Underwriters (including the Representative),
the effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Certificates.
(d) On the Closing Date, each of the Basic Documents and the
Certificates shall have been duly authorized, executed and delivered by the
parties thereto, shall be in full force and effect and no default shall exist
thereunder, and the Trustee shall have received a fully executed copy thereof
or, with respect to the Certificates, a conformed copy thereof. The Basic
Documents and the Certificates shall be substantially in the forms heretofore
provided to the Representative.
(e) The Representative shall have received an opinion of Stroock &
Stroock & Lavan LLP, special counsel to the Depositor, dated the Closing Date,
satisfactory in form and substance to the Representative and counsel for the
Underwriters, to the effect that:
(i) The Registration Statement became effective under the Act as
of ______, 1997 and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement or
any part thereof or any amendment thereto has been issued under the
Act and no proceeding for that purpose has been instituted or
threatened by the Commission.
(ii) The Depositor is not, and will not as a result of the offer
and sale of the Certificates as contemplated in the Prospectus and
this Agreement become, an "investment company" as defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), or a company "controlled by" an "investment company" within the
meaning of the Investment Company Act.
(iii) The Pooling and Servicing Agreement need be qualified under
the Trust Indenture Act and the Trust is not required to register
under the Investment Company Act.
(iv) The Receivables are chattel paper as defined in the UCC as
in effect in the State of New York.
(v) The statements in the Prospectus under the headings "Summary
of Terms -- Federal Income Tax Consequences," "Federal Income Tax
Consequences," "Summary of Terms -- ERISA Considerations," and "ERISA
Considerations," to the extent that they constitute statements of
matters of law or legal conclusions with respect thereto, have been
reviewed by such counsel and accurately describe the material
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<PAGE>
consequences to holders of the Certificates under the Code and ERISA.
(vi) The Registration Statement relating to the Certificates as
of its effective date and the Prospectus as of the date of this
Agreement, and any amendment or supplement thereto, as of its date,
complied as to form in all material respects with the requirements of
the Act and the applicable Rules and Regulations. Such counsel need
express no opinion with respect to the financial statements, the
exhibits, annexes and other financial, statistical, numerical or
portfolio data, economic conditions or financial condition of the
portfolio information included in or incorporated by reference into
the Registration Statement relating to the Certificates, the
Prospectus or any amendment or supplement thereto.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York.
(f) The Representative shall have received the opinion of Stroock &
Stroock & Lavan LLP, special counsel to the Trust, dated the Closing Date,
satisfactory in form and substance to the Representative and counsel for the
Underwriters, regarding the creation, attachment and perfection of a first
priority security interest in the Receivables and the property held in the
Reserve Account in favor of the Trustee on behalf of the Certificateholders.
Such opinion may contain such assumptions, qualifications and limitations as are
customary in opinions of this type and are reasonably acceptable to counsel to
the Underwriters. In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the federal law
of the United States of America and the laws of the State of New York. To the
extent any portion of such opinion is governed by the laws of the State of
Delaware, such opinion will be given by ___________________.
(g) The Representative shall have received the opinion of in-house
counsel to the Originators, the Depositor and BDFS or such other counsel
acceptable to the Representative and counsel for the Underwriters, dated the
Closing Date, satisfactory in form and substance to the Underwriters and counsel
for the Underwriters to the effect that:
(i) Each of the Originators, the Depositor and BDFS has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the state of its incorporation, with full corporate
power and authority to own its properties and conduct its business,
and is duly qualified to transact business and is in good standing in
each jurisdiction in which its failure to qualify would have a
material adverse effect upon the business or the ownership of its
property.
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<PAGE>
(ii) The Registration Statement became effective under the Act as
of ____ __, 1997, and, to the best of our knowledge and information,
no stop order suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereto has been issued
under the Act and no proceeding for that purpose has been instituted
or threatened by the Commission.
(iii) The Loan Sale Agreement has been duly authorized, executed
and delivered by, and constitutes a legal, valid and binding
obligation of, each Originator, enforceable against such Originator in
accordance with its terms, subject as to enforceability to the effects
of applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws now or hereafter in effect
relating to creditors' rights generally and subject to general
principles of equity (whether in a proceeding at law or in equity).
The Loan Purchase Agreement has been duly authorized, executed and
delivered by, and constitutes a legal, valid and binding obligation
of, BDFS, enforceable against BDFS in accordance with its terms,
subject as to enforceability to the effects of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
similar laws now or hereafter in effect relating to creditors' rights
generally and subject to general principles of equity (whether in a
proceeding at law or in equity). The Pooling and Servicing Agreement,
the Loan Purchase Agreement and the Underwriting Agreement have been
duly authorized, executed and delivered by, and each constitutes a
legal, valid and binding obligation of, the Depositor, enforceable in
accordance with its terms, subject as to enforceability to the effects
of applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws now or hereafter in effect
relating to creditors' rights generally and subject to general
principles of equity (whether in a proceeding at law or in equity).
The Pooling and Servicing Agreement and the Underwriting Agreement
have been duly authorized, executed and delivered by, and each
constitutes a legal, valid and binding obligation of, BDFS enforceable
against BDFS in accordance with their terms, subject as to
enforceability to the effects of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws now
or hereafter in effect relating to creditors' rights generally and
subject to general principles of equity (whether in a proceeding at
law or in equity).
(iv) The Depositor has duly authorized, executed and delivered
the written order to the Trustee to execute and deliver the
Certificates. When the Certificates have been executed, and delivered
by the Trustee under the Pooling and Servicing Agreement and paid for
pursuant to this Agreement, the Certificates will be validly issued
and outstanding and entitled to the benefits of the Pooling and
Servicing Agreement, subject as to enforceability to the effects of
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and similar laws now or hereafter in effect
relating to creditors' rights generally and subject to general
principles of equity (whether in a proceeding at law or in equity).
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(v) Neither the transfer of certain of the Receivables by the
Originators to the Depositor or the Depositor to the Trustee on behalf
of the Trust, nor the assignment by the Depositor of the Trust Estate
to the Trust, nor the execution, delivery and performance by the
Depositor, BDFS and each of the Originators of this Agreement and the
Basic Documents to which it is a party, nor the consummation by the
Depositor of the transactions contemplated thereby will conflict with
or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or assets of
the Depositor, any Originator or BDFS, as the case may be, pursuant to
the terms of the certificate of incorporation or the by-laws of the
Depositor, any Originator or BDFS or any statute, rule, regulation or
order of any governmental agency or body, or any court having
jurisdiction over the Depositor, such Originator or BDFS or its
properties, or any agreement or instrument known to me after due
investigation to which the Depositor, such Originator or BDFS is a
party or by which the Depositor, such Originator or BDFS or any of its
properties is bound.
(vi) BDFS has all necessary licenses required by law in
connection with its performance as Servicer pursuant to the Pooling
and Servicing Agreement.
(vii) No authorization, license, approval, consent or order of,
or filing with, any court or governmental agency or authority is
necessary in connection with the execution, delivery and performance
of this Agreement and each of the Basic Documents to which it is a
party by the Depositor, any Originator or BDFS.
(viii) To the best of the knowledge of such counsel, there are no
legal or governmental proceedings pending to which the Depositor, any
Originator or BDFS is a party or of which any property of the
Depositor, any Originator or BDFS is the subject, and no such
proceedings are known by me to be threatened or contemplated by
governmental authorities or threatened by others (i) asserting the
invalidity of all or any part of the Underwriting Agreement, the Loan
Sale Agreement, the Loan Purchase Agreement or the Pooling and
Servicing Agreement or (ii) that could materially adversely affect the
ability of the Depositor, any Originator or BDFS to perform its
obligations under this Agreement or any of the Basic Documents to
which it is a party.
(ix) Each Originator has full power and authority to sell and
assign the property to be sold and assigned to the Depositor by it
pursuant to the Loan Sale Agreement and has duly authorized such sale
and assignment to the BDFS by all necessary corporate action.
(x) BDFS has full power and authority to sell and assign the
property to be sold and assigned to the Depositor by it pursuant to
the Loan Sale Agreement and has duly authorized such sale and
assignment to the BDFS by all necessary corporate action.
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<PAGE>
(xi) Such counsel is familiar with the Originators' standard
operating procedures relating to the acquisition of a perfected first
priority security interest in the vehicles financed by each of such
Originators pursuant to retail installment sale contracts in the
ordinary course of their business. Assuming that these standard
procedures are followed with respect to the perfection of security
interests in the Financed Vehicles, each Originator has acquired or
will acquire a perfected first priority security interests in the
Financed Vehicles with respect to which it has originated Receivables
sold by it to the Depositor.
(xii) Immediately prior to the transfer of certain of the
Receivables by the Originators pursuant to the Loan Purchase
Agreement, each Originator was the sole owner of all right, title and
interest in the Receivables and the other property transferred by it
to the Depositor.
(xiii) To such counsel's knowledge, there are no material legal
or governmental proceedings pending or threatened against the
Depositor other than those disclosed in the Registration Statement and
the Prospectus.
(xiv) To the best of such counsel's knowledge, there are no
contracts or documents of the Depositor which are required to be filed
as exhibits to the Registration Statement pursuant to the Act or the
Rules or Regulations which have not been so filed. The documents
incorporated by reference in the Registration Statement and
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and the Rules and Regulations, except
as to the financial statements and other financial and statistical
data included therein, to which such counsel need not express any
opinion.
(xv) Such counsel shall state that they have participated in the
preparation of the Registration Statement and the Prospectus, and the
Registration Statement relating to the Certificates as of its
effective date, and the Prospectus, as of the date of this Agreement,
and any amendment or supplement thereto, as of its date when it became
effective, contained any 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 its date contained or on the Closing Date contains, any
untrue statement of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided that such counsel need not express
any view with respect to the financial, statistical or computational
material included in or incorporated by reference into the
Registration Statement relating to the Certificates, the Prospectus or
any amendment or supplement thereto.
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Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York.
(h) The Representative shall have received an opinion addressed to it
of Stroock & Stroock & Lavan LLP, in its capacity as counsel to the
Underwriters, dated the Closing Date, with respect to (i) the consolidation
of the assets and liabilities of the Depositor with those of any of the
Originators under the doctrine of substantive consolidation, (ii) the
creation of (x) a "true sale" with respect to the sale of the Receivables
from each of the Originators to the
Depositor and from the Depositor to the Trust or (y) a valid and binding
security interest in the Receivables and (iii) the validity of the Certificates
and such other related matters as the Representative shall reasonably require
and the Depositor shall have furnished or caused to be furnished to such counsel
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters. Such opinions shall be limited to the laws of the
State of New York and United States federal law.
(i) The Representative shall have received an opinion of __________,
counsel to the Trustee, dated the Closing Date and satisfactory in form and
substance to the Representative and counsel for the Underwriters, to the effect
that:
(i) The Trustee is a ___validly existing under the laws of the
___.
(ii) The Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Pooling and
Servicing Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of the Pooling and
Servicing Agreement.
(iii) The Pooling and Servicing Agreement has been duly executed
and delivered by the Trustee and constitutes a legal, valid and
binding obligation of the Trustee, enforceable against the Trustee in
accordance with its respective terms, except that such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium,
liquidation, or other similar laws applicable to banking corporations
affecting the enforcement of creditors' rights generally, and by
general principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(iv) The Certificates have been duly authenticated by the Trustee
in accordance with the terms of the Pooling and Servicing Agreement.
(j) The Representative shall have received copies of each opinion of
counsel delivered to either rating agency, together with a letter addressed to
the Underwriters, dated the Closing Date, to the effect that the Underwriters
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may rely on each such opinion to the same extent as though such opinion was
addressed to each as of its date.
(k) The Representative shall have received a certificate dated the
Closing Date of the Depositor, executed by any two of the Chairman of the Board,
the President, any Executive Vice President, Senior Vice President or Vice
President, the Treasurer, any Assistant Treasurer, the Secretary, the principal
financial officer or the principal accounting officer of the Depositor, in which
such officer shall state that, to the best of its knowledge after reasonable
investigation, (i) the representations and warranties of the Depositor,
contained in this Agreement and the Basic Documents to which it is a party are
true and correct in all material respects, (ii) that the Depositor, has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied under such agreements at or prior to the Closing Date, and (iii) since
_________ __, 199_-_, except as may be disclosed in the Prospectus or in such
certificate, no material adverse change, or any development involving a
prospective material adverse change, in or affecting particularly the business
or properties of the Trust, BDFS or the Depositor, has occurred. Such
certificate shall have attached thereto a true and correct photocopy of the
demand note furnished to the Depositor by the Sponsor.
(l) The Representative shall have received a certificate dated the
Closing Date of the Sponsor, executed by any two of the Chairman of the Board,
the President, any Executive Vice President, Senior Vice President or Vice
President, the Treasurer, any Assistant Treasurer, the Secretary, the principal
financial officer or the principal accounting officer of the Sponsor in which
such officer shall state that, to the best of its knowledge after reasonable
investigation, (i) the representations and warranties of the Sponsor contained
in this Agreement, the Loan Purchase Agreement and the Pooling and Servicing
Agreement are true and correct in all material respects, (ii) that the Sponsor
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to the and (iii) since
______ __, 199_-_, except as may be disclosed in the Prospectus or in such
certificate, no material adverse change, or any development involving a
prospective material adverse change, in or affecting particularly the business
or properties of the Trust, the Sponsor or the Depositor, has occurred.
(m) The Representative shall have received evidence satisfactory to it
and counsel for the Underwriters that, on or before the Closing Date, UCC-1
financing statements shall have been submitted to the Trustee, for filing in the
appropriate filing offices reflecting (1) the transfer of the interest in the
Receivables, certain other property and the proceeds thereof (A) from each
Originator to the Depositor and (B) from the Depositor to the Trust, and (2) the
grant of the security interest by the Trust in the Receivables, certain other
property and the proceeds thereof to the Trustee.
(n) The Class A Certificates shall be rated "AAA" or its equivalent,
and the Class B Certificates shall be rated at least "_" or its equivalent, in
each case by Moody's and S&P and neither corporation shall have placed the
Certificates under surveillance or review with possible negative implications.
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<PAGE>
The Depositor will provide or cause to be provided to the
Representative such conformed copies of such of the foregoing opinions,
certificates, letters and documents as the Representative shall reasonably
request.
7. Indemnification and Contribution.
(a) The Depositor and the Sponsor, jointly and severally, agree to
indemnify and hold harmless each Underwriter against any and all losses, claims,
damages or liabilities, joint or several, or any action in respect thereof
(including but not limited to, any loss, claim, damage or liability (or action
relating to purchases and sales of the Certificates)), to which such Underwriter
may become subject, under the Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that neither the Depositor nor
the Sponsor shall be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with the Underwriters' Information
and the Derived Information.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Depositor and the Sponsor against any losses, claims, damages or liabilities
to which the Depositor or the Sponsor may become subject, under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto or any related preliminary prospectus, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with the Underwriters' Information, and will reimburse
any legal or other expenses reasonably incurred by the Sponsor or the Depositor
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above or (e) below, notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
-18-
<PAGE>
under subsection (a) or (b) above or (e) below, except to the extent it has been
materially prejudiced by such failure and, provided further, that the failure to
notify any indemnifying party shall not relieve it from any liability which it
may have to any indemnified party otherwise that under this Section. In case any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and to the extent that it may wish to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, except to
the extent provided in the next following paragraph, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonable satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Underwriters, if the indemnified
parties under this Section 7 consist of the Underwriters, or by the Depositor
and the Sponsor, if the indemnified parties under this Section 7 consist of the
Depositor and the Sponsor.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 7 (a), (b) and (e) hereof, shall use its best efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) Each Underwriter agrees to provide the Depositor with a copy of
any Derived Information (as defined in Section 7(h) below) no later than the
date preceding the date such Derived Information is required to be filed with
the Commission on a Current Report pursuant to the PSA Letters.
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<PAGE>
(e) Each Underwriter severally agrees, assuming all Sponsor-Provided
Information is accurate and complete in all material respects, to indemnify and
hold harmless the Depositor and the Sponsor against any losses, claims, damages
or liabilities to which the Depositor or the Sponsor may become subject, under
the Act, the Exchange Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement of any material fact contained in the Derived Information
provided by such Underwriter, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and will reimburse any
legal or other expenses reasonably incurred by the Sponsor or the Depositor in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred.
(f) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless the indemnified party under subsection (a) or
(b) above [CONTRIBUTION FOR COMP MATERIAL - SUBSECTION (E)?], then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Depositor and the
Sponsor on the one hand and the Underwriters on the other from the offering of
the Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, 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 Depositor or the Sponsor on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Depositor and the Sponsor on the one hand and the Underwriters on the other
shall be deemed to be in such proportion that the Underwriters shall be
responsible for that portion represented by the excess, if any, of the sale
price received by the Underwriters for the resale of the Certificates over the
purchase price paid by the Underwriters to the Depositor for the Certificates
(the "Spread"); and the Depositor and the Sponsor shall be responsible for the
balance. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Depositor or the Sponsor or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Depositor, the Sponsor and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (f) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purposes) or by
any other method of allocation which does not take into account the equitable
considerations referred to herein.
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (f) shall be deemed to include any legal or other expenses reasonably
-20-
<PAGE>
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (f). Notwithstanding
the provisions of this subsection (f), in no case shall any Underwriter (except
(x) with respect to any Derived Information incorporated by reference into the
Registration Statement or Prospectus at the request of such Underwriter (i)
which had not been approved by the Depositor for use by the Underwriters or (ii)
for which the Depositor have not received a letter from __________ in form and
substance satisfactory to them and (y) as may be provided in any agreement among
the Underwriters relating to the offering of the Certificates) be responsible
for any amount (not including the fees and expenses of its counsel) in excess of
the Spread received by such Underwriter, as set forth on the cover page of the
Prospectus. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(g) The obligations of the Depositor and the Sponsor under this
Section shall be in addition to any liability which the Depositor and the
Sponsor may otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls the Underwriters within the meaning of the
Act or the Exchange Act. The obligations of the Underwriters shall be in
addition to any liability which the Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Depositor,
and each of its officers that signed the Registration Statement.
(h) For purposes of this Section 7, as to each Underwriter the term
"Derived Information" means such portion, if any, of the information delivered
to the Depositor by such Underwriter pursuant to subsection (d) hereof for
filing with the Commission in the Current Report as:
(i) is not contained in the Prospectus without taking into
account information incorporated therein by reference;
(ii) does not constitute Sponsor-Provided Information (as defined
below); and
(iii) is of the type of information defined as "computational
materials," "structural term sheets" or "collateral term sheets" (as
such terms are interpreted in the PSA Letters).
"Sponsor-Provided Information" means any computer tape furnished to the
Underwriters by the Sponsor concerning the assets comprising the Trust.
(i) The Underwriters confirm that the information set forth in the
last paragraph on the cover page of the Prospectus and in the ______ paragraph
under the caption "Underwriting" in the Prospectus (together, the "Underwriters'
Information") is correct, and together with the Derived Information, constitutes
the only information furnished in writing to the Depositor by or on behalf of
the Underwriters specifically for inclusion in the Registration Statement and
the Prospectus.
-21-
<PAGE>
(i) Each Underwriter severally represents and warrants to, and
covenants with, the Depositor and the Sponsor that all Derived
Information provided to the Depositor pursuant to this Section 7, as
of the date such information is so provided and as of the date such
information is filed by the Depositor with the Commission will not
include any untrue statement of a material fact, when considered in
conjunction with the Prospectus, and will not omit to state any
material fact necessary, when considered in conjunction with the
Prospectus, to make the statements contained therein, in the light of
the circumstances under which they were made, not misleading.
(ii) Each Underwriter severally further covenants with the
Depositor that if any Derived Information required to be provided to
the Depositor pursuant to subsection (d) above is determined to
contain any information that is inaccurate or misleading, such
Underwriter (whether or not such Derived Information was provided to
the Depositor or filed by the Depositor with the Commission) shall
promptly prepare and deliver to the Depositor and each prospective
investor which received such Derived Information corrected Derived
Information. All information provided to the Depositor pursuant to
this Section 7(i) shall be provided within the time periods set forth
in subsection (d) above.
(iii) Each Underwriter severally covenants with the Depositor
that all Derived Information delivered by it to prospective investors
shall contain a legend satisfactory in substance to the Depositor.
(j) Notwithstanding any other provision herein, each Underwriter
severally agrees to pay all costs and expenses of the Depositor incurred in
connection with (i) the filing by the Depositor of any Derived Information with
the Commission and (ii) any action by the Depositor against such Underwriter to
enforce any of its rights set forth in this Section 7, including, without
limitation, legal fees and expenses.
8. Default of Underwriter. If any of the Underwriters default in their
obligations to purchase Certificates hereunder, and the aggregate principal
amount of Certificates that the defaulting Underwriter agreed but failed to
purchase does not exceed 10% of the total principal amount of the Certificates,
the Underwriters may make arrangements satisfactory to the Depositor for the
purchase of such Certificates by other persons including the non-defaulting
Underwriter, but if no such arrangements are made by the Closing Date, the
non-defaulting Underwriter shall be obligated, in proportion to its commitment
hereunder, to purchase the Certificates that such defaulting Underwriter agreed
but failed to purchase. If any of the Underwriters so default and the aggregate
principal amount of Certificates with respect to which such default or defaults
occur exceeds 10% of the total principal amount of Certificates and arrangements
satisfactory to the Underwriters and the Depositor for the purchase of such
Certificates by other persons are not make within 36 hours after such default,
this Agreement will terminate without liability on the part of the Depositor,
except as provided in Section 9 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve the Underwriter from liability for its
default.
-22-
<PAGE>
9. Survival of Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Depositor or its officers and of the Underwriters set forth in or made pursuant
to this Agreement or contained in certificates of officers of the Depositor
submitted pursuant hereto shall remain operative and in full force and effect,
regardless of any investigation or statement as to the results thereof, made by
or on behalf of the Underwriters, the Depositor or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Certificates. If for any reason the
purchase of the Certificates by the Underwriters is not consummated, the
Depositor shall remain responsible for the expenses to be paid or reimbursed by
the Sponsor pursuant to Section 5(l) and the respective obligations of the
Depositor, the Sponsor and the Underwriters pursuant to Section 7 shall remain
in effect. If for any reason the purchase of the Certificates by the
Underwriters is not consummated (other than because of a failure to satisfy the
conditions set forth in items (iii), (v) and (vi) of Section 6(b)), the
Depositor will reimburse the Underwriters for all out-of-pocket expenses
reasonably incurred by them in connection with the offering of the Certificates.
10. Notices. Any written request, demand, authorization, direction,
notice, consent or waiver shall be personally delivered or mailed certified
mail, return receipt requested (or in the form of telex or facsimile notice,
followed by written notice as aforesaid) and shall be deemed to have been duly
given upon receipt, if sent to the Underwriters or the Representative, when
delivered to the Representative at _____________________, Attention: Investment
Banking Department-- Transactions Advisory Group (fax # __________), and if sent
to the Depositor or the Sponsor, when delivered to 270 South Service Road,
Melville, NY 11747, Attention: General Counsel (Fax # (516) 777-8440).
11. Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligations hereunder.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to the
choice of law provisions thereof.
14. Representation of Underwriters. The Representative will act for
the several Underwriters in connection with the transactions described in this
Agreement, and any action taken by Representative under this Agreement will be
binding upon all the Underwriters.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Depositor, the Sponsor
and the Underwriters in accordance with its terms.
Very truly yours,
BARNETT AUTO RECEIVABLES CORP.
By:__________________________
Name:
Title:
BARNETT DEALER FINANCIAL
SERVICES, INC.
By:__________________________
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of the
date first written above.
__________________________________________
By:_______________________________________
Name:
Title:
Acting on behalf of itself and as the
Representative of the Several
Underwriters
-24-
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SCHEDULE I
Initial Principal
Balance of
Underwriter Class A Certificates
- ----------- --------------------
- --------------................................. $
- --------------................................
Total.........................................
Initial Principal
Balance of
Underwriter Class B Certificates
- ----------- --------------------
______________................................. $
- --------------.................................
- --------------.................................
Total..........................................
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<PAGE>
SCHEDULE III
Original
Principal
Security Balance $ Price % Price $ Rate %
- -------- --------- ------- ------- ------
Class A Certificates
Class B Certificates
Total Price to Public: $
Total Price to Sponsor:
Underwriting Discounts
and Commissions: $
-26-
EXHIBIT 4.1
---------------------------------------------------------
FORM OF POOLING AND SERVICING
AGREEMENT
between
BARNETT AUTO RECEIVABLES CORP.,
as Depositor,
BARNETT DEALER FINANCIAL SERVICES, INC.,
as Servicer and Sponsor
and
--------------------------,
as Trustee,
On behalf of the Certificateholders,
and as Collateral Agent
Dated as of ________ __, 199_
---------------------------------------------------------
Barnett Auto Trust 199_-_
$_____________ Class A ____% Asset Backed Certificates
$_____________ Class B ____% Asset Backed Certificates
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
SECTION 1.1. Definitions.....................................2
SECTION 1.2. Other Definitional Provisions..................20
SECTION 1.3. Calculations...................................21
SECTION 1.4. References.....................................21
SECTION 1.5. References to the Trust........................21
SECTION 1.6. Action by or Consent of Certificateholders.....21
ARTICLE II
The Trust Property
SECTION 2.1. Conveyance of Trust Property...................22
SECTION 2.2. Representations and Warranties as to
Each Receivable................................22
SECTION 2.3. Repurchase upon Breach.........................26
SECTION 2.4. Custody of Receivable Files....................27
SECTION 2.5. Duties of Servicer as Custodian................27
SECTION 2.6. Instructions; Authority To Act.................28
SECTION 2.7. Custodian's Indemnification....................28
SECTION 2.8. Effective Period and Termination...............29
ARTICLE III
Administration and Servicing of the Trust Property
SECTION 3.1. Duties of Servicer.............................29
SECTION 3.2. Collection and Allocation of Receivable
Payments.......................................30
SECTION 3.3. Realization upon Receivables...................30
SECTION 3.4. Physical Damage Insurance; Other Insurance.....31
SECTION 3.5. Maintenance of Security Interests in
Financed Vehicles..............................31
SECTION 3.6. Covenants of Servicer..........................32
SECTION 3.7. Purchase of Receivables upon Breach............32
SECTION 3.8. Servicing Fee..................................32
SECTION 3.9. Servicer's Certificate.........................33
SECTION 3.10. Annual Statement as to Compliance; Notice
of Default.....................................33
SECTION 3.11. Annual Independent Certified Public
Accountants' Report............................33
SECTION 3.12. Access to Certain Documentation and
Information Regarding Receivables..............34
SECTION 3.13. Servicer Expenses..............................34
SECTION 3.14. Appointment of Subservicers....................34
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<PAGE>
ARTICLE IV
Distributions; Reserve Fund
SECTION 4.1. Establishment of Accounts......................35
SECTION 4.2. Collections....................................38
SECTION 4.3. Additional Deposits............................39
SECTION 4.4. Net Deposits...................................39
SECTION 4.5. Distributions..................................39
SECTION 4.6. Reserve Fund...................................41
SECTION 4.7. Statements to Certificateholders...............42
SECTION 4.8. Advances ......................................44
ARTICLE V
[Intentionally Omitted]
ARTICLE VI
The Certificates
SECTION 6.1. The Certificates...............................44
SECTION 6.2. Authentication and Delivery of
Certificates...................................45
SECTION 6.3. Registration of Transfer and Exchange of
Certificates...................................45
SECTION 6.4. Reserved.......................................46
SECTION 6.5. Reserved.......................................46
SECTION 6.6. Mutilated, Destroyed, Lost or Stolen
Certificates...................................46
SECTION 6.7. Persons Deemed Owners..........................47
SECTION 6.8. Access to List of Certificateholders' Names
and Addresses..................................47
SECTION 6.9. Maintenance of Office or Agency................47
SECTION 6.10. Book-Entry Certificates........................47
SECTION 6.11. Notices to Clearing Agency.....................48
SECTION 6.12. Definitive Certificates........................48
ARTICLE VII
The Depositor
SECTION 7.1. Representations of Depositor...................49
SECTION 7.2. Special Purpose Entity.........................51
SECTION 7.3. Corporate Existence............................51
SECTION 7.4. Liability of Depositor; Indemnities............52
SECTION 7.5. Merger or Consolidation of, or Assumption
of the Obligations of Depositor...............53
SECTION 7.6. Limitation on Liability of Depositor and
Others.........................................54
SECTION 7.7. Depositor May Own Certificates.................54
SECTION 7.8. Security Interest..............................54
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<PAGE>
ARTICLE VIII
The Servicer and the Sponsor
SECTION 8.1. Representations of Servicer....................54
SECTION 8.2. Indemnities of Servicer........................56
SECTION 8.3. Merger or Consolidation of, or Assumption
of the Obligations of, BDFS...................57
SECTION 8.4. Limitation on Liability of Servicer and
Others.........................................57
SECTION 8.5. BDFS Not To Resign as Servicer.................58
SECTION 8.6. Corporate Existence............................58
SECTION 8.7. Tax Accounting.................................59
SECTION 8.8. Demand Note....................................59
ARTICLE IX
Servicing Termination
SECTION 9.1. Events of Servicing Termination................60
SECTION 9.2. Appointment of Successor.......................61
SECTION 9.3. Payment of Servicing Fee; Repayment of
Advances.......................................61
SECTION 9.4. Notification to Certificateholders.............61
SECTION 9.5. Waiver of Past Events of Servicing
Termination....................................62
ARTICLE X
The Trustee
SECTION 10.1. Acceptance by Trustee..........................62
SECTION 10.2. Duties of Trustee..............................62
SECTION 10.3. Trustee's Certificate..........................64
SECTION 10.4. Trustee's Assignment of Purchased
Receivables....................................64
SECTION 10.5. Certain Matters Affecting the Trustee..........64
SECTION 10.6. Trustee Not Liable for Certificates or
Receivables....................................65
SECTION 10.7. Trustee May Own Certificates...................67
SECTION 10.8. Trustee's Fees and Expenses....................67
SECTION 10.9. Eligibility Requirements for Trustee...........67
SECTION 10.10. Resignation or Removal of Trustee..............68
SECTION 10.11. Successor Trustee..............................68
SECTION 10.12. Merger or Consolidation of Trustee.............69
SECTION 10.13. Appointment of Co-Trustee or Separate
Trustee........................................69
SECTION 10.14. Representations and Warranties of Trustee......70
SECTION 10.15. Reports by Trustee.............................71
SECTION 10.16. Tax Accounting.................................71
SECTION 10.17. Trustee May Enforce Claims Without
Possession of Certificates.....................71
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<PAGE>
ARTICLE XI
Termination
SECTION 11.1. Termination of the Trust........................72
SECTION 11.2. Optional Purchase of All Receivables............72
SECTION 11.3. Mandatory Sale of all Contracts.................73
ARTICLE XII
Miscellaneous Provisions
SECTION 12.1. Amendment.......................................74
SECTION 12.2. Protection of Title to Trust....................75
SECTION 12.3. Limitation on Rights of Certificateholders......77
SECTION 12.4. GOVERNING LAW...................................78
SECTION 12.5. Notices.........................................78
SECTION 12.6. Severability of Provisions......................79
SECTION 12.7. Assignment......................................79
SECTION 12.8. Certificates Nonassessable and Fully Paid.......79
SECTION 12.9. Intention of Parties............................79
SECTION 12.10. Counterparts....................................80
SECTION 12.11. Collateral Agent Protection.....................80
SECTION 12.12. Limitation of Liability of Trustee and
Collateral Agent................................80
SECTION 12.13. Independence of the Servicer....................80
SECTION 12.14. No Joint Venture................................80
SECTION 12.15. Headings........................................80
SECTION 12.16. Limitations on Rights of Others.................80
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<PAGE>
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivable
-i-
<PAGE>
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Servicer's Certificate
Exhibit D - Form of Monthly Statement to Certificateholders
Exhibit E - Form of Benefit Plan Affidavit
Exhibit F - Form of Trustee's Certificate
Exhibit G - Termination - Auction Procedures
-ii-
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of
_________, 199 _ (the "Agreement"), among Barnett Auto
Receivables Corp., a New York corporation, as depositor (the
"Depositor"), Barnett Dealer Financial Services, Inc., a Florida
corporation ("BDFS"), as servicer (the "Servicer") and sponsor
(the "Sponsor") and _____________, as trustee hereunder (the
"Trustee") and as collateral agent with respect to the Reserve
Fund (the "Collateral Agent").
In consideration of the premises and of the mutual agreements
herein contained, and other good and valuable consideration, the receipt of
which is acknowledged, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"ACCOUNTS" has the meaning specified in Section 4.1(a)(ii).
"ACCOUNT PROPERTY" means all amounts and investments held from
time to time in any Account, the Reserve Fund or the Payahead Account, as the
case may be (whether in the form of deposit accounts, Physical Property,
book-entry securities, uncertificated securities or otherwise), and all proceeds
of the foregoing.
"ACTUARIAL RECEIVABLE" means any Receivable under which the
portion of a payment allocable to principal and the portion of a payment
allocable to interest is determined in accordance with the Scheduled Payment.
"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 Actuarial Receivable pursuant to Section 4.8(a).
"ADVISOR" has the meaning specified in Section 11.3.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGGREGATE NET LOSSES" means, with respect to a Collection
Period, the aggregate principal balance of all Receivables newly designated
during such Collection Period as Liquidated Receivables minus Liquidation
Proceeds collected during such Collection Period with respect to all Liquidated
Receivables.
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"AGREEMENT" means this Pooling and Servicing Agreement, as the
same may be amended and supplemented from time to time.
"AMOUNT FINANCED" means, with respect to any Receivable, the
amount advanced under such Receivable toward the purchase price of the related
Financed Vehicle and any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the
annual rate of finance charges stated in the related Contract expressed as a
percentage.
"AUCTION" has the meaning specified in Section 11.3.
"AUCTION PROCEDURES" has the meaning specified in Section 11.3.
"AUCTION PROPERTY" has the meaning specified in Section 11.3.
"AUTHORIZED OFFICER" means, (i) with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any vice
president, assistant vice president, managing director, secretary, assistant
secretary, assistant treasurer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject and (ii) with respect to the Servicer,
any officer of the Servicer who is authorized to act for the Servicer in matters
relating to the Trust and who is identified on the list of Authorized Officers
delivered by the Servicer to the Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"BALLOON LOAN" means a Receivable originated with a stated
maturity of less than the period of time of the corresponding amortization
schedule.
"BALLOON PAYMENT" means the final payment required to be made
under a Balloon Loan.
"BASIC DOCUMENTS" means the Depository Agreement, the Loan
Purchase Agreement and other documents and certificates delivered in connection
therewith.
"BDFS" has the meaning specified in the preamble.
"BOOK-ENTRY CERTIFICATES" mean beneficial interests in the
definitive Certificates described in Section 6.10, the ownership of which shall
be evidenced, and transfers of which shall be made, through book entries by a
Clearing Agency as described in Section 6.10.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a
day on which banking institutions or trust companies in New York, New York,
Jacksonville, Florida or the city in which the Corporate Trust Office is located
are authorized by law, regulation, executive order or governmental decree to be
closed.
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"CERTIFICATE" means any Class A Certificate or Class B
Certificate.
"CERTIFICATE OWNER" means, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules, regulations and procedures of such
Clearing Agency).
"CERTIFICATE REGISTER" means the register maintained by the
Trustee for the registration of Certificates and of transfers and exchanges of
Certificates as provided in Section 6.3.
"CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name a
Certificate shall be registered in the Certificate Register, EXCEPT THAT, solely
for the purpose of giving any consent, request or waiver pursuant to this
Agreement, the interest evidenced by any Certificate registered in the name of
the Depositor, the Servicer or any Person actually known to an Authorized
Officer of the Trustee to be an Affiliate of the Depositor or the Servicer,
shall not be taken into account in determining whether the requisite percentage
necessary to effect any such consent, request or waiver shall have been
obtained.
"CLASS A CERTIFICATE" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit A hereto.
"CLASS A CERTIFICATEHOLDER" or "CLASS A HOLDER" means the Person
in whose name a Class A Certificate shall be registered in the Certificate
Register, EXCEPT THAT, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class A
Certificate registered in the name of the Depositor, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, request
or waiver shall have been obtained.
"CLASS A DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 4.1.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of Class A Monthly Interest 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 is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"CLASS A INTEREST DISTRIBUTION" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such Distribution
Date and the Class A Interest Carryover Shortfall for such Distribution Date.
"CLASS A MONTHLY INTEREST" means, with respect to any
Distribution Date, one- twelfth (or, in the case of the first Distribution Date,
a fraction, the numerator of which is __ and the denominator of which is 360) of
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the product of the Class A Pass-Through Rate and the Class A Principal Balance
as of the Distribution Date occurring in the preceding Collection Period (after
giving effect to any payments made on such Distribution Date) or, in the case of
the first Distribution Date, the Original Class A Principal Balance.
"CLASS A MONTHLY PRINCIPAL" means, with respect to any
Distribution Date, the Class A Percentage of Principal Collections for such
Distribution Date plus the Class A Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"CLASS A PASS-THROUGH RATE" means ___% per annum, calculated on
the basis of a 360-day year consisting of twelve 30-day months.
"CLASS A PERCENTAGE" means __%.
"CLASS A POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Class A
Principal Balance (after giving effect to any distributions made on such
Distribution Date) divided by the Original Class A Principal Balance.
"CLASS A PRINCIPAL BALANCE" equals the Original Class A Principal
Balance, as reduced by all amounts allocable to principal on the Class A
Certificates previously distributed to Class A Certificateholders.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, with respect to
any Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
"CLASS A PRINCIPAL DISTRIBUTION" means, with respect to any
Distribution Date (including the Final Scheduled Distribution Date), the sum of
Class A Monthly Principal for such Distribution Date and the Class A Principal
Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the
Class A Principal Distribution shall not exceed the Class A Principal Balance
immediately prior to such Distribution Date. In addition, on the Final Scheduled
Distribution Date, the principal required to be deposited in the Class A
Distribution Account will include the lesser of (a) any principal due and
remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class A Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class A Principal Balance to zero.
"CLASS B CERTIFICATE" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit B hereto.
"CLASS B CERTIFICATEHOLDER" or "CLASS B HOLDER" means the Person
in whose name a Class B Certificate shall be registered in the Certificate
Register, EXCEPT THAT, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class B
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Certificate registered in the name of the Depositor, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, request
or waiver shall have been obtained.
"CLASS B DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 4.1.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of Class B Monthly Interest 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 is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
"CLASS B INTEREST DISTRIBUTION" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"CLASS B MONTHLY INTEREST" means, with respect to any
Distribution Date, one- twelfth (or, in the case of the first Distribution Date,
a fraction, the numerator of which is __ and the denominator of which is 360) of
the product of the Class B Pass-Through Rate and the Class B Principal Balance
as of the Distribution Date occurring in the preceding Collection Period (after
giving effect to any payments made on such Distribution Date) or, in the case of
the first Distribution Date, the Original Class B Principal Balance.
"CLASS B MONTHLY PRINCIPAL" means, with respect to any
Distribution Date, the Class B Percentage of Principal Collections for such
Distribution Date plus the Class B Percentage of Realized Losses with respect to
Receivables which became Liquidated Receivables during the related Collection
Period.
"CLASS B PASS-THROUGH RATE" means ___% per annum, calculated on
the basis of a 360-day year consisting of twelve 30-day months.
"CLASS B PERCENTAGE" means __%.
"CLASS B POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Class B
Principal Balance (after giving effect to any distributions made on such
Distribution Date) divided by the Original Class B Principal Balance.
"CLASS B PRINCIPAL BALANCE" equals the Original Class B Principal
Balance, as reduced by all amounts allocable to principal on the Class B
Certificates previously distributed to Class B Certificateholders.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, with respect to
any Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
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"CLASS B PRINCIPAL DISTRIBUTION" means, with respect to any
Distribution Date (including the Final Scheduled Distribution Date), the sum of
Class B Monthly Principal for such Distribution Date and the Class B Principal
Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the
Class B Principal Distribution shall not exceed the Class B Principal Balance
immediately prior to such Distribution Date. In addition, on the Final Scheduled
Distribution Date, the principal required to be distributed to Class B
Certificate- holders will include the lesser of (a) any principal due and
remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class B Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class B Principal Balance to zero, and, in
the case of clauses (a) and (b), remaining after any required distribution of
the amount described in clause (a) to the Class A Distribution Account.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be DTC.
"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.
"COLLATERAL AGENT" means __________________, a _____________
banking corporation, in its capacity as collateral agent with respect to the
Reserve Fund and the Payahead Account for the Certificateholders.
"COLLECTION ACCOUNT" means the account or accounts established
and maintained as such pursuant to Section 4.1.
"COLLECTION PERIOD" means, a calendar month, except with respect
to the first Collection Period, which shall be the period from the Cutoff Date
to _________ __, 199_. Any amount stated "as of the close of business on the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day 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 Advances and
(5) all distributions to be made on the immediately following Distribution Date.
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"COLLECTIONS" mean, for a Distribution Date, the sum of the
Interest Collections and Principal Collections for such Distribution Date.
"COMPUTER TAPE" means the computer tape furnished to the Trustee
describing certain characteristics of the Receivables as of the Cutoff Date.
"CONTRACT" means a motor vehicle retail installment sale
contract.
"CORPORATE TRUST OFFICE" means the principal office of the
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 _____________________ or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor and the
Servicer, or the principal corporate trust office of any successor Trustee (the
address of which the successor Trustee will notify the Certificateholders, the
Depositor and the Servicer).
"CRAM DOWN LOSS" means, with respect to a Receivable if a court
of appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"CUMULATIVE NET LOSS RATIO" means, with respect to any
Distribution Date, a fraction, expressed as a percentage, the numerator of which
is an amount equal to the excess of (i) the cumulative amount of Realized Losses
and Cram Down Losses from the Cutoff Date through the last day of the related
Collection Period over (ii) the cumulative amount of Recoveries from the Cutoff
Date through the last day of the related Collection Period and the denominator
of which is the Initial Pool Balance.
"CUTOFF DATE" means ____________, 199_.
"CUTOFF DATE PRINCIPAL BALANCE" means, with respect to a
Receivable, the Principal Balance of such Receivable as of the Cutoff Date.
"DEALER" means a motor vehicle dealer who sold a Financed Vehicle
and who originated and assigned the respective Receivable to an Originator under
an existing agreement between such Dealer and such Originator.
"DEALER AGREEMENT" means any agreement between a Dealer and an
Originator relating to the acquisition of Receivables from a Dealer by such
Originator.
"DEFINITIVE CERTIFICATES" shall have the meaning specified in
Section 6.10.
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"DELINQUENCY PERCENTAGE" means, with respect to a Collection
Period the ratio of (a) the outstanding principal balance of all outstanding
Receivables 60 days or more delinquent (which amount shall include Receivables
in respect of Financed Vehicles that have been repossessed but not yet sold or
otherwise liquidated) as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, divided by (b) the
outstanding principal balance of all Receivables on the last day of such
Collection Period.
"DELIVERY" when used with respect to 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 Trustee or Collateral Agent (all references to the Collateral
Agent in this definition relate to the Reserve Fund), as applicable,
or their respective nominee, agent or custodian by physical delivery
to the Trustee or Collateral Agent, as applicable, or its nominee,
agent or custodian endorsed to, or registered in the name of, the
Trustee or Collateral Agent, as applicable, or their respective
nominee, agent 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 Collateral
Agent, as applicable, or their respective nominee, agent 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 Collateral
Agent, as applicable, or their respective nominee, agent or custodian
and the sending by such financial intermediary of a confirmation of
the purchase of such certificated security by the Trustee or
Collateral Agent, as applicable, or their respective nominee, agent 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 Collateral Agent, as applicable, or
their respective nominee, agent 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 Collateral Agent, as applicable, or their respective
nominee, agent 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 Collateral
Agent, as applicable, or their respective nominee, agent or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Account Property to the Trustee or Collateral Agent, as applicable, or
their respective nominee, agent or custodian, consistent with changes
in applicable law or regulations or the interpretation thereof;
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(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 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 Trustee or Collateral Agent, as
applicable, or its nominee, agent or custodian of the purchase by the
Trustee or Collateral Agent, as applicable, or its nominee, agent 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 Trustee or
Collateral Agent, as applicable, or its nominee, agent or custodian
and indicating that such custodian holds such Account Property solely
as agent for the Trustee or Collateral Agent, as applicable, or its
nominee, agent or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Account Property to the Trustee or
Collateral Agent, as applicable, or its nominee, agent or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of 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 Collateral Agent, as applicable, or its
nominee, agent or custodian of such uncertificated security and the
making by such financial intermediary of entries on its books and
records identifying such uncertificated certificates as belonging to
the Trustee or Collateral Agent, as applicable, or its nominee, agent
or custodian.
"DEMAND NOTE" means, the Demand Note delivered from the Sponsor
in the amount of $1,000,000, which Demand Note has not been canceled, waived or
terminated. Such Demand Note is enforceable against the Sponsor, subject to its
terms, and subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
"DEPOSITOR" means Barnett Auto Receivables Corp., as the
depositor of the Receivables, and each successor to Barnett Auto Receivables
Corp. (in the same capacity) to the extent permitted hereunder.
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"DEPOSITORY AGREEMENT" means the agreement among the Depositor,
the Servicer, the Trustee and DTC, dated __________, 199_.
"DETERMINATION DATE" means, with respect to any Distribution
Date, the earlier of the eighth Business Day of the month in which a
Distribution Date occurs and the fourth Business Day preceding such Distribution
Date.
"DISTRIBUTION DATE" means, with respect to each Collection
Period, the fifteenth day of the following month, or if such day is not a
Business Day, the immediately following Business Day, commencing in _________.
"DISTRIBUTION DATE STATEMENT" means, the statement described in
Section 4.7
"DTC" means The Depository Trust Company.
"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 (other than the Depositor
or any affiliate of the Depositor) 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 which signifies investment grade.
"ELIGIBLE INSTITUTION" means any depository institution (other
than the Depositor or any affiliate of the Depositor) 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 (A) either
a long-term senior unsecured debt rating of AAA or a short-term senior unsecured
debt or certificate of deposit rating of A-1+ or better by Standard & Poor's and
(B)(1) a long-term senior unsecured debt rating of A1 or better and (2) a
short-term senior unsecured debt rating of 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 Federal Deposit
Insurance Corporation. If so qualified, the Trustee and Collateral Agent may be
considered an Eligible Institution.
"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 (including the Depositor or any
Affiliate of the Depositor) or trust company incorporated under the
laws of the United States of America or any State thereof or the
District of Columbia (or any domestic branch of a foreign bank) and
subject to supervision and examination by federal or State banking or
depository institution authorities (including depository receipts
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issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or portion
of such obligation for the benefit of the holders of such depository
receipts); PROVIDED, HOWEVER, that at the time of the investment or
contractual commitment to invest therein (which shall be deemed to be
made again each time funds are reinvested following each Distribution
Date), the commercial paper or other short-term senior 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) of such depository institution or trust company shall
have a credit rating from Standard & Poor's of A-1+ and from Moody's
of P-1;
(c) commercial paper (including commercial paper of the
Depositor or any Affiliate of the Depositor) having, at the time of
the investment or contractual commitment to invest therein, a rating
from Standard & Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for
which the Depositor or the Trustee or any of their respective
Affiliates is investment manager or advisor) having a rating from
Standard & Poor's of AAA-m or AAAm-G and from Moody's of Aaa;
(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) referred
to in clause (b) above; and
(g) any other investment which would not cause either
Rating Agency to downgrade or withdraw its then current rating of
either the Class A Certificates or the Class B Certificates.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA ENTITY" means (i) an employee benefit plan, retirement
arrangement, individual retirement account or Keogh subject to either Title I of
ERISA or Section 4975 of the Code, or (ii) an entity whose source of funds to be
used for the purchase of a Class B Certificate includes the assets of any such
plan, arrangement or account.
"EVENT OF SERVICING TERMINATION" means an event specified in
Section 9.1.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"FINAL SCHEDULED DISTRIBUTION DATE" means the ______________
Distribution Date.
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"FINAL SCHEDULED MATURITY DATE" means ___________.
"FINANCED VEHICLE" means a new or used automobile, (including
passenger car, minivan, sport/utility vehicle or light truck) together with all
accessions thereto, securing an Obligor's indebtedness under the respective
Receivable.
"INDEPENDENT COUNSEL" means, when used with respect to any
specified Person, that the Person (a) is in fact independent of the Servicer,
the Trust, the Depositor and any Affiliate of any of the foregoing Persons and
(b) is not an officer or employee of the Servicer, the Trust, the Depositor or
any Affiliate of any of the foregoing Persons.
"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
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), 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 COLLECTIONS" means, with respect to any Distribution
Date, the sum of the following amounts without duplication: (a) that portion of
all collections on the Receivables allocable to interest in respect of the
preceding Collection Period using (x) in the case of a Simple Interest
Receivable, the Simple Interest Method and (y) in the case of an Actuarial
Receivable, the actuarial method (including, with respect to Actuarial
Receivables, amounts withdrawn from the Payahead Account and allocable to
interest, and excluding amounts deposited into the Payahead Account and
allocable to interest, in each case in respect of the preceding Collection
Period); (b) Liquidation Proceeds attributable to interest on the Receivables
which became Liquidated Receivables during the preceding Collection Period in
accordance with the Servicer's customary servicing procedures; (c) all Advances
made by the Servicer of interest due on the Actuarial Receivables; (d) the
Purchase Amount of each Receivable repurchased by the Depositor or the Sponsor
or purchased by the Servicer as of the close of business on the last day of the
preceding Collection Period to the extent attributable to accrued interest on
such Receivable; (e) Recoveries for such Collection Period and [(f) Investment
Earnings for such Distribution Date]; PROVIDED, HOWEVER, that in calculating the
Interest Collections (i) all payments and proceeds (including Liquidation
Proceeds) of any Receivables repurchased by the Depositor or the Sponsor or
purchased by the Servicer the Purchase Amount of which has been included in the
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Interest Collections on a prior Distribution Date, and (ii) distributed to the
Servicer with respect to such Distribution Date, as reimbursement for
Outstanding Advances in accordance with Section 4.8 shall all be excluded.
["INVESTMENT EARNINGS" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on amounts
on deposit in the Accounts and the Reserve Fund to be deposited into the
Collection Account on such Distribution Date pursuant to Section 4.1.]
"LIEN" means a security interest, lien, charge, pledge or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
which attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
"LIQUIDATION DISTRIBUTION DATE" has the meaning specified in
Section 11.3.
"LIQUIDATION PROCEEDS" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source (other
than any proceeds from any Dealer commission) 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.
"LIQUIDATED RECEIVABLES" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"LOAN PURCHASE AGREEMENT" means the Loan Purchase Agreement dated
as of ____________ __, 199_ among the Originators, and the Depositor.
"MOODY'S" means Moody's Investors Service, Inc., or its
successors in interest.
"NET LOSSES" means the sum of Realized Losses and Cram Down
Losses minus Recoveries for any Collection Period.
"OBLIGOR" on a Receivable means the purchaser or the
co-purchasers of the Financed Vehicle and any other Person who owes payments
under the Receivable.
"OFFICERS' CERTIFICATE" means a certificate signed by (a) the
president, any senior vice president or any vice president and (b) a secretary
or assistant secretary of the Depositor, the Sponsor or the Servicer, as
appropriate, provided that no one person may sign in a capacity fulfilling both
clause (a) and clause (b).
"OPINION OF COUNSEL" means one or more written opinions of
counsel who may, except as otherwise expressly provided in this Agreement, be
employees of or counsel to the Depositor or the Servicer, and which opinion or
opinions shall be addressed to the Trustee as Trustee; provided, however, that
any opinion regarding the status of the Trust as a grantor trust for federal
income tax purposes shall be delivered by Independent Counsel.
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"ORIGINAL CLASS A PRINCIPAL BALANCE" means $-------------.
"ORIGINAL CLASS B PRINCIPAL BALANCE" means $-------------.
"ORIGINAL POOL BALANCE" means the aggregate Cutoff Date Principal
Balance of the Receivables, which is $-------------.
"ORIGINAL PRINCIPAL BALANCE" means the sum of the Original Class
A Principal Balance and the Original Class B Principal Balance.
"ORIGINATORS" means the subsidiaries of Barnett Bank, N.A., which
sold Receivables to the Depositor pursuant to the Loan Purchase Agreement.
"OUTSTANDING ADVANCES" on the Actuarial Receivables means the
sum, as of the close of business on the last day of a Collection Period, of all
Advances as reduced as provided in Section 4.8(a).
"PAYAHEAD" on an Actuarial Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 4.2(b) with respect to such Receivable.
"PAYAHEAD ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 4.1(b)(i).
"PAYAHEAD BALANCE" on an Actuarial 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 Actuarial
Receivable, as reduced by applications of previous Payaheads with respect to
such Actuarial Receivable, pursuant to Sections 4.1 and 4.8.
"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.
"PHYSICAL PROPERTY" has the meaning assigned to such term in the
definition of "Delivery" above.
"PLAN" has the meaning specified in Section 6.3.
"POOL BALANCE" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"PRINCIPAL BALANCE" of a Receivable, as of the close of business
on the last day of a Collection Period, means the Amount Financed minus the sum
of (i)(a) with respect to a Simple Interest Receivable, that portion of all
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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 (b) in the case of
an Actuarial Receivable, that portion of all Scheduled Payments due on or prior
to such day allocable to principal using the actuarial method, (ii) any refunded
portion of extended warranty protection plan costs or of physical damage, theft,
credit life, credit accident or health insurance premiums included in the Amount
Financed, (iii) any payment of the Purchase Amount with respect to the
Receivable allocable to principal, (iv) any prepayment in full or any partial
prepayments applied to reduce the Principal Balance of the Receivable and (v)
Cram Down Losses in respect of such Receivable.
"PRINCIPAL COLLECTIONS" means, with respect to any Distribution
Date, the sum of (i) (a) with respect to Simple Interest Receivables, that
portion of all collections on the Receivable allocable to principal in respect
of the preceding Collection Period and (b) with respect to Actuarial
Receivables, the sum of (x) the amount of all Scheduled Payments allocable to
principal due during the preceding Collection Period and (y) the portion of all
prepayments in full allocable to principal received during the preceding
Collection Period, in the case of both (a) and (b), without regard to any
extensions or modifications thereof effected after the Cutoff Date, other than
with respect to any extensions or modifications required in connection with Cram
Down Losses during such Collection Period; (ii) the principal balance of each
Receivable that was repurchased by the Depositor or the Sponsor or purchased by
the Servicer, in each case, as of the close of business on the last day of the
preceding Collection Period (except to the extent included in (i) above; (iii)
the principal balance of each Liquidated Receivable which became such during the
preceding Collection Period (except to the extent included in (i) above); (iv)
partial prepayments on Receivables in respect of the preceding Collection Period
relating to refunds of extended service contracts, or of physical damage, credit
life, credit accident or heath insurance premium, disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor and only to the extent not included in clause (i) above; and (v) the
aggregate amount of Cram Down Losses during such Collection Period.
"PURCHASE AMOUNT" means the amount, as of the close of business
on the last day of a Collection Period, required to prepay in full the
respective Receivable under the terms thereof including interest at the APR to
the end of the month of purchase (without giving effect to Outstanding
Advances).
"PURCHASED RECEIVABLE" means a Receivable purchased as of the
close of business on the last day of a Collection Period by (i) the Servicer
pursuant to Section 3.7 or (ii) repurchased by the Depositor or the Sponsor
pursuant to Section 2.3.
"RATING AGENCY" means Moody's and/or Standard & Poor's. If no
such organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Depositor, notice of which designation shall be given
to the Trustee, the Collateral Agent and the Servicer.
"RATING AGENCY CONDITION" means, with respect to any action, that
each Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
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of the Rating Agencies shall have notified the Depositor, the Servicer or the
Trustee in writing prior to the expiration of such 10-day period that such
action will, in and of itself, result in a reduction or withdrawal of the then
current rating of either class of Certificates. With respect to Section 4.2, the
Rating Agency Condition shall be deemed to be satisfied on the Closing Date
after receipt of a letter from each Rating Agency dated such date stating that
the Class A Certificates are rated in the highest investment rating category and
the Class B Certificates are rated at least "A" or its equivalent.
"REALIZED LOSSES" means, for any period, the excess of the
Principal Balance of any Liquidated Receivable over Liquidation Proceeds to the
extent allocable to principal.
"RECEIVABLE" means any Contract listed on Schedule A (which
Schedule may be in the form of microfiche), but excluding Liquidated Receivables
and Purchased Receivables.
"RECEIVABLE FILES" means, with respect to a Receivable, the
documents, specified in Section 2.4.
"RECORD DATE" means, in respect of each Collection Period and the
related Distribution Date, the last day of the calendar month immediately
preceding such Distribution Date.
"RECOVERIES" means, with respect to any Liquidated Receivable,
monies collected in respect thereof, from whatever source (other than any
proceeds from any Dealer commission), 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.
"RELATED FINANCED VEHICLE" means a Financed Vehicle securing the
Obligor's indebtedness under a Related Receivable.
"RELATED ORIGINATOR" means, with respect to any Receivable, the
Originator who originated such Receivable and who sold such Receivable to the
Depositor pursuant to the Loan Purchase Agreement.
"RELATED RECEIVABLE" means, with respect to any Originator, a
Receivable originated by such Originator who sold such Receivable to the
Depositor pursuant to the Loan Purchase Agreement.
"RELATED RECEIVABLE FILES" has the meaning specified in Section
2.5(a).
"RESERVE FUND" means the fund established and maintained as such
pursuant to Section 4.1(b).
"RESERVE FUND DEPOSIT" means, with respect to the Closing Date,
$___________.
"SCHEDULED PAYMENT" on an Actuarial 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
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actuarial method over the term of the Actuarial Receivable (except, in the case
a Balloon Loan, to the extent necessary to amortize the Principal Balance to the
amount of the Balloon Payment over the life of the Actuarial Receivable) and to
provide interest at the APR.
"SCHEDULE OF RECEIVABLES" means each list attached hereto as
Schedule A identifying the Receivables conveyed by the Depositor, which list may
be in the form of microfiche, or computer readable tape or diskette.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICER" means BDFS, the Servicer of the Receivables, and each
successor to BDFS (in the same capacity) pursuant to Section 7.5 or 8.3.
"SERVICER'S CERTIFICATE" has the meaning specified in Section
3.9.
"SERVICING FEE" means, with respect to any Distribution Date, the
fee payable to the Servicer for services rendered during such Collection Period,
determined pursuant to Section 3.8.
"SERVICING FEE RATE" shall be 1.00% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"SIMPLE INTEREST RECEIVABLE" means any Receivable under which the
portion of a payment allocable to principal and the portion of a payment
allocable to interest is determined in accordance with the Simple Interest
Method.
"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.
"SPECIFIED RESERVE BALANCE" means, with respect to any
Distribution Date, the greater of (a) ____% of the sum of the Class A Principal
Balance and the Class B Principal Balance on such Distribution Date (after
giving effect to all distributions with respect to the Certificates to be made
on such Distribution Date) except that, if on any Distribution Date (x) the
Cumulative Net Loss Ratio exceeds the Trigger Percentage for such Distribution
Date or (y) the average of the Delinquency Percentages for the three preceding
Collection Periods exceeds ____%, then the Specified Reserve Balance shall be an
amount equal to the greater of ___% of the sum of the Class A Principal Balance
and the Class B Principal Balance on such Distribution Date (after giving effect
to all distributions with respect to the Certificates to be made on such
Distribution Date) and the amount specified in clause (b) below or (b) ____% of
the sum of the Original Class A Principal Balance and the Original Class B
Principal Balance. In no circumstances will the Depositor be required to deposit
any amounts in the Reserve Fund other than the Reserve Fund Deposit.
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"SPONSOR" has the meaning specified in the preamble.
"STAMP" has the meaning specified in Section 6.3.
"STANDARD & POOR'S" or "S&P" means Standard & Poor's Ratings
Group, or its successor.
"TRANSFER DATE" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"Trigger Percentage" means (i) in the case of any Distribution
Date prior to ___ Distribution Date, ___%, (ii) in the case of any Distribution
Date on and after the ___ Distribution Date but prior to the ___ Distribution
Date, ___%, (iii) in the case of any Distribution Date on and after the ___
Distribution Date but prior to the ___ Distribution Date, ___%, (iv) in the case
of any Distribution Date on and after the ___ Distribution Date but prior to the
___ Distribution Date, ___% and (v) in the case of any Distribution Date on and
after the ___ Distribution Date, ___%.
"TRUST" means the Barnett Auto Trust 199_-_ created by this
Agreement.
"TRUSTEE" means ____________________, as Trustee under this
Agreement, or any successor, and any successor Trustee appointed and acting
pursuant to Sections 10.10 and 10.11.
"TRUST PROPERTY" means:
(a) all right, title and interest of the Depositor in and to the
Receivables, and all moneys received thereon (other than any proceeds from any
Dealer commission), on or after the Cutoff Date and, with respect to Receivables
which are Actuarial Receivables, all monies received thereon prior to the Cutoff
Date that are due on or after the Cutoff Date;
(b) all right, title and interest of the Depositor in the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Depositor in the Financed Vehicles;
(c) all right, title and interest of the Depositor in and to any
proceeds from claims on any physical damage, repossession, loss, skip, credit
life and credit accident, vendor's single interest and health insurance policies
or certificates relating to the Financed Vehicles or the Obligors;
(d) all right, title and interest of the Depositor in and to
refunds for the costs of extended service contracts with respect to Financed
Vehicles, refunds of unearned premiums with respect to credit life and credit
accident and health insurance policies or certificates covering an Obligor or
Financed Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
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(e) the interest of the Depositor in any proceeds from any
Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as a result
of a breach of representation or warranty in the related Dealer Agreement or a
default by an Obligor resulting in the repossession of the Financed Vehicle
under such Dealer Agreement;
(f) all right, title and interest of the Depositor to such
amounts as from time to time may be held in the Collection Account, the Class A
Distribution Account and the Class B Distribution Account (including the account
property related thereto);
(g) all right, title and interest to receive payments from time
to time under circumstances specified from the Reserve Fund and the Payahead
Account;
(h) all right, title and interest of the Depositor under the
Loan Purchase Agreement; and
(i) the proceeds of any and all of the foregoing.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Agreement, in any instrument governed hereby
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
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, 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 instrument, certificate
or other document shall control.
(c) 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."
(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.
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SECTION 1.3. CALCULATIONS. Except as otherwise specifically
provided herein, all calculations of the amount of interest accrued on the
Certificates during any Collection Period and all calculations of the amount of
the Servicing Fee payable with respect to a Collection Period shall be made on
the basis of a 360-day year consisting of twelve 30-day months.
SECTION 1.4. REFERENCES. All references to the first day of a
Collection Period shall refer to the opening of business on such day. All
references to the last day of a Collection Period shall refer to the close of
business on such day.
SECTION 1.5. REFERENCES TO THE TRUST. Whenever any provision of
this Agreement refers to actions to be taken by the Trust, matters to be
consented to by the Trust, or deliveries or notices to the Trust, such provision
shall be deemed to refer to actions to be taken by the Trustee, matters to be
consented to by the Trustee, or deliveries or notices to the Trustee.
SECTION 1.6. ACTION BY OR CONSENT OF CERTIFICATEHOLDERS. Whenever
any provision of this Agreement refers to action to be taken or consented to by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consented to by Certificateholders.
ARTICLE II.
THE TRUST PROPERTY
SECTION 2.1. CONVEYANCE OF TRUST PROPERTY. In consideration of
the Trustee's delivery to, or upon the written order of the Depositor of
authenticated Certificates, in authorized denominations, in an aggregate amount
equal to the Original Principal Balance, the Depositor does hereby sell,
transfer, assign and convey to the Trustee, upon the terms and conditions
hereof, the Trust Property to the Trustee, without recourse.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES AS TO EACH
RECEIVABLE. The Sponsor and the Depositor, jointly and severally, make the
following representations and warranties as to each Receivable conveyed by the
Depositor to the Trustee hereunder on which the Trustee shall conclusively rely
in accepting the Trust Property in trust and authenticating the Certificates.
Unless otherwise indicated, such representations and warranties are being made
as of the execution and delivery of the Agreement, but shall survive the sale,
transfer and assignment of the Receivables and the other Trust Property to the
Trustee.
(a) TITLE. It is the intention of the Depositor that the
transfer and assignment contemplated by the Loan Purchase Agreement constitute a
sale of the Related Receivables from the Originators to the Depositor pursuant
to the Loan Purchase Agreement and that the beneficial interest in and title to
such Related Receivables not be part of the debtor's estate in the event of the
filing of a petition for bankruptcy or insolvency by or against such Originator.
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No Related Receivable has been sold, transferred, assigned or pledged by such
Originator to any Person other than the Depositor pursuant to the Loan Purchase
Agreement. Immediately prior to the transfer and assignment contemplated by the
Loan Purchase Agreement, such Originator had good and marketable title to each
Related Receivable conveyed by it to the Depositor, free and clear of all Liens
and, immediately upon the transfer thereof, the Depositor shall have good and
marketable title to each such Related Receivable, free and clear of all Liens;
and the transfer of the Related Receivables to the Depositor has been perfected
under the UCC. 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 Trustee, and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the filing of a
petition for receivership by or against the Depositor. No Receivable has been
sold, transferred, assigned or pledged by the Depositor to any Person other than
the Trustee. Immediately prior to the transfer and assignment herein
contemplated, the Depositor had good and marketable title to each Receivable,
free and clear of all Liens and, immediately upon the transfer thereof, the
Trustee shall have good and marketable title to each such Receivable, free and
clear of all Liens; and the transfer of the Receivables to the Trustee has been
perfected under the UCC.
(b) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction to give the Depositor a first priority perfected
security interest in the Receivables, to give the Trustee a first priority
perfected ownership interest in the Receivables, and to give the Trustee a first
priority perfected security interest therein, shall have been presented to the
Trustee for filing in the appropriate filing offices. Upon such filing, the
Trustee will have a first priority perfected security interest in the Trust
Property.
(c) CHARACTERISTICS OF RECEIVABLES. Each Receivable (A) has been
either originated by a Dealer in the regular course of such Dealer's business
and purchased from such Dealer by an Originator in the ordinary course of the
Originator's business or otherwise originated by the Originator in the ordinary
course of the Originator's business, and each Obligor was approved in accordance
with the Related Originator's standard underwriting procedures in effect at the
time such Receivable was originated or purchased, (B) was conveyed by the
Related Originator to the Depositor, (C) has created or shall create a valid,
subsisting and enforceable first priority security interest in favor of the
Related Originator in the Related Financed Vehicle, which security interest has
been assigned by the Related Originator to the Depositor, which is assignable by
the Depositor to the Trustee, (D) contains customary and enforceable provisions
under the laws of the State governing such Receivable such that the rights and
remedies of the holder thereof are adequate for realization against the
collateral of the benefits of the security; and (E) provides for level monthly
payments that fully amortizes the Amount Financed by maturity (except for the
last payment, which may be different from the level payment and except, with
respect to a Balloon Loan, to the extent of the Balloon Payment).
(d) SCHEDULE OF RECEIVABLES. The information set forth in
Schedule A to this Agreement is true and correct in all material respects as of
the opening of business on the Cutoff Date and no selection procedures believed
by the Depositor to be adverse to the Certificateholders were utilized in
selecting the Receivables. The Computer Tape regarding the Receivables is true
and correct in all material respects as of the Cutoff Date.
(e) COMPLIANCE WITH LAW. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage and credit life and credit
accident and health insurance and any extended service contracts complied in all
material respects at the time it was originated or made and at the Closing Date
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(after giving effect to the transactions contemplated by the Basic Documents)
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
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 Soldier's and Sailor's Civil Relief Act of 1940, state
adaptations of the National Consumer Act and the Uniform Consumer Credit Code,
and other consumer credit laws and equal credit opportunity and disclosure laws.
(f) BINDING OBLIGATION. Each Receivable represents the legal,
valid and binding payment obligation in writing of the Obligor thereunder,
enforceable by the holder thereof in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws now or hereafter in
effect related to or affecting creditors' rights generally and subject to
general principles of equity (whether applied in a proceeding at law or in
equity) and all parties to such Receivable had full legal capacity to execute
and deliver such Receivable and all other documents related thereto and to grant
the security interest purported to be granted thereby.
(g) NO GOVERNMENT OBLIGOR. None of the Receivables is due from
the United States of America or any state or from any agency, department or
instrumentality of the United States of America or any state.
(h) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to
the sale, assignment, and transfer thereof under the Agreement, (i) each
Receivable shall be secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Related Originator as secured
party or (ii) application has been made with the appropriate governmental
authority for a valid perfected first priority security interest in the Financed
Vehicle in favor of the Related Originator, and such security interest is or
shall be prior to all other Liens upon and security interests in such Financed
Vehicle which now exist or may hereafter arise or be created (except, as to
priority, for any tax liens or mechanics' liens which may arise after the
Closing Date).
(i) RECEIVABLES IN FORCE. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from the
Lien granted by the related Receivable in whole or in part unless another
vehicle has been substituted as collateral securing the Receivable without any
other modification to such Receivable.
(j) NO WAIVER. No provision of a Receivable has been modified or
waived except as reflected in the Receivable File relating to such Receivable.
(k) NO AMENDMENTS. No Receivable has been amended, except as
permitted pursuant to Section 4.2.
(l) NO DEFENSES. No right of rescission, setoff, counterclaim or
defense has been asserted or threatened with respect to any Receivable. The
operation of the terms of any Receivable or the exercise of any right thereunder
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will not render such Receivable unenforceable in whole or in part or subject to
any such right of rescission, setoff, counterclaim, or defense.
(m) NO LIENS. As of the Cutoff Date, there are no Liens or
claims, including Liens for work, labor, materials or unpaid state or federal
taxes relating to any Financed Vehicle securing the related Receivable, that are
or may be prior to or equal to the Lien granted by such Receivable.
(n) NO DEFAULT. Except for payment delinquencies continuing for
a period of not more than thirty days as of the Cutoff Date and, except as
permitted in this paragraph, no default, breach, violation or event (in any such
case) permitting acceleration under the terms of any Receivable has occurred;
and no continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has arisen; and the Depositor has
not waived and shall not waive any of the foregoing.
(o) MATURITY OF RECEIVABLES. Each Receivable has an original
maturity of not more than ___ months; the weighted average original maturity of
the Receivables is ___ months as of the Cutoff Date; the remaining term of each
Receivable is ___ months or less as of the Cutoff Date; the weighted average
remaining term of the Receivables is ___ months as of the Cutoff Date; and the
latest scheduled maturity of any Receivable shall be no later than the Final
Scheduled Maturity Date.
(p) NO BANKRUPTCIES. No Obligor on any Receivable was noted in
the related Receivable File as having filed for bankruptcy in a proceeding which
remained undischarged as of the Cutoff Date.
(q) NO REPOSSESSIONS. As of the Cutoff Date, no Financed Vehicle
securing any Receivable is in repossession status.
(r) CHATTEL PAPER. Each Receivable constitutes "chattel paper"
as defined in the UCC.
(s) APR. The weighted average Annual Percentage Rate of the
Receivables as of the Cutoff Date is approximately ___%.
(t) PRINCIPAL BALANCE. Each Receivable has an outstanding
principal balance as of the Cutoff Date of not less than ___ or more than $____.
The average principal balance of the Receivables as of the Cutoff Date is $___.
The aggregate principal balance of the Receivables as of the Cutoff Date is
$___.
(u) FINANCING. Approximately ___% of the aggregate principal
balance of the Receivables, constituting approximately ___% of the number of
Receivables, as of the Cutoff Date, represents financing of new vehicles; the
remainder of the Receivables represents financing of used vehicles.
Approximately ___% of the aggregate principal balance of the Receivables,
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constituting approximately ___% of the number of Receivables, as of the Cutoff
Date, represents financing of Balloon Loans. Approximately ___% of the aggregate
Principal Balance of the Receivables, constituting approximately ___% of the
number of Receivables, as of the Cutoff Date, represents financing of Simple
Interest Receivables; the remainder of the Receivables represents financing of
Actuarial Receivables.
(v) PAID-AHEAD. Approximately ___% of the aggregate Principal
Balance of the Receivables, constituting approximately ___% of the number of
Receivables are paid-ahead for a period of one to six months. No Receivable is
paid-ahead more than eight months.
(w) INSURANCE; OTHER. The Servicer, in accordance with its
customary procedures, has confirmed (A) that each Obligor has obtained insurance
covering the Financed Vehicle as of the date of execution of the Related
Receivable insuring against loss and damage due to fire, theft, collision and
other risks generally covered by comprehensive and collision coverage and that
each Receivable requires the Obligor to maintain such insurance naming the
applicable Originator and its successors and assigns as a loss payee, (B) each
Receivable that finances the cost of premiums for credit life and credit
accident and health insurance is covered by an insurance policy or certificate
of insurance naming the applicable Originator as loss payee (lienholder) under
each such insurance policy and certificate of insurance and (C) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.
(x) LAWFUL ASSIGNMENT. No Receivable has been originated in, or
as of the Closing Date is subject to the laws of, any jurisdiction under which
the sale, transfer and assignment of such Receivable under this Agreement (i) is
unlawful, void, voidable or unenforceable in accordance with its terms or (ii)
would render such Receivable void, voidable or unenforceable in accordance with
its terms. None of any Originator or the Depositor has entered into any
agreement with any account debtor that prohibits, restricts or conditions the
assignment of all or any portion of the Receivable.
(y) NO INSURANCE PREMIUMS. As of the Cutoff Date, no portion of
the principal balance of any Receivable included amounts attributable to the
payment of any physical damage or theft insurance premium.
(z) ONE ORIGINAL. There is only one manually executed original
copy of each Receivable.
(aa) ORIGINATION OF RECEIVABLES. Based on the billing address of
the Obligors and the principal balance of Receivables as of the Cutoff Date,
approximately ___% of the Receivables were originated in ___, approximately ___%
of the Receivables were originated in ___ and approximately ___% of the
Receivables were originated in ___, each Obligor has been approved by the
Originator based on the Originator's standard underwriting procedures as in
effect at the time the related Receivable was entered into. Based on the billing
address of the Obligors and the principal balance of the Receivables as of the
Cutoff Date, not more than 10% of the Receivables were originated in any one
state other than ___, ___ and ___.
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(bb) RECEIVABLE FILES. The Receivable Files are kept at the
Depositor's office listed in Schedule B and are segregated from any other
Receivable Files. The Receivable Files have been marked to indicate the
Depositor's ownership interest therein.
(cc) COMPUTER RECORDS. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Depositor and each
Originator have been marked to show the absolute ownership by the Trustee on
behalf of the Trust of the Receivables.
SECTION 2.3 REPURCHASE UPON BREACH. (a) The Sponsor, the
Depositor, the Servicer or the Trustee, as the case may be, shall inform the
other parties to this Agreement and the Trustee promptly, in writing, upon its
discovery of any breach of the Depositor's and the Sponsor's representations and
warranties made pursuant to Section 2.2. Unless any such breach shall have been
cured by the last day of the first Collection Period following the discovery
thereof by the Trustee or receipt by the Trustee of written notice from the
Sponsor, the Depositor or the Servicer of such breach, the Sponsor and the
Depositor shall be jointly and severally obligated to repurchase any Receivable
in which the interests of the Certificateholders are materially and adversely
affected by any such breach as of the last day of such Collection Period. In
consideration of and simultaneously with the repurchase of the Receivable, the
Sponsor and/or the Depositor shall remit to the Collection Account the Purchase
Amount in the manner specified in Section 4.3 and the Trustee shall execute such
assignments and other documents reasonably requested by the Sponsor and/or the
Depositor in order to effect such repurchase.
(b) Pursuant to Sections 2.1, the Depositor has conveyed to the
Trustee all of the Depositor's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Loan Purchase
Agreement, including the delivery requirements, representations and warranties
and the cure or repurchase obligations of each Originator under the Loan
Purchase Agreement. The Depositor hereby represents and warrants to the Trustee
that such assignment is valid, enforceable and effective to permit the Trustee
to enforce such obligations of each Originator under the Loan Purchase
Agreement.
(c) The sole remedy of the Trust, the Trustee or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 2.2 and the agreement contained in this Section shall be to
require the Sponsor and/or the Depositor to repurchase Receivables pursuant to
this Section, subject to the conditions contained herein. The Trustee shall not
have any duty to conduct any affirmative investigation as to the occurrence of
any conditions requiring the repurchase of any Receivable pursuant to this
Section.
SECTION 2.4. CUSTODY OF RECEIVABLE FILES. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Trustee 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 (the "Receivable Files") with respect to each
Receivable:
(i) the original executed copy of the Receivable;
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(ii) a record of the information supplied by the Obligor in
the original credit application;
(iii) the original certificate of title or such documents
that the Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of the Related Originator
in the Financed Vehicle (it being understood that the original
certificates of title generally are not delivered to the Related
Originator for 90 days but that promptly upon delivery they shall be
delivered to the Servicer as custodian hereunder); and
(iv) any and all other documents that the Servicer shall
keep on file, in accordance with its customary procedures, relating to
a Receivable, an Obligor or a Financed Vehicle.
SECTION 2.5. DUTIES OF SERVICER AS CUSTODIAN. (a) SAFEKEEPING.
The Servicer shall hold the Receivable Files on behalf of the Trustee for the
benefit of all present and future Certificateholders and maintain such accurate
and complete accounts, records and computer systems pertaining to each
Receivable File as shall enable the Servicer and Trustee to comply with this
Agreement. In performing its duties as custodian the Servicer shall act with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to the receivable files relating to all comparable
automotive receivables that the Servicer services for itself 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 promptly take appropriate action to remedy any such failure.
(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 90 days after any change in location. Upon
reasonable prior notice, the Servicer shall make available to the Trustee or its
respective duly authorized representatives, attorneys or auditors a list of
locations of the Receivable Files and 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 written instruction from the
Trustee, the Servicer shall release or shall cause to be released 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 and upon the release and delivery of any such document in accordance
with the instructions of the Trustee, the Servicer shall be released from any
further liability and responsibilities under this Section 2.5 with respect to
such documents unless and until such time as such document may be returned to
the Servicer.
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SECTION 2.6 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 an Authorized Officer of the
Trustee.
SECTION 2.7 CUSTODIAN'S INDEMNIFICATION. The Servicer as
custodian shall indemnify and hold harmless the Trustee and its officers,
directors, employees and agents for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses (including reasonable
attorneys' fees and expenses) that may be imposed on, incurred by or asserted
against the Trustee or any of its 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 or any subservicer, as custodian of the
Receivable Files where the final determination that any such improper act or
omission by the Servicer, which resulted in such liability, obligation, loss,
damage, payment, cost or expense is established by a court of law, by an
arbitrator or by way of settlement agreed to by the Servicer; PROVIDED, HOWEVER,
that the Servicer shall not be liable for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Trustee.
This provision shall not be considered to limit the Servicer's or any other
party's rights, obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this Agreement.
SECTION 2.8 EFFECTIVE PERIOD AND TERMINATION. (a) 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
BDFS 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 9.1, the appointment of such Servicer as custodian
shall be terminated by the Trustee or by Holders of Certificates evidencing not
less than a majority of the aggregate outstanding principal balance of the Class
A Certificates and the Class B Certificates taken together as a single class, in
the same manner as the Trustee or such Holders may terminate the rights and
obligations of the Servicer under Section 9.1. 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 to the Servicer and the Rating Agencies. As soon as practicable
after any termination of such appointment, the Servicer shall deliver, or cause
to be delivered at its, expense the Receivable Files to the Trustee or the
Trustee's agent at such place or places as the Trustee may reasonably designate
in writing. If the Servicer shall be terminated as custodian hereunder for any
reason but shall continue to serve as Servicer, the Trustee shall, or shall
cause its agent to, make the Receivable Files available to the Servicer (or, if
designated by the Servicer, a permitted subservicer) during normal business
hours upon reasonable notice so as to permit the Servicer to perform its
obligations as Servicer hereunder at the sole expense of the Servicer.
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ARTICLE III.
ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY
SECTION 3.1 DUTIES OF SERVICER. The Servicer, as agent for the
Trust (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 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 or periodic statements or
invoices to Obligors, reporting tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Trustee with
respect to distributions and making Advances pursuant to Section 4.8(a). Subject
to the provisions of Section 3.2, 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 Trust, the Trustee
and the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Trustee (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
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 Trustee
or the Certificateholders. The Trustee shall upon the written request of the
Servicer, furnish the servicer with any powers of attorney and other documents
reasonably necessary or appropriate (as certified to the Trustee by the
Servicer) to enable the Servicer to carry out its servicing and administrative
duties hereunder.
SECTION 3.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS.
(a) 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 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 receivables that it services for itself or others.
(b) The Servicer may not grant extensions or modify the original
due dates of a Receivable; PROVIDED, HOWEVER, that the Servicer may (i) grant
one extension with respect to a Receivable of one month in any rolling twelve
month period and may change the original due date once during the term of a
Receivable to a new due date within 20 days of the original scheduled due date
of such Receivable and (ii) grant extensions or modify the original due dates of
a Receivable with respect to a Receivable for which a court of appropriate
jurisdiction in a bankruptcy or insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments or other terms on such Receivable;
provided, however, that the Servicer may not extend the date for final payment
by the Obligor of any Receivable beyond the last day of the Collection Period
preceding the Certificate Final Scheduled Distribution Date. The Servicer may in
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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 voluntarily agree to any reduction of (i) the original interest rate, (ii)
the amount of any Scheduled Payment on a Precomputed Receivable or the original
regular scheduled payment on a Simple Interest Receivable, or (iii) the
Principal Balance of any Receivable.
SECTION 3.3. REALIZATION UPON RECEIVABLES. On behalf of the
Trust, the Servicer shall use all reasonable efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert the ownership
of the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any Receivable, the Trustee shall,
upon written request of the Servicer, execute such documents as shall be
necessary to prosecute any such proceedings. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize proceeds from Receivables repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of a representation or
warranty in the related Dealer Agreement or a default by an Obligor resulting in
the repossession of the Financed Vehicle under such Dealer Agreement. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its reasonable discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses.
SECTION 3.4. PHYSICAL DAMAGE INSURANCE; OTHER INSURANCE. (a) The
Servicer shall, in accordance with its customary servicing procedures, verify
(i) that each Obligor shall have obtained insurance covering the Financed
Vehicle, as of the date of the execution of the Receivable, insuring against
loss and damage due to fire, theft, collision and other risks generally covered
by comprehensive and collision coverage and that each Receivable requires the
Obligor to maintain such physical loss and damage insurance naming the Related
Originator and its successors and assigns as a loss payee, (ii) that each
Receivable that finances the cost of premiums for credit life and credit
accident and health insurance is covered by an insurance policy or certificate
naming the Originator as policyholder (creditor) and (iii) as to each Receivable
that finances the cost of an extended service contract, the respective Financed
Vehicle which secures the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any of the insurance policies
referred to in Section 3.4(a) which, but for the actions of the Servicer, would
have been covered thereunder. The Servicer, on behalf of the Trustee shall take
such reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies, shall be deposited in the Collection Account
pursuant to Section 4.2. The parties hereto acknowledge that the Servicer shall
not be required to force place any insurance coverage referred to in Section
3.4(a)(i) above, or any other insurance coverage.
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SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED
VEHICLES. The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of (i) the
security interest created by each Receivable in the related Financed Vehicle and
(ii) the interest of the Trust in the Receivables created by this Agreement,
including but not limited to obtaining the execution by the Obligors and the
recording, registering, filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by
Obligors under the respective Receivables, the Originators under the Loan
Purchase Agreement and the Depositor hereunder. The Servicer is hereby
authorized to take such steps as are necessary to re-perfect such security
interest on behalf of the Trust and the Trustee in the event of the relocation
of a Financed Vehicle or for any other reason.
SECTION 3.6. COVENANTS OF SERVICER. The Servicer shall not
release the Financed Vehicle securing any Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession or except as may be required by
an insurer in order to receive proceeds from insurance covering such Financed
Vehicle, nor shall the Servicer impair the rights of the Trustee or the
Certificateholders in such Receivables (it being understood that no action of
the Servicer taken in compliance with the terms of this Agreement shall be
deemed to impair such rights), nor shall the Servicer increase the number of
scheduled payments due under a Receivable. Notwithstanding the foregoing, the
Servicer may grant extensions or modify the original due dates of a Receivable
or make such other changes with respect to a Receivable for which a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments on such Receivable; provided,
however, that the Servicer may not extend the date for final payment by the
Obligor of any Receivable beyond the last day of the Collection Period preceding
the Final Scheduled Distribution Date.
SECTION 3.7. 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 3.2(b), 3.5 or 3.6. Unless
the breach shall have been cured by the last day of the second Collection Period
following such discovery thereof by the Trustee or the receipt by the Trustee of
notice of such breach, the Servicer shall be obligated to purchase any
Receivable in which the interests of the Certificateholders are materially and
adversely affected by such breach as of the last day of such second Collection
Period (or, at the Servicer's option, the last day of the first Collection
Period following the discovery). In consideration of the purchase of any such
Receivable pursuant to the preceding sentence, the Servicer shall remit the
Purchase Amount in the manner specified in Section 4.3. The sole remedy of the
Trustee or the Certificateholders with respect to a breach of Section 3.2(b),
3.5 or 3.6 shall be to require the Servicer to purchase 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 purchase of
any Receivable pursuant to this Section.
SECTION 3.8. SERVICING FEE. The servicing fee for (a) the
___Distribution Date shall equal $___ and (b) for each Distribution Date
thereafter shall equal the product of (i) one-twelfth, (ii) the Servicing Fee
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Rate and (iii) the Pool Balance as of the first day of the related Collection
Period (the "Servicing Fee"). In addition, the "Servicing Fee" described in (a)
and (b) above shall include late fees, prepayment charges and other similar
charges allowed by applicable law with respect to Receivables collected (from
whatever source) on the Receivables.
SECTION 3.9. SERVICER'S CERTIFICATE. On each Determination Date,
the Servicer shall deliver to the Trustee and the Depositor, with a copy to the
Rating Agencies, a Servicer's Certificate (the "Servicer's Certificate")
substantially in the form of Exhibit C hereto containing all information
necessary to make the distributions pursuant to Sections 4.5 and 4.6 (including,
if required, withdrawals from or deposits to the Payahead Account and Advances
by the Servicer pursuant to Section 4.8) for the Collection Period preceding the
date of such Servicer's Certificate. Receivables to be purchased by the Servicer
or to be repurchased by the Depositor or the Sponsor shall be identified by the
Servicer by account number with respect to such Receivable (as specified in
Schedule A).
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF
DEFAULT. (a) The Servicer shall deliver to the Trustee, on or before April 30 of
each year beginning April 30, 199_, an Officers' Certificate, dated as of
December 31 of the preceding year, stating that (i) a review of the activities
of the Servicer during the preceding 12-month period (or, in the case of the
first such report, during the period from the Closing Date to December 31, 199_)
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, in the case of the first such certificate, such longer
period) 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 3.11 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 3.11 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 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 an Event of Servicing Termination under Section 9.1(a) or
(b).
SECTION 3.11. 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 or the
Depositor, to deliver to the Depositor and the Trustee on or before April 30 of
each year as of December 31 of the preceding fiscal year, beginning April 30,
199_, (1) 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 and therefor and that such examination was made in accordance
with generally accepted auditing standards (except as otherwise noted therein),
and accordingly included such tests of the accounting records and such other
auditing procedures as such firm considered necessary in the circumstances; and
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(2) a report on description of lease and loan servicing operations and tests of
operating effectiveness in form and substance as is currently prepared on an
annual basis with respect to Servicer. The Servicer shall also concurrently
cause the accountants to deliver a report addressed to the Servicer and Trustee
to the effect that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer Certificates; (2) except as disclosed
in the report, no exceptions or errors in the Servicer Certificates were found;
and (3) the delinquencies and loss information, relating to the Receivables
contained in the Servicer Certificates were found to be accurate.
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 3.12. 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 Certificateholders shall
be required by applicable statutes or regulations to review such documentation
as demonstrated by evidence satisfactory to the Servicer in its reasonable
judgment. Access shall be afforded without charge, but only upon reasonable
request (not less than seventy-two hours) and during 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 3.13. 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 3.14. APPOINTMENT OF SUBSERVICERS. 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; PROVIDED FURTHER that the Servicer
shall remain obligated and 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
Trustee or the Certificateholders shall have any responsibility therefor.
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ARTICLE IV.
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1. ESTABLISHMENT OF ACCOUNTS. (a) (i) The Trustee shall
establish and maintain in the name of the Trustee one or more Eligible Deposit
Accounts (the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders. The Trustee shall establish and maintain in the name of the
Trustee an Eligible Deposit Account (the "Class A Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Class A Certificateholders. The Trustee shall
establish and maintain in the name of the Trustee an Eligible Deposit Account
(the "Class B Distribution Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Class B
Certificateholders.
(ii) Funds on deposit in the Collection Account, the Class A
Distribution Account and the Class B Distribution Account
(collectively, the "Accounts") shall be invested by the Trustee in
Eligible Investments selected in writing by the Servicer; PROVIDED,
HOWEVER, 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 beneficiaries of the applicable
Account; PROVIDED, that on each Distribution Date all interest and
other investment income (net of losses and investment expenses) on
funds on deposit therein shall be withdrawn from the Accounts at the
written direction of the Servicer and shall be paid to the Servicer.
Funds on deposit in the Accounts shall be invested in Eligible
Investments that will mature so that such funds will be available at
the close of business on the Transfer Date preceding the following
Distribution Date. Funds deposited in an Account on a Transfer Date
which immediately precedes a Distribution Date or upon the maturity of
any Eligible Investments are not required to be (but may be) invested
overnight. Neither the Servicer nor the Trustee shall be liable for
any investment losses.
(iii) The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Accounts and
in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust
Property. Except as expressly provided herein, the Accounts shall be
under the sole dominion and control of the Trustee for the benefit of
the Certificateholders. If, at any time, any of the Accounts ceases to
be an Eligible Deposit Account, the Trustee (or Servicer on its
behalf) shall within 10 Business Days (or such longer period, as to
which each Rating Agency may consent) establish a new Account as an
Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Account. In connection with the foregoing, the
Servicer agrees that, in the event that any of the Accounts are not
accounts with the Trustee, the Servicer shall notify the Trustee in
writing promptly upon any of such Accounts ceasing to be an Eligible
Deposit Account.
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(iv) The Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee in writing to make withdrawals and
payments from the Accounts for the purpose of permitting the Servicer
to carry out its duties hereunder or permitting the Trustee to carry
out its duties.
(b) (i) The Servicer shall establish and maintain in the
name of _______________, as Collateral Agent, an Eligible Deposit
Account (the "Reserve Fund") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders. The Servicer shall establish and maintain in the
name of _______________, as Collateral Agent, an Eligible Deposit
Account (the "Payahead Account ") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit
of the Certificateholders. Neither the Reserve Fund nor the Payahead
Account shall be property of the Trust.
(ii) Funds on deposit in the Reserve Fund and the Payahead
Account shall be invested by the Collateral Agent in Eligible
Investments selected in writing by the Servicer; PROVIDED, HOWEVER, it
is understood and agreed that the Collateral Agent shall not be liable
for any loss arising from such investment in Eligible Investments. All
such Eligible Investments shall be held by the Collateral Agent for
the benefit of the beneficiaries of the Reserve Fund; PROVIDED, that
on each Distribution Date all interest and other investment income
(net of losses and investment expenses) on funds on deposit therein
shall be withdrawn from the Reserve Fund and the Payahead Account at
the written direction of the Servicer and shall be paid to the
Servicer for distribution to the Servicer. Funds on deposit in the
Reserve Fund and the Payahead Account shall be invested in Eligible
Investments that will mature so that such funds will be available at
the close of business on the Transfer Date preceding the following
Distribution Date. Funds deposited in the Reserve Fund and the
Payahead Account on a Transfer Date which immediately precedes a
Distribution Date or upon the maturity of any Eligible Investments are
not required to be (but may be) invested overnight. Neither the
Servicer nor the Trustee shall be liable for any investment losses.
The Depositor will treat these funds, Eligible Investments and other
assets in the Reserve Fund and the Payahead Account as its own for
federal, state and local income tax and franchise tax purposes and
will report on its tax returns all income, gain and loss from the
Reserve Fund and the Payahead Account.
(iii) The Reserve Fund and the Payahead Account shall be
under the sole dominion and control of the Collateral Agent. If, at
any time, the Reserve Fund or the Payahead Account, as the case may
be, ceases to be an Eligible Deposit Account, the Servicer shall
within 10 Business Days (or such longer period, as to which each
Rating Agency may consent) establish a new Reserve Fund or the
Payahead Account, as the case may be, as an Eligible Deposit Account
and shall transfer any cash and/or any investments to such new Reserve
Fund or the Payahead Account, as the case may be. In connection with
the foregoing, the Servicer agrees that, in the event that the Reserve
Fund or the Payahead Account is not an account with the Trustee, the
Servicer shall notify the Trustee in writing promptly upon the Reserve
Fund or the Payahead Account ceasing to be an Eligible Deposit
Account.
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(iv) The Servicer shall have the power, revocable by the
Trustee, to instruct the Collateral Agent in writing to make
withdrawals and payments from the Reserve Fund or the Payahead Account
for the purpose of permitting the Servicer to carry out its duties
hereunder or permitting the Collateral Agent to carry out its duties.
(c) With respect to the Account Property in respect of the
Reserve Fund or the Payahead Account, the Collateral Agent agrees and with
respect to the remainder of the Account Property, the Trustee agrees, that:
(i) any Account Property that is held in deposit accounts
shall be held solely in an Eligible Deposit Account subject to the
penultimate sentence of Section 4.1(b)(iii); and, except as otherwise
provided herein, each such Eligible Deposit Account shall be subject
to the exclusive custody and control of the Collateral Agent or the
Trustee, as the case may be, and the Collateral Agent or the Trustee,
as the case may be, shall have sole signature authority with respect
thereto;
(ii) any Account Property that constitutes Physical
Property shall be delivered to the Collateral Agent or the Trustee,
as the case may be, in accordance with paragraph (a) of the definition
of "Delivery" and shall be held, pending maturity or disposition,
solely by the Collateral Agent or the Trustee, as the case may be, or
a financial intermediary (as such term is defined in Section 8-313(4)
of the UCC) acting solely for the Collateral Agent or the Trustee, as
the case may be;
(iii) any 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 Collateral
Agent or the Trustee, as the case may be, pending maturity or
disposition, through continued book-entry registration of such Account
Property as described in such paragraph; and
(iv) any 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 Collateral Agent or the
Trustee, as the case may be, in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the Collateral
Agent or the Trustee, as the case may be, pending maturity or
disposition, through continued registration of the Collateral Agent's
or the Trustee, as the case may be, (or its nominee's) ownership of
such security.
(d) (i) On the Closing Date, the Depositor shall cause to be
deposited $___in the Payahead Account representing all collected funds
received in connection with the Actuarial Receivables prior to the
Cutoff Date that are due on or after the Cutoff Date, consisting of
all or a portion of the Scheduled Payments due on the Actuarial
Receivables in any Collection Period following the first Collection
Period.
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(ii) The Servicer shall on or prior to each Distribution
Date (and prior to deposits to the Class A Distribution Account or the
Class B Distribution Account) transfer from the Collection Account to
the Payahead Account all Payaheads as described in Section 4.2
received by the Servicer during the Collection Period. Notwithstanding
the foregoing and the first sentence of Section 4.2, for so long as
the Servicer is permitted to make monthly remittances to the
Collection Account pursuant to Section 4.2, 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 4.5(a).
SECTION 4.2. COLLECTIONS. (a) On the Closing Date, the Depositor
shall cause to be deposited $___in the Collection Account representing all
collected funds received on the Receivables after the Cutoff Date and prior to
the Closing Date. The Servicer shall remit within two Business Days of receipt
thereof to the Collection Account all collected funds received from payments by
or on behalf of the Obligors with respect to the Receivables, and all
Liquidation Proceeds, both as collected during the Collection Period.
Notwithstanding the foregoing, for so long as (i) the Servicer is BDFS, (ii) no
Event of Servicing Termination shall have occurred and be continuing, (iii) if
the Servicer does not have a short term debt rating or deposit rating as
applicable, of at least A-1 from Standard & Poor's and P-1 from Moody's, a
[guaranty, letter of credit, surety bond or other similar instrument is issued
covering collections, any amounts referred to in clause (e) of the definition of
Available Principal and Liquidation Proceeds held by BDFS, which is acceptable
to the Rating Agencies and issued by an entity, which has a short- term debt or
deposit rating, as applicable, of at least A-1 from Standard & Poor's and P-1
from Moody's;] and (iv) 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 to the
Collection Account on the related Transfer Date. For purposes of this Article IV
the phrase "payments by or on behalf of Obligors" shall mean payments made with
respect to the Receivables by Persons other than the Servicer, the Sponsor or
the Depositor.
(b) All collections for the Collection Period shall be applied
by the Servicer as follows: with respect to each Actuarial Receivable (other
than a Purchased Receivable), payments by or on behalf of the Obligor shall be
applied first to reduce Outstanding Advances as described in Section 4.8(a).
Next, any excess shall be applied, in the case of Actuarial Receivables, to the
Scheduled Payment and, shall be applied in the case of Simple Interest
Receivables, to interest and principal in accordance with the Simple Interest
Method. With respect to Actuarial Receivables, any remaining excess shall be
added to the Payahead Balance, and shall be applied to prepay the Actuarial
Receivable, but only if the sum of such excess and the previous Payahead Balance
shall be sufficient to prepay the Actuarial Receivable in full. Otherwise, any
such remaining excess payments shall constitute a Payahead and shall increase
the Payahead Balance.
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(c) All Liquidation Proceeds shall be applied to the related
Receivable in accordance with the Servicer's customary servicing procedures.
SECTION 4.3. ADDITIONAL DEPOSITS. The Servicer shall deposit in
the Collection Account the aggregate Advances pursuant to Section 4.8. The
Servicer, the Sponsor and the Depositor shall deposit or cause to be deposited
in the Collection Account the aggregate Purchase Amount with respect to any
Purchased Receivables and the Depositor shall deposit therein any amounts to be
paid under Section 11.1. The Servicer will deposit or cause to be deposited the
aggregate Purchase Amount with respect to Purchased Receivables within two
Business Days after such obligations become due, unless the Servicer shall not
be required to make deposits within two Business Days of receipt pursuant to
Section 4.2(a) (in which case such deposit will be made by the related Transfer
Date). All such other deposits shall be made on the Transfer Date following the
end of the related Collection Period.
SECTION 4.4. NET DEPOSITS. As an administrative convenience, if
the Servicer is not required to remit collected funds within two Business Days
of receipt thereof, the Servicer will be permitted to make the deposit of such
funds, 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 to be made a single,
net transfer, from the Collection Account to the Payahead Account, or vice
versa. The Servicer, however, will account to the Trustee and the
Certificateholders as if all deposits, distributions and transfers were made
individually.
SECTION 4.5. DISTRIBUTIONS. (a) On each Distribution Date, the
Trustee shall cause to be transferred from the Payahead Account, or from the
Servicer in the event the provisions of Section 4.1(d)(ii) are applicable, (i)
to the Collection Account, in immediately available funds, the aggregate
previous Payaheads to be applied to Scheduled Payments on Actuarial Receivables
for the related Collection Period or prepayments for the related Collection
Period, pursuant to Sections 4.2 and 4.8, in the amounts set forth in the
Servicer's Certificate for such Distribution Date and (ii) to the Depositor, in
immediately available funds, the investment earnings, net of losses on the
Payaheads for the related Collection Period. A single, net transfer may be made.
(b) The Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9) to make, and the Trustee shall make,
a distribution from the Collection Account to the Servicer by 11:00 a.m. (New
York time), amounts in respect of Outstanding Advances to the extent that the
Servicer is entitled to reimbursement in respect thereof in accordance with
Section 4.8. On each Determination Date, the Servicer shall calculate all
amounts required to determine the amounts to be deposited in the Class A
Distribution Account and the Class B Distribution Account.
(c) Subject to the last paragraph of this Section 4.5(b), on each
Distribution Date, the Servicer shall instruct the Trustee in writing (based on
the information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9) to make the following deposits and
distributions for receipt by the Servicer or deposit in the applicable Account
by 12:00 P.M. (New York City time):
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(i) to the extent of Interest Collections for such
Distribution Date (and, in the case of shortfalls occurring under
clause (B) below in the Class A Interest Distribution, the Class B
Percentage of Principal Collections for such Distribution Date to the
extent of such shortfalls):
(A) to the Servicer, the Servicing Fee for such
Distribution Date and all unpaid Servicing Fees from prior
Collection Periods (to the extent such amounts have not been
retained pursuant to Section 4.4);
(B) to the Class A Distribution Account, after the
application of clause (A), the Class A Interest Distribution
for such Distribution Date; and
(C) to the Class B Distribution Account, after the
application of clauses (A) and (B), the Class B Interest
Distribution for such Distribution Date; and
(ii) to the extent of the portion of Principal Collections
and Interest Collections for such Distribution Date remaining after
the application of clauses (i)(A), (B) and (C) above:
(A) to the Class A Distribution Account, the Class A
Principal Distribution for such Distribution Date;
(B) to the Class B Distribution Account, after the
application of clause (A), the Class B Principal
Distribution for such Distribution Date; and
(C) to the Reserve Fund, any amounts remaining after
the application of clauses (i)(A) through (C) and (ii) (A)
and (B).
In the event that the Collection Account is maintained with an institution other
than the Trustee, the Servicer shall instruct and cause such institution to make
all deposits and distributions pursuant to this Section 4.5(b) on the related
Transfer Date. The Trustee shall be entitled to conclusively rely on the
Servicer's instructions and any Servicer's Certificate without investigation.
(c) On each Distribution Date, in accordance with the written
direction of the Servicer, all amounts on deposit in the Class A Distribution
Account, after application of Section 4.6 below, will be distributed to the
Class A Certificateholders by the Trustee and all amounts on deposit in the
Class B Distribution Account, after application of Section 4.6 below, will be
distributed to the Class B Certificateholders by the Trustee. Payments under
this Section 4.5(c) shall be made to the Certificateholders either by
wiretransfer, 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 ten Business Days prior to such Distribution Date
and such Holder's Certificates in the aggregate evidence a denomination of not
less than $__________ or by check mailed by the Trustee to each Holder's
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respective address of record (or, in the case of Certificates registered in the
name of a Clearing Agency, or its nominee, by wire transfer of immediately
available funds).
SECTION 4.6. RESERVE FUND. (a) On the Closing Date, the Reserve
Fund Deposit shall be deposited into the Reserve Fund from the net proceeds from
the sale of the Certificates. The Depositor hereby grants to the Collateral
Agent a security interest in and to the Reserve Fund and any and all property
credited thereto from time to time, including but not limited to Eligible
Investments, to secure payment of the Certificates according to their terms.
Amounts held from time to time in the Reserve Fund will continue to be held by
the Collateral Agent for the benefit of Class A Certificateholders and the Class
B Certificateholders but the Reserve Fund shall not be an asset of the Trust. By
acceptance of their Certificates, Certificateholders shall be deemed to have
appointed ________________ as Collateral Agent. _________________ hereby accepts
such appointment as Collateral Agent.
(b) On each Distribution Date, the Servicer shall instruct the
Collateral Agent in writing (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date pursuant to
Section 3.9) to withdraw from the Reserve Fund on such Distribution Date, to the
extent of funds available therein, the amounts specified below, in the order of
priority specified below, and deposit such amounts in the Class A Distribution
Account or the Class B Distribution Account, as specified below, on such
Distribution Date:
(i) an amount equal to the excess, if any, of the
Class A Interest Distribution for such Distribution Date over the sum
of Interest Collections for such Distribution Date and the Class B
Percentage of Principal Collections for such Distribution Date will be
deposited into the Class A Distribution Account;
(ii) an amount equal to the excess, if any, of the Class
B Interest Distribution for such Distribution Date over the portion of
Interest Collections for such Distribution Date remaining after the
distribution of the Class A Interest Distribution for such
Distribution Date will be deposited into the Class B Distribution
Account;
(iii) an amount equal to the excess, if any, of the
Class A Principal Distribution for such Distribution Date over the
portion of Principal Collections and Interest Collections for such
Distribution Date remaining after the distribution of the Class A
Interest Distribution and the Class B Interest Distribution for such
Distribution Date will be deposited into the Class A Distribution
Account; and
(iv) an amount equal to the excess, if any, of the
Class B Principal Distribution for such Distribution Date over the
portion of Principal Collections and Interest Collections for such
Distribution Date remaining after the distribution of the Class A
Interest Distribution, the Class B Interest Distribution and the Class
A Principal Distribution for such Distribution Date will be deposited
into the Class B Distribution Account.
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The Collateral Agent shall be entitled to conclusively rely on the Servicer's
instruction and the Servicer's Certificate without investigation.
(c) If the amount on deposit in the Reserve Fund on any
Distribution Date (after giving effect to all other deposits thereto and
withdrawals therefrom to be made on such Distribution Date) is greater than the
Specified Reserve Balance for such Distribution Date, the Servicer shall
instruct the Collateral Agent in writing to distribute the amount of the excess
to the Depositor on such Distribution Date. On the date on which the Trust
terminates, any funds remaining in the Reserve Fund (after all other
distributions to be made from the Reserve Fund pursuant to this Section 4.6 have
been made) shall be distributed to the Servicer upon written request. Amounts
properly distributed to the Servicer for distribution to the Servicer pursuant
to Section 4.1(b)(ii) or this Section 4.6(c) shall not be available under any
circumstances to the Trust, the Trustee or the Certificateholders and the
Servicer shall in no event thereafter be required to refund any such distributed
amounts.
SECTION 4.7. STATEMENTS TO CERTIFICATEHOLDERS. (a) On each
Determination Date, the Servicer shall provide to the Trustee (with a copy to
the Rating Agencies) for the Trustee to forward to each Certificateholder of
record a statement, substantially in the form of Exhibit A (each a "Distribution
Date Statement") setting forth with respect to the related Collection Period at
least the following information as to the Certificates to the extent applicable:
(i) the amount of the distribution allocable to principal
of the Class A Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on
the Class A Certificates and the Class B Certificates;
(ii) the Pool Balance as of the close of business on the
last day of such Collection Period, after giving effect to payments
allocated to principal reported under (i) and (ii) above;
(iv) the amount of the Servicing Fee paid to the Servicer
with respect to such Collection Period and the Class A Percentage and
Class B Percentage of the Servicing Fee paid to the Servicer with
respect to such Collection Period;
(v) the amount of any Class A Interest Carryover Shortfall,
Class A Principal Carryover Shortfall, Class B Interest Carryover
Shortfall and Class B Principal Carryover Shortfall on the
Distribution Date immediately following such Collection Period and the
change in such amounts from those with respect to the immediately
preceding Distribution Date;
(vi) the Class A Pool Factor and the Class B Pool Factor as
of such Distribution Date, after giving effect to payments allocated
to principal reported under clause (i) above;
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(vii) the amount of the aggregate Realized Losses, net of
Recoveries if any, for such Collection Period;
(viii) the aggregate Principal Balance of all Receivables
which were more than 60 days delinquent as of the close of business on
the last day of such Collection Period;
(ix) the amount on deposit in the Reserve Fund on such
Distribution Date, after giving effect to distributions made on such
Distribution Date;
(x) the Class A Principal Balance and the Class B
Principal Balance as of such Distribution Date, after giving effect to
payments allocated to principal reported under clause (i) above;
(xi) the amount otherwise distributable to the Class B
Certificateholders that is being distributed to the Class A
Certificateholders on such Distribution Date;
(xii) the aggregate Purchase Amount of Receivables
repurchased by the Depositor or purchased by the Servicer with respect
to such Collection Period;
(xiii) the amounts collected by the Servicer;
(xiv) the amounts received by the Trust from the Servicer;
(xv) delinquency information relating to the Receivables
which are 30, 60 and 90 days delinquent; and
Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above shall
be expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of a Certificate.
(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the Trustee
shall mail, to each Person who at any time during such calendar year shall have
been a Certificateholder, a statement provided by the Servicer containing the
sum of the amounts described in clauses (i), (ii), (iv) and (v) above for such
calendar year or, in the event such Person shall have been a Certificateholder
during a portion of such calendar year, for the applicable portion of such year,
for the purposes of such Certificateholder's preparation of federal income tax
returns. In addition, the Servicer shall furnish to the Trustee for distribution
to such Person at such time any other information necessary under applicable law
for the preparation of such income tax returns.
(c) The Servicer, at its own expense, shall cause a firm of
nationally recognized accountants to prepare any state tax returns required to
be filed by the Trust, and the Trustee shall execute and file such returns if
requested to do so by the Servicer. The Trustee, upon written request, will
promptly furnish the Servicer with all such information known to the Trustee as
may be reasonably required in connection with the preparation of any state tax
returns of the Trust.
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SECTION 4.8. 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 an Actuarial 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 an "Advance"), to the extent that the Servicer, at its sole
discretion, shall determine that the Advance shall be recoverable from the
Obligor, the Purchase Amount, Liquidation Proceeds or proceeds of any other
Actuarial Receivables. With respect to each Actuarial Receivable, the Advance
shall increase Outstanding Advances. Outstanding Advances shall be reduced by
subsequent payments by or on behalf of the Obligor, collections of Liquidation
Proceeds in respect of the related Receivable or payments of the Purchase Amount
of the related Receivable.
If the Servicer shall determine that an Outstanding Advance with
respect to any Actuarial Receivable shall not be recoverable as aforesaid, the
Servicer shall be reimbursed from any collections (including Liquidation
Proceeds) on other Actuarial Receivables in the Trust and Outstanding Advances
with respect to such Actuarial Receivables shall be reduced accordingly.
(b) The Servicer shall not make any advance with respect to
interest on or principal of Simple Interest Receivables.
ARTICLE V.
[Intentionally Omitted]
ARTICLE VI.
THE CERTIFICATES
SECTION 6.1. THE CERTIFICATES. The Certificates shall be issued
as Class A Certificates and Class B Certificates, substantially in the form of
Exhibits A and B hereto, respectively. The Certificates shall be issued in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof; PROVIDED, HOWEVER, that one Class A Certificate and one Class B
Certificate may be issued in a denomination that represents any remaining
portion of the Original Class A Principal Balance and the Original Class B
Principal Balance, as the case may be. The Certificates shall be executed by the
Trustee 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 Trustee, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates.
SECTION 6.2. AUTHENTICATION AND DELIVERY OF CERTIFICATES. The
Trustee shall cause to be authenticated and delivered to or upon the written
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order of the Depositor, in exchange for the Receivables and other Trust
Property, simultaneously with the sale, assignment and transfer to the Trustee
of the Receivables, and the constructive delivery to the Trustee of the
Receivables Files and the other components of the Trust existing as of the
Closing Date, Certificates in authorized denominations equaling in the aggregate
the sum of the Original Class A Principal Balance and the Original Class B
Principal Balance, and evidencing the entire ownership of the Trust. No
Certificate shall entitle the Holder thereof 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 the form of Certificates attached hereto as Exhibit A and Exhibit B
respectively, executed by the Trustee by manual signature. Such authentication
shall constitute conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates issued on the Closing Date shall be dated the Closing Date. Any
Certificates issued thereafter shall be dated the date of their authentication.
SECTION 6.3. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES. The Trustee shall maintain, or cause to be maintained, at the
office or agency to be maintained by it in accordance with Section 6.9, 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. Upon surrender for
registration of transfer of any Class A Certificate or Class B Certificate at
such office or agency, the Trustee shall execute, authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Class A
Certificates or Class B Certificates, as the case may be, in authorized
denominations of a like aggregate amount. At the option of a Certificateholder,
Class A Certificates or Class B Certificates may be exchanged for other Class A
Certificates or Class B Certificates, as the case may be, of authorized
denominations of a like aggregate amount at the office or agency maintained by
the Trustee in accordance with Section 6.9. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer duly executed by the Holder and in a form
satisfactory to 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. All
Certificates surrendered for registration of transfer or exchange shall be
canceled and disposed of in a commercially reasonable manner approved by the
Trustee.
A Class B Certificate may not be directly or indirectly sold or
transferred to, or purchased or acquired by, or on behalf of (1) any employee
benefit plan, retirement arrangement, individual retirement account or keogh
plan which is subject to either Title I of ERISA, or Section 4975 of the Code
(each, a "Plan"), or (2) any entity whose source of funds to be used for the
purchase of such Class B Certificate includes the assets of any such Plan, other
than an "Insurance Company General Account" as defined in, and which complies
with the provisions of, Prohibited Transaction Exemption 95-60 issued by the
United States Department of Labor. Every transferee of a Class B Certificate
represented by a Book-Entry Certificate shall be deemed to have represented and
warranted to the Depositor and the Trustee that it is not an entity described in
either clause (1) or (2) above. Each transferee of a Definitive Certificate
shall deliver a Benefit Plan Affidavit to the Depositor and the Trustee in the
form of Exhibit E. Neither the Servicer nor the Trustee will incur any liability
for any transfers made in accordance with this Section 6.3.
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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 duly executed by the Certificateholder or his
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Trustee, 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 Trustee in addition to, or in substitution for,
STAMP, all in accordance with the Exchange Act.
SECTION 6.4. RESERVED.
SECTION 6.5. RESERVED.
SECTION 6.6. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Class A Certificate or Class B Certificate shall be
surrendered to the Trustee, or if the Trustee shall receive evidence to its
satisfaction of the destruction, loss or theft of any Class A Certificate or
Class B Certificate and (b) there shall be delivered to the Trustee such
security or indemnity as may be required to save the Trustee harmless, then in
the absence of notice that such Class A Certificate or Class B Certificate shall
have been acquired by a bona fide purchaser, the Trustee shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Class A Certificate or Class B Certificate, a new
Class A Certificate or Class B Certificate of like tenor and denomination. In
connection with the issuance of any new Certificate under this Section 6.6, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any replacement
Certificate issued pursuant to this Section 6.6 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 6.7. PERSONS DEEMED OWNERS. Prior to due presentation of
a Certificate for registration of transfer, the Trustee 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 4.5 and for all
other purposes, and the Trustee shall not be bound by any notice to the
contrary.
SECTION 6.8. 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 of the names and addresses of the Certificateholders
as of the most recent Record Date. If Definitive Certificates have been issued,
the Trustee, upon written request by holders of Class A Certificates or Class B
Certificates evidencing not less than 25% of the aggregate outstanding principal
balance of either the Class A Certificates or the Class B Certificates, as the
case may be, will, within fifteen days after the receipt of such request, afford
such Class A Certificateholders or Class B Certificateholders access during
normal business hours to the most current list of Certificateholders for
purposes of communicating with other Certificateholders with respect to their
rights under the Agreement. Each Certificateholder, by receiving and holding a
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Certificate, shall be deemed to have agreed that none of the Depositor, the
Servicer or the Trustee is accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.
SECTION 6.9. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain, or cause to be maintained, at its expense, in the Borough of
Manhattan, The City of New York, an office or agency 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 ___________________________ or
by mail to the Corporate Trust Office 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 any such office or agency.
SECTION 6.10. BOOK-ENTRY CERTIFICATES. Upon original issuance,
the Class A Certificates and the Class B Certificates shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to DTC or its custodian, by, or on behalf of the
Depositor. Such Certificates shall initially be registered on the Certificate
Register in the name of Cede & Co., the nominee of DTC, and no Certificate Owner
will receive a definitive certificate representing such Certificate Owner's
interest in the Class A Certificates or the Class B Certificates, as the case
may be, except as provided in Section 6.12. Unless and until definitive,
fully-registered Certificates ("Definitive Certificates") have been issued to
Class A Certificateholders or Class B Certificateholders, as the case may be,
pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full
force and effect;
(ii) the Depositor, the Servicer and the Trustee may deal
with the Clearing Agency for all purposes (including the making of
distributions on the Certificates and the taking of actions by the
Certificateholders) as the authorized representative of the
Certificate Owners;
(iii) to the extent that the provisions of this Section 6.10
conflict with any other provisions of this Agreement, the provisions
of this Section 6.10 shall control;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law, the rules, regulations and procedures of the
Clearing Agency and agreements between such Certificate Owners and the
Clearing Agency and all references in this Agreement to actions by
Certificateholders shall refer to actions taken by the Clearing Agency
upon instructions from the Clearing Agency Participants, and all
references in this Agreement to distributions, notices, reports and
statements to Certificateholders shall refer to distributions,
notices, reports and statements to the Clearing Agency or its nominee,
as registered holder of the Certificates, as the case may be, for
distribution to Certificate Owners in accordance with the rules,
regulations and procedures of the Clearing Agency;
(v) pursuant to the Depository Agreement, DTC will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest on the
Certificates to the Clearing Agency Participants, for distribution by
such Clearing Agency Participants to the Certificate Owners or their
nominees; and
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(vi) Certificate Owners may own beneficial interest in
Certificates representing original denominations of $1,000 and integral
multiples of $1,000 in excess thereof except for any residual amount of Original
Class A Principal Balance or Original Class B Principal Balance.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing specified percentages of the aggregate outstanding
principal balance of such Certificates, such direction or consent may be given
by Certificate Owners having interests in the requisite percentage, acting
through the Clearing Agency.
SECTION 6.11. 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 6.12, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency.
SECTION 6.12. DEFINITIVE CERTIFICATES. If (i) (A) the Depositor
advises the Trustee in writing that the Clearing Agency is no longer willing or
able properly to discharge its responsibilities under the Depository Agreement
and (B) the Trustee or the Servicer 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 Servicing Termination, Holders of Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates and the Class B Certificates, taken together
as a single Class, advise the Trustee and the Clearing Agency through the
Clearing Agency Participants in writing, and the Clearing Agency shall so notify
the Trustee, that the continuation of a book-entry system through the Clearing
Agency is no longer in their best interests, the Trustee shall notify the
Clearing Agency which shall be responsible to notify the Certificate Owners of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners, requesting the same. Upon surrender to the
Trustee by the Clearing Agency of the Certificates registered in the name of the
nominee of the Clearing Agency, accompanied by re-registration instructions from
the Clearing Agency for registration, the Trustee shall execute, on behalf of
the Trust, authenticate and deliver Definitive Certificates in accordance with
such instructions. The Servicer shall arrange for, and will bear all costs of,
the printing and issuance of such Definitive Certificates. Neither the
Depositor, the Servicer nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be fully
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. 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.
Neither the Trust, the Depositor, the Servicer nor the Trustee will have any
responsibility or obligation to any Clearing Agency Participants or the Persons
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for whom they act as nominees with respect to (1) the accuracy of any records
maintained by DTC or any Clearing Agency Participants, (2) the payment by DTC or
any Clearing Agency Participant of any amount due to any beneficial owner in
respect of the Principal Balance of, or interest on, the Certificates, (3) the
delivery by any Clearing Agency Participant of any notice to any Certificate
Owner which is required or permitted hereunder to be given to Certificateholders
or (4) any other action taken by DTC or its nominee as the Certificateholder.
ARTICLE VII.
THE DEPOSITOR
SECTION 7.1. REPRESENTATIONS OF DEPOSITOR. The Depositor makes
the following representations on which the Trustee is deemed to have relied in
accepting the Receivables and other Trust Property in trust and in executing and
authenticating the Certificates. The representations are being made as of the
execution and delivery of this Agreement and shall survive the sale and
assignment of the Receivables and other Trust Property to the Trustee.
(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 New York 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 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 OF THE DEPOSITOR. The Depositor has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and under each of the Basic Documents to which
the Depositor is a party; the Depositor has full corporate power and authority
to sell and assign the property to be sold and assigned to and deposited with
the Trustee and the Depositor has duly authorized such sale and assignment to
the Trustee by all necessary corporate action; and the execution, delivery and
performance of this Agreement and under each of the Basic Documents to which the
Depositor is a party have been duly authorized by the Depositor by all necessary
corporate action.
(d) BINDING OBLIGATION. This Agreement and under each of the
Basic Documents to which the Depositor is a party constitutes legal, valid and
binding obligations of the Depositor, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws now or hereafter in
effect relating to creditors' rights generally and subject to general principles
of equity (whether applied in a proceeding at law or in equity).
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
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or without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Depositor, or any material indenture, agreement or
other instrument to which the Depositor is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law or,
to the best of its 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. There are no proceedings or investigations
pending against the Depositor or, to its best knowledge, threatened against the
Depositor, 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 any of the Basic
Documents, or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or any of the Basic Documents, (iii) seeking any determination or
ruling that could reasonably be expected to have a material and adverse effect
on the performance by the Depositor of its obligations under, or the validity or
enforceability of the Basic Documents, or the Certificates or (iv) seeking to
affect adversely the Federal or state income tax or ERISA attributes of the
Trust or the Certificates.
(g) ALL CONSENTS. All authorizations, licenses, consents, orders
or approvals of or registrations or declarations with any court, regulatory
body, administrative agency or other government instrumentality required to be
obtained, effected or given by the Depositor in connection with the execution
and delivery by the Depositor of this Agreement or any of the Basic Documents to
which it is a party and the performance by the Depositor of the transactions
contemplated by this Agreement or any of the Basic Documents to which it is a
party, have been duly obtained, effected or given and are in full force and
effect, except where failure to obtain the same would not have a material
adverse effect upon the rights of the Trust or the Certificateholders.
SECTION 7.2. SPECIAL PURPOSE ENTITY. The Depositor has been
formed as a special purpose entity whose business shall be limited to those
activities specified in its articles of incorporation. The Depositor agrees that
it shall not, under any circumstances, seek the protection of federal bankruptcy
laws or any similar state or local laws providing for the relief of debtors.
SECTION 7.3. CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 7.5, 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.
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(b) During the term of this Agreement, the Depositor shall
observe the applicable legal requirements for the recognition of the Depositor
as a legal entity separate and apart from its affiliates, including as follows:
(i) the Depositor shall maintain corporate records and
books of account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement, the
Depositor shall not commingle its assets and funds with those of
its affiliates;
(iii) the Depositor shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Depositor's corporate actions required by law to be authorized by
the Board of Directors, shall keep minutes of such meetings and
of meetings of its stockholder(s) and observe all other customary
corporate formalities (and any successor Depositor not a
corporation shall observe similar procedures in accordance with
its governing documents and applicable law);
(iv) the Depositor shall at all times hold itself out to
the public under the Depositor's own name as a legal entity
separate and distinct from its affiliates; and
(v) all transactions and dealings between the Depositor
and its affiliates will be conducted on an arm's-length basis
SECTION 7.4. LIABILITY OF DEPOSITOR; INDEMNITIES. The Depositor
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement and the
representations made by the Depositor under this Agreement.
(a) The Depositor shall indemnify, defend and hold harmless the
Trust and the Trustee and their respective officers, directors, employees and
agents from and against any taxes that may at any time be asserted against any
such Person with respect to the transactions contemplated in this Agreement and
any of the Basic Documents (except any income taxes arising out of fees paid to
the Trustee and except any taxes to which the Trustee may otherwise be subject
to), 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 of the date of, the
issuance and original sale of the Certificates or asserted with respect to
ownership of the Receivables or federal or other income taxes arising out of
distributions on the Certificates) and reasonable costs and expenses in
defending against the same or in connection with any application relating to the
Certificates under any state securities laws.
(b) The Depositor shall indemnify, defend and hold harmless the
Trust, the Trustee and the Certificateholders and the officers, directors,
employees and agents of the Trustee from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent arising out of,
or imposed upon such Person through (i) the Depositor's willful misfeasance, bad
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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 Trust's violation of federal or state securities
laws in connection with the offering and sale of the Certificates or in
connection with any application relating to the Certificates under any state
securities laws.
(c) The Depositor shall be liable as primary obligor for, and
shall indemnify, defend and hold harmless the Trustee and its officers,
directors, employees and agents from and against any and all losses, claims,
damages and liabilities and reasonable costs and expenses arising out of, or
incurred in connection with, this Agreement or any of the Basic Documents, the
Trust Property, the acceptance or performance of the trusts and duties set forth
herein or the action or the inaction of the Trustee hereunder except to the
extent that such cost, expense, loss, claim, damage or liability: (i) shall be
due to the willful misfeasance, bad faith or negligence of the Trustee or (ii)
shall arise from any breach by the Trustee of its covenants, representations or
warranties under this Agreement. Such liability shall survive the termination of
the Trust. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this paragraph, the Trustee's choice of legal counsel
shall be subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
(d) The Depositor shall pay any and all taxes levied or assessed
upon all or any part of the Trust Property (other than those taxes expressly
excluded from the Depositor's responsibilities pursuant to the parentheticals in
paragraph (a) above).
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 other 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 7.5. 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, shall be the successor to the
Depositor without the execution or filing of any document or any further act by
any of the parties to this Agreement; PROVIDED, HOWEVER, that the Depositor
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Depositor if other
than Barnett Auto Receivables Corp., executes an agreement of assumption to
perform every obligation of the Depositor under this Agreement; (ii) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 2.2 or 7.1 shall have been breached and no Event of
Servicing Termination, and no event that, after notice or lapse of time, or both
would become an Event of Servicing Termination shall have happened and be
continuing, (iii) 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, if any, comply with this
Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that the
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Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Depositor shall have a consolidated net worth at
least equal to that of the predecessor, (v) such transaction will not result in
a material adverse federal or state tax consequence to the Trust or the
Certificateholders and (vi) unless Barnett Auto Receivables Corp. is the
surviving entity, the Depositor shall have delivered to the 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 Trustee in the Receivables and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interests.
SECTION 7.6. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising under this Agreement or any Basic Document (provided that such reliance
shall not limit in any way the Depositor's obligations under Section 2.2). 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 7.7. 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 expressly provided
herein or in any Basic Document.
SECTION 7.8. SECURITY INTEREST. During the term of this
Agreement, the Depositor will not take any action to assign the security
interest in any Financed Vehicles other than pursuant to this Agreement.
ARTICLE VIII.
THE SERVICER AND THE SPONSOR
SECTION 8.1. REPRESENTATIONS OF BDFS. BDFS makes the following
representations on which the Trustee is deemed to have relied in accepting the
Receivables and other Trust Property in trust and in authenticating the
Certificates. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale and assignment of the Receivables and other
Trust Property to the Trustee.
(a) ORGANIZATION AND GOOD STANDING. BDFS is duly organized and
validly existing as a corporation in good standing under the laws of the State
of Florida 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 power,
authority and legal right to service the Receivables.
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(b) DUE QUALIFICATION. BDFS is duly qualified to do business 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 OF BDFS. BDFS has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement have been duly authorized by BDFS by all necessary corporate action.
All authorizations, consents, orders or approvals of or registrations or
declarations with any court, regulatory body, administrative agency or other
government instrumentality required to be obtained, effected or given by BDFS in
connection with the execution and delivery by BDFS of this Agreement and the
performance by BDFS of the transactions contemplated by this Agreement have been
duly obtained, effected or given and are in full force and effect, except where
failure to obtain the same would not have a material adverse effect upon the
rights of the Trust or the Certificateholders.
(d) BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of BDFS, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws now or hereafter in effect relating to
creditors' rights generally and subject to general principles of equity (whether
applied in a proceeding of law or in equity).
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under the certificate of
incorporation or by-laws of BDFS, or any material indenture, agreement or other
instrument to which BDFS is a party or by which it shall be bound; nor result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to this Agreement); nor violate any law or, to the best of its
knowledge, any order, rule or regulation applicable to BDFS of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over BDFS or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending against BDFS, or, to its best knowledge, threatened against BDFS, before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over BDFS 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
could reasonably be expected to have a material and adverse effect on the
performance by BDFS of its obligations under, or the validity or enforceability
of this Agreement or the Certificates or (iv) seeking to affect adversely the
federal or state income tax or ERISA attributes of the Trust or the
Certificates.
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(g) NO AMENDMENT OR WAIVER. No provision of any Receivable has
been waived, altered or modified in any respect, except pursuant to a document,
instrument or writing included in the relevant Receivable File, and no such
amendment, waiver, alteration or modification causes such Receivable not to
conform to the other warranties contained in this Section or those of the
Depositor and the Sponsor contained in Section 2.2.
(h) APPROVALS. All approvals, licenses, authorizations,
consents, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official,
required in connection with the execution and delivery of this Agreement have
been or will be taken or obtained on or prior to the Closing Date.
(i) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept
in the offices of BDFS or affiliates of BDFS, specified in Schedule B, or at
such other office specified in accordance with Section 2.4.
(j) DEMAND NOTE. The Sponsor has contributed the Demand Note to
the Depositor on or before the Closing Date.
SECTION 8.2. 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.
The Servicer shall indemnify, defend and hold harmless the Trust,
the Trustee, the Depositor and the Certificateholders and any of the officers,
directors, employees and agents of the Trustee or the Depositor from any and all
losses, claims, damages, liabilities and reasonable costs and expenses
(including reasonable attorneys' fees and expenses) to the extent arising out
of, or imposed upon any such Person through, the negligence, willful misfeasance
or bad faith of the Servicer in the performance of its obligations and duties
under this Agreement or in the performance of the obligations and duties of any
subservicer under any subservicing agreement or by reason of the reckless
disregard of its obligations and duties under this Agreement or by reason of the
reckless disregard of the obligations of any subservicer under any subservicing
agreement, where the final other determination that any such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, any such gross negligence, willful misfeasance, bad faith or
recklessness on the part of the Servicer or any subservicer, is established by a
court of law, by an arbitrator or by way of settlement agreed to by the
Servicer. Notwithstanding the foregoing, if the Servicer is rendered unable, in
whole or in part, by virtue of an act of God, act of war, fires, earthquake or
other natural disasters, to satisfy its obligations under this Agreement, the
Servicer shall not be deemed to have breached any such obligation upon the
sending of written notice of such event to the other parties hereto, for so long
as the Servicer remains unable to perform such obligation as a result of such
event. This provision shall not be construed to limit the Servicer's, any
subservicer's or any other party's rights, obligations, liabilities, claims or
defenses which arise as a matter of law or pursuant to any other provision of
this Agreement.
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The Servicer shall indemnify, defend and hold harmless the Trust,
the Trustee, the Depositor, the Certificateholders or any of the officers,
directors, employees and agents of the Trustee or the Depositor from any and all
losses, claims, damages, liabilities and reasonable costs and expenses
(including reasonable attorneys' fees and expenses) to the extent arising out of
or imposed upon any such Person as a result of any compensation payable to any
subcustodian or subservicer (including any fees payable in connection with the
release of any Receivable File from the custody of such subservicer or in
connection with the termination of the servicing activities of such subservicer
with respect to any Receivable) whether pursuant to the terms of any
subservicing agreement or otherwise.
The Servicer shall indemnify, defend and hold harmless the Trust,
the Trustee, the Depositor, or the Certificateholders from and against any taxes
that may at any time be asserted against the Trust, the Trustee, the Depositor
or the Certificateholders, (other than any taxes based upon the income of any
such person), with respect to the transactions contemplated herein including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
The Servicer shall indemnify, defend, and hold harmless the Trust
and Trustee from and against all reasonable costs and expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein contained, if any,
except to the extent that such reasonable cost or expense, reasonable loss,
claim, damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or gross negligence (except for errors in judgment) of the Trustee; or
(b) relates to any tax other than the taxes with respect to which the Servicer
shall be required to indemnify the Trustee.
SECTION 8.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, BDFS. Any Person (a) into which BDFS may be merged or
consolidated, (b) which may result from any merger or consolidation to which
BDFS shall be a party or (c) which may succeed to the properties and assets of
BDFS, substantially as a whole, shall be the successor to BDFS without the
execution or filing of any document or any further act by any of the parties to
this Agreement; PROVIDED, HOWEVER, that BDFS hereby covenants that it will not
consummate any of the foregoing transactions except upon satisfaction of the
following: (i) the surviving Servicer if other than BDFS executes an agreement
of assumption to perform every obligation of BDFS under this Agreement, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 8.1 shall have been breached and no Event of
Servicing Termination, and no event that, after notice or lapse of time, or
both, would become an Event of Servicing Termination shall have occurred and be
continuing, (iii) 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, if any, comply with this
Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that the
Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Servicer shall have a consolidated net worth at
least equal to that of the predecessor Servicer, and (v) such transaction will
not result in a material adverse federal or state tax consequence to the Trust
or the Certificateholders.
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SECTION 8.4. LIMITATION ON LIABILITY OF BDFS AND OTHERS. Neither
BDFS nor any of its directors, officers, employees or agents 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
by BDFS or any subservicer pursuant to this Agreement or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect BDFS 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. BDFS or
any subservicer and any of their respective directors, officers, employees or
agents 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 otherwise provided in this Agreement, BDFS shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall 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 (but shall not be required
to) undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement to protect the interests of the Certificateholders
under this Agreement.
SECTION 8.5. BDFS NOT TO RESIGN AS SERVICER. Subject to the
provisions of Section 8.3, BDFS, hereby agrees not to resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties hereunder shall no
longer be permissible under applicable law or if such resignation is required by
regulatory authorities. Notice of any such determination permitting the
resignation of BDFS as Servicer shall be communicated to the 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 Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until the earlier of the Trustee or a
successor Servicer having assumed the responsibilities and obligations of the
resigning Servicer in accordance with Section 9.2 or the date upon which any
regulatory authority requires such resignation.
SECTION 8.6. CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 8.3, BDFS 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.
(b) During the term of this Agreement, BDFS shall observe the
applicable legal requirements for the recognition of BDFS as a legal entity
separate and apart from its affiliates, including as follows:
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(i) BDFS shall maintain corporate records and books of
account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement, BDFS
shall not commingle its assets and funds with those of its
affiliates;
(iii) BDFS shall hold such appropriate meetings of its Board
of Directors as are necessary to authorize all BDFS's corporate
actions required by law to be authorized by the Board of
Directors, shall keep minutes of such meetings and of meetings of
its stockholder(s) and observe all other customary corporate
formalities (and any successor Servicer not a corporation shall
observe similar procedures in accordance with its governing
documents and applicable law);
(iv) BDFS shall at all times hold itself out to the public
under BDFS's own name as a legal entity separate and distinct
from its affiliates; and
(v) all transactions and dealings between BDFS and its
affiliates will be conducted on an arm's-length basis.
SECTION 8.7. TAX ACCOUNTING. The Servicer shall prepare any
federal tax returns of the Trust in accordance with the Code and any regulations
(including, to the extent applicable by their terms, proposed regulations)
thereunder. To the extent not inconsistent with any such regulations, such
returns shall be prepared in a manner consistent with the following rules:
(a) The Class A Certificateholders shall be treated as owning the
Class A Percentage of Interest Collections (but limited to the Class A
Certificate Rate plus the Servicing Fee Rate) and Principal Collections and the
Class B Certificateholders shall be treated as owning the Class B Percentage of
Interest Collections (but limited to the Class B Certificate Rate plus the
Servicing Fee Rate) and Principal Collections. The Depositor shall be treated as
having retained the stripped coupons on the Class A Percentage and the Class B
Percentage of each Receivable equal to the difference between the APR of such
Receivable and the portion owned by the Class A and Class B Certificateholders,
respectively, pursuant to this paragraph.
(b) To the extent that as a result of the subordination
provisions of this Agreement, actual cash distributions to the Class B
Certificateholders are less than the amount set forth in subsection (a), the
Class B Certificateholders shall be deemed to have (i) received the amount set
forth in subsection (a), (ii) paid such difference to the Class A
Certificateholders pursuant to a guaranty of the Class A Certificates, and (iii)
become subrogated to the rights of the Class A Certificateholders to recovery of
the amounts so paid.
SECTION 8.8. DEMAND NOTE. (a) During the term of this Agreement,the
Sponsor will keep the Demand Note issued to the Depositor in full force and
effect and will not cancel, waive or terminate such Demand Note.
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ARTICLE IX.
SERVICING TERMINATION
SECTION 9.1. EVENTS OF SERVICING TERMINATION. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(a) any failure by the Servicer to deliver to the Trustee for
deposit in any of the Accounts, the Reserve Fund or the Payahead Account any
required payment or to direct the Trustee or the Collateral Agent, as
applicable, to make any required distributions therefrom that shall continue
unremedied for a period of five Business Days after written notice of such
failure is received by the Servicer from the Trustee or the Collateral Agent, as
applicable, or after discovery of such failure by an Authorized Officer of the
Servicer; or
(b) any failure by the Servicer duly to observe or to perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement, which failure shall (i) materially and adversely affect the
rights of either the Class A Certificateholders or the Class B
Certificateholders 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 by the Trustee or (B) to the
Servicer and to the Trustee by Holders of Certificates evidencing not less than
25% of the aggregate outstanding principal balance of the Class A Certificates
and Class B Certificates taken together as a single class (or for such longer
period, not in excess of 120 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 120 days and the
Servicer delivers an Officers' Certificate to the Trustee to such effect and to
the effect that the Servicer has commenced or will promptly commence, and will
diligently pursue, all reasonable efforts to remedy such default); or
(c) an Insolvency Event occurs with respect to the Servicer or
any successor; then, and in each and every case, so long as the Event of
Servicing Termination shall not have been remedied within any applicable cure
period, either the Trustee, or the Holders of Certificates evidencing not less
than [25%] [a majority] of the aggregate outstanding principal balance of the
Class A Certificates and the Class B Certificates taken together as a single
class, by notice then given in writing to the Servicer and the Trustee may
terminate all the rights and obligations (other than the obligations set forth
in Section 8.2) 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 9.2;
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
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the time be held by the predecessor Servicer for deposit, or shall thereafter be
received by it with respect to a Receivable. All reasonable costs and expenses
(including reasonable 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
Servicing Termination, the Trustee shall give notice thereof to the Rating
Agencies.
SECTION 9.2. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's
receipt of notice of termination, pursuant to Section 9.1 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 earlier
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 the Trustee shall be
entitled to the Servicing Fee. Notwithstanding the above, the Trustee shall, if
it shall be unwilling or 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 $50,000,000 and whose regular business shall include the
servicing of automotive 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 the
rights granted to the predecessor Servicer by the terms and provisions of this
Agreement. No successor Servicer shall be liable for any acts or omissions of
any predecessor Servicer.
SECTION 9.3. PAYMENT OF SERVICING FEE; REPAYMENT OF ADVANCES. If
the Servicer shall change, the predecessor Servicer shall be entitled to (i)
receive any accrued and unpaid Servicing Fees through the date of the successor
Servicer's acceptance hereunder in accordance with Section 4.8. and (ii)
reimbursement for Outstanding Advances pursuant to Sections 4.2 and 4.8 with
respect to all Advances made by the predecessor Servicer.
SECTION 9.4. NOTIFICATION TO CERTIFICATEHOLDERS. Upon receipt by
an Authorized Officer of the Trustee of written notice of any termination of, or
appointment of a successor to, the Servicer pursuant to this Article IX, the
Trustee shall give prompt written notice thereof to Certificateholders and the
Rating Agencies.
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SECTION 9.5. WAIVER OF PAST EVENTS OF SERVICING TERMINATION. The
Holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, may, on behalf of all
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 Accounts, the
Reserve Fund or the Payahead Account in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any Events
of Servicing Termination 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 X.
THE TRUSTEE
SECTION 10.1. ACCEPTANCE BY TRUSTEE. The Trustee, by its
execution of this Agreement, accepts all consideration conveyed by the Depositor
pursuant to Section 2.1 and the Trust created hereunder and declares that it
shall hold such consideration in trust upon the terms hereof set forth for the
benefit of the Certificateholders.
SECTION 10.2. DUTIES OF TRUSTEE. (a) The Trustee, both prior to
and after the curing of an Event of Servicing Termination, undertakes to perform
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.
If an Event of Servicing Termination shall have occurred and shall not have been
cured (the appointment of a successor Servicer (including the Trustee) to
constitute a cure for the purposes of this Article), of which an Authorized
Officer of the Trustee has actual knowledge the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs; PROVIDED,
HOWEVER, that if the Trustee assumes the duties of the Servicer pursuant to
Section 9.2, the Trustee in performing such duties shall use the degree of skill
and attention required by Section 3.1.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are required specifically to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
reasonably conform to the requirements of this Agreement. No provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, its own bad faith or its own
willful misconduct; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of an Event of Servicing
Termination, and after the curing of all such Events of Servicing
Termination that may have occurred, the duties and obligations of the
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Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee, the permissible right of the Trustee
(solely in its capacity as such) to do things enumerated in this
Agreement shall not be construed as a duty and, in the absence of bad
faith on the part of the Trustee, or manifest error, the Trustee
(solely in its capacity as such) may conclusively rely on the truth of
the statements and the correctness of the opinions expressed upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of
judgment made in good faith by an officer of the Trustee, unless it
shall be proved that the Trustee shall have been negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with the direction of the Holders of Certificates
evidencing not less than a majority of the aggregate outstanding
principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, as set forth in Section
9.1, relating to the time, method and place of conducting any
proceeding or any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement.
(d) The Trustee (solely in its capacity as such) shall not be
required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that the repayment of such funds or indemnity satisfactory to it
against such risk or liability shall not be assured to it, and none of the
provisions contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement,
the Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or Financed Vehicle or to
impair the value of any Receivable or Financed Vehicle.
(f) The Trustee shall have no power to vary the corpus of the
Trust including (i) accepting any substitute obligation for a Receivable
initially assigned to the Trustee under this Agreement, (ii) adding any other
investment, obligation or security except for investments of moneys in the
Accounts as permitted in this Agreement, or (iii) withdrawing any Receivable,
except for a withdrawal permitted under this Agreement.
SECTION 10.3. TRUSTEE'S CERTIFICATE. As soon as practicable after
each Transfer Date on which Receivables shall be assigned to the Depositor
pursuant to Section 2.3 or 11.2, as applicable, or to the Servicer pursuant to
Section 3.7, the Trustee shall execute a certificate, prepared by the Servicer,
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substantially in the form of Exhibit F hereto, including its date and the date
of the Agreement, and accompanied by a copy of the Servicer's Certificate for
the related Collection Period. The Trustee's certificate shall operate, as of
such Transfer Date, as an assignment pursuant to Section 10.4.
SECTION 10.4. TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES. With
respect to all Receivables repurchased by the Depositor or the Sponsor pursuant
to Section 2.3 or 11.2, or purchased by the Servicer pursuant to Section 3.7,
the Trustee shall assign, without recourse, representation or warranty, to the
Depositor or to the Servicer, as the case may be, all the Trustee's right, title
and interest in and to such Receivables, and all security and documents and all
other Trust Property conveyed pursuant to Section 2.1 with respect to such
Receivables. Such assignment shall be a sale and assignment outright, and not
for security. If, in any enforcement suit or legal proceeding, it is held that
the Depositor or the Servicer, as the case may be, may not enforce any such
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Receivable, the Trustee shall, at the expense of
the Depositor, the Sponsor or the Servicer, as the case may be, take such steps
as the Depositor, the Sponsor or the Servicer, as the case may be, deems
necessary to enforce the Receivable, including bringing suit in the Trustee's
name or the names of the Certificateholders.
SECTION 10.5. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 10.2:
(i) The Trustee may conclusively rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate of auditors or accountants or any other certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, appraisal, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(ii) The Trustee may consult with counsel and any Opinion
of Counsel or any advice of such counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it under this Agreement in good faith and in
accordance with such Opinion of Counsel or any advice of such counsel.
(iii) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or in
relation to this Agreement, at the request, order or direction of any
of the Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the
Trustee security or indemnity satisfactory to it against the costs,
expenses, and liabilities that may be incurred therein or thereby.
(iv) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon
it by this Agreement; PROVIDED, HOWEVER, that the Trustee's conduct
does not constitute willful misfeasance or negligence.
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(v) Prior to the occurrence of an Event of Servicing
Termination and after the curing of all Events of Servicing
Termination that may have occurred, the Trustee shall not be bound to
make any investigation into the facts of any matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, direction, order, approval, bond, note or
other paper or document, unless requested in writing so to do by
Holders of Certificates evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates
and the Class B Certificates taken together as a single class;
PROVIDED, HOWEVER, that if the payment within a reasonable time to the
Trustee of the costs, expenses, or liabilities likely to be incurred
by it in the making of an investigation requested by the
Certificateholders is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require indemnity satisfactory to it
against such cost, expense, or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be
paid by the Servicer, or, if paid by the Trustee, shall be reimbursed
by the Servicer upon demand. Nothing in this clause (v) shall affect
the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors;
PROVIDED, FURTHER, that the Trustee shall be entitled to make such
further inquiry or investigation into such facts or matter as it may
reasonably see fit, and if the Trustee shall determine to make such
further inquiry or investigation it shall be entitled to examine the
books and records of the Servicer or the Depositor, personally or by
agent or attorney, at the sole cost and expense of the Servicer or
Depositor, as the case may be.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly
or by or through agents, attorneys, nominees or a custodian, and shall
not be liable for the acts of such agents, attorneys, nominees or
custodians provided that they have been appointed with due care.
(vii) The Trustee shall not be required to make any initial
or periodic examination of any documents or records related to the
Receivables or Financed Vehicles for the purpose of establishing the
presence or absence of defects, the compliance by the Depositor with
their representations and warranties or for any other purpose.
SECTION 10.6. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the Trustee's execution of,
and the certificate of authentication on, the Certificates). Except as expressly
provided herein, the Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (other than the Trustee's
execution of, and the authentication of the Certificates), or of any Receivable
or related document, or for the validity of the execution by the Depositor, the
Sponsor and the Servicer of this Agreement or of any supplements hereto or
instruments of further assurance, or for the sufficiency of the Trust Property
hereunder, and the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the part
of the Depositor, the Sponsor or the Servicer under this Agreement except as
herein set forth; but the Trustee may require the Depositor or the Servicer to
provide full information and advice as to the performance of the aforesaid
covenants, conditions and agreements. The Trustee (solely in its capacity as
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such) shall have no obligation to perform any of the duties of the Depositor,
the Sponsor or the Servicer, except as explicitly set forth in this Agreement.
The Trustee shall have no liability in connection with compliance of the
Servicer or the Depositor with statutory or regulatory requirements related to
the Receivables. The Trustee shall not make or be deemed to have made any
representations or warranties with respect to the Receivables or the validity or
sufficiency of any assignment of the Receivables to the Trust or the Trustee.
The Trustee (solely in its capacity as such) shall at no time have any
responsibility or liability for, or with respect to, the legality, validity or
enforceability of any security interest in any Financed Vehicle or (prior to the
time, if any, that the Servicer is terminated as custodian hereunder) any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, the efficacy of the Trust or
its ability to generate funds sufficient to provide for the payments to be
distributed to Certificateholders under this Agreement, the existence,
condition, location and ownership of any Financed Vehicle, 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 Sponsor with any
representation or warranty made under this Agreement or in any related document
and the accuracy of any such representation or warranty, prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith or any
breach thereof, any investment of monies by the Servicer or any loss resulting
therefrom (it being understood that the Trustee, on behalf of the Trust shall
remain responsible for any Trust Property that it may hold), the acts or
omissions of the Depositor, the Sponsor, the Servicer, or any Obligor, any
action of the Servicer taken in the name of the Trustee, or any action by the
Trustee taken at the instruction of the Servicer (PROVIDED that such instruction
is not in express violation of the terms and provisions of this Agreement);
PROVIDED, HOWEVER, that the foregoing shall not relieve the Trustee of its
obligation to perform its duties under this Agreement. Except with respect to a
claim based on the failure of the Trustee to perform its duties under this
Agreement (whether in its capacity as Trustee or as successor Servicer) or based
on the Trustee's willful misfeasance, negligence or bad faith, or based on the
Trustee's breach of a representation and warranty contained in Section 10.14, no
recourse shall be had to the Trustee (whether in its individual capacity or as
Trustee) for any claim based on any provision of this Agreement, the
Certificates or any Receivable or assignment thereof against the Trustee in its
individual capacity; the Trustee shall not have any personal obligation,
liability, or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim. The Trustee shall not be accountable for the use or
application by the Depositor of the proceeds of such Certificates, or for the
use or application of any funds paid to the Servicer in respect of the
Receivables prior to the time such amounts are deposited in the Collection
Account (whether or not the Collection Account is maintained with the Trustee).
The Trustee shall have no liability for any losses from the investment or
reinvestment in Eligible Investments made in accordance with Section 4.1.
SECTION 10.7. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
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SECTION 10.8. TRUSTEE'S FEES AND EXPENSES. The Servicer agrees to
pay to the Trustee, and the Trustee shall be entitled to, reasonable
compensation as is agreed upon in writing between the Trustee and the Servicer
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by this Agreement and in the exercise and
performance of any of the powers and duties under this Agreement as Trustee, and
the Servicer shall pay or reimburse the Trustee upon its request for all
reasonable expenses (including, without limitation, expenses incurred in
connection with notices or other communications to Certificateholders),
disbursements and advances (including the reasonable compensation and the
reasonable expenses and disbursements of its counsel and of all persons not
regularly in its employ) incurred or made by the Trustee in accordance with any
of the provisions of this Agreement (including the reasonable fees and expenses
of its agents, any co-trustee and counsel) or in defense of any action brought
against it in connection with this Agreement except any such expense,
disbursement, or advance as may arise from its negligence, willful misfeasance
or bad faith. The Servicer shall indemnify the Trustee, its officers, directors,
agents and employees for, and hold it, and its officers, directors, agents and
employees harmless against, any loss, liability, cost or expense, arising out of
or in connection with the transactions contemplated by this Agreement PROVIDED,
that such loss, liability, cost, or expense is not caused by the Trustee's
negligence, willful misconduct or bad faith. The Servicer's covenant to pay the
expenses, disbursements and advances provided for in the second preceding
sentence, the Servicer's indemnification of the Trustee provided for in the
preceding sentence and the Servicer's indemnity pursuant to Section 8.2 shall
survive the termination of this Agreement.
SECTION 10.9. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The trustee
shall be organized and doing business under the banking laws of such State or of
the United States, shall be authorized under such laws to exercise corporate
trust powers, shall have a combined capital and surplus of at least $50,000,000,
shall have a credit rating of at least Baa3 from Moody's and shall be subject to
supervision or examination by federal or state banking authorities. 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 10.9, the consolidated net worth of such
corporation shall be deemed to be its consolidated capital and surplus as set
forth in its most recent consolidated report of condition so published. In case
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 10.9, the Trustee shall resign immediately in the
manner and with the effect specified in Section 10.10.
SECTION 10.10 RESIGNATION OR REMOVAL OF Trustee. (a) The Trustee
may at any time resign and be discharged from the trusts hereby created by
giving 30 days' prior 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.
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(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 10.9 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, conservator or liquidator 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 Trustee is removed
under the authority of the immediately preceding sentence, the Servicer shall
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed, the
successor Trustee, the Certificateholders at their respective addresses of
record and the Rating Agencies.
(c) Any resignation or removal of the Trustee and appointment of
a successor Trustee pursuant to any of the provisions of this Section 10.10
shall not become effective until acceptance of appointment by the successor
Trustee pursuant to Section 10.11.
(d) The respective obligations of the Depositor and the Servicer
described in this Agreement shall survive the removal or resignation of the
Trustee as provided in this Agreement. The Trustee shall be paid all amounts
outstanding upon its resignation or removal.
SECTION 10.11 SUCCESSOR TRUSTEE. (a) Any successor Trustee
appointed pursuant to Section 10.10 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
rights, powers, duties and obligations of its predecessor under this Agreement,
with like effect as if originally named as Trustee. The predecessor Trustee
shall deliver to the successor Trustee all documents and statements held by it
under this Agreement, and the Servicer and the predecessor Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Trustee
all such rights, powers, duties and obligations.
(b) No successor Trustee shall accept appointment as provided in
this Section 10.11 unless at the time of such acceptance such successor Trustee
shall be eligible pursuant to Section 10.9.
(c) Upon acceptance of appointment by a successor Trustee
pursuant to this Section 10.11, the Servicer shall mail notice of such
acceptance by the successor Trustee under this Agreement to all
Certificateholders at their respective addresses of record and to the Rating
Agencies. If the Servicer shall fail to mail such notice within ten 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 10.12 MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation
or banking association which is eligible to be a successor Trustee under Section
10.9 (i) into which the Trustee may be merged or consolidated, (ii) that may
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result from any merger, conversion, or consolidation to which the Trustee shall
be a party, or (iii) that may succeed by purchase and assumption to the business
of the Trustee, where the Trustee is not the surviving entity, which corporation
or banking association executes an agreement of assumption to perform every
obligation of the Trustee under this Agreement, shall be the successor of the
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. The Trustee shall promptly notify the Servicer and the
Rating Agencies of any such merger, conversion, consolidation or purchase and
assumption where the Trustee is not the surviving entity.
SECTION 10.13. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
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 Property or any Financed Vehicle may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person,
in such capacity and for the benefit of the Certificateholders, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 10.13, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Servicing Termination shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.9 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.11.
Notwithstanding the appointment of a co-trustee or separate trustee hereunder,
the Trustee shall not be relieved of any of its obligations under this
Agreement.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee,
is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as
Trustee under this Agreement or as successor to the Servicer under
this Agreement), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Property
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.
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(ii) No trustee under this Agreement shall be liable by
reason of any act or omission of any other trustee under this
Agreement.
(iii) The Servicer and the Trustee acting jointly 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 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
in particular to the provisions 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.
(d) Any separate trustee or co-trustee may, at any time, appoint
the Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. The Trustee shall promptly notify the Servicer and the Rating
Agencies of any appointment made pursuant to this Section 10.13.
SECTION 10.14 REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The
Trustee makes the following representations and warranties on which the
Depositor, the Sponsor, the Servicer, and Certificateholders may rely:
(i) ORGANIZATION AND GOOD STANDING. The Trustee is a corporation
duly organized, validly existing, and in good standing under the laws
of the State of _______; and
(ii) POWER AND AUTHORITY. The Trustee has full power, authority
and legal right to execute, deliver, and perform this Agreement and
has taken all necessary action to authorize the execution, delivery,
and performance by it of this Agreement.
SECTION 10.15. REPORTS BY TRUSTEE. The Trustee shall provide to any
Certificateholder or Certificate Owner who so requests in writing (addressed to
the Corporate Trust Office) a copy of any Servicer's Certificate, the
annualstatement described in Section 3.10, and the annual accountant's
examination described in Section 3.11. The Trustee may require any
Certificateholder or Certificate Owner requesting such report to pay a
reasonable sum to cover the cost of the Trustee's complying with such request.
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SECTION 10.16. TAX ACCOUNTING. The Servicer shall prepare any
federal tax returns of the Trust in accordance with the Code and any regulations
(including, to the extent applicable by their terms, proposed regulations)
thereunder. In no event shall the Trustee in its individual capacity be liable
for any liabilities, costs or expenses of the Trust, the Certificateholders, the
Depositor, the Sponsor or the Servicer arising under any tax law or regulation,
including, without limitation, federal, state or local income or excise taxes or
any tax imposed on or measured by income (or any interest or penalty with
respect thereto or arising from any failure to comply therewith).
Notwithstanding the foregoing, in no event shall the Trustee be liable hereunder
for any liabilities, costs or expenses incurred from any information furnished
to it by the Servicer or failure to furnish information by the Servicer in a
timely manner.
SECTION 10.17. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
ARTICLE XI.
TERMINATION
SECTION 11.1 TERMINATION OF THE TRUST. (a) The Trust, and the
respective obligations and responsibilities of the Depositor, the Sponsor, the
Servicer and the Trustee hereunder shall terminate (except as otherwise
expressly provided herein) upon the earliest of: (i) the Distribution Date next
succeeding the purchase by the Depositor at its option, pursuant to Section
11.2, of the Receivables remaining in the Trust, (ii) the Distribution Date next
Succeeding the sale through Auction, pursuant to Section 11.3 of the Receivables
remaining in the Trust, (iii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement or (iv) the Distribution
Date next succeeding the month following the maturity or the liquidation of the
last Receivable held in the Trust and the disposition of any amounts received
upon liquidation of any property remaining in the Trust; PROVIDED, HOWEVER, in
no event shall the Trust created hereby 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 11.1.
(b) Upon receipt of written notice of termination by the
Servicer, notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender the Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders and the Rating Agencies mailed not
earlier than the 15th day and not later than the 25th day of the month next
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preceding the specified Distribution Date stating the amount of any such final
payment and 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. 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 4.5. Amounts remaining after distribution, or providing
for distribution, to the Certificateholders shall be distributed to the
Depositor upon written request.
(c) 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. The Trustee shall after giving such notice deliver or cause to be
delivered to the Servicer the Certificate Register. If within one year after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Servicer 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 such funds held pending such distribution shall be held uninvested. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Trustee to the Depositor upon written request.
SECTION 11.2. OPTIONAL PURCHASE OF ALL RECEIVABLES. On the last
day of any Collection Period immediately preceding a Determination Date as of
which the then outstanding Pool Balance is 10% or less of the Initial Pool
Balance, the Depositor shall have the option to purchase the corpus of the
Trust. To exercise such option, the Depositor shall deposit pursuant to Section
4.3 the sum of the Class A Principal Balance and the Class B Principal Balance
plus accrued and unpaid interest thereon into the Collection Account for the
Distribution Date occurring in the month in which such repurchase is to be
effected. The payment shall be made in the manner specified in Section 4.3, and
shall be distributed pursuant to Section 4.5. Upon such payment the Servicer
shall succeed to and own all interests in and to the Trust and the Trust
Property.
SECTION 11.3. MANDATORY SALE OF ALL CONTRACTS. In accordance with
the procedures and schedule set forth in Exhibit G hereto (the "Auction
Procedures"), the Trustee shall conduct or shall cause to be conducted an
auction (the "Auction") of the Receivables remaining in the Trust (such
Receivables hereinafter referred to as the "Auction Property") in order to
effect a termination of the Trust pursuant to Section 11.1 on the second
Distribution Date succeeding the Record Date on which the Pool Balance is 5% or
less of the Original Pool Balance and at such time as the Depositor shall have
not exercised its option contained in Section 11.2. Such Auction shall be
conducted within 10 days following the Distribution Date following the Record
Date on which the Pool Balance is 5% or less of the Original Pool Balance. The
Depositor, the Sponsor, or the Servicer may, but shall not be required to, bid
at the Auction. The Trustee shall sell or shall cause the sale and transfer of
the Auction Property to the highest bidder therefor at the Auction provided
that;
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(i) the Auction has been conducted in accordance with the
Auction Procedures;
(ii) the Trustee has received good faith bids for the Auction
Property from two prospective purchasers that are considered by the
Trustee, in its sole discretion, to be competitive participants in the
market for motor vehicle retail installment sale contracts and other
motor vehicle installment sale contracts;
(iii) a financial advisor, as advisor to the Trustee (in such
capacity, the "Advisor"), shall have advised the Trustee in writing
that at least two of such bidders (including the winning bidder) are
participants in the market for motor vehicle retail installment sale
contracts and other motor vehicle installment sale contracts willing
and able to purchase the Auction Property;
(iv) the highest bid in respect of the Auction Property is not
less than the aggregate fair market value of the Auction Property (as
determined by the Trustee in its sole discretion);
(v) any bid submitted by the Depositor, the Sponsor, the
Servicer or any Affiliate of any of them shall reasonably represent
the fair market value of the Auction Property, as independently
verified and represented in writing by a qualified independent third
party evaluator (which may include the Advisor or an investment bank
firm) selected by the Trustee; and
(vi) the highest bid would result in proceeds from the sale of
the Auction Property which will be at least equal to the sum of (A)
the greater of (1) the aggregate Purchase Price for the Receivables
(including defaulted Receivables), plus the appraised value of any
other property held by the Trust (less liquidation expenses) or (2) an
amount that, when added to amounts on deposit in the Collection
Account and available for distribution to Certificateholders on the
second Distribution Date following the consummation of such sale (the
"Liquidation Distribution Date"), would result in proceeds sufficient
to distribute to Certificateholders the amounts of interest due to the
Certificateholders for such Distribution Date and any unpaid interest
payable to the Certificateholders with respect to one or more prior
Distribution Dates and the outstanding principal amount of the
Certificate Balance, and (B) the Total Servicing Fee payable on such
second Distribution Date.
Provided that all of the conditions set forth in clauses (i)
through (vi) have been met, the Trustee shall sell and transfer the Auction
Property, without representation, warranty or recourse, to such highest bidder
in accordance with and upon completion of the Auction Procedures. The Trustee
shall deposit the purchase price for the Auction Property in the Collection
Account at least one Business Day prior to such second succeeding Distribution
Date. In addition, the Auction must stipulate that the Servicer be retained to
service the Receivables on terms substantially similar to those in the
Agreement. In the event that any of such conditions are not met or such highest
bidder fails or refuses to comply with any of the Auction Procedures, the
Trustee shall decline to consummate such sale and transfer. In the event such
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sale and transfer is not consummated in accordance with the foregoing, however,
the Trustee may from time to time in the future, but shall not be under any
further obligation to, solicit bids for sale of the assets of the Trust upon the
same terms and conditions as set forth above.
If any of the foregoing conditions are not met, the Trustee shall
decline to consummate such sale and shall not be under any obligation to solicit
any further bids or otherwise negotiate any further sale of Receivables
remaining in the Trust. In such event, however, the Trustee may from time to
time solicit bids in the future for the purchase of such Receivables pursuant to
this Section 11.3.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
SECTION 12.1. AMENDMENT. (a) This Agreement may be amended by the
Depositor, the Sponsor, the Servicer and the Trustee, but without the consent of
any of the Certificateholders, to cure any ambiguity or defect, to correct or
supplement any provision in this Agreement or for the purpose of adding any
provision 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, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Trustee, adversely affect the interests of
any Certificateholder and receipt of an opinion pursuant to Section 12.2(i);
PROVIDED FURTHER, that any amendment within the scope of Section 12.1(b)(i) or
(ii) shall be deemed to materially and adversely affect the interests of the
Certificateholders, as evidenced by an Officer's Certificate of the Servicer
delivered to the Trustee.
(b) This Agreement may also be amended from time to time by the
Depositor, the Sponsor, the Servicer and the Trustee, with the consent of the
Holders of Certificates evidencing not less than a majority of the aggregate
outstanding principal balance of the Class A Certificates and the Class B
Certificates taken together as a single class, 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 (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of, or
change the allocation or priority of, collections of payments on Receivables or
distributions that are required to be made on any Certificate, without the
consent of all adversely affected Certificateholders or (ii) reduce the
percentage of the aggregate outstanding principal balance of the Certificates,
the holders of which are required to consent to any such amendment, without the
consent of all Certificateholders. 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.
(c) Prior to its execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to the Rating Agencies. Promptly after its execution of any such
amendment or consent, the Trustee shall furnish written notification of the
substance of such amendment or consent to each Rating Agency.
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(d) It shall not be necessary for the consent of
Certificateholders pursuant to Section 12.1(b) to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
(e) 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 that all conditions precedent to the execution and delivery of
such amendment have been satisfied and the Opinion of Counsel referred to in
Section 12.2(i) has been delivered. The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Trustee's own rights, duties
or immunities under this Agreement or otherwise.
SECTION 12.2. PROTECTION OF TITLE TO TRUST. (a) The Servicer
shall cause to be executed and filed such financing statements and cause to be
executed and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
interest of the Certificateholders and the Trustee under this Agreement in the
Trust Property and in the proceeds thereof. The Servicer 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. In the event that the Servicer fails to perform its obligations under
this subsection, the Trustee may (but shall not be obligated to) do so, at the
expense of the Servicer.
(b) Neither the Depositor nor the Servicer shall (nor shall the
Servicer permit an Originator to) change its name, identity or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed by the Servicer 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. 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 (and shall cause each Originator with
respect to the Related Receivable to) 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)
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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 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 backup archives)
that refer to a Receivable shall indicate clearly that such Receivable is owned
by the Trust. Indication of the Trust's ownership of a Receivable shall be
deleted from or modified on the Depositor's and the Servicer's computer systems
when, and only when, the Receivable shall have been paid in full or shall be
repurchased by the Depositor or the Sponsor or purchased by the Servicer.
(f) If at any time the Sponsor, 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 or cause to be given 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 Trust.
(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 or any subservicer's records regarding any Receivable.
(h) Upon request at any time the Trustee shall have reasonable
grounds to believe that such request is necessary in connection with the
performance of its duties under this Agreement, the Servicer shall furnish to
the Trustee, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Trust, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Trustee and the Trustee in the Receivables, and reciting the details
of such filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect
such interest; and
(2) within 120 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 120-day period, either (A) stating that, in the
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opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (l) 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 to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act within
the time periods specified in such sections.
SECTION 12.3. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, or entitle the 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, or 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
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to this Agreement,
nor shall anything set forth in this Agreement, or contained in the terms of the
Certificates, be construed so as to constitute the Holders as partners or
members of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken pursuant to any
provision of this Agreement.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless the Holders of the Certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under the Agreement and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 30 days after its receipt of such notice, request, and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; no one or more Holders of Certificates shall have any right in any
manner whatever by virtue or by availing itself or themselves of any provisions
of this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right, under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Class A Certificateholders or Class B
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<PAGE>
Certificateholders, as the case may be. For the protection and enforcement of
the provisions of this Section 12.3, each Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 12.4. 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 12.5. 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, sent by overnight
courier or mailed by certified mail, return receipt requested, (or in the form
of telex or facsimile notice, followed by written notice delivered as aforesaid)
and shall be deemed to have been duly given upon receipt (a) in the case of the
Depositor to Barnett Auto Receivables Corp., 270 South Service Road, Melville,
New York 11747, Facsimile _____, (b) in the case of the Servicer, to BDFS, 10401
Deerwood Park Boulevard, Jacksonville, FL 32256, facsimile ______________, (c)
in the case of the Trustee, at the Corporate Trust Office, facsimile
______________, (d) in the case of Moody's, to Moody's Investors Service, Inc.,
to 99 Church Street, New York, New York 10004, Attention of Asset Backed
Securities Group, facsimile 212-553-0573 and (e) in the case of Standard &
Poor's, to Standard & Poor's Corporation, 26 Broadway (15th Floor), New York,
New York 10004, Attention of Asset Backed Surveillance Department, facsimile
212-208-0098; or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties. All demands, notices and
communications upon or to the Certificateholders under this Agreement shall be
in writing, sent by first class mail.
SECTION 12.6. SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of the
Holders thereof.
SECTION 12.7. ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 7.5, 8.3 and 8.5, this
Agreement may not be assigned by the Depositor or the Servicer. This Agreement
may not be assigned by the Trustee except as provided by Sections 10.10 through
10.13 hereof.
SECTION 12.8. CERTIFICATES NONASSESSABLE AND FULLY PAID. The
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee pursuant to Section 6.1, each Certificate shall be deemed
fully paid.
SECTION 12.9. INTENTION OF PARTIES. (a) The execution and
delivery of this Agreement shall constitute an acknowledgment by the Depositor
and the Trustee, on behalf of the Certificateholders, that it is intended that
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the assignment and transfer herein contemplated constitute a sale and assignment
outright, and not for security, of the Receivables and the other Trust Property,
conveying good title thereto free and clear of any liens, from the Depositor to
the Trustee, and that the Receivables and the other Trust Property shall not be
a part of the estate of the Depositor in the event of the insolvency,
receivership, conservatorship or the occurrence of another similar event, of, or
with respect to, the Depositor. In the event that such conveyance is determined
to be made as security for a loan made by the Trustee or the Certificateholders
to the Depositor, the parties intend that the Depositor shall have granted to
the Trustee a security interest in all of the Depositor's right, title and
interest in and to the Trust Property conveyed to the Trustee pursuant to
Section 2.1 in order to secure the obligations under the Certificates, and that
this Agreement shall constitute a security agreement under applicable law.
(b) The execution and delivery of this Agreement shall
constitute an acknowledgment by the Depositor on behalf of the
Certificateholders that they intend that the Trust be classified (for federal
tax purposes) as a grantor trust under Subpart E, Part I of Subchapter J of the
Code of which the Certificateholders are owners, rather than as an association
taxable as a corporation. The powers granted and obligations undertaken in this
Agreement shall be construed so as to further such intent.
SECTION 12.10. 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 12.11. COLLATERAL AGENT PROTECTION. Notwithstanding
anything contained herein to the contrary, the Collateral Agent shall have the
same rights and protection afforded to the Trustee hereunder.
SECTION 12.12. LIMITATION OF LIABILITY OF TRUSTEE AND COLLATERAL
AGENT. Notwithstanding anything contained herein to the contrary (i) this
Agreement has been accepted by ________________ as Trustee and as Collateral
Agent with respect to the Reserve Fund and in no event shall __________ have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Depositor 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 Depositor and (ii) under no circumstances shall
_______________ be liable for the payment of any indebtedness or expenses of the
Trust; PROVIDED, HOWEVER, nothing contained herein shall relieve
_________________ of its obligations contained herein in its capacity as Trustee
and as Collateral Agent.
SECTION 12.13. INDEPENDENCE OF THE SERVICER. For all purposes of
this Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by the Trustee, the Servicer shall have no authority to act for or
represent the Trustee in any way and shall not otherwise be deemed an agent of
the Trustee.
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<PAGE>
SECTION 12.14. NO JOINT VENTURE. Nothing contained in this
Agreement (i) shall constitute the Servicer and the 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.
SECTION 12.15. 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 12.16. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Depositor, the Sponsor, the
Servicer, the Trust, the Trustee and for the benefit of the Certificateholders
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
Trust Property or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
BARNETT AUTO RECEIVABLES CORP.,
as Depositor
By:
---------------------------
Name:
Title:
BARNETT DEALER FINANCIAL SERVICES, INC.,
as Servicer and Sponsor
By:
---------------------------
Name:
Title:
------------------------------,
as Trustee and Collateral Agent
By:
---------------------------
Name:
Title:
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<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
(delivered to the Trustee at Closing)
<PAGE>
SCHEDULE B
LOCATION OF RECEIVABLES
<PAGE>
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 TRUSTEE 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 CERTIFICATE
WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT
BALANCE ON THE FACE HEREOF.
NUMBER A- $_______________ (of
CUSIP NO.______________ $____________ issued)
BARNETT AUTO TRUST 199_-_
CLASS A _____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of motor vehicle retail installment sale
contracts secured by new or used automobiles, vans or light duty trucks.
(This Certificate does not represent an interest in or obligation of Barnett
Auto Receivables Corp., Barnett Dealer Financial Services, Inc., the Trustee or
any of their respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT _________________ is the registered owner of a
$____________________ nonassessable, fully-paid, fractional undivided interest
in Barnett Auto Trust 199_-_ (the "Trust") formed pursuant to the Pooling and
Servicing Agreement (the "Agreement") dated as of ______________ among Barnett
Auto Receivables Corp., as depositor (the "Depositor"), Barnett Dealer Financial
Services, Inc., as servicer (the "Servicer") and sponsor (the "Sponsor") and
______________, a __________________, as Trustee and Collateral Agent, 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.
A-1
<PAGE>
This Certificate is one of the duly authorized Certificates, designated as
the Class A ____% Asset Backed Certificates (herein called the "Class A
Certificates"), issued under the Agreement. Also issued under the Agreement are
Certificates designated as the Class B ____% Asset Backed Certificates (the
"Class B Certificates"). The Class A Certificates and the Class B Certificates
are hereinafter collectively called the "Certificates." The aggregate beneficial
ownership interests in the Trust evidenced by all Class A Certificates is ___%.
This Class A Certificate is issued under and is subject to the terms, provisions
and conditions of 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 Class A Certificates.
The property of the Trust includes a pool of simple interest motor vehicle
retail installment sale contracts and other motor vehicle retail installment
chattel paper for new or used automobiles (including passenger cars, minivans,
sport/utility vehicles or light trucks) (collectively, the "Receivables"), all
monies received under the Receivables on or after the related Cutoff Date and
with respect to Receivables which are Actuarial Receivables, all monies received
thereon prior to the Cutoff Date that are due on or after the Cutoff Date,
security interests in the vehicles financed thereby, certain bank accounts, the
rights to proceeds from certain insurance proceeds, the rights of the Trust
under the Agreement, the right to receive certain payments from funds deposited
in the Reserve Fund and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (each, a
"Distribution Date"), commencing on ______________, to the Person in whose name
this Certificate is registered at the close of business on the last day of the
calendar month preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
It is the intent of the Sponsor, the Depositor, the Trustee and the
Certificateholders that the Trust be classified (for federal tax purposes) as a
grantor trust under Subpart E, Part I of Subchapter J of the Code of which the
Class A Certificateholders are owners, rather than as an association taxable as
a corporation. The Depositor, the Servicer, the Trustee and the
Certificateholders, by acceptance of a Class A Certificate, 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 Certificate will be made as provided in the Agreement
by the Trustee by check mailed or wire to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon, except that with respect to 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 Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency maintained for that
purpose by the Trustee in the Borough of Manhattan, the City of New York.
A-2
<PAGE>
Reference is hereby made to the further provisions of this 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 Certificate
shall not entitle the Holder hereof to any benefit under the Agreement or be
valid for any purpose.
THIS 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.
A-3
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Certificate to be duly executed.
Date:
------------------------------,
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
A-4
<PAGE>
(REVERSE OF CLASS A CERTIFICATE)
The Class A Certificates do not represent an obligation of, or an
interest in, any of 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 Certificate 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 Sponsor, the Servicer and the Trustee and the rights of the
Certificateholders at any time by the Depositor, the Sponsor, the Servicer and
the Trustee with the consent of the Holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies 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 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.
Except as provided in the Agreement, the Class A Certificates are
issuable only as registered certificates without coupons in minimum
denominations of $1,000 and integral multiples thereof; provided, however, that
one Class A Certificate may be issued in a denomination that represents any
remaining portion of the Original Class A Principal Balance. As provided in the
Agreement and subject to certain limitations therein set forth, Class A
Certificates are exchangeable for new Class A Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
A-5
<PAGE>
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Trustee 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 Depositor of the Receivables
may at its option purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Collection Period as of which the Pool Balance is 10% or less of the
Original Pool Balance. In addition, within ten days following a Distribution
Date as of which the Pool Balance is 5% or less of the Original Pool Balance,
and if the Depositor has not exercised its option to repurchase the Receivable
an auction sale shall be conducted (as described in the Agreement) and such
auction shall effect early retirement of the Certificates.
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or 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 Trustee, with full power of substitution in
the premises.
Dated:
- --------------------------------------*/
Medallion:
- --------------------------------*/
- -----------------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears upon the face of the within Class A Certificate
in every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A-7
<PAGE>
EXHIBIT B
FORM OF CLASS B CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE
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 MAY NOT BE DIRECTLY OR INDIRECTLY SOLD OR TRANSFERRED TO,
OR PURCHASED OR ACQUIRED BY, OR ON BEHALF OF (1) ANY EMPLOYEE BENEFIT PLAN,
RETIREMENT ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH PLAN WHICH IS
SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (EACH, A "PLAN"), OR (2) ANY ENTITY WHOSE SOURCE OF FUNDS TO BE USED FOR
THE PURCHASE OF THIS CLASS B CERTIFICATE INCLUDES THE ASSETS OF ANY SUCH PLAN,
OTHER THAN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED IN, AND WHICH
COMPLIES WITH THE PROVISIONS OF, PROHIBITED TRANSACTION EXEMPTION 95-60.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE
WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT
BALANCE ON THE FACE HEREOF.
NUMBER B- $_______________ (of
CUSIP NO. ____________ $___________ issued)
BARNETT AUTO TRUST 199_-_
CLASS B ____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of motor vehicle retail installment sale
contracts secured by new or used automobiles, vans or light duty trucks.
B-1
<PAGE>
(This Certificate does not represent an interest in or obligation of Barnett
Auto Receivables Corp., Barnett Dealer Financial Services, Inc., the Trustee or
any of their respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT _________________ is the registered owner of a
$____________________ nonassessable, fully-paid, fractional undivided interest
in Barnett Auto Trust 199__ (the "Trust") formed pursuant to the Pooling and
Servicing Agreement (the "Agreement") dated as of ________________ _______ __,
199_ among Barnett Auto Receivables Corp., as depositor (the "Depositor"),
Barnett Dealer Financial Services, Inc., as servicer (the "Servicer") and
sponsor (the "Sponsor") and ______________, a ___________, as Trustee and
Collateral Agent, 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 the duly authorized Certificates,
designated as the Class B ____% Asset Backed Certificates (herein called the
"Class B Certificates"), issued under the Agreement. Also issued under the
Agreement areCertificates designated as the Class A ____% Asset Backed
Certificates (the "Class A Certificates"). The Class A Certificates and the
Class B Certificates are hereinafter collectively called the "Certificates." The
aggregate beneficial ownership interests in the Trust evidenced by all Class B
Certificates is ___%. This Class B Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement to which Agreement
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Depositor, the Sponsor, the Servicer, the Trustee
and Holders of the Class B Certificates.
The property of the Trust includes a pool of simple interest motor vehicle
retail installment sale contracts and other motor vehicle retail installment
Chattel paper for new or used automobiles (including passenger cars, minivans,
sport/utility vehicles or light trucks) (collectively, the "Receivables"), all
monies received under the Receivables on or after the Cutoff Date and, with
respect to Receivables which are Actuarial Receivables, all monies received
thereon prior to the Cutoff Date that are due on or after the Cutoff Date,
security interests in the vehicles financed thereby, certain bank accounts, the
rights to proceeds from certain insurance proceeds, the rights of the Trust
under the Agreement, the right to receive certain payments from funds deposited
in the Reserve Fund and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (each, a
"Distribution Date"), commencing on _____________, to the Person in whose name
this Certificate is registered at the close of business on the last day of the
calendar month preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
It is the intent of the Sponsor, the Depositor, the Trustee and the
Certificateholders that the Trust be classified (for Federal tax purposes) as a
grantor trust under Subpart E, Part I of Subchapter J of the Code of which the
Class B Certificateholders are owners, rather than as an association taxable as
a corporation. The Depositor, the Servicer and the Certificateholders, by
B-2
<PAGE>
acceptance of a Class B Certificate, 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 Certificate will be made as provided in the Agreement
by the Trustee by check mailed or wire to the Certificateholder of record in the
Certificate Register without the presentation or surrender of this Certificate
or the making of any notation hereon, except that with respect to 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 Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency maintained for that
purpose by the Trustee in the Borough of Manhattan, the City of New York.
Reference is hereby made to the further provisions of this 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 Certificate
shall not entitle the Holder hereof to any benefit under the Agreement or be
valid for any purpose.
THIS 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.
B-3
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Certificate to be duly executed.
Date: ----------------------,
as Trustee
By:--------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the within-mentioned
Agreement.
Date:
---------------------------,
as Trustee
By:
--------------------------
Authorized Signatory
B-4
<PAGE>
(REVERSE OF CLASS B CERTIFICATE)
The Class B Certificates do not represent an obligation of, or an interest
in, any of 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 Certificate 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 Sponsor, the Servicer and the Trustee and the rights of the
Certificateholders at any time by the Depositor, the Sponsor, the Servicer and
the Trustee with the consent of the Holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies 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 duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Class B Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
Except as provided in the Agreement, the Class B Certificates are issuable
only as registered certificates without coupons in minimum denominations of
$1,000 and integral multiples thereof; PROVIDED, HOWEVER, that one Class B
Certificate may be issued in a denomination that represents any remaining
portion of the Original Class B Principal Balance. As provided in the Agreement
and subject to certain limitations therein set forth, Class B Certificates are
exchangeable for new Class B Certificates of authorized denominations evidencing
the same aggregate denomination, as requested by the Holder surrendering the
same. No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Trustee or any such agent shall be affected by any notice to the contrary.
B-5
<PAGE>
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 Depositor of the Receivables
may at its option purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Collection Period as of which the Pool Balance is 10% or less of the
Original Pool Balance. In addition, within ten days following a Distribution
Date as of which the Pool Balance is 5% or less of the Original Pool Balance,
and if the Depositor has not exercised its option to repurchase the Receivable
an auction sale shall be conducted (as described in the Agreement) and such
auction shall effect early retirement of the Certificates.
[By accepting and holding this Class B Certificate, the Holder hereof shall
be deemed to have represented and warranted that it is it is not acquiring Class
B Certificates, directly or indirectly, for or on behalf of an ERISA Entity
other than an "insurance company general account" as defined in, and which
complies with the provisions of, Prohibited Transaction Exemption 95- 60.]
[The transferee hereof of this Class B Definitive Certificate will
represent that it is not either (1) an employee benefit plan, retirement
arrangement, individual retirement account or keogh plan which is subject to
either Title I of ERISA, or Section 4975 of the Code, or (2) any entity whose
source of funds to be used for the purchase of the Class B Certificate includes
the assets of any such Plan, other than an "Insurance Company General Account"
as defined in, and which complies with the provisions of, Prohibited Transaction
Exemption 95-60 issued by the United States Department of Labor.]
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or 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 Trustee, with full power of substitution in
the premises.
Dated:
*/
- -------------------------------------------
Medallion:
*/
- ----------------------------
- -----------------------
*/ NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears upon the face of the within Class B Certificate
in every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
B-7
<PAGE>
EXHIBIT E
FORM OF BENEFIT PLAN AFFIDAVIT
- ----------------------------
- ----------------------------
New York, New York ________
Barnett Dealer Financial Services, Inc.
10401 Deerwood Park Boulevard
Jacksonville, FL 32256
STATE OF ___________)
ss:
COUNTY OF __________)
Under penalties of perjury, I, the undersigned, declare that, to
the best of my knowledge and belief, the following representations are true,
correct, and complete.
1. That I am a duly authorized officer of _____________ (the
"PURCHASER"), whose taxpayer identification number is _________, and on behalf
of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Class B Certificate (the
"CERTIFICATE") representing an interest in the Trust.
3. That the Purchaser is not either (1) an employee benefit plan,
retirement arrangement, individual retirement account or keogh plan which is
subject to either Title I of ERISA, or Section 4975 of the Code, or (2) any
entity whose source of funds to be used for the purchase of the Class B
Certificate includes the assets of any such Plan, other than an "Insurance
Company General Account" as defined in, and which complies with the provisions
of, Prohibited Transaction Exemption 95-60 issued by the United States
Department of Labor.
Capitalized terms used in and not otherwise defined herein shall
have the meaning assigned to them in the Pooling and Servicing Agreement dated
as of ______ __, 199__ among Barnett Auto Receivables Corp., as depositor,
Barnett Dealer Financial Services, Inc., as servicer and sponsor and
_______________, as trustee.
E-1
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this instrument to
be duly executed on its behalf, by its duly authorized officer this ____ day of
___________, 19__.
----------------------------------
By:
---------------------------------
Its:
---------------------------------
Personally appeared before me ____________, known or proved to me
to be the same person who executed the foregoing instrument and to be a
________________ of the Purchaser, and acknowledged to me that he or she
executed the same as his or her free act and deed and as the free act and deed
of the Purchaser.
Subscribed and sworn before me
this ____ day of ____________, 19__
- ------------------------------
Notary Public
My commission expires the ____ day
of ___________________, 19__.
E-2
<PAGE>
EXHIBIT F-1
FORM OF TRUSTEE'S CERTIFICATE - ASSIGNMENT TO DEPOSITOR
Trustee's Certificate pursuant to Section 10.3 of the Pooling and
Servicing Agreement.
_________________, a ______________ corporation, as trustee (the
"Trustee") of Barnett Auto Trust 199_-_, created pursuant to the Pooling and
Servicing Agreement, dated as of ___________ (the "Pooling and Servicing
Agreement"), among Barnett Auto Receivables Corp., as depositor (the
"Depositor"), Barnett Dealer Financial Services, Inc., as servicer (the
"Servicer") and sponsor (the "Sponsor") and the Trustee, does hereby sell,
transfer, assign and otherwise convey to the Depositor, without recourse,
representation or warranty, all of the Trustee's right, title and interest in
and to all of the Receivables (as defined in the Pooling and Servicing
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which are to be retransferred to the Depositor pursuant to Section
[2.3] [11.2] of the Pooling and Servicing Agreement, and all security and
documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _______ day
of ______________________, 199___.
____________________________________
F-1
<PAGE>
EXHIBIT F-2
FORM OF TRUSTEE'S CERTIFICATE - ASSIGNMENT TO SERVICER
Trustee's Certificate pursuant to Section 10.3 of the Pooling and
Servicing Agreement.
________________, a _______________ corporation (the "Trustee")
of Barnett Auto Trust 199_-_, created pursuant to the Pooling and Servicing
Agreement, dated as of _____________ (the "Pooling and Servicing Agreement"),
among Barnett Auto Receivables Corp., as depositor (the "Depositor"), Barnett
Dealer Financial Services, Inc., as servicer (the "Servicer") and sponsor (the
"Sponsor") and the Trustee does hereby sell, transfer, assign and otherwise
convey to the Servicer, without recourse, representation or warranty, all of the
Trustee's right, title and interest in and to all of the Receivables (as defined
in the Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Purchased Receivables," which are to be transferred by the
Trustee to the Servicer pursuant to Section 3.7 of the Pooling and Servicing
Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _______ day
of __________________________, 199___.
________________________________________
F-2
<PAGE>
EXHIBIT G
TERMINATION - AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with a sale effected pursuant to Section 11.3 of the Pooling and
Servicing Agreement dated as of _________, 199__ (the "Agreement"), among
Barnett Auto Receivables Corp., a New York corporation, as depositor (the
"Depositor"), Barnett Dealer Financial Services, Inc., a Florida corporation,
("BDFS"), as servicer (the "Servicer") and sponsor (the "Sponsor") and
_____________, as trustee hereunder (the "Trustee") and as collateral agent with
respect to the Reserve Fund (the "Collateral Agent"). Capitalized terms used
herein that are not otherwise defined shall have the meanings ascribed thereto
in the Agreement.
PRE-AUCTION PROCESS
(a) Upon receiving notice of the Auction, the Advisor will initiate
its general Auction procedures consisting of the following: (i) with the
assistance of the Servicer, prepare a general solicitation package along with a
confidentiality agreement; (ii) derive a list of qualified bidders, in a
commercially reasonable manner; (iii) initiate contact with all qualified
bidders; (iv) send a confidentiality agreement to all qualified bidders; (v)
upon receipt of a signed confidentiality agreement, send solicitation packages
to all interested bidders on behalf of the applicable Trustee; and (vi) notify
the Servicer of all potential bidders and anticipated timetable.
(b) The general solicitation package will include: (i) the prospectus
from the public offering of the Certificates; (ii) a copy of all monthly
servicing reports or a copy of all annual servicing reports and the prior year's
monthly servicing reports; (iii) a form of a Purchase Agreement and Pooling and
Servicing Agreement; (iv) a description of the minimum purchase price required
to cause the Trustee to sell the Auction Property as set forth in Section 11.3
of the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and (vii) a
preliminary data tape of the Pool Balance as of the related Distribution Date
reflecting the same data attributes used to create the Cutoff Date tables for
the Prospectus Supplement dated ________ __, 199_ relating to the offering of
the Certificates.
(c) The Trustee, with the assistance of the Servicer and the Advisor,
will maintain an auction package beginning at the time of closing of the
transaction, which will contain terms (i)- (iii) listed in the preceding
paragraph. If the Advisor is unable to perform its role as advisor to the
Trustee, the Servicer acting in its capacity under the Agreement will select a
successor Advisor and inform the Trustee of its actions.
(d) The Advisor will send solicitation packages to all bidders at
least 15 business days before the date of the Auction. Bidders will be required
to submit any due diligence questions in writing to the Advisor for
determination of their relevancy, no later than 10 business days before the date
of the Auction. The Servicer and the Advisor will be required to satisfy all
relevant questions at least five Business Days prior to the date of the Auction
and distribute the questions and answers to all bidders.
F-3
<PAGE>
AUCTION PROCESS
(a) _______________________, in its role as Advisor to the Trustee,
will be allowed to bid in the Auction, but will not be required to do so.
(b) The Servicer will also be allowed to bid in the Auction if it
deems appropriate, but will not be required to do so.
(c) On the date of the Auction, all bids will be due by facsimile to
the offices of the applicable Trustee by 1:00 p.m. New York City time, with the
winning bidder to be notified by 2:00 p.m. New York City time. All acceptable
bids (as described in Section 11.3 of the Agreement) will be due on a conforming
basis on the bid sheet contained in the solicitation package.
(d) If the Trustee receives fewer than two market value bids from
participants in the market for motor vehicle retail installment sale contracts
and other motor vehicle installment sale contracts willing and able to purchase
the Auction Property, the Trustee shall decline to consummate the sale.
(e) Upon notification to the winning bidder, a good faith deposit
equal to one percent (1%) of the Pool Balance will be required to be wired to
the Trustee upon acceptance of the bid. This deposit, along with any interest
income attributable to it, will be credited to the purchase price but will not
be refundable. The Trustee will establish a separate account for the acceptance
of the good faith deposit, until such time as the account is fully funded and
all monies are transferred into the Collection Account, such time not to exceed
one Business Day before the related Distribution Date (as described above).
(f) The winning bidder will receive on the date of the Auction a copy
of the draft Purchase Agreement, Pooling and Servicing Agreement and Servicer's
Representations and Warranties (which shall be substantially identical to the
representations and warranties set forth in Section 8.1 of the Agreement).
(g) ______________, in its capacity as Advisor to the Trustee, will
provide to the Trustee a letter concluding whether or not the winning bid is a
fair market value bid. __________________ will also provide such letter if it is
the winning bidder. In the case where _____________ or the Servicer is the
winning bidder it will in its letter provide for market comparable valuations.
(h) The Auction will stipulate that the Servicer be retained to
service the Receivables sold pursuant to the terms of the Purchase and Sale
Agreement and the Pooling and Servicing Agreement.
F-4
INSERT EXHIBIT 4.3
EXHIBIT 4.3
=============================================================
BARNETT AUTO TRUST 199_-_
__% Asset Backed Notes
--------------------------------
FORM OF INDENTURE
Dated as of _________ __, 199_-_
--------------------------------
----------------
Trustee
================================================================
<PAGE>
CROSS REFERENCE TABLE1
TIA Indenture
Section Section
310 (a) (1) 6.11
(a) (2) 6.11
(a) (3) 6.10
(a) (4) N.A.2
(a) (5) 6.11
(b) 6.8; 6.11
(c) N.A.
311 (a) 6.12
(b) 6.12
(c) N.A.
312 (a) 7.1
(b) 7.2
(c) 7.2
(d) 7.4
313 (a) 7.4
(b) (1) 7.4
(b) (2) 11.5
(c) 7.4
(d) 7.3
314 (a) 3.9; 11.15
(b) 11.1
(c) (1) 11.1
(c) (2) 11.1
(c) (3) 11.1
(d) 11.1
(e) 11.1
(f) 11.1
315 (a) 6.1
(b) 6.5; 11.5
(c) 6.1
(d) 6.1
(e) 5.13
316 (a) (last sentence) 2.7
- -----------------------
1 Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
2. N.A. means Not Applicable.
<PAGE>
(a) (1) (A) 5.11
(a) (1) (B) 5.12
(a) (2) N.A.
(b) 5.7
(c) N.A
317 (a) (1) 5.3
(a) (2) 5.32
(b) 3.3
318 (a) 11.7
- ---------------
2. N.A. means Not Applicable.
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act 8
SECTION 1.3 Rules of Construction 8
ARTICLE II
The Notes
SECTION 2.1 Form 8
SECTION 2.2 Execution, Authentication and Delivery 9
SECTION 2.3 Temporary Notes 9
SECTION 2.4 Registration; Registration of Transfer and Exchange 10
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes 11
SECTION 2.6 Persons Deemed Owner 12
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest 12
SECTION 2.8 Cancellation 13
SECTION 2.9 Release of Collateral 13
SECTION 2.10 Book-Entry Notes 13
SECTION 2.11 Notices to Clearing Agency 14
SECTION 2.12 Definitive Notes 14
SECTION 2.13 Reserved 15
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest 15
SECTION 3.2 Maintenance of Office or Agency 15
SECTION 3.3 Money for Payments To Be Held in Trust 15
SECTION 3.4 Existence 17
SECTION 3.5 Protection of Trust Estate 17
SECTION 3.6 Opinions as to Trust Estate 17
SECTION 3.7 Performance of Obligations; Servicing of Receivables 18
SECTION 3.8 Negative Covenants 20
SECTION 3.9 Annual Statement as to Compliance 20
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms 21
-i-
<PAGE>
SECTION 3.11 Successor or Transferee 23
SECTION 3.12 No Other Business 23
SECTION 3.13 No Borrowing 23
SECTION 3.14 Servicer's Obligations 23
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities 23
SECTION 3.16 Capital Expenditures 23
SECTION 3.17 [Reserved] 23
SECTION 3.18 Restricted Payments 23
SECTION 3.19 Notice of Events of Default 23
SECTION 3.20 Further Instruments and Acts 24
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture 24
SECTION 4.2 Application of Trust Money 25
SECTION 4.3 Repayment of Moneys Held by Paying Agent 25
SECTION 4.4 Notice 25
ARTICLE V
Remedies
SECTION 5.1 Events of Default 25
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment 26
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee 27
SECTION 5.4 Remedies; Priorities 29
SECTION 5.5 Optional Preservation of the Receivables 30
SECTION 5.6 Limitation of Suits 31
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest 31
SECTION 5.8 Restoration of Rights and Remedies 31
SECTION 5.9 Rights and Remedies Cumulative 32
SECTION 5.10 Delay or Omission Not a Waiver 32
SECTION 5.11 Control by Noteholders 32
SECTION 5.12 Waiver of Past Defaults 32
SECTION 5.13 Undertaking for Costs 33
SECTION 5.14 Waiver of Stay or Extension Laws 33
SECTION 5.15 Action on Notes 33
SECTION 5.16 Performance and Enforcement of Certain Obligations 33
-ii-
<PAGE>
ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee 34
SECTION 6.2 Rights of Trustee 35
SECTION 6.3 Individual Rights of Trustee 36
SECTION 6.4 Trustee's Disclaimer 36
SECTION 6.5 Notice of Defaults 36
SECTION 6.6 Reports by Trustee to Holders 36
SECTION 6.7 Compensation and Indemnity 36
SECTION 6.8 Replacement of Trustee 37
SECTION 6.9 Successor Trustee by Merger 38
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee 38
SECTION 6.11 Eligibility; Disqualification 39
SECTION 6.12 Preferential Collection of Claims Against Issuer 39
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses
of Noteholders 40
SECTION 7.2 Preservation of Information; Communications
to Noteholders 40
SECTION 7.3 Reports by Issuer 40
SECTION 7.4 Reports by Trustee 41
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money 41
SECTION 8.2 Trust Accounts 41
SECTION 8.3 General Provisions Regarding Accounts 42
SECTION 8.4 Release of Trust Estate 42
SECTION 8.5 Opinion of Counsel 43
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures without Consent of
Noteholders 43
SECTION 9.2 Supplemental Indentures with Consent of Noteholders 44
SECTION 9.3 Execution of Supplemental Indentures 46
SECTION 9.4 Effect of Supplemental Indenture 46
SECTION 9.5 Conformity with Trust Indenture Act 46
SECTION 9.6 Reference in Notes to Supplemental Indentures 46
-iii-
<PAGE>
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption 47
SECTION 10.2 Form of Redemption Notice 47
SECTION 10.3 Notes Payable on Redemption Date 48
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. 48
SECTION 11.2 Form of Documents Delivered to Trustee 50
SECTION 11.3 Acts of Noteholders 51
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies 51
SECTION 11.5 Notices to Noteholders; Waiver 52
SECTION 11.6 Alternate Payment and Notice Provisions 52
SECTION 11.7 Conflict with Trust Indenture Act 52
SECTION 11.8 Effect of Headings and Table of Contents 53
SECTION 11.9 Successors and Assigns 53
SECTION 11.10 Separability 53
SECTION 11.11 Benefits of Indenture 53
SECTION 11.12 Legal Holidays 53
SECTION 11.13 Governing Law 53
SECTION 11.14 Counterparts 53
SECTION 11.15 Recording of Indenture 53
SECTION 11.16 Trust Obligation 54
SECTION 11.17 No Petition 54
SECTION 11.18 Inspection 54
Testimonium, Signatures and Seals
Exhibit A Schedule of Receivables
Exhibit B Form of Sale and Servicing Agreement
Exhibit C Form of Note Depository Agreement
Exhibit D Form of Note
-iv-
<PAGE>
INDENTURE dated as of _________ __, 199_-_,
between BARNETT AUTO TRUST 199_-_, a Delaware business trust
(the "Issuer"), and ________________, a ________________, as
trustee and not in its individual capacity (the "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 __% Asset
Backed Notes (the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, as
Trustee for the benefit of the Holders of the Notes, a security interest in and
to all of the Issuer's right, title and interest in and to (a) the Receivables,
and all moneys received thereon (other than any proceeds fr any Dealer
commission), on or after the Cutoff Date and, with respect to Receivables which
are Actuarial Receivables, all monies received thereon prior to the Cutoff Date
that are due on or after the Cutoff Date; (b) the security interests in the
Financed Vehicles granted by Obligors pursuant to the Receivables and any other
interest of the Issuer in the Financed Vehicles; (c) any proceeds with respect
to claims or any physical damage, repossession, loss, skip, credit life and
credit accident, vendor's single interest and health insurance policies or
certificates relating to the Financed Vehicles or the Obligors; (d) any refunds
for the costs of extended service contracts with respect to Financed Vehicles,
refunds of unearned premiums with respect to credit life and credit accident and
health insurance policies covering Financed Vehicles or Obligors; (e) any
proceeds with respect to any Receivable repurchased by a Dealer, pursuant to a
Dealer Agreement, as a result of a breach of representation or warranty in the
related Dealer Agreement or a default by an Obligor resulting in the
repossession of the Financed Vehicle under such Dealer Agreement; (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 the Loan Purchase
Agreement; and (h) the proceeds of any and all 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 except as
set forth herein, and to secure compliance with the provisions o this Indenture,
all as provided in this Indenture.
The Trustee, as 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 interests of the
Holders of the Notes may be adequately and effectively protected.
<PAGE>
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 DEFINITIONS. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer and the
Servicer, any officer or agent acting under a power of attorney of the Owner
Trustee or the Servicer, as applicable, who is authorized to act for the Owner
Trustee or the Servicer, as applicable, in matters relating to t Issuer and who
is identified on the list of Authorized Officers delivered by each of the Owner
Trustee and the Servicer to the 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 Depository Agreements and other documents
and certificates delivered in connection therewith.
"Book Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in the City of New York or
Wilmington, Delaware are authorized or obligated by law, regulation or executive
order to remain closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"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.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
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"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered which office at date of the execution of this Agreement is located
at ____________________________, Attention: Corporate Trust Asset Backed Unit
(Telephone: ____________; Facsimile: ___________ or at such other address as the
Trustee may designate from time to time by notice to the Noteholders, the
Servicer and the Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any general
partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of 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" means this Indenture as amended and supplemented from time
to time.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Depositor and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Depositor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Depositor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
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"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the 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 __% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"Notes" means the __% Asset Backed Notes, substantially in the form of
Exhibit D.
"Note Depository Agreement" means the agreement among the Issuer, the
Trustee, the Servicer and The Depository Trust Company, as the initial Clearing
Agency, dated one Business Day prior to Closing Date, substantially in the form
of Exhibit C.
"Note Owner" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as indirect participant, in
each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"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 11.1 and TIA ss. 314, and
delivered to the 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 employees of
or counsel to the Issuer and who shall be satisfactory to the Trustee, and which
opinion or opinions shall be addressed to the Truste as Trustee, shall comply
with any applicable requirements of Section 11.1, and shall be in form and
substance satisfactory to the Trustee.
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"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor, satisfactory
to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the 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 Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that a Responsible Officer of the Trustee either
actually knows to be so owned or has received written notice thereof 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 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
Outstanding at the date of determination.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including paym of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means a Distribution Date.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
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"Record Date" means, with respect to a Distribution Date or Redemption
Date the day immediately preceding the related Distribution Date or Redemption
Date or, in the event Definitive Securities have been issued, the last day of
the month immediately preceding the month in which such Distribution Date
occurs.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(b), the Distribution Date specified by the Servicer or the Issuer pursuant
to Section 10.1(a) or (b) as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the unpaid principal amount of
the then outstanding Notes plus accrued and unpaid interest thereon to but
excluding the Redemption Date, or (b) in the case of a paym made to Noteholders
pursuant to Section 10.1(b), the amount on deposit in the Note Distribution
Account, but not in excess of the amount specified in clause (a) above.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any other
officer of the Trustee customarily performing functi 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, the Sponsor
and the Servicer, substantially in the form of Exhibit B as the same may be
amended or supplemented from time to time.
"Schedule of Receivables" means the listing of the Receivables set
forth in Exhibit A (which Exhibit may be in the form of microfiche).
"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 3.7(e).
"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 all property and
interests Granted to the 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.
"Trustee" means ________________, a ______________, not in its
individual capacity but as trustee under this Indenture, or any successor
trustee under this Indenture.
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"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(a) Except as otherwise specified herein, the following terms have the
respective meanings set forth in the Sale and Servicing Agreement as in effect
on the Closing Date for all purposes of this Indenture, and the definitions of
such terms are equally applicable both to the singula and plural forms of such
terms:
Section of Sale and
Term Servicing Agreement
Annual Percentage Rate or APR Section 1.1
Certificateholders Section 1.1
Closing Date Section 1.1
Collection Account Section 1.1
Collection Period Section 1.1
Contract Section 1.1
Depositor Section 1.1
Depository Agreements Section 1.1
Distribution Date Section 1.1
Eligible Deposit Account Section 1.1
Eligible Investments Section 1.1
Final Scheduled Distribution Date Section 1.1
Final Scheduled Maturity Date Section 1.1
Financed Vehicle Section 1.1
Initial Pool Balance Section 1.1
Note Distribution Account Section 1.1
Noteholders' Distributable Amount Section 1.1
Noteholders' Percentage Section 1.1
Obligor Section 1.1
Owner Trustee Section 1.1
Person Section 1.1
Pool Balance Section 1.1
Purchased Receivable Section 1.1
Rating Agency Section 1.1
Rating Agency Condition Section 1.1
Receivable Section 1.1
Reserve Account Section 1.1
Servicer Section 1.1
Servicer Default Section 1.1
Specified Reserve Account Balance Section 1.1
Total Distribution Amount Section 1.1
Trust Accounts Section 1.1
Trust Agreement Section 1.1
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(b) Capitalized terms used herein and not otherwise defined herein or
in the Sale and Servicing Agreement have the meanings assigned to them in the
Trust Agreement.
SECTION 1.2 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 Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
The Notes
SECTION 2.1 Form. The Notes, together with the Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit D, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
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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 D are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of 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 o did not hold
such offices at the date of such Notes.
The Trustee shall upon Issuer Order authenticate and deliver Notes for
original issue in an aggregate principal amount of $___________. The aggregate
principal amount of Notes outstanding at any time may not exceed such amounts
except as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof (except for one Note which may
be issued in a denomination other than an integral multiple of $1,000).
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 Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of th tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
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be maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the 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 2.4 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
Trustee shall be "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. The Note Registrar may resign as such
only upon written notice delivered to an Authorized Officer of the Issuer, and
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 Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and, upon one of its
Authorized Officers receiving written notice thereof, any chang in the location,
of the Note Register, and the Trustee shall have the right to inspect the Note
Register at all reasonable times and to obtain copies thereof, and the Trustee
shall have the right to rely upon a certificate executed on behalf of the Note
Registrar by an Executive Officer thereof as to the names and addresses of the
Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute and
upon its request the Trustee shall authenticate and the Noteholder shall obtain
from the Trustee, in the name of the designated transferee or transferees, one
or more new Notes, in any authorized denominations, of the same class and a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of the same class and 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 upon its
request the Trustee shall authenticate and the Noteholder shall obtain from the
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
(i) duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized
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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 Securities Transfer Agents 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, and (ii) accompanied by such other
documents as the Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this section 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 resp to the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee such security or indemnit as may be required
by it to hold the Issuer and the Trustee harmless, then, in the absence of
notice to the Issuer, the Note Registrar or the 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
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; 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 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 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 Trustee) connected therewith.
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Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such N for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest. (a)
The Notes shall accrue interest as provided in the form of the Notes, set forth
in Exhibit D, and such interest shall be payable on each Distribution Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable 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 Final Scheduled Distribution Date (and except for
the Redemption Price for any Note called for redemption pursuant to Section
10.1(a)) which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments
on each Distribution Date as provided in the form of the Notes, set forth in
Exhibit D. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable, if not previously paid, the date on which an
Event of Default shall have occurred and be continuing, if the Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2. All principal payments on the Notes shall be
made pro rata to the Noteholders. The 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
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surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.2.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the 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 and the Trustee a notice
that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.8 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver the 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 canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the 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 returned to it; provided that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, the
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 sections 314(c) and
314(d)(l) 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 ________________, as agent for The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, th Issuer. Such Notes shall
initially be registered on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the 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
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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 ClearingAgency 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 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 Note Owners pursuant to Section
2.12, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (i) the
Servicer advises the Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Notes, and the Servicer is unable to locate a qualified successor, (ii) the
Servic 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, Note Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Notes advise
the Trustee through the Clearing Agency in writing that the continuation of a
book entry system through the Clearing Agency is no longer in the best interests
of the Note Owners, then the Clearing Agency shall notify all Note Owners and
the 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
Trustee of the typewritten Note or Notes representing the Book-Entry Notes by
the Clearing Agency, accompanied by registration instructions, the Issuer shall
execute and the Trustee shall authenticate the Definitive Notes in accordance
with the instructions of the Clearing Agency. None of the Issuer, the Note
Registrar or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively
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rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Notes, the Trustee shall recognize the Holders of the
Definitive Notes as Noteholders.
SECTION 2.13 Reserved.
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to Section 8.2(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 for the benefit of the
Notes, to the Noteholders.Amounts properly withheld under the Code by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.2 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 t Notes and this
Indenture may be served. The Issuer hereby initially appoints the Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the 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 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 Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Sections 8.2(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 Sectio 8.2(c) shall be made on
behalf of the Issuer by the 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.
At least one Business Day prior to 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 Trustee) shall
promptly notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
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shall agree with the Trustee (and if the 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 Trustee notice of any default by the Issuer of which
it has actual knowledge (or any other obligor upon the Notes) in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
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 Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such a
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds,
any money held by the 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 discharg 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 Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense of
the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of 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
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will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Paying Agent,
at the last address of record for each such Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the provisions
of Section 3.10, 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 3.5 Protection of Trust Estate. The Issuer will from time to
time prepare (or shall cause to be prepared), 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 Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
The Issuer hereby designates the 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; it being understood that the
Trustee has no duty to determine whether any filing or recording is necessary
hereunder.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing
Date, the Issuer shall furnish to the 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 indentur 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
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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) Within 120 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months after
the Cutoff Date, the Issuer shall furnish to the Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such acti 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 are 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 January 30 in the following calendar
year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under a 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
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents 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 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 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 preparing (or causing to prepared) and filing ( 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 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 Trustee and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, Issuer is
taking in respect of such default. If a Servicer Default of which the Issuer has
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knowledge 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 8.1 of
the Sale and Servicing Agreement, the Issuer shall appoint a successor servicer
(the "Successor Servicer"), and such Successor Servic shall accept its
appointment by a written assumption in a form acceptable to the 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 Trustee
without further action shall automatically be appointed the Successor Servicer.
The 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 Trustee shall (i) be an established financial
institution having a net worth of not less than $50,000,000 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 Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a Successor Servicer. In
connection with any such appointment, the 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 8.2 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
Trustee). If the 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 Trustee and, accordingly, the provisions of Article
VI hereof shall be inapplicable to the Trustee in its duties as the successor to
the Servicer and the servicing of the Receivables. In case the Trustee shall
become successor to the Servicer under the Sale and Servicing Agreement, the
Trustee shall be entitled to appoint as Servicer any one of its Affiliates, or
delegate any of its responsibilities as Servicer to agents, subject to the terms
of the Sale and Servicing Agreement, provided that such appointment or
delegation shall not affect or alter in any way the liability of the Trustee as
a successor for the performance of the duties and obligations of the Servicer in
accordance with the terms hereof.
(f) Upon an Authorized Officer of the Issuer acquiring actual
knowledge of any termination of the Servicer's rights and powers pursuant to the
Sale and Servicing Agreement, the Issuer shall promptly notify the Trustee. As
soon as a Successor Servicer (other than the Trustee) is appointed, the Issuer
shall notify the 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 Trustee under this Indenture or the rights of the Trustee
hereunder, the Issuer agrees that, unless such action is specifically permitted
hereunder or under the Basic Documents, it will not, without th prior
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written consent of the 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 or the Basic Documents, or
waive timely performance or observance by the Servicer, the Sponsor or the
Depositor under the Sale and Servicing Agreement; provided, however, that no
such amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders, or (ii) reduce the aforesaid percentage of
the Notes which are required to consent to any such amendment, without the
consent of the Holders of all the Outstanding Notes. If any such amendment,
modification, supplement or waiver shall be so consented to by the Trustee or
such Holders, the Issuer agrees, promptly following a request by the 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 Trustee may deem
necessary or appropriate in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Basic
Documents, 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 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) 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 thi 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 other-wise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of the
related Obligor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 199_), and otherwise in compliance with
the requirements of TIA Section 314(a)(4) an Officer's Certificate stating, as
to the Authorized Officer signing such Officer's Certificate, that
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(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in the compliance of any such condition or covenant, specifying
each such default known to such Authorized Officer and the nature and
status thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain 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 supplement hereto, executed and
delivered to the Trustee, in form satisfactory to the 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 Trustee) to the effect that such
transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the 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 all or substantially
all of its properties or assets, including those included in the Trust Estate,
to any Person, unless
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer the conveyance or transfer of which is hereby
restricted shall
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(A) 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 assume, by an
indenture supplement hereto, executed and delivered to the Trustee, in form
satisfactory to the 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 agree by means of such
supplemental indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of Holders of the
Notes, (D) unless otherwise provided in such supplemental indenture, expressly
agree to indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture and the
Notes and (E) expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall prepare (or
cause to be prepared) and 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 Trustee) to the effect that such
transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an Officers'
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), Barnett Auto 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
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delivery of written notice to the Trustee stating that Barnett Auto 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.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.8 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 [Reserved]
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 owner-ship or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing Agreement or Trust Agreement. The Issuer will not, directly
or indirectly, make payments to or distributions from the Collection Account
except in accordance with this Indenture and the Basic Documents.
SECTION 3.19 Notice Of Events Of Default. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or the Depositor
of its obligations under the Sale and Servicing Agreement of which an Authorized
Officer of the Issuer acquires actual knowledge.
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SECTION 3.20 FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.2) and (vi) the rights of Noteholders
as beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them, and the 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 2.5 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 3.3) have been delivered to the Trustee
for cancellation; or
(2) all Notes not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at the
Final Scheduled Distribution Date within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Issuer, and the Issuer, in the case
of (i), (ii) or (iii) above, has irrevocably deposited or
caused to be irrevocably deposited with the 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 Trustee for
cancellation when due to the Final Scheduled Distribution Date
or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1(a)), as the case may be;
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(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 Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section
11.1(a) and each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have
been complied with.
SECTION 4.2 APPLICATION OF TRUST MONEY. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the 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 4.3 REPAYMENT OF MONEYS HELD BY PAYING Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.3 and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
SECTION 4.4 NOTICE. Upon the satisfaction and discharge of this
Indenture with respect to the Notes, the Trustee shall notify each Rating Agency
of such satisfaction and discharge.
ARTICLE V
REMEDIES
SECTION 5.1 EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note
when the same becomes due and payable, and such default shall
continue for a period of five days; or
(ii) default in the payment of the principal of or
any installment of the principal of any Note when the
same becomes due and payable; or
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(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 Trustee or to the Issuer and the
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 30 consecutive days; or
(v) the commencement by the Issuer of a voluntary case
under any applicable Federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, or the
consent by the Issuer to the entry of an order for relief in
an involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of
the Trust Estate, or the making by the Issuer of any general
assignment for the
benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event of which an Authorized Officer of the Issuer has acquired actual
knowledge 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 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
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
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the 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 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 Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the
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 Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and
counsel; and
(ii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section
5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
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 Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest upon the overdue
principal, and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the 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 Trustee and its agents
and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the 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.
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(c) If an Event of Default occurs and is continuing, the Trustee may,
as more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate proceedings as the 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 Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the 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 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
Trustee (including any claim for reasonable compensation to
the Trustee and each predecessor Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by
the Trustee and each predecessor Trustee, except as a result
of negligence, bad faith or willful misconduct) 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 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 Trustee or the Holders of Notes allowed in
any judicial proceedings relative to the Issuer, its creditors
and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
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amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(e) Nothing herein contained shall be deemed to authorize the 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
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 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 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 Trustee, each predecessor 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 Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
the Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4 REMEDIES; PRIORITIES. (a) If an Event of Default shall
have occurred and be continuing, the Trustee may do one or more of the following
(subject to Section 5.5):
(i) institute proceedings in its own name and as
trustee of an express trust for the collection of all amounts
then payable on the Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect
to the Trust Estate;
(iii) exercise any remedies of a secured party under the
UCC and take any other appropriate action to protect and
enforce the rights and remedies of the 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;
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PROVIDED, HOWEVER, that the Trustee may not sell or other-wise
liquidate the Trust Estate following an Event of Default, other than an
Event of Default described in Section 5.1(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
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 Trustee obtains the consent of Holders of
66-2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C), the
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 Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property (and other amounts including
amounts held on deposit in the Reserve Account) held as Collateral for the
benefit of the Noteholders in the following order:
FIRST: to the Trustee for amounts due under Section 6.7;
SECOND: to Noteholders for amounts due and unpaid on
the Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and
payable on the Notes for interest;
THIRD: to Noteholders for amounts due and unpaid on
the Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and
payable on the Notes for principal; and
FOURTH: to the Issuer for distribution to the
Certificateholders.
The 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 Trustee a notice that states
the record date, the payment date and the amount to be paid.
SECTION 5.5 OPTIONAL PRESERVATION OF THE RECEIVABLES. If the Notes
have been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the 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 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 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.
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SECTION 5.6 LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice
to the 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 Trustee
to institute such proceeding in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such
request;
(iv) the 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 Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner 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 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
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of 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 5.8 RESTORATION OF RIGHTS AND REMEDIES. If the 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 Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
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respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 5.9 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the 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 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 Trustee
or to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the 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 Trustee
with respect to the Notes or exercising any trust or power conferred on the
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 5.4, any
direction to the Trustee to sell or liquidate the Trust Estate
shall be by the Holders of Notes representing not less than
100% of the Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have
been satisfied and the Trustee elects to retain the Trust
Estate pursuant to such Section, then any direction to the
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 Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with
such direction;
PROVIDED, HOWEVER, that, subject to Section 6.1, the Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
Section 5.12 WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the
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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 Trustee and the Holders of the Notes
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, 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 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 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 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 Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the 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.
SECTION 5.16 PERFORMANCE AND ENFORCEMENT OF CERTAIN
OBLIGATIONS. (a) Promptly following a written request from the Trustee to do so
and at the Servicer's expense, the Issuer agrees to take all such lawful action
as the Trustee may request to compel or secure the performance and observance by
the Depositor, the Sponsor and the Servicer, as applicable, of each of their
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obligations to the Issuer under or in connection with the Sale and Servicing
Agreement in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Sale and Servicing Agreement to the extent and in the
manner directed by the 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 Trustee
may, and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of 66-2/3% 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, including the right or
power to take any action to compel or secure performance or observance by the
Depositor or the Servicer of each of their obligations to the Issuer thereunder
and to give any consent, request, notice, direction, approval, extension or
waiver under the Sale and Servicing Agreement, and any right of the Issuer to
take such action shall be suspended.
ARTICLE VI
THE TRUSTEE
SECTION 6.1 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 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 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
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 Indenture;
however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) 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
paragraph (b) of this Section;
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(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible 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 Section 5.11.
(d) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the 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.
(f) No provision of this Indenture 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.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.2 RIGHTS OF TRUSTEE. (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
the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) The 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 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 Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, 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
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hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.3 INDIVIDUAL RIGHTS OF TRUSTEE. The 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 Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 TRUSTEE'S DISCLAIMER. The 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 Trustee's certificate of authentication.
SECTION 6.5 NOTICE OF DEFAULTS. If a Default occurs and is continuing
and if it is either actually known or written notice of the existence thereof
has been delivered to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder and the Owner Trustee notice of the Default within 90
days after such knowledge or notice 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 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 6.6 REPORTS BY TRUSTEE TO HOLDERS. The Trustee shall deliver
to each Noteholder such information as may be reasonably required to enable such
Holder to prepare its Federal and state income tax returns.
SECTION 6.7 COMPENSATION AND INDEMNITY. The Issuer shall or shall
cause the Servicer to pay to the Trustee from time to time compensation for its
services in accordance with a separate agreement between the Servicer and the
Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuer shall or shall cause
the Servicer to reimburse the 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 Trustee's agents,
counsel, accountants and experts. The Issuer shall or shall cause the Servicer
to indemnify the Trustee and its officers, directors, employees and agents
against any and all loss, liability or expense (including attorneys' fees and
expenses) incurred by it in connection with the acceptance or the administration
of this trust and the performance of its duties hereunder. The Trustee shall
notify the Issuer and the Servicer promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuer and the Servicer shall
not relieve the Issuer of its obligations hereunder or the Servicer of its
obligations under Article X of the Sale and Servicing Agreement. The Issuer
shall or shall cause the Servicer to defend the claim and the Trustee may have
separate counsel and the Issuer shall or shall cause the Servicer to pay the
fees and expenses of such counsel. Neither the Issuer nor the Servicer need
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reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct, negligence
or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture and the resignation or
removal of the Trustee subject to a satisfaction of the Rating Agency Condition.
When the Trustee incurs expenses after the occurrence of a Default specified in
Section 5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 REPLACEMENT OF TRUSTEE. The 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 Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Issuer shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge
of the Trustee or its property; or
(iv) the Trustee otherwise becomes incapable of
acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture subject to satisfaction of the Rating Agency Condition. The successor
Trustee shall mail a notice of its succession to Noteholders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring 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 Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor 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 6.8 and payment of all fees and expenses owed to the
outgoing Trustee.
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Notwithstanding the replacement of the Trustee pursuant to this Section, the
Issuer's and the Servicer's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee.
SECTION 6.9 SUCCESSOR TRUSTEE BY MERGER. If the 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 Trustee. The 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 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 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 Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the 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 Trustee shall have.
SECTION 6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the 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, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the 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 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or
imposed 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
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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 hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder,
including acts or omissions of predecessor or successor
trustees; and
(iii) the 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 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 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 Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute 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 invest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The 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 it shall have a long term debt
rating of BBB- by Standard & Poors and Baa3 by Moody's or better by the Rating
Agencies. The Trustee shall comply with TIA ss. 310 (b), including the optional
provision permitted by the second sentence of TIA ss. 310(b)(9); PROVIDED,
HOWEVER, that there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which otheR securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the 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 Trustee may
reasonably require, of the names and addresses of the Holders as of such Record
Date, (b) at such other times as the 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 Trustee is the Note Registrar,
no such list shall be required to be furnished.
SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
SECTION 7.3 REPORTS BY ISSUER. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of
the annual reports and of the
information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe)
which the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the 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 Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i)
and (ii) of this Section 7.3(a) as may be required by
rules and regulations prescribed from time to time by the
Commission.
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(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4 REPORTS BY TRUSTEE. If required by TIA ss. 313(a), within
60 days after each _________ 1, beginning with _____ 1, ____, the Trustee shall
mail to each Noteholder as required by TIA ss. 313(c) a brief report dated as of
such date that complies with TIA ss. 313(a). The Trustee also shall comply with
TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission, if required by the Exchange Act,
and each stock exchange, if any, on which the Notes are listed. The Issuer shall
notify the Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the 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 Trustee pursuant to this Indenture. The 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 Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
SECTION 8.2 TRUST ACCOUNTS. (a) On or prior to the Closing Date, the
Issuer shall cause the Servicer to establish and maintain, in the name of the
Trustee, for the benefit of the Noteholders and the Certificateholders, the
Trust Accounts as provided in Section 5.1 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 5.2 of the Sale and Servicing
Agreement. On or before each Distribution Date, the Noteholders' Distributable
Amount with respect to the preceding Collection Period will be transferred from
the Collection Account and/or the Reserve Account to the Note Distribution
Account as provided in Sections 5.5 and 5.6 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, the Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)):
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(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; and
(ii) to the Holders of the Notes on account of principal
until the Outstanding Amount of the Notes is reduced to zero.
SECTION 8.3 GENERAL PROVISIONS REGARDING ACCOUNTS. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and reinvested by the Trustee upon Issuer Order, subject to the
provisions of Section 5.1(b) of the Sale and Servicing Agreement. All income or
other gain from investments of moneys deposited in the Trust Accounts (other
than the Payahead Account) shall be deposited (or caused to be deposited) by the
Trustee in the Collection Account, and any loss resulting from such investments
shall be charged to such account. All income or other gain from investments of
monies deposited in the Payahead Account shall be released by the Trustee to the
Depositor, net of any loss resulting from such investments charged to the
Payahead Account. The Issuer will not direct the 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 Trustee to make any such investment or sale, if requested by the Trustee,
the Issuer shall deliver to the Trustee an Opinion of Counsel, acceptable to the
Trustee, to such effect.
(b) [Reserved]
(c) Subject to Section 6.1(c), the 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 Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(d) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on
any Business Day; or (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes shall not have been
declared due and payable pursuant to Section 5.2, or, (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 5.5 as if there had not been such a declaration; then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments.
SECTION 8.4 RELEASE OF TRUST ESTATE. (a) Subject to Article VI
hereunder, the Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the lien of this
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Indenture, or convey the 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 Trustee as provided in this
Article VIII shall be bound to ascertain the Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Trustee shall, at such time as there are no Notes outstanding
and all sums due the Trustee pursuant to Section 6.7 have been paid, release any
remaining portion of the Trust Estate that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.4(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA ss. 314(c) and 314(d)(1) meeting the applicable requirements
of Section 11.1.
SECTION 8.5 OPINION OF COUNSEL. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.4(a), accompanied by copies of any instruments involved, and the
Trustee shall also require as a condition to such action, an Opinion of Counsel,
in form and substance satisfactory to the 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 Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by the Issuer, as evidenced to the Trustee, the Issuer and the
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 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 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;
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(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 Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any
supplemental indenture or to make any other provisions with
respect to matters or questions arising under this Indenture
or in any supplemental indenture; PROVIDED that such action
shall not 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 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 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 by the Issuer, as evidenced to the 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 such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder; PROVIDED, FURTHER, that any
amendment within the scope of Section 9.2 (i)-(vii) shall be deemed to
materially and adversely affect the interests of the Noteholders, as evidenced
by an Officer's Certificate of the Servicer delivered to the Trustee.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF
NOTEHOLDERS. The Issuer and the 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
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Act of such Holders delivered to the Issuer and the 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 provision of this
Indenture relating to the application of collections on, or
the proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or
the interest thereon is payable, or impair the right to
institute suit for the enforcement of the
provisions of this Indenture requiring the application of
funds available therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption,
on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of
the Notes, the consent of the Holders of which is required for
any such supplemental indenture, or the consent of the Holders
of which is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso
to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of
the Notes required to direct the Trustee to direct the Issuer
to sell or liquidate the Trust Estate pursuant to Section 5.4;
(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
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or contemplated herein or in the Basic Documents, 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 Trustee may 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 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 Trustee of any
supplemental indenture pursuant to this Section, the 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 Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, 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 Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise. The
Trustee shall provide copies of each such supplemental indenture to each of the
Rating Agencies.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
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pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 REDEMPTION. (a) The Notes are subject to redemption in
whole, but not in part, (i) at the direction of the Depositor pursuant to
Section 9.1(a) of the Sale and Servicing Agreement, on any Distribution Date on
which the Depositor exercises its option to purchase the Trust Estate pursuant
to said Section 9.1(a) and (ii) upon the mandatory sale of the Receivables
pursuant to Section 9.2 of the Sale and Servicing Agreement. The purchase price
for the Notes shall be equal to the Redemption Price; PROVIDED, HOWEVER, that
the Issuer has available funds sufficient to pay the Redemption Price. The
Servicer shall furnish the Rating Agencies notice of such redemption. If the
Notes are to be redeemed pursuant to this Section 10.1(a) (i) or (ii), the
Servicer shall furnish notice to the Trustee not later than 25 days prior to the
Redemption Date and the Issuer shall deposit with the Trustee in the Note
Distribution Account, on or before the Redemption Date, the Redemption Price of
the Notes to be redeemed whereupon all such Notes shall be due and payable on
the Redemption Date upon the furnishing of a notice complying with Section 10.2
to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(b), the Servicer shall,
to the extent practicable, furnish notice of such event to the Trustee not later
than 25 days prior to the Redemption Date whereupon all such amounts shall be
payable on the Redemption Date.
SECTION 10.2 FORM OF REDEMPTION NOTICE. (a) Notice of redemption under
Section 10.1(a) shall be given by the Trustee by facsimile or by first-class
mail, postage prepaid, transmitted or mailed not less than five days in the case
of Section 10.1(a)(i) and Section 10.1(a)(ii) prior to the applicable Redemption
Date to each Holder of Notes, as of the close of business on the Record Date
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
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(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be
made only upon presentation and surrender of such Notes and
the place where such Notes are to be surrendered for payment
of the Redemption Price (which shall be the office or agency
of the Issuer to be maintained as provided in Section 3.2);
and
(iv) that interest on the Notes shall cease to
accrue on the Redemption Date.
Notice of redemption of the Notes shall be given by the 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 Sections 10.1(b) is not required
to be given to Noteholders.
SECTION 10.3 NOTES PAYABLE ON REDEMPTION DATE. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 COMPLIANCE CERTIFICATES AND OPINIONS, ETC.. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the 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:
(i) a statement that each signatory of such certificate
or opinion has read or has caused to be read such covenant or
condition and the definitions herein relating thereto;
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(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each
such signatory such condition or covenant has been complied
with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, the Issuer shall,
in addition to any obligation imposed in Section 11.1(a) or elsewhere in this
Indenture, furnish to the 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
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 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) Other than with respect to the release of any
Purchased Receivables or Liquidated Receivables, whenever any
property or securities are to be released
from the lien of this Indenture, the Issuer shall also
furnish to the 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
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
Trustee an Independent Certificate as to the same matters if
the fair value of the property or securities and of all other
property other than Purchased Receivables and Defaulted
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Receivables, or securities released from the lien of this
Indenture since the commencement of the then current calendar
year, as set forth in the certificates required by clause
(iii) above and this clause (iv), equals 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 2.9 or any other provision
of this Section, the Issuer may (A) collect, liquidate, sell
or otherwise dispose of Receivables as and to the extent
permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent
permitted or required by the Basic Documents.
SECTION 11.2 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Depositor or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Depositor or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the 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,
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however, be construed to affect the Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3 ACTS OF NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the 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 6.1)
conclusive in favor of the 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 customary manner of the Trustee.
(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
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 NOTICES, ETC., TO 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 to be
made upon, given or furnished to or filed with:
(a) The Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if personally delivered, delivered by overnight
courier or mailed certified mail, return receipt requested and shall be deemed
to have been duly given upon receipt to the Trustee at its Corporate Trust
Office, or
(b) The Issuer by the Trustee or by any Noteholder shall be in writing
and sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Issuer addressed to:
Barnett Auto Trust 199_-_, in care of the Owner Trustee, Attention: Corporate
Trust Administration at the address of the Owner Trustee's Corporate Trust
Office set forth in the Trust Agreement or at any other address previously
furnished in writing to the Trustee by Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Trustee.
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Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or the Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004, Attention:
ABS Monitoring Department and (ii) in the case of S&P, at the following address:
Standard & Poor's Ratings Group, 26 Broadway (15th Floor), New York, New York
10004, Attention of 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 11.5 NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner here
in 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 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 Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices, provided that such methods are reasonable and consented to by the
Trustee (which consent shall not be unreasonably withheld). The Issuer will
furnish to the Trustee a copy of each such agreement and the Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.7 CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or 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.
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The provisions of TIA ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 EFFECT OF HEADINGS AND TABLE OF Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors.
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 an 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 Trustee or any other counsel reasonably acceptable
to the 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 Trustee under this Indenture.
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SECTION 11.16 TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Depositor, the
Servicer, the holder of the GP Interest, the Owner Trustee or the Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Depositor, the Servicer, the
holder of the GP Interest, the 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
Depositor, the Servicer, the holder of the GP Interest, the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Depositor, the Servicer, the holder of the GP Interest, the Owner
Trustee or the Trustee or of any successor or assign of the Depositor, the
Servicer, the holder of the GP Interest, the Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the 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 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, the holder of
the GP Interest or the Trust, or join in any institution against the Depositor,
the holder of the GP Interest or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
SECTION 11.18 INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the 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 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
Trustee may reasonably determine that such disclosure is consistent with its
Obligations hereunder.
[THIS SPACE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
BARNETT AUTO TRUST 199_-_,
By: ________________, not in its
individual capacity but solely as Owner Trustee,
By:_____________________________
Name:
Title:
----------------,
not in its individual capacity
but solely as Trustee,
By:_____________________________
Name:
Title:
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[Form of Note] EXHIBIT D
REGISTERED $
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______________
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF 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.
D-1
<PAGE>
BARNETT AUTO TRUST 199_-_
__% ASSET BACKED NOTES
Barnett Auto 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 $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE) and the denominator of which
is $___________ by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Notes pursuant to Section
3.1 of the Indenture; PROVIDED, HOWEVER, that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of the __________
Distribution Date (the "Note Final Scheduled Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or Section
10.1(b) of the Indenture. The Issuer will pay interest on this Note at the rate
per annum shown above on each Distribution Date commencing in ___________ 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). Interest on this Note will accrue for each Distribution Date
from the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from
_________ __, 199_-_. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. 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 Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-2
<PAGE>
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: BARNETT AUTO 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 __% Asset Backed Notes of Barnett Auto Trust 199_-_
designated above and referred to in the within-mentioned Indenture.
Date: ________________,
not in its individual capacity
but solely as Trustee,
By: _________________________
Authorized Signatory
D-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its __% Asset Backed Notes (herein called the "Notes"), all issued
under an Indenture dated as of _________ __, 199_-_ (such indenture, as
supplemented or amended, is herein called the "Indenture"), between the Issuer
and ________________, as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution Date in an
amount described on the face hereof. "Distribution Date" means the fifteenth day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing ____________.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Note Final Scheduled Distribution
Date and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or
Section 10.1(b) 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 Trustee
or the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture. All
principal payments on the Notes shall be made pro rata to the 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 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
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principal amount of this Note on a Distribution Date, then the Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the Holder
hereof as of the Record Date preceding such Distribution Date by notice mailed
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 Trustee's
principal Corporate Trust Office or at the office of the 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 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, (i) at the option of the Depositor, on any Distribution Date on or
after the date on which the Pool Balance is less than ten percent of the Initial
Pool Balance or (ii) if the Depositor has not exercised its rights in clause (i)
within ten days following a Distribution Date as of which the Pool Balance is 5%
or less of the Initial Pool Balance, an auction sale shall be conducted (as
described in the Sale and Servicing Agreement).
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, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his 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 Securities Transfer Agents 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, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Depositor, the Servicer, the holder of the GP Interest, the
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 Depositor, the Servicer, the holder
of the GP Interest, the Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Depositor, the Servicer,
the holder of the GP Interest, the Owner Trustee or the Trustee or of any
successor or assign of the Depositor, the Servicer, the holder of the GP
Interest, the Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
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except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor, the holder of the GP Interest or the
Issuer, or join in any institution against the Depositor, the holder of the GP
Interest 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, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of 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 of 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 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 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.
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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 Indenture or the Basic Documents, neither ________________ in
its individual capacity, ________________ in its individual capacity, any owner
of a beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for the
sole purposes of binding the interests of the Owner Trustee in the assets of the
Issuer. The Holder of this Note by the acceptance hereof agrees that except as
expressly provided in the Indenture or the Basic Documents, in the case of an
Event of Default under the Indenture, the Holder shall have no claim against any
of the foregoing for any deficiency, loss or claim therefrom; PROVIDED, HOWEVER,
that nothing contained herein shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
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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: ___________ _______________________3
Signature Guaranteed:
3 NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
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EXHIBIT 4.4
BARNETT AUTO TRUST 199_-_
FORM OF AMENDED AND RESTATED TRUST AGREEMENT
between
BARNETT AUTO RECEIVABLES CORP.
and
-----------------------
Dated as of ______ __, 199_
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS
SECTION 1.1. Capitalized Terms.............................................1
SECTION 1.2 Other Definitional Provisions.................................4
ARTICLE II - ORGANIZATION
SECTION 2.1. Name..........................................................4
SECTION 2.2. Office........................................................5
SECTION 2.3. Purposes and Powers...........................................5
SECTION 2.4. Appointment of Owner Trustee..................................5
SECTION 2.5. Initial Capital Contribution of Trust Estate..................6
SECTION 2.6. Declaration of Trust..........................................6
SECTION 2.7. Transfer of Interest to the Depositor; Liability of
the Holder of the GP Interest................................6
SECTION 2.8. Title to Trust Property.......................................7
SECTION 2.9. Situs of Trust................................................7
SECTION 2.10. Representations and Warranties of the Depositor...............7
SECTION 2.11. [RESERVED]....................................................8
SECTION 2.12. Federal Income Tax Allocations................................8
ARTICLE III - TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership.............................................9
SECTION 3.2. The Trust Certificates........................................9
SECTION 3.3. Authentication of Trust Certificates..........................9
SECTION 3.4. Registration of Transfer and Exchange of Trust Certificates...9
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust Certificates......10
SECTION 3.6. Persons Deemed Certificateholders............................10
SECTION 3.7. Access to List of Certificateholders' Names and Addresses....11
SECTION 3.8. Maintenance of Office or Agency..............................11
SECTION 3.9. Appointment of Paying Agent..................................11
SECTION 3.10. [Reserved]...................................................12
SECTION 3.11. [Reserved]...................................................12
SECTION 3.12. Disposition by the Holder of the GP Interest.................12
SECTION 3.13. [Reserved]...................................................12
SECTION 3.14. Book-Entry Trust Certificates................................12
SECTION 3.15. Notices to Clearing Agency...................................13
SECTION 3.16. Definitive Trust Certificates................................13
SECTION 3.17. Trust Certificate Transfer Restrictions......................14
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ARTICLE IV - ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters.........14
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters...15
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy........15
SECTION 4.4. Restrictions on Certificateholders' Power......................15
SECTION 4.5. Majority Control...............................................15
SECTION 4.6. Execution of Documents.........................................15
ARTICLE V - APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account..............16
SECTION 5.2. Application of Funds in Certificate Distribution Account.......16
SECTION 5.3. [Reserved].....................................................17
SECTION 5.4. Method of Payment..............................................17
SECTION 5.5. No Segregation of Monies; No Interest..........................17
SECTION 5.6. Accounting and Reports to the Noteholders, Certificateholders,
the Internal Revenue Service and Others........................17
SECTION 5.7. Signature on Returns; Tax Matters Partner......................18
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority..............................................18
SECTION 6.2. Action upon Instruction........................................19
SECTION 6.3. No Duties Except as Specified in this Agreement
or in Instructions............................................20
SECTION 6.4. No Action Except under Specified Documents or Instructions.....20
SECTION 6.5. Restrictions...................................................20
SECTION 6.6. Notice of Default Under Indenture..............................20
ARTICLE VII - CONCERNING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties................................20
SECTION 7.2. Furnishing of Documents........................................22
SECTION 7.3. Representations and Warranties.................................22
SECTION 7.4. Reliance; Advice of Counsel....................................22
SECTION 7.5. Not Acting in Individual Capacity..............................23
SECTION 7.6. Owner Trustee Not Liable for Trust Certificates
or Receivables.................................................23
SECTION 7.7. Owner Trustee May Own Trust Certificates and Notes.............23
ARTICLE VIII - COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses..............................24
SECTION 8.2. Indemnification................................................24
SECTION 8.3. Payments to the Owner Trustee..................................24
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ARTICLE IX - DISSOLUTION AND TERMINATION OF TRUST
SECTION 9.1. Termination of Trust Agreement.................................24
SECTION 9.2. Dissolution upon Bankruptcy of the Holder of the GP Interest...26
ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER
TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee....................26
SECTION 10.2. Resignation or Removal of Owner Trustee.......................27
SECTION 10.3. Successor Owner Trustee.......................................27
SECTION 10.4. Merger or Consolidation of Owner Trustee......................28
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.................28
ARTICLE XI - MISCELLANEOUS
SECTION 11.1. Supplements and Amendments....................................29
SECTION 11.2. No Legal Title to Owner Trust Estate in Certificateholders....31
SECTION 11.3. Limitations on Rights of Others...............................31
SECTION 11.4. Notices.......................................................31
SECTION 11.5. Severability..................................................31
SECTION 11.6. Separate Counterparts.........................................31
SECTION 11.7. Successors and Assigns........................................32
SECTION 11.8. [Reserved]....................................................32
SECTION 11.9. No Petition...................................................32
SECTION 11.10 No Recourse...................................................32
SECTION 11.11.Headings......................................................32
SECTION 11.12.GOVERNING LAW.................................................32
SECTION 11.13.[Reserved]....................................................32
SECTION 11.14.Servicer......................................................32
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AMENDED AND RESTATED TRUST AGREEMENT
dated as of ______ __, 199_ between BARNETT
AUTO RECEIVABLES CORP., a New York
corporation, as depositor, and
_______________________ as Owner Trustee.
ARTICLE I.
DEFINITIONS
SECTION 1.1 CAPITALIZED TERMS. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Agreement" shall mean this Amended and Restated Trust
Agreement, as the same may be amended and supplemented from time to time.
"Basic Documents" shall mean the Sale and Servicing Agreement,
the Indenture, the Certificate Depository Agreement, the Note Depository
Agreement and the other documents and certificates delivered in connection
therewith.
"BDFS" means Barnett Dealer Financial Services, Inc., a Florida
corporation.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.17.
"Book Entry Trust Certificates" means 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 3.14.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 DEL. CODE ss. 3801 ET SEQ., as the same may be amended
from time to time.
["____" shall mean ____________, a _________________.]
"Certificate" means a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
"Certificate Depository Agreement" shall mean the agreement
among the Trust, the Servicer and The Depository Trust Company, as the initial
Clearing Agency, dated as of one Business Day prior to the Closing Date,
relating to the Trust Certificates, substantially in the form attached hereto as
Exhibit C, 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 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of
the Business Trust Statute.
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"Certificate Register" and "Certificate Registrar" shall mean
the register mentioned and the registrar appointed pursuant to Section 3.4.
"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.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, 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
_______________________, Attention: _____________; or at such other address as
the Owner Trustee may designate by notice to the Certificateholders and the
Depositor, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Depositor).
"Definitive Trust Certificates" shall mean either or both (as
the context requires) of (i) Trust Certificates issued in certificated, fully
registered form as provided in Section 3.14 and (ii) Trust Certificates issued
in certificated, fully registered form as provided in Section 3.16.
"Demand Note" shall have the meaning assigned to such term in
Section 2.11(e).
"Delaware Trustee" shall have the meaning assigned to such
term in Section 10.1.
"Depositor" shall mean Barnett Auto Receivables Corp., as the
depositor of the Receivables, and each successor to Barnett Auto Receivables
Corp., (in the same capacity) to the extent permitted hereunder.
"ERISA" shall have the meaning assigned to such term
in Section 3.17.
"Expenses" shall have the meaning assigned to such
term in Section 8.2.
"GP Interest" shall have the meaning assigned to such term in
Section 2.7.
"Holder" or "Certificateholder" shall mean the Person in whose
name a Trust Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.
"Note Depository Agreement" shall mean the agreement among the
Trust, the Trustee, the Servicer and The Depository Trust Company, as the
initial Clearing Agency, dated
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as of one Business Day prior to the Closing Date,relating to the Notes, as the
same may be amended or supplemented from time to time.
"Owner" shall mean each Person who is the beneficial owner of
a Book Entry Certificate as reflected in the records of the Clearing Agency or
if a Clearing Agency Participant is not the Owner, then as reflected in records
of a Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency).
"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.
"Owner Trustee" shall mean _______________________, a
_______________, 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 3.9 and shall initially be the Owner Trustee.
"Record Date" shall mean, with respect to any Distribution
Date, the close of business on the fourteenth day of the calendar month in which
such Distribution Date occurs.
"Responsible Officer" shall mean, when used with respect to
the Owner Trustee, any officer assigned to the Corporate Trust Office of the
Owner Trustee, including any Vice President, any Assistant Vice President, any
trust officer or any other officer of the Owner Trustee customarily performing
functions similar to those performed by any of the above designated officers or
any agent acting under a power of attorney from the Owner Trustee, having
responsibility for the administration of this Trust Agreement, as the case may
be, and also, with respect to a particular matter relating to the Trust, any
other officer of the Owner Trustee to whom such matter is referred because of
such officer's knowledge of and familiarity with such matter. Any notice given
to the address and in the manner specified in Section 11.4 hereof shall be
deemed to be given to a Responsible Officer.
"Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement among the Trust, Barnett Auto Receivables Corp., as seller
and BDFS, as servicer and. as sponsor, dated as of ______ __, 199_, as the same
may be amended and 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
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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.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not
otherwise defined 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
as in effect on the date of this Agreement or any such certificate or other
document, as applicable. 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.
ARTICLE II.
ORGANIZATION
SECTION 2.1 NAME. The Trust created hereby shall be known as
"Barnett Auto Trust 199_-_", in which name the Owner Trustee may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and sue and be
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sued.
SECTION 2.2 OFFICE. The office of the Trust shall be in care of
the Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Depositor.
SECTION 2.3 PURPOSES AND POWERS. (a) The purpose of the Trust
is, and the Trust shall have the power and authority, 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 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 acquire, receive and accept from time to
time the Owner Trust Estate, and to assign, grant, transfer,
pledge, mortgage and convey the Trust Estate pursuant to the
Indenture and to hold, manage and distribute to the
Certificateholders pursuant to the terms of the 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 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 which the Trust is a party, 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 Certificateholders 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 2.4. 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.
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SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF 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.
SECTION 2.6. 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
Certificateholders, subject to the obligations of the Trust under the Basic
Documents to which the Trust is a party. 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.
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
to the extent not inconsistent herewith, in the Business Trust Statute with
respect to accomplishing the purposes of the Trust. The Owner Trustee shall file
the Certificate of Trust with the Secretary of State.
SECTION 2.7. TRANSFER OF INTEREST TO THE DEPOSITOR; LIABILITY
OF THE HOLDER OF THE GP INTEREST. (a) On the Closing Date the Depositor shall
purchase a 1% interest in the Trust (the "GP Interest"). The holder of the GP
Interest 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. The holder of the GP
Interest shall also be liable directly to and will indemnify the 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 holder of the GP Interest would be liable if the Trust were
a partnership under the Delaware Revised Uniform Limited Partnership Act in
which the holder of the GP Interest were a general partner; PROVIDED, HOWEVER,
that the holder of the GP Interest shall not be liable for any losses incurred
by a Certificateholder in the capacity of an investor in the Trust Certificates
or 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 holder of the GP
Interest shall not be liable) shall be deemed third party beneficiaries of this
paragraph. The obligations of the holder of the GP Interest under this paragraph
shall be evidenced by the Trust Certificates described in Section 3.12, 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.
(b) No Holder, other than to the extent set
forth in clause (a), shall have any personal liability for any liability or
obligation of the Trust.
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SECTION 2.8. 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 2.9. 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 New York. Payments will be received by the Trust only in Delaware or
New York, and payments will be made by the Trust only from Delaware or New York.
The only office of the Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor is duly organized and validly
existing as a New York corporation 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.
(b) The Depositor has the corporate 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
has been duly authorized by the Depositor by all necessary corporate action.
(c) 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 by-laws of the Depositor, or any material
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.
(d) It 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.
(e) It has been duly capitalized by the delivery
of a demand note (the
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"Demand Note") from the Sponsor in the amount of $1,000,000, which Demand Note
has not been canceled, waived or terminated. The proceeds of such Demand Note
have not been used and will not be used to pay (i) any of the expenses of the
holder of the GP Interest in connection with the transactions contemplated by
the Basic Documents or (ii) the purchase price for the Certificates purchased
pursuant to Section 2.7. Such Demand Note is enforceable against the Sponsor,
subject to its terms, and subject to applicable bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and similar laws now or
hereafter in effect relating to creditors' rights generally and subject to
general principles of equity (whether applied in a proceeding at law or in
equity).
SECTION 2.11. [RESERVED]
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, credit and deduction entering into the computation
thereof) shall be allocated:
(a) to the extent of available net income, among
the Certificateholders 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 date, an amount of net income up to the sum of (i) the
Certificate-holders' Monthly Interest Distribution 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 at the Certificate Rate that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date, to the
extent permitted by law, at the Certificate Rate from such preceding
Distribution Date through the current Distribution Date, and (iii) the portion
of the market discount on the Receivables accrued during such month that is
allocable to the excess of the initial aggregate principal amount of the Trust
Certificates over their initial aggregate issue price; and
(b) to the holder of the GP Interest, 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 clause (b). Net losses of the Trust, if any, for any
month as determined for Federal income tax purposes (and each item of income,
gain, loss, credit and deduction entering into the computation thereof) shall be
allocated to the holder of the GP Interest to the extent the holder of the GP
Interest is reasonably expected as determined by the Servicer to bear the
economic burden of such net losses, then net losses shall be allocated among the
Certificateholders 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 until the principal balance of the Trust Certificates is
reduced to zero. The holder of the GP Interest 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 holder of the GP Interest, the Certificateholders, or as otherwise
required by the Code.
ARTICLE III.
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TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. INITIAL OWNERSHIP. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.5 and until the
issuance of the Trust Certificates, the Depositor shall be the sole beneficiary
of the Trust.
SECTION 3.2. THE TRUST CERTIFICATES. The Trust Certificates
shall be issued in denominations of $1,000 and integral multiples of $1,000 in
excess thereof; PROVIDED, however, that (a) Trust Certificates may be issued to
the holder of the GP Interest pursuant to Section 2.7 in such denominations as
to represent at least 1% of the initial Certificate Balance and (b) one Trust
Certificate may be issued in a denomination other than an integral multiple of
$1,000. 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 due
registration of such Trust Certificate in such transferee's name pursuant to
Section 3.4.
SECTION 3.3. AUTHENTICATION OF TRUST CERTIFICATES. Concurrently
with the initial sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, 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 or any vice president, without further corporate action by the
Depositor, in authorized denominations. No Trust Certificate shall entitle its
holder to any benefit under this Agreement, or shall 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 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. ____ is hereby appointed as the Owner Trustee's
authenticating agent for the Trust Certificates. Any reference herein regarding
the Owner Trustee's authentication of the Trust Certificates shall be deemed to
include ____.
SECTION 3.4. 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 3.8, 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.
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Upon surrender for registration of transfer of any Trust
Certificate at the office or agency maintained pursuant to Section 3.8, and,
upon satisfaction of the conditions set forth below, the Owner Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized denominations of a
like class and aggregate face 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 the same class in
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 3.8.
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 Certificateholder or his attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate 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 Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Exchange Act. Each Trust
Certificate surrendered for registration of transfer or exchange shall be
canceled 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, but shall not be obligated to, 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.
SECTION 3.5. 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 actual knowledge by a Responsible Officer of
the Owner Trustee that such Trust Certificate shall have been acquired by a bona
fide purchaser, the Owner Trustee on behalf of the Trust shall execute and the
Owner Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Trust Certificate, a new Trust
Certificate of like class, tenor and denomination. In connection with the
issuance of any new Trust Certificate under this Section, the Owner Trustee or
the Certificate Registrar may, but shall not be obligated to, 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 an ownership
interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Trust Certificate shall be found at any time.
SECTION 3.6. PERSONS DEEMED CERTIFICATEHOLDERS. Every person by
virtue of becoming a Certificateholder or Owner in accordance with this
Agreement and
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the rules and regulations of the Clearing Agency shall be deemed
to be bound by the terms of this Agreement. Prior to due presentation of a Trust
Certificate for registration of transfer, the Owner Trustee or the Certificate
Registrar may treat the Person in whose name any Trust Certificate shall be
registered in the Certificate Register as the Owner of such Trust Certificate
for the purpose of receiving distributions pursuant to Section 5.2 and for all
other purposes whatsoever, and neither the Owner Trustee nor the Certificate
Registrar shall be bound by any notice to the contrary.
SECTION 3.7. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Depositor and the holder of the GP Interest, within 15 days after
receipt by the Owner Trustee of a request therefor from the Servicer, the
Depositor or the holder of the GP Interest in writing, a list, in such form as
the Servicer, the Depositor or the holder of the GP Interest may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Holders of Trust Certificates 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 either the Depositor 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 3.8 MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee
shall maintain in the Borough of Manhattan, 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 agent 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 3.9 APPOINTMENT OF PAYING AGENT. The Paying Agent shall
make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 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.
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The Paying Agent shall initially be ____, and any co-paying agent chosen
by ____, and acceptable to the Servicer. The Paying Agent shall be
permitted to resign upon 30 days' written notice to the Owner Trustee and the
Servicer. In the event that the Owner Trustee 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 Articles VII and VIII shall apply to ____ or the Owner Trustee
also in its role as Paying Agent, for so long as ____ or 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 [Reserved]
SECTION 3.11 [Reserved]
SECTION 3.12 DISPOSITION BY THE HOLDER OF THE GP INTEREST. On
and after the Closing Date, the holder of the GP Interest shall retain
beneficial and record ownership of Trust Certificates representing at least 1%
of the initial Certificate Balance. Any attempted transfer of any Trust
Certificate that would reduce such interest of the holder of the GP Interest
below 1% of the Certificate Balance shall be void. The Owner Trustee shall cause
any Trust Certificate issued to the holder of the GP Interest to contain a
legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
SECTION 13 [Reserved]
SECTION 3.14 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 Certificate (as defined below) may be issued to the Depositor, as
holder of the GP Interest pursuant to Section 2.7. Such Book-Entry 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 beneficial owner (other than the Depositor and the
holder of the GP Interest) will receive a definitive Trust Certificate
representing such beneficial owner's interest in such Trust Certificate, except
as provided in Section 3.16. Unless and until Definitive Trust Certificates have
been issued to beneficial owners pursuant to Section 3.16:
(i) the provisions of this Section shall be in
full force and effect;
(ii) the Certificate Registrar and the Owner Trustee
shall be entitled to deal with the Clearing Agency for all
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purposes of this Agreement relating to the Book-Entry Trust
Certificates (including the payment of principal of and
interest on the Book-Entry Trust Certificates and the giving
of instructions or directions to Owners of Book-Entry Trust
Certificates) as the sole Holder of Book-Entry Trust
Certificates and shall have no obligations to the Owners
thereof;
(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 the Owners of the Book-Entry Trust
Certificates shall be exercised only through the Clearing
Agency and shall be limited to those established by law and
agreements between such 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 3.16, 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 Book-Entry Trust
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 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
Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the
beneficial interest in the Book-Entry Trust Certificates and
has delivered such instructions to the Owner Trustee.
SECTION 3.15 NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Owners is required under this Agreement, unless and
until Definitive Trust Certificates shall have been issued to Owners pursuant to
Section 3.16, the Owner Trustee shall give all such notices and communications
specified herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners, except to the holder of the GP Interest.
SECTION 3.16 DEFINITIVE TRUST CERTIFICATES. If (i) the Servicer
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 Servicer is unable to locate a qualified successor,
(ii) the Servicer 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, Owners of Certificates 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
Owners of Trust Certificates, then the Clearing Agency shall notify all Owners
and the Owner Trustee of the occurrence of any such event and of the
availability of the Definitive Trust Certificates to Owners requesting the same.
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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.
SECTION 3.17 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title 1 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.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 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 Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any material claim or
lawsuit by the Trust except claims or lawsuits brought in connection with the
collection of the Receivables and the compromise of any material 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 interest of the
Certificateholders;
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(e) the amendment, change or modification of the
Sale and Servicing Agreement, except to cure any ambiguity or defect or to amend
or supplement any provision in a manner that would not materially adversely
affect the interests of the Certificateholders; or
(f) the appointment pursuant to the Indenture of
a successor Trustee or the consent to the assignment by the Note Registrar,
Paying Agent or Trustee or Certificate Registrar of its obligations under the
Indenture or this Agreement, as applicable. The Owner Trustee shall notify the
Certificateholders in writing of any appointment of a successor Note Registrar,
Paying Agent or Certificate Registrar within five Business Days thereof.
SECTION 4.2 ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. The Owner Trustee shall not have the power, except upon the
direction of the Certificateholders, to (a) remove the Servicer under the Sale
and Servicing Agreement pursuant to Section 8.1 thereof or (b) 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 Certificateholders.
SECTION 4.3 ACTION BY CERTIFICATEHOLDERS 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 Certificateholders and the delivery to the Owner Trustee by each
such Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4 RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 nor shall the Owner Trustee be
obligated to determine if a Certificateholder's direction violates this Section
4.4 or to follow any such direction, if given.
SECTION 4.5 MAJORITY CONTROL. Except as otherwise specifically
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Trust Certificates evidencing not
less than a majority of the Certificate Balance. Except as otherwise
specifically provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing not less than a majority of the Certificate Balance at
the time of the delivery of such notice.
SECTION 4.6 EXECUTION OF DOCUMENTS. Notwithstanding anything
herein to the contrary, the Owner Trustee is authorized, empowered and directed,
on behalf of the Trust, to execute, deliver, issue and authenticate the
Certificates, to execute, deliver and issue the Notes,
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and to execute and deliver each Basic Document to which the Trust or the Owner
Trustee is or is to be a party and any other document, instrument, certificate
or other writing that may be necessary, convenient or incidental thereto. Any
such execution, delivery, issuance and authentication is hereby ratified and
confirmed in all respects and does not and will be deemed not to conflict with,
constitute or result in a breach or violation of, or a default under, any
provision of or any duty under this Trust Agreement.
ARTICLE V.
APPLICATION OF TRUST FUNDS: CERTAIN DUTIES
SECTION 5.1 ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT.
The Owner Trustee, for the benefit of the Certificateholders, shall establish
and maintain at ____ 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. Except as otherwise provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders.
SECTION 5.2 APPLICATION OF FUNDS IN CERTIFICATE DISTRIBUTION
ACCOUNT. (a) On each Distribution Date, the Owner Trustee will, based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9 of the Sale and Servicing Agreement,
distribute to Certificateholders, to the extent of the funds available, amounts
deposited in the Certificate Distribution Account pursuant to Section 5.5 of the
Sale and Servicing Agreement on such Distribution Date in the following order of
priority:
(i) first, to the Certificateholders, on a pro
rata basis, an amount equal to the Certificateholders'
Interest Distributable Amount; and
(ii) second, to the Certificateholders, on a pro
rata basis, an amount equal to the Certificateholders'
Principal Distributable Amount.
(b) On each Distribution Date, the Owner Trustee
shall send to each Certificateholder the statement provided to the Owner Trustee
by the Servicer pursuant to Section 5.8 of the Sale and Servicing Agreement on
such Distribution Date.
(c) In the event that any withholding tax is
imposed on the Trust's payment (or allocations of income) to a
Certificateholder, such tax shall reduce the amount otherwise distributable to
the Certificateholder in accordance with this Section. The Owner Trustee is
hereby authorized and directed to retain from amounts otherwise distributable to
the Certificateholders sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
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Trustee from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Trust 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-US
Certificateholder), the Owner Trustee may in it sole discretion withhold such
amounts in accordance with this clause (c). In the event that an Owner wishes to
apply for a refund of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred. The Servicer shall facilitate compliance with
this Section 5.2(c) by performance of its duties under Section 10.1(b) of the
Sale and Servicing Agreement.
SECTION 5.3 [Reserved]
SECTION 5.4 METHOD OF PAYMENT. Subject to Section 9.1(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 (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Distribution Date or (ii) such Certificateholder is the holder of the GP
Interest, or an Affiliate thereof, or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register; PROVIDED, however, that, unless Definitive Certificates have been
issued pursuant to Section 3.16, 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.), distributions will be made by wire transfer in
immediately available funds to the account designated by such nominee.
Notwithstanding the foregoing, the final distribution in respect of any Trust
Certificate (whether on the Final Scheduled Distribution Date or otherwise) will
be payable only upon presentation and surrender of such Trust Certificate at the
office or agency maintained for that purpose by the Owner Trustee pursuant to
Section 3.8.
SECTION 5.5 NO SEGREGATION OF MONIES; NO INTEREST. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law. The Owner
Trustee shall not be liable for any interest thereon.
SECTION 5.6 ACCOUNTING AND REPORTS TO THE NOTEHOLDERS,
CERTIFICATEHOLDERS, THE INTERNAL REVENUE SERVICE AND OTHERS. Subject to Sections
10.1(b)(iii) and 10.1(c) of the Sale and Servicing Agreement, the holder of the
GP Interest shall (a) maintain (or cause to be maintained) the books of the
Trust on a calendar year basis on the accrual method of accounting, (b) deliver
(or cause to be delivered) to each Certificateholder, as may be required by the
Code and applicable Treasury Regulations, such information as may be required
(including Schedule K-1) to enable each Certificateholder to prepare its Federal
and state income tax returns,
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(c) prepare or cause to be prepared, and file or cause to be
filed, all tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Owner Trustee to make such
elections as may from time to time be required or appropriate under any
applicable state or Federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for Federal income tax
purposes and (d) collect or cause to be collected any withholding tax as
described in and in accordance with Section 5.2(c) with respect to income or
distributions to Certificateholders. The Owner Trustee shall make all elections
pursuant to this Section as directed by the holder of the GP Interest. The Owner
Trustee shall sign all tax information returns furnished to it in execution form
by the holder of the GP Interest, and filed pursuant to this Section 5.6 and any
other returns as may be required by law and so furnished to it by the holder of
the GP Interest, and in doing so shall rely entirely upon, and shall have no
liability for information provided by, or calculations provided by, the holder
of the GP Interest. The holder of the GP Interest shall cause the Trust to elect
under Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Receivables. The Trust shall not make
the election provided under Section 754 of the Code.
SECTION 5.7 SIGNATURE ON RETURNS; TAX MATTERS PARTNER. (a)
Notwithstanding the provisions of Section 5.6, the Owner Trustee shall sign on
behalf of the Trust the tax returns of the Trust furnished to it in execution
form by the holder of the GP Interest, unless applicable law requires a
Certificateholder or an Owner to sign such documents, in which case such
documents shall be signed by the holder of the GP Interest.
(b) The holder of the GP Interest shall be the
"tax matters partner" of the Trust pursuant to the Code.
ARTICLE VI.
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 GENERAL AUTHORITY. The Owner Trustee is authorized
and directed to execute and deliver the Basic Documents to which the Trust is
named as a party and each certificate or other document attached as an exhibit
to or contemplated by the Basic Documents to which the Trust is named as a party
and any amendment thereto, in each case, in such form as the Depositor shall
approve as evidenced conclusively by the Owner Trustee's execution thereof, and
on behalf of the Trust, to direct the Trustee to authenticate and deliver Notes
in the aggregate principal amount of $__________. 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 Servicer
recommends to it in writing with respect to the Basic Documents.
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 Sale and Servicing Agreement and to administer the Trust
in the interest of the Owners, subject to the Basic
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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 Servicer has agreed in the Sale and Servicing
Agreement, or the holder of the GP Interest has agreed hereunder or thereunder,
to perform any act or to discharge any duty of the Owner Trustee hereunder or of
the Trust under any Basic Document, and the Owner Trustee shall not be liable
for the default or failure of the Servicer or the holder of the GP Interest to
carry out its obligations hereunder or thereunder.
SECTION 6.2 ACTION UPON INSTRUCTION. (a) Subject to Article IV,
the Certificateholders 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 Certificateholders 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 any Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Certificateholders 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 ten days of
such notice (or within such shorter period of time as may be specified in such
notice or may be necessary under the circumstances) it may, but shall be under
no duty to, take or refrain from taking such action, not inconsistent with this
Agreement or the Basic Documents, as it shall deem to be in the best interests
of the Certificateholders, and shall have no liability to any Person for such
action or inaction.
(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
Certificateholders 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
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days of such notice (or within such shorter period of time as may be specified
in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Certificateholders, and shall have no liability to
any Person for such action or inaction.
SECTION 6.3 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 direction or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation or termination statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien 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 6.4 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 direction or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.5 RESTRICTIONS. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of a Responsible Officer of the
Owner Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. The Certificateholders shall not direct the Owner
Trustee to take action that would violate the provisions of this Section.
SECTION 6.6 NOTICE OF DEFAULT UNDER INDENTURE. Within 5
business days of receipt of a notice of Default under the Indenture, the Owner
trustee shall provide notice to each Certificateholder by letter.
ARTICLE VII.
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee
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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, bad faith or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for
any error of judgment made by a Responsible 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 Servicer or any Certificateholder;
(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 Certificateholder, other than as expressly provided for
herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for
the default or misconduct of the Trustee or the Servicer or the holder of the GP
Interest under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to insure compliance by the Servicer or
the holder of the GP Interest with any agreement to which it is a party or to
perform the obligations of the Trust under this Agreement or the Basic Documents
that are required to be performed by the Trustee under the Indenture or the
Servicer under the Sale and Servicing Agreement or the holder of the GP Interest
under this 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
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Agreement or otherwise or in relation to this Agreement or any Basic Document,
at the request, order or direction of any of the Certificateholders, unless
such Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and, except
as otherwise provided in the third sentence of this Section 7.1, the Owner
Trustee shall not be answerable to any Certificateholder in the performance of
any such act.
SECTION 7.2 FURNISHING OF DOCUMENTS. The Owner Trustee shall
furnish to the Certificateholders 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 7.3 REPRESENTATIONS AND WARRANTIES. The Owner Trustee
hereby represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized
and validly existing in good standing under the laws of the State of Delaware
and having an office within 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 nor 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 state law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any judgment or
order binding on it, or constitute any default under its charter documents or
by-laws 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 7.4 RELIANCE; ADVICE OF COUNSEL. (a) The Owner Trustee
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the
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treasurer, secretary 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 7.5 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 7.6 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 Vehicle 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 Vehicle; 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 any Basic Document
or in any related document or the accuracy of any such warranty or
representation or any action of the Trustee or the Servicer or any subservicer
taken in the name of the Owner Trustee.
SECTION 7.7 OWNER TRUSTEE MAY OWN TRUST CERTIFICATES AND NOTES.
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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
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
ARTICLE VIII.
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 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 Sponsor and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the holder of the GP Interest 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 8.2 INDEMNIFICATION. The holder of the GP Interest
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 holder of the GP Interest shall not be liable for or required to
indemnify the Owner Trustee from and against Expenses arising or resulting from
any of the matters described in the third sentence of Section 7.1. 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 holder of the GP Interest, which approval shall
not be unreasonably withheld.
SECTION 8.3 PAYMENTS TO THE 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.
DISSOLUTION AND TERMINATION OF TRUST
SECTION 9.1 TERMINATION OF TRUST AGREEMENT. (a) The Trust shall
dissolve, (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
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Agreement and Article V or (ii) at the time provided in Section
9.2. The bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder or Owner, other than the holder of the GP Interest as
described in Section 9.2, shall not (x) operate to terminate this Agreement or
the Trust, nor (y) entitle such Certificateholder's or 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 nor (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in clause (a), neither
the Depositor nor the holder of the GP Interest nor any Certificateholder shall
be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust,
specifying the Distribution Date upon which the 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 9.1(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 (if other than the Owner Trustee) 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 5.2.
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. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed, subject to
applicable escheat laws, by the Owner Trustee to the holder of the GP Interest.
Certificateholders shall thereafter look solely to the holder of the GP Interest
as general unsecured creditors.
(d) Any funds remaining in the Trust after funds
for final distribution have been distributed or set aside for distribution shall
be distributed by the Owner Trustee to the holder of the GP Interest (other than
any amounts remaining in the Reserve Account which shall be distributed to the
Depositor).
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(e) Upon dissolution and completion of the
winding up of the Trust, the Owner Trustee shall cause the Certificate of Trust
to be canceled by filing a certificate of cancellation with the Secretary of
State in accordance with the provisions of Section 3810 of the Business Trust
Statute and thereupon the Trust and this Agreement shall terminate. The Owner
Trustee shall furnish notice of such dissolution to each Rating Agency.
SECTION 9.2 DISSOLUTION UPON BANKRUPTCY OF THE HOLDER OF THE GP
INTEREST. In the event that an Insolvency Event shall occur with respect to the
holder of the GP Interest, the Trust shall dissolve and this Agreement shall be
terminated in accordance with Section 9.1 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 Certificateholders holding
a majority of the Certificate Balance (other than the holder of the GP Interest)
to the effect that each such party disapproves of the liquidation of the
Receivables and dissolution of the Trust. Promptly after the occurrence of any
Insolvency Event with respect to the holder of the GP Interest, (i) the holder
of the GP Interest shall give the Trustee and the Owner Trustee written notice
of such Insolvency Event, (ii) the Owner Trustee shall, upon the receipt of such
written notice from the holder of the GP Interest, give prompt written notice to
the Certificateholders and the Trustee of the occurrence of such event and (iii)
the Trustee shall, upon receipt of written notice of such Insolvency Event from
the Owner Trustee or the holder of the GP Interest, give prompt written notice
to the Noteholders of the occurrence of such event; PROVIDED, HOWEVER, that any
failure to give a notice required by this sentence shall not prevent or delay,
in any manner, a termination of the Trust pursuant to the first sentence of this
Section 9.2. Upon a termination pursuant to this Section, the Owner Trustee on
behalf of the Trust shall direct the Trustee promptly to sell the assets of the
Owner Trust Estate 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 and shall be
distributed in accordance with Section 9.1(b) thereof.
ARTICLE X.
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The
Owner Trustee shall at all times be a corporation authorized to exercise
corporate trust powers; and having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or state
authorities; PROVIDED that with respect to the Owners Trustee (but not any
successor trustee) the combined capital and surplus of the parent organization
of such banking corporation shall be included in the determination of the
combined capital and surplus of such banking corporation. 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
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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 10.2. In addition, at all times the Owner Trustee or a co-
trustee shall be a person that satisfies the requirements of Section 3807(a) of
the Business Trust Statute (the "Delaware Trustee").
SECTION 10.2 RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer 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 10.1 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Owner Trustee. If the Servicer
shall remove the Owner Trustee under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed and one copy to the successor
Owner Trustee and payment of 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 10.3 and payment of all fees and expenses owed
to the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3 SUCCESSOR OWNER TRUSTEE. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Servicer and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee shall become effective and such
successor Owner Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner
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Trustee all documents and statements and monies held by it under this
Agreement; and the Servicer and the predecessor Owner Trustee shall execute and
deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided
in this Section unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Servicer shall mail notice of the successor of
such Owner Trustee to all Certificateholders, the Trustee, the Noteholders and
the Rating Agencies. If the Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Servicer.
SECTION 10.4 MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
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 further that the Owner Trustee shall mail notice of such merger, sale,
conversion or consolidation to the Rating Agencies.
SECTION 10.5 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 Vehicle may at the time be located,
the Servicer and the Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Owner
Trust Estate, 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 Owner Trustee may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
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(i) all rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act),
except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the 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;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission
of any other trustee under this Agreement; and
(iii) the Servicer and the Owner Trustee acting
jointly may at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1 SUPPLEMENTS AND AMENDMENTS. (a) 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
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ambiguity or defect, 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; PROVIDED, FURTHER, that any amendment within the scope of
Section 11.1(b)(i) or (ii) shall be deemed to materially and adversely affect
the interests of the Noteholders or the Certificateholders, as evidenced by an
Officer's Certificate of the Servicer delivered to the Owner Trustee.
(b) 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 of Notes evidencing not less
than a majority of the Outstanding Amount of the Notes and, to the extent
affected thereby, 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 (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 shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (ii) 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 Holders of all
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 Trustee and each of
the Rating Agencies.
(c) It shall not be necessary for the consent of
Certificateholders, the Noteholders or the 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.
(d) 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.
(e) 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 and that all
conditions precedent to the execution and delivery of such amendment have been
satisfied. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
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<PAGE>
The Owner Trustee shall furnish copies of any such amendments to this Agreement
to each Rating Agency.
SECTION 11.2 NO LEGAL TITLE TO OWNER TRUST ESTATE IN
CERTIFICATEHOLDERS. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided beneficial 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
Certificateholders 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 11.3 LIMITATIONS ON RIGHTS OF OTHERS. Except for
Section 2.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Certificateholders, the Servicer and, to the
extent expressly provided herein, the 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 11.4 NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed certified mail, return receipt requested and shall be deemed to have
been duly given upon receipt, if to the Owner Trustee, addressed to the
Corporate Trust Office; if to the Depositor or the holder of the GP Interest,
addressed to Barnett Auto Receivables Corp., 270 South Service Road, P.O. Box
888, Melville, New York 11747, Attention: General Counsel; or, as to each party,
at such other address as shall be designated by such party in a written notice
to each other party.
(a) 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 11.5 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 11.6 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.
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SECTION 11.7 SUCCESSORS AND ASSIGNS. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Depositor, the holder of the GP Interest, the Owner Trustee and its
successors and each Certificateholder and its successors and permitted assigns,
all as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
SECTION 11.8 [Reserved]
SECTION 11.9 NO PETITION. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against the holder
of the GP Interest, or join in any institution against the holder of the GP
Interest 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, 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 ownership interests in the Trust only and do
not represent interests in or obligations of the Depositor, the Servicer, the
holder of the GP Interest, the Owner Trustee, the Trustee or any Affiliate
thereof and no recourse by such Certificateholder 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 GOVERNED
BY AND 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 [RESERVED]
SECTION 11.14 SERVICER. The Servicer is authorized to
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execute on behalf of the Trust all such documents, reports, filings, tax
returns, instruments, certificates and opinions as it shall be the duty of the
Trust to prepare, file or deliver pursuant to the Basic Documents. Upon written
request, the Owner Trustee on behalf of the Trust shall execute and deliver to
the Servicer a power of attorney appointing the Servicer the Trust's agent and
attorney-in-fact to execute all such documents, reports, filings, tax returns,
instruments, certificates and opinions.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
-----------------------,
Owner Trustee
By:____________________
Name:
Title:
BARNETT AUTO RECEIVABLES CORP.,
Depositor and intended holder of the
GP Interest,
By: ____________________
Name: Peter I. Cavallaro
Title: Vice President & Assistant Secretary
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<PAGE>
EXHIBIT A
NUMBER $
R- CUSIP NO. -----------
SEE REVERSE FOR CERTAIN DEFINITIONS
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR FOR
THE ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING, WITHOUT
LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH PLANS), OR (iii) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY. BY ACCEPTING AND HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE
CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT
IS NOT A BENEFIT PLAN.
[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.]
THE PRINCIPAL OF THIS TRUST CERTIFICATE IS DISTRIBUTABLE IN
INSTALLMENTS AS SET FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL OF THIS TRUST CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
[THIS CERTIFICATE IS NOT TRANSFERABLE]
BARNETT AUTO TRUST 199_-_
____% ASSET BACKED CERTIFICATE
_____________________
1. To be inserted on the Certificate to be held by the holder of the GP
Interest.
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<PAGE>
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of retail
installment sale contracts and other motor vehicle installment chattel paper
secured by new and used automobiles (including passenger cars, minivans,
sport/utility vehicles and light trucks), and sold to the Trust by Barnett Auto
Receivables Corp.
(THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
BARNETT AUTO RECEIVABLES CORP. OR ANY OF ITS AFFILIATES, EXCEPT TO THE EXTENT
DESCRIBED BELOW.)
THIS CERTIFIES THAT is the registered owner of DOLLARS
nonassessable, fully-paid, beneficial ownership interest in Barnett Auto Trust
199_-_ (the "Trust") formed by Barnett Auto Receivables Corp., a New York
corporation (the "Depositor"). The Trust Certificates have a Certificate Rate of
___% per annum.
The Trust was created pursuant to an Amended and Restated Trust
Agreement dated as of ______ __, 199_ (the "Trust Agreement"), between the
Depositor and _______________________, not in its individual capacity but solely
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.
This Certificate is one of the duly authorized Trust
Certificates designated as "___% Asset Backed Certificates" (herein called the
"Trust Certificates"). Also issued under the Indenture dated as of ______ __,
199_, between the Trust and _____________, as trustee, are Notes designated as
"___% Asset Backed Notes" (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 the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of retail installment sale contracts and other motor
vehicle installment chattel paper secured by new and used automobiles (including
passenger cars, minivans, sport/utility vehicles and light trucks), (the
"Receivables"), all monies received on the Receivables on or after ______ __,
199_, 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.
Under the Trust Agreement, there will be distributed on the
15th day of each month or, if such 15th day is not a Business Day, the next
Business Day (the "Distribution Date"), commencing in __________, to the Person
in whose name this Trust Certificate is registered at the close of business on
the day immediately preceding the Distribution Date (the "Record Date") such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date; PROVIDED, HOWEVER,
that principal will be distributed to the Certificateholders on (to the extent
of funds remaining after the Notes have been paid in full) and after the date on
which the Notes have been paid in full.
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<PAGE>
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, the Indenture and the Trust Agreement, as applicable.
It is the intent of the Depositor, Servicer, holder of the GP
Interest and Certificateholders that, for purposes of Federal income taxes, the
Trust will be treated as a partnership and the Certificateholders (including the
holder of the GP Interest) will be treated as partners in that partnership. The
holder of the GP Interest 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, by its acceptance of a Trust
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the holder of the GP Interest, or join in
any institution against the Trust or the holder of the GP Interest 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 Trust 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 the purpose by the Owner Trustee in the Borough of Manhattan,
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 GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE
A-3
<PAGE>
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
A-4
<PAGE>
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.
Date:
BARNETT AUTO TRUST 199_-_
By: _______________________,
solely as Owner Trustee and not in its individual
capacity
By: ________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
Date:
-----------------------,
solely as Owner Trustee and not in its
individual capacity
By:___________________________
Authorized Signatory
or
-----------------------,
solely as Owner Trustee and not in its
individual capacity
By: ______________________,
Authenticating Agent
By:___________________________
Authorized Signatory
A-5
<PAGE>
A-6
<PAGE>
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the holder of the GP Interest, the
Owner Trustee or any Affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Trust Agreement, the Indenture 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 with respect to the Receivables (and certain other amounts),
all as more specifically set forth herein and in the Sale and Servicing
Agreement. The Trust Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Sale and Servicing Agreement. A copy of each of the Sale and
Servicing Agreement and the Trust Agreement may be examined during normal
business hours at the principal office of the Depositor, and at such other
places, if any, designated by the Depositor, by any Certificateholder upon
written request.
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 Notes and the Trust Certificates evidencing not
less than a majority of the outstanding principal balance of the Notes and the
Certificate Balance. 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 hereof 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 in 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 the Owner Trustee.
Except for Trust Certificates issued to the Depositor and
transferred to the holder of the GP Interest (if an entity other than the
Depositor), the Trust Certificates are issuable only as registered Trust
Certificates without coupons in denominations of $1,000 or integral multiples of
$1,000 in excess thereof; except as otherwise provided in the Trust Agreement.
A-7
<PAGE>
As provided in the Trust Agreement and subject to certain limitations therein
set forth, Trust Certificates are exchangeable for new Trust Certificates in
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 sufficient to cover any tax
or governmental charge payable in connection 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 Trust 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 Depositor may at its option
purchase the corpus of the Trust 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; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Collection Period as of which the Pool Balance is 10% or less of the
Initial Pool Balance. In addition, within ten days following a Distribution Date
as of which the Pool Balance is 5% or less of the Initial Pool Balance, and if
the Depositor has not exercised its option to repurchase the Receivable an
auction sale shall be conducted (as described in the Sale and Servicing
Agreement) and such auction shall effect early retirement of the Certificates.
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 1 of ERISA, (b) a plan described in Section 4975(e) (l) of
the Code or (c) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity, as well as any entity whose underlying
assets include plan assets by reason of a plan or arrangement investing in such
entity (including an insurance company general account) (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.
A-8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________ Attorney to transfer said Trust
Certificate on the books of the Trust 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.
A-9
<PAGE>
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
BARNETT AUTO TRUST 199_-_
THIS Certificate of Trust of Barnett Auto Trust 199_-_ (the
"Trust"), 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, ss. 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is
BARNETT AUTO TRUST 199_-_.
2. DELAWARE TRUSTEE. The name and business address of the
trustee of the Trust in the State of Delaware is _______________________, , ,
Delaware _________, Attention: _____________________________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust.
-----------------------,
not in its individual capacity but
solely as owner trustee of the Trust.
By:________________________________
Name:
Title:
B-1
Exhibit 5.1
August 14, 1997
Barnett Auto Receivables Corp.
270 South Service Road
Melville, New York 11747
Ladies and Gentlemen:
We have acted as counsel to Barnett Auto Receivables Corp., a New York
corporation (the "Company"), in connection with the preparation of the
registration statement on Form S-3 (No. 333- 26675) (the "Registration
Statement") relating to the proposed offering from time to time in one or more
series (each, a "Series") by one or more trusts of asset backed notes (the
"Notes") and asset backed certificates (the "Certificates," and, together with
the Notes, the "Securities"). The Registration Statement has been filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"). As set forth in the Registration Statement,
each Series of Securities is to be issued under and pursuant to the terms of a
separate pooling and servicing agreement, or sale and servicing agreement, trust
agreement and indenture (each, an "Agreement") among two or more of the Company,
Barnett Dealer Financial Services, Inc. as servicer (the "Servicer") and as
sponsor (the "Sponsor"), and one or more independent trustees (each, a
"Trustee") to be identified in the prospectus supplement for such Series of
Securities.
As such counsel, we have examined copies of the Certificate of Incorporation and
By-Laws of the Company, the Registration Statement, the base Prospectus and form
of Prospectus Supplement included therein, the form of each Agreement, and
originals or copies of such other corporate minutes, records, agreements and
other instruments of the Company, certificates of public officials and other
documents and have made such examinations of law, as we have deemed necessary to
form the basis for the opinions hereinafter expressed. In our examination of
such materials, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all copies submitted to us. As to various questions of
fact material to such opinion, we have relied, to the extent we deemed
appropriate, upon representations, statements and certificates of officers and
representatives of the Company and others.
<PAGE>
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of New York and we do not express any opinion herein concerning
any law other than the federal laws of the United States of America, the laws of
the State of New York and the General Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that:
1. When the issuance, execution and delivery of each Series of Notes
have been authorized by all necessary corporate action of the Company in
accordance with the provisions of the related Agreement or Agreements, and when
such Notes have been duly executed and delivered, authenticated by the Trustee
and sold as described in the Registration Statement, such Notes will
constitute valid and binding obligations of the issuer thereof in accordance
with their terms and the terms of such Agreement or Agreements. This opinion is
subject to the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto and we express no opinion with respect
to the application of equitable principles or remedies in any proceeding,
whether at law or in equity.
2. When the issuance, execution and delivery of each Series of
Certificates have been authorized by all necessary corporate action of the
Company in accordance with the provisions of the related Agreement or
Agreements, and when such Certificates have been duly executed and delivered,
authenticated by the Trustee and sold as described in the Registration
Statement, such Certificates will be legally issued, fully paid and
non-assessable.
3. We hereby confirm the opinions set forth in the Prospectus under the
heading "Federal Income Tax Considerations," to the extent they constitute
matters of law or legal conclusions with respect thereto.
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<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the captions
"Federal Income Tax Considerations" and "Legal Opinions" in the Prospectus which
forms a part of the Registration Statement. In giving such consent, we do not
admit hereby that we come within the category of persons whose consent is
required under Section 7 of the Act or the Rules and Regulations of the
Commission thereunder.
Very truly yours,
/s/ Stroock & Stroock & Lavan LLP
STROOCK & STROOCK & LAVAN LLP
<PAGE>
EXHIBIT 10.1
---------------------------------------------------------
FORM OF SALE AND SERVICING
AGREEMENT
among
BARNETT AUTO TRUST 199_-_,
as Issuer,
BARNETT DEALER FINANCIAL SERVICES, INC.
as Servicer and Sponsor,
and
BARNETT AUTO RECEIVABLES CORP.,
as Depositor
Dated as of __________ __, 199_
---------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.1. Definitions.................................................2
SECTION 1.2. Other Definitional Provisions..............................18
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables..................................19
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Depositor................20
SECTION 3.2. Repurchase upon Breach.....................................25
SECTION 3.2. Custody of Receivable Files................................26
SECTION 3.3. Duties of Servicer as Custodian............................26
SECTION 3.5. Instructions; Authority To Act.............................27
SECTION 3.6. Custodian's Indemnification................................27
SECTION 3.7. Effective Period and Termination...........................27
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer.........................................28
SECTION 4.2. Collection and Allocation of Receivable Payments...........29
SECTION 4.3. Realization upon Receivables...............................29
SECTION 4.4. Physical Damage Insurance; Other Insurance.................30
SECTION 4.5. Maintenance of Security Interests in Financed
Vehicles...................................................30
SECTION 4.6. Covenants of Servicer......................................30
SECTION 4.7. Purchase of Receivables upon Breach........................31
SECTION 4.8. Servicing Fee..............................................31
SECTION 4.9. Servicer's Certificate.....................................31
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.......32
SECTION 4.11. Annual Independent Certified Public Accountants'
Report.....................................................32
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables......................................33
SECTION 4.13. Servicer Expenses..........................................33
SECTION 4.14. Appointment of Subservicer.................................33
<PAGE>
ARTICLE V
Distributions; Reserve Account; Statements to
Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts.............................34
SECTION 5.2. Collections.................................................36
SECTION 5.3. Application of Collections..................................37
SECTION 5.4. Additional Deposits.........................................37
SECTION 5.5. Distributions...............................................37
SECTION 5.6. Reserve Account.............................................39
SECTION 5.7. Advances....................................................39
SECTION 5.8. Statements to Certificateholders and Noteholders............40
SECTION 5.9. Net Deposits................................................41
ARTICLE VI
The Depositor
SECTION 6.1. Representations of Depositor................................41
SECTION 6.2. Corporate Existence.........................................43
SECTION 6.3. Liability of Depositor; Indemnities.........................44
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor...................................45
SECTION 6.5. Limitation on Liability of Depositor and Others.............46
SECTION 6.6. Depositor May Own Certificates or Notes.....................46
SECTION 6.7. Security Interest...........................................46
ARTICLE VII
The Servicer and the Sponsor
SECTION 7.1. Representations of BDFS.....................................46
SECTION 7.2. Indemnities of BDFS.........................................48
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of BDFS.........................................49
SECTION 7.4. Limitation on Liability of BDFS and Others..................50
SECTION 7.5. BDFS Not To Resign as Servicer..............................50
SECTION 7.6. Corporate Existence.........................................51
SECTION 7.7. Demand Note.................................................51
ARTICLE VIII
Default
SECTION 8.1. Servicer Default............................................51
SECTION 8.2. Appointment of Successor....................................53
SECTION 8.3. Payment of Servicing Fee; Repayment of Advances.............53
SECTION 8.4. Notification to Noteholders and Certificateholders..........53
SECTION 8.5. Waiver of Past Defaults.....................................54
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<PAGE>
ARTICLE IX
Termination
SECTION 9.1. Optional Purchase of All Receivables........................54
SECTION 9.2. Mandatory Sale of all Contracts.............................55
ARTICLE X
Administrative Duties of the Servicer
SECTION 10.1. Administrative Duties.......................................57
SECTION 10.2. Records.....................................................59
SECTION 10.3. Additional Information To Be Furnished to the Issuer........59
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment...................................................59
SECTION 11.2. Protection of Title to Trust................................60
SECTION 11.3. Notices.....................................................62
SECTION 11.4. Assignment..................................................63
SECTION 11.5. Limitations on Rights of Others.............................63
SECTION 11.6. Severability................................................63
SECTION 11.7. Separate Counterparts.......................................63
SECTION 11.8. Headings....................................................63
SECTION 11.9. Governing Law...............................................63
SECTION 11.10. Assignment to Trustee.......................................64
SECTION 11.11. Nonpetition Covenant........................................64
SECTION 11.12. Limitation of Liability of Owner Trustee and Trustee........64
SECTION 11.13. Independence of the Servicer................................64
SECTION 11.14. No Joint Venture............................................65
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<PAGE>
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Form of Monthly Securityholder Statement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Auction Procedures
-ii-
<PAGE>
SALE AND SERVICING AGREEMENT dated as
of __________ __, 199_, among BARNETT AUTO TRUST
199_-_, a Delaware business trust, as issuer (the
"Issuer"), BARNETT AUTO RECEIVABLES CORP., as
depositor (the "Depositor") and BARNETT DEALER
FINANCIAL SERVICES, INC., ("BDFS") as servicer
(the "Servicer") and sponsor (the "Sponsor").
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts and
other motor vehicle installment sale contracts generally purchased by the
Originators (as hereinafter defined) from motor vehicle dealers, some of which
receivables were acquired by BDFS pursuant to the Loan Sale Agreement, all of
which receivables were acquired by the Depositor pursuant to the Loan Purchase
Agreement;
WHEREAS the Sponsor as of the date hereof has caused the
Depositor to form the Issuer;
WHEREAS the Depositor is willing to sell such receivables to the
Issuer and assign its rights but none of its obligations under the Loan Purchase
Agreement to the Issuer; and
WHEREAS the Servicer 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 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"ADVISER" has the meaning specified in Section 9.2.
"ACTUARIAL RECEIVABLE" means any Receivable under which the
portion of a payment allocable to principal and the portion of a payment
allocable to interest is determined in accordance with the Scheduled Payment.
"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 Actuarial Receivable pursuant to Section 5.7(a).
"AGGREGATE NET LOSSES" means, with respect to a Collection
Period, the aggregate principal balance of all Receivables newly designated
during such Collection Period as Liquidated Receivables minus Liquidation
Proceeds collected during such Collection Period with respect to all Liquidated
Receivables.
<PAGE>
"AGREEMENT" means this Sale and Servicing Agreement, as the same
may be amended and supplemented from time to time.
"AMOUNT FINANCED" with respect to a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the
annual rate of finance charges stated in the related Contract.
"AUCTION" has the meaning specified in Section 9.2.
"AUCTION PROCEDURES" has the meaning specified in Section 9.2.
"AUCTION PROPERTY" has the meaning specified in Section 9.2.
"AVAILABLE PRINCIPAL" means, with respect to any Distribution
Date, the sum of the following amounts without duplication: (a) that portion of
all collections on the Receivables allocable to principal in respect of the
preceding Collection Period using (x) in the case of a Simple Interest
Receivable, the Simple Interest Method and (y) in the case of an Actuarial
Receivable, the actuarial method (including, with respect to Actuarial
Receivables, amounts withdrawn from the Payahead Account and allocable to
principal and excluding amounts deposited into the Payahead Account and
allocable to principal, in each case, in respect of the preceding Collection
Period); (b) Liquidation Proceeds attributable to the principal amount of
Receivables which became Liquidated Receivables during the preceding Collection
Period in accordance with the Servicer's customary servicing procedures; (c) all
Advances made by the Servicer of principal due on the Actuarial Receivables in
respect of the preceding Collection Period; (d) to the extent attributable to
principal, the Purchase Amount of each Receivable repurchased by the Depositor
or the Sponsor or purchased by the Servicer as of the close of business on the
last day of the preceding Collection Period; and (e) partial prepayments on
Receivables in respect of the preceding Collection Period relating to refunds of
extended warranty contract costs or of credit life or disability insurance
policy premiums, but only if such costs or premiums were financed by the
respective Obligor and only to the extent not included in clause (a) above;
provided, however, that in calculating the Available Principal all payments and
proceeds (including Liquidation Proceeds) of any Receivables (i) repurchased by
the Depositor or the Sponsor or purchased by the Servicer the Purchase Amount of
which has been included in the Available Principal on a prior Distribution Date,
and (ii) distributed to the Servicer, with respect to such Distribution Date, as
reimbursement for Outstanding Advances in accordance with Section 5.7 shall all
be excluded.
"BALLOON LOAN" means a Receivable originated with a stated
maturity of less than the period of time of the corresponding amortization
schedule.
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<PAGE>
"BALLOON PAYMENT" means the final payment required to be made
under a Balloon Loan.
"BASIC DOCUMENTS" means the Certificate of Trust, the Trust
Agreement, the Indenture, the Loan Purchase Agreement, the Loan Sale Agreement,
the Depository Agreements and other documents and certificates delivered in
connection therewith.
"BDFS" means Barnett Dealer Financial Services, Inc., a Florida
corporation.
"CERTIFICATE" means a Trust Certificate (as defined in the Trust
Agreement).
"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 POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Certificate
Balance (after giving effect to distributions made on such date) divided by the
initial Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of
the Cutoff Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"CERTIFICATE RATE" means ___% per annum.
"CERTIFICATEHOLDER" 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' Interest Distributable
Amount and the Certificateholders' Principal Distributable Amount.
"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 at the Certificate
Rate 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 Certificate Rate from and including such preceding
Distribution Date to but excluding the current Distribution Date.
"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 shall be computed on the basis of a 360-day year of twelve 30-day
months for purposes of this definition.
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<PAGE>
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the product of (i) one-twelfth of
the Certificate Rate (or, in the case of the first Distribution Date, the
Certificate Rate multiplied by a fraction, the numerator of which is the number
of days elapsed from and including the Closing Date to but excluding such
Distribution Date and the denominator of which is 360) and (ii) the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all payments of principal to the Certificateholders on or prior to such
Distribution Date (or, in the case of the first Distribution Date, the
Certificate Balance on the Closing Date).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the Certificateholders' Percentage
of the Principal Distribution Amount or, with respect to any Distribution Date
on or after the Distribution Date on which the outstanding principal balance of
the Notes is reduced to zero, 100% of the Principal Distribution Amount (less
any amount required on the first such Distribution Date to reduce the
outstanding principal balance of the Notes to zero, which shall be deposited
into the Note Distribution Account).
"CERTIFICATEHOLDERS' PERCENTAGE" means 100% minus the
Noteholders' Percentage.
"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 Certificate-holders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Certificate Final Scheduled Distribution Date, the principal
required to be distributed to Certificateholders will include the lesser of (a)
any payments of principal due and remaining unpaid on each Receivable in the
Trust as of the last day of the Collection Period preceding the Certificate
Final Scheduled Distribution Date or (b) the portion of 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, in either case after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to the
Servicer, the Noteholders and the Certificateholders on such Distribution Date,
(i) the outstanding principal balance of the Notes is zero and (ii) the amount
on deposit in the Reserve Account is equal to or greater than the Certificate
Balance, Certificateholders' Principal Distributable Amount shall include an
amount equal to such Certificate Balance.
"CLOSING DATE" means _______, 199_.
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<PAGE>
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1.
"COLLECTION PERIOD" means a calendar month, except with respect
to the first Collection Period, which shall be the period from the Cutoff Date
to _________ __, 199_. Any amount stated "as of the close of business on the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day 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 Advances and
(5) all distributions to be made on the immediately following Distribution Date.
"COMPUTER TAPE" means the computer tapes furnished to the Trustee
describing certain characteristics of the Receivables as of the Cutoff Date.
"CONTRACT" means a motor vehicle retail installment sale
contract.
"CRAM DOWN LOSS" means, with respect to a Receivable if a court
of appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such Receivable or otherwise
modifying or restructuring the scheduled payments to be made on such Receivable,
an amount equal to (i) the excess of the principal balance of such Receivable
immediately prior to such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"CUMULATIVE NET LOSS RATIO" means, with respect to any
Distribution Date, a fraction, expressed as a percentage, the numerator of which
is an amount equal to the excess of (i) the cumulative amount of Realized Losses
and Cram Down Losses from the Cutoff Date through the last day of the related
Collection Period over (ii) the cumulative amount of Recoveries from the Cutoff
Date through the last day of the related Collection Period and the denominator
of which is the Initial Pool Balance.
"CUTOFF DATE" means __________ __, 199_.
"DEALER" means a motor vehicle dealer who sold a Financed Vehicle
and who originated and assigned the respective Receivable to an Originator under
an existing agreement between such Dealer and such Originator.
"DEALER AGREEMENT" means any agreement between a Dealer and an
Originator relating to the acquisition of Receivables from a Dealer by such
Originator.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection
Period, the ratio of (a) the outstanding principal balance of all outstanding
Receivables 60 days or more delinquent (which amount shall include Receivables
in respect of Financed Vehicles that have been repossessed but not yet sold or
otherwise liquidated) as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, divided by (b) the
outstanding principal balance of all Receivables on the last day of such
Collection Period.
"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 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 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 Trustee or its nominee or custodian of the
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<PAGE>
purchase by the 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
Trustee or its nominee or custodian 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 Barnett Auto Receivables Corp., as the
depositor of the Receivables, and each successor to Barnett Auto Receivables
Corp., (in the same capacity) to the extent permitted hereunder.
"DEPOSITORY AGREEMENTS" mean the Certificate Depository Agreement
and the Note Depository Agreement.
"DETERMINATION DATE" means, with respect to any Distribution
Date, the earlier of the eighth Business Day of the month in which a
Distribution Date occurs and the fourth Business Day preceding such Distribution
Date.
"DISTRIBUTION DATE" means, with respect to each Collection
Period, the fifteenth day of the following month, or if such day is not a
Business Day, the immediately following Business Day, commencing in _________.
"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 (other than the Depositor
or any affiliate of the Depositor) 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 a depository institution (other than
the Depositor or any affiliate of the Depositor) 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 (A) either a
long-term senior unsecured debt rating of AAA or a short-term senior unsecured
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debt or certificate of deposit rating of A-l+ or better by Standard & Poor's and
(B)(1) a long-term senior unsecured debt rating of Al or better and (2) a
short-term senior unsecured debt rating of P-l 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 Federal Deposit
Insurance Corporation. If so qualified, the Owner Trustee or the Trustee may be
considered an Eligible Institution.
"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 (including the Depositor or any Affiliate
of the Depositor) or trust company incorporated under the laws of the United
States of America or any state thereof or the District of Columbia (or any
domestic branch of a foreign bank) and subject to supervision and examination by
federal or state banking or depository institution authorities (including
depository receipts issued by any such institution or trust company as custodian
with respect to any obligation referred to in clause (a) above or portion of
such obligation for the benefit of the holders of such depository receipts);
PROVIDED, HOWEVER, that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial paper or other
short-term senior 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) of such depository institution or trust company
shall have a credit rating from Standard & Poor's of A-1+ and from Moody's of
P-1;
(c) commercial paper (including commercial paper of the
Depositor or any Affiliate of the Depositor) having, at the time of the
investment or contractual commitment to invest therein, a rating from Standard &
Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for
which the Depositor, the Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor) having a rating from Standard &
Poor's of AAA-m or AAAm-G and from Moody's of Aaa;
(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) referred to in clause (b) above; and
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(g) any other investment which would not cause either
Rating Agency to downgrade or withdraw its then current rating of the Notes or
the Certificates.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"FINAL SCHEDULED DISTRIBUTION DATE" means with respect to (i) the
Notes, the _____________ Distribution Date and (ii) the Certificates, the
______________ Distribution Date.
"FINAL SCHEDULED MATURITY DATE" means ________________.
"FINANCED VEHICLE" means a new or used automobile, (including
passenger car, minivan, sport/utility vehicle or light truck) together with all
accessions thereto, securing an Obligor's indebtedness under the respective
Receivable.
"GP INTEREST" means the 1% interest in the Trust held by the
Depositor pursuant to the Trust Agreement.
"INDENTURE" means the Indenture dated as of __________ __, 199_,
between the Issuer and the Trustee, as the same may be amended and supplemented
from time to time.
"INITIAL POOL BALANCE" means the Pool Balance as of the Cutoff
Date, which is $____________.
"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
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), 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: (a)
that portion of all collections on the Receivables allocable to interest in
respect of the preceding Collection Period using (x) in the case of a Simple
Interest Receivable, the Simple Interest Method and (y) in the case of an
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Actuarial Receivable, the actuarial method (including, with respect to Actuarial
Receivables, amounts withdrawn from the Payahead Account and allocable to
interest, and excluding amounts deposited into the Payahead Account and
allocable to interest, in each case in respect of the preceding Collection
Period); (b) Liquidation Proceeds attributable to interest on the Receivables
which became Liquidated Receivables during the preceding Collection Period in
accordance with the Servicer's customary servicing procedures; (c) all Advances
made by the Servicer of interest due on the Actuarial Receivables; (d) the
Purchase Amount of each Receivable repurchased by the Depositor or the Sponsor
or purchased by the Servicer as of the close of business on the last day of the
preceding Collection Period to the extent attributable to accrued interest on
such Receivable; (e) Recoveries for such Collection Period and (f) Investment
Earnings for such Distribution Date; PROVIDED, HOWEVER, that in calculating the
Interest Distribution Amount (i) all payments and proceeds (including
Liquidation Proceeds) of any Receivables repurchased by the Depositor or the
Sponsor or purchased by the Servicer the Purchaser Amount of which has been
included in the Interest Distribution Amount on a prior Distribution Date, and
(ii) distributed to the Servicer with respect to such Distribution Date, as
reimbursement for Outstanding Advances in accordance with Section 5.7 shall all
be excluded.
"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 (except the Payahead Account) and the
Certificate Distribution Account to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.1(b).
"ISSUER" means Barnett Auto Trust 199_-_.
"LIEN" means a security interest, lien, charge, pledge or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
which attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
"LIQUIDATED RECEIVABLES" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"LIQUIDATION DISTRIBUTION DATE" has the meaning specified in
Section 9.2.
"LIQUIDATION PROCEEDS" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source (other
than any proceeds from any Dealer commission) 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.
"LOAN SALE AGREEMENT" means the Loan Sale Agreement dated as of
__________ __, 199_ among BDFS and the Originators.
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"LOAN PURCHASE AGREEMENT" means the Loan Purchase Agreement dated
as of __________ __, 199_ among BDFS and the Depositor.
"MOODY'S" means Moody's Investors Service, Inc., or its
successor.
"NET LOSSES" means the sum of Realized Losses and Cram Down
Losses minus Recoveries for any Collection Period.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1.
"NOTE POOL FACTOR" for the Notes as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the outstanding
principal balance of Notes divided by the original outstanding principal balance
of the Notes. The Note Pool Factor for the Notes will be 1.0000000 as of the
Cutoff Date; thereafter, the Note Pool Factor for the Notes will decline to
reflect reductions in the outstanding principal balance of the 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.
"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 Interest Rate from such preceding
Distribution Date through the current Distribution Date.
"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. Interest shall be computed on
the basis of a 360 day year of twelve 30-day months.
"NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the product of (i) one-twelfth of the Interest
Rate (or, in the case of the first Distribution Date, the Interest Rate
multiplied by a fraction, the numerator of which is the number of days elapsed
from and including the Closing Date to but excluding such Distribution Date and
the denominator of which is 360) and (ii) the outstanding principal balance of
the Notes on the immediately preceding Distribution Date, after giving effect to
all distributions of principal to Noteholders on 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 Noteholders' Percentage of the Principal
Distribution Amount.
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"NOTEHOLDERS' PERCENTAGE" means 100% until the point in time at
which the Notes have been paid in full and zero thereafter.
"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.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the sum of the Noteholder's 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, on the
Final Scheduled Distribution Date of the Notes, 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 such Notes to zero.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of
the Financed Vehicle and any other Person who owes payments under the
Receivable.
"OFFICERS' CERTIFICATE" means a certificate signed by (a) the
president, any senior vice president or any vice president and (b) a secretary
or assistant secretary of the Depositor, the Sponsor or the Servicer, as
appropriate, provided that no one person may sign in a capacity fulfilling both
clause (a) and clause (b).
"ORIGINATORS" means the subsidiaries of Barnett Bank, N.A. which
sold Receivables to BDFS pursuant to the Loan Sale Agreement.
"OUTSTANDING ADVANCES" on the Actuarial Receivables means the
sum, as of the close of business on the last day of a Collection Period, of all
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Advances as reduced as provided in Section 5.7(a).
"OWNER TRUST ESTATE" has the meaning assigned to such term in the
Trust Agreement.
"OWNER TRUSTEE" means ____________, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"PAYAHEAD" on an Actuarial Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 5.3 with respect to such Receivable.
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"PAYAHEAD ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1.
"PAYAHEAD BALANCE" on an Actuarial 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 Actuarial
Receivable, as reduced by applications of previous Payaheads with respect to
such Actuarial Receivable, pursuant to Sections 5.3 and 5.7.
"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.
"PHYSICAL PROPERTY" has the meaning assig ned to such term in the
definition of "Delivery" above.
"POOL BALANCE" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"PRINCIPAL BALANCE" of a Receivable, as of the close of business
on the last day of a Collection Period, means the Amount Financed minus the sum
of (i)(a) with respect to a Simple Interest Receivable, that 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 (b) in the case of
an Actuarial Receivable, that portion of all Scheduled Payments due on or prior
to such day allocable to principal using the actuarial method, (ii) any refunded
portion of extended warranty protection plan costs or of physical damage, theft,
credit life, credit accident or health insurance premiums included in the Amount
Financed, (iii) any payment of the Purchase Amount with respect to the
Receivable allocable to principal, (iv) any prepayment in full or any partial
prepayments applied to reduce the Principal Balance of the Receivable and (v)
Cram Down Losses in respect of such Receivable.
"PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of (i) (a) with respect to Simple Interest
Receivables, that portion of all collections on the Receivable allocable to
principal in respect of the preceding Collection Period and (b) with respect to
Actuarial Receivables, the sum of (x) the amount of all Scheduled Payments
allocable to principal due during the preceding Collection Period and (y) the
portion of all prepayments in full allocable to principal received during the
preceding Collection Period, in the case of both (a) and (b), without regard to
any extensions or modifications thereof effected after the Cutoff Date, other
than with respect to any extensions or modifications required in connection with
Cram Down Losses during such Collection Period; (ii) the principal balance of
each Receivable that was repurchased by the Depositor or the Sponsor, or
purchased by the Servicer, in each case, as of the close of business on the last
day of the preceding Collection Period (except to the extent included in (i)
above; (iii) the principal balance of each Liquidated Receivable which became
such during the preceding Collection Period (except to the extent included in
(i) above); (iv) partial prepayments on Receivables in respect of the preceding
Collection Period relating to refunds of extended service contracts, or of
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physical damage, credit life, credit accident or heath insurance premium,
disability insurance policy premiums, but only if such costs or premiums were
financed by the respective Obligor and only to the extent not included in clause
(i) above; and (v) the aggregate amount of Cram Down Losses during such
Collection Period.
"PURCHASE AMOUNT" means the amount, as of the close of business
on the last day of a Collection Period, required to prepay in full the
respective Receivable under the terms thereof including interest at the APR to
the end of the month of purchase (without giving effect to Outstanding
Advances).
"PURCHASED RECEIVABLE" means a Receivable purchased as of the
close of business on the last day of a Collection Period by (i) the Servicer
pursuant to Section 4.7 or (ii) repurchased by the Depositor or the Sponsor
pursuant to Section 3.2.
"RATING AGENCY" means Moody's and/or Standard & Poor's. If no
such organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Depositor, notice of which designation shall be given
to the Trustee, the Owner Trustee and the Servicer.
"RATING AGENCY CONDITION" means, with respect to any action, that
each Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified the Depositor, the Servicer, the
Owner Trustee or the Trustee in writing that such action will, in and of itself,
result in a reduction or withdrawal of the then current rating of the Notes, or
the Certificates.
"REALIZED LOSSES" means the excess of the Principal Balance of
any Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal.
"RECEIVABLE" means any Contract listed on Schedule A (which
Schedule may be in the form of microfiche) but excluding Liquidated Receivables
and Purchased Receivables.
"RECEIVABLE FILES" means the documents specified in Section 3.3.
"RECOVERIES" means, with respect to any Liquidated Receivable,
monies collected in respect thereof, from whatever source (other than any
proceeds from any Dealer commission), 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.
"RELATED FINANCED VEHICLE" means a Financed Vehicle securing the
Obligor's indebtedness under a Related Receivable.
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"RELATED ORIGINATOR" means, with respect to any Receivable, the
Originator who originated such Receivable and who sold such Receivable to BDFS
pursuant to the Loan Sale Agreement.
"RELATED RECEIVABLE" means, with respect to any Originator, a
Receivable originated by such Originator who sold such Receivable to BDFS
pursuant to the Loan Sale Agreement.
"RESERVE ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1.
"RESERVE ACCOUNT INITIAL DEPOSIT" means an amount equal to
$_________.
"RESERVE ACCOUNT TRANSFER AMOUNT" means an amount equal to the
lesser of (i) the amount of cash or other immediately available funds on deposit
in the Reserve Account on such Distribution Date (before giving effect to any
withdrawals therefrom relating to such Distribution Date) or (ii) the amount, if
any, by which (x) the sum of the Total Servicing Fee, the Noteholders' Interest
Distributable Amount, the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the Certificateholders'
Principal Distributable Amount for such Distribution Date exceeds (y) the sum of
the Interest Distribution Amount and the Available Principal for such
Distribution Date.
"SCHEDULED PAYMENT" on an Actuarial 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 Actuarial Receivable (except, in the case
a Balloon Loan, to the extent necessary to amortize the Principal Balance to the
amount of the Balloon Payment over the life of the Actuarial Receivable) and to
provide interest at the APR.
"SECURITIES" means the Notes and the Certificates.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICER" means BDFS, the servicer of the Receivables, and each
successor to BDFS, (in the same capacity) pursuant to Section 7.3 or 8.2.
"SERVICER DEFAULT" means an event specified in Section 8.1.
"SERVICER'S CERTIFICATE" means an Officers' Certificate of the
Servicer delivered pursuant to Section 4.9, substantially in the form of Exhibit
B.
"SERVICING FEE" has the meaning specified in Section 4.8.
"SERVICING FEE RATE" means 1.00% per annum.
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"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 principal and the portion of a payment
allocable to interest is determined in accordance with the Simple Interest
Method.
"SPECIFIED RESERVE ACCOUNT BALANCE" means, with respect to any
Distribution Date the greater of (a) ____% of the sum of the aggregate
outstanding principal amount of Notes plus the outstanding Certificate Balance
on such Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such Distribution
Date), except that, if on any Distribution Date (x) the Cumulative Net Loss
Ratio exceeds the Trigger Percentage for such Distribution Date or (y) the
average of the Delinquency Percentages for the three preceding Collection
Periods exceeds ____%, then the Specified Reserve Account Balance shall be an
amount equal to ____% of the sum of the aggregate outstanding principal amount
of the Notes and the aggregate outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such Distribution
Date); or (b) ___% of the sum of the aggregate initial principal balance of the
Notes plus the initial Certificate Balance.
"SPONSOR" means BDFS, as the sponsor of the Issuer.
"STANDARD & POOR'S" means Standard & Poor's Ratings Group, or its
successor.
"TOTAL DISTRIBUTION AMOUNT" means, for each Distribution Date,
the sum of (i) the Interest Distribution Amount, (ii) the Available Principal
and (iii) the Reserve Account Transfer Amount, in each case in respect of such
Distribution Date.
"TOTAL SERVICING FEE" means with respect to each Distribution
Date the Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods.
"TRANSFER DATE" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"TRIGGER PERCENTAGE" means (i) in the case of any Distribution
Date prior to ___ Distribution Date, ___%, (ii) in the case of any Distribution
Date on and after the ___ Distribution Date but prior to the ___ Distribution
Date, ___%, (iii) in the case of any Distribution Date on and after the ___
Distribution Date but prior to the ___ Distribution Date, ___%, (iv) in the case
of any Distribution Date on and after the ___ Distribution Date but prior to the
___ Distribution Date, ___% and (v) in the case of any Distribution Date on and
after the ___ Distribution Date, ___%.
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"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 5.1.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement
dated as of __________ __, 199_, between the Depositor and the Owner Trustee, as
the same may be amended and supplemented from time to time.
"TRUST OFFICER" means, (i) in the case of the Trustee, any
Officer within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Assistant Treasurer, Assistant Secretary or
any other officer of the Trustee customarily performing functions similar to
those performed by 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 (ii) in the case of the Owner Trustee, any officer in the corporate
trust office of the Owner Trustee with direct responsibility for the
administration of this Agreement or any of the Basic Documents on behalf of the
Owner Trustee.
"TRUST PROPERTY" has the meaning assigned thereto in Section 2.1.
"TRUSTEE" means the Person acting as Trustee under the Indenture,
its successors in interest and any successor trustee under the Indenture.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Indenture, or, if not defined therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed hereby
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
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, 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 instrument, certificate
or other document shall control.
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(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, Schedule
and Exhibit references contained in this Agreement are references to 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.
ARTICLE II.
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Receivables. In consideration of the Issuer's
delivery to or upon the order of the Depositor on the Closing Date of the net
proceeds from the sale of the Notes and the Certificates and the other amounts
to be distributed from time to time to the Depositor in accordance with the
terms of this Agreement, the Depositor does hereby sell, transfer, assign, set
over and otherwise convey to the Issuer, without recourse (subject to
the obligations herein):
(a) all right, title and interest of the Depositor in and to the
Receivables, and all moneys received thereon (other than any proceeds from any
Dealer commission), on or after the Cutoff Date and, with respect to Receivables
which are Actuarial Receivables, all monies received thereon prior to the Cutoff
Date that are due on or after the Cutoff Date;
(b) all right, title and interest of the Depositor in the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Depositor in the Financed Vehicles;
(c) all right, title and interest of the Depositor in and to any
proceeds from claims on any physical damage, repossession, loss, skip, credit
life and credit accident, vendor's single interest and health insurance policies
or certificates relating to the Financed Vehicles or the Obligors;
(d) all right, title and interest of the Depositor in and to
refunds for the costs of extended service contracts with respect to Financed
Vehicles, refunds of unearned premiums with respect to credit life and credit
accident and health insurance policies or certificates covering an Obligor or
Financed Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(e) the interest of the Depositor in any proceeds from any
Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as a result
of a breach of representation or warranty in the related Dealer Agreement or a
default by an Obligor resulting in the repossession of the Financed Vehicle
under such Dealer Agreement;
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(f) all right, title and interest in all funds on deposit from
time to time in the Certificate Distribution Account, in the Trust Accounts,
including the Reserve Account Initial Deposit, and in all investments and
proceeds thereof (including all income thereon);
(g) all right, title and interest of the Depositor under the
Loan Purchase Agreement; and
(h) the proceeds of any and all of the foregoing (the items
specified in clauses (a) through (h) is referred to herein as the "Trust
Property").
It is the intention of the Depositor that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables and other Trust Property from the Depositor to the Trust and the
beneficial interest in and title to the Receivables and such other Trust
Property shall not be part of the Depositor's estate in the event of the filing
of a bankruptcy petition by or against the Depositor under any bankruptcy law.
In the event that, notwithstanding the intent of the Depositor, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the Trust Property for the benefit
of the Securityholders.
ARTICLE III.
THE RECEIVABLES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR AND
SPONSOR. The Sponsor and the Depositor, jointly and severally, make 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 the
Agreement, but shall survive the sale, transfer and assignment of the
Receivables to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) TITLE. It is the intention of the Depositor that the transfer
and assignment contemplated by the Loan Sale Agreement constitute a sale of the
Related Receivables from the Originators to BDFS pursuant to the Loan Sale
Agreement and that the beneficial interest in and title to such Related
Receivables not be part of the debtor's estate in the event of the filing of a
petition for bankruptcy or insolvency by or against such Originator. No Related
Receivable has been sold, transferred, assigned or pledged by such Originator to
any Person other than BDFS pursuant to the Loan Sale Agreement. Immediately
prior to the transfer and assignment contemplated by the Loan Sale Agreement,
such Originator had good and marketable title to each Related Receivable
conveyed by it to BDFS, free and clear of all Liens and, immediately upon the
transfer thereof, BDFS shall have good and marketable title to each such Related
Receivable, free and clear of all Liens; and the transfer of the Related
Receivables to BDFS has been perfected under the UCC. It is the intention of the
Depositor that the transfer and assignment contemplated by the Loan Purchase
Agreement constitute a sale of the Receivables from the BDFS to the Depositor
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pursuant to the Loan Purchase Agreement and that the beneficial interest in and
title to such Receivables not be part of the debtor's estate in the event of the
filing of a petition for bankruptcy or insolvency by or against BDFS. No
Receivable has been sold, transferred, assigned or pledged by such Originator to
any Person other than the Depositor pursuant to the Loan Purchase Agreement.
Immediately prior to the transfer and assignment contemplated by the Loan
Purchase Agreement, BDFS had good and marketable title to each Receivable
conveyed by it to the Depositor, free and clear of all Liens and, immediately
upon the transfer thereof, the Depositor shall have good and marketable title to
each Receivable, free and clear of all Liens; and the transfer of the
Receivables to the Depositor has been perfected under the UCC. 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 such Receivables not be part of the
debtor's estate in the event of the filing of a petition for receivership by or
against the Depositor. 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,
immediately upon the transfer thereof, the Issuer shall have good and marketable
title to each such Receivable, free and clear of all Liens; and the transfer of
the Receivables to the Issuer has been perfected under the UCC.
(b) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction to give the Depositor a first priority perfected
security interest in the Receivables, to give the Issuer a first priority
perfected ownership interest in the Receivables, and to give the Trustee a first
priority perfected security interest therein, shall have been presented to the
Trustee for filing in the appropriate filing offices. Upon such filing, the
Trustee will have a first priority perfected security interest in the Trust
Property.
(c) CHARACTERISTICS OF RECEIVABLES. Each Receivable (A) has been
either originated by a Dealer in the regular course of such Dealer's business
and purchased from such Dealer by an Originator in the ordinary course of the
Originator's business or otherwise originated by the Originator in the ordinary
course of the Originator's business, and each Obligor was approved in accordance
with the Related Originator's standard underwriting procedures in effect at the
time such Receivable was originated or purchased, (B) was conveyed by the
Related Originator to the Depositor, (C) has created or shall create a valid,
subsisting and enforceable first priority security interest in favor of the
Related Originator in the Related Financed Vehicle, which security interest has
been assigned by the Related Originator to the Depositor, which is assignable by
the Depositor to the Issuer and by the Issuer to the Trustee, (D) contains
customary and enforceable provisions under the laws of the State governing such
Receivable such that the rights and remedies of the holder thereof are adequate
for realization against the collateral of the benefits of the security; and (E)
provides for level monthly payments that fully amortizes the Amount Financed by
maturity (except for the last payment, which may be different from the level
payment and except, with respect to a Balloon Loan, to the extent of the Balloon
Payment).
(d) SCHEDULE OF RECEIVABLES. The information set forth in
Schedule A to this Agreement is true and correct in all material respects as of
the opening of business on the Cutoff Date and no selection procedures believed
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by the Depositor to be adverse to the Noteholders or the Certificateholders were
utilized in selecting the Receivables. The Computer Tape regarding the
Receivables is true and correct in all material respects as of the Cutoff Date.
(e) COMPLIANCE WITH LAW. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage and credit life and credit
accident and health insurance and any extended service contracts complied in all
material respects at the time it was originated or made and at the Closing Date
(after giving effect to the transactions contemplated by the Basic Documents)
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
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 Soldier's and Sailor's Civil Relief Act of 1940, state
adaptations of the National Consumer Act and the Uniform Consumer Credit Code,
and other consumer credit laws and equal credit opportunity and disclosure laws.
(f) BINDING OBLIGATION. Each Receivable represents the legal,
valid and binding payment obligation in writing of the Obligor thereunder,
enforceable by the holder thereof in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws now or hereafter in
effect related to or affecting creditors' rights generally and subject to
general principles of equity (whether applied in a proceeding at law or in
equity) and all parties to such Receivable had full legal capacity to execute
and deliver such Receivable and all other documents related thereto and to grant
the security interest purported to be granted thereby.
(g) NO GOVERNMENT OBLIGOR. None of the Receivables is due from
the United States of America or any state or from any agency, department or
instrumentality of the United States of America or any state.
(h) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to
the sale, assignment, and transfer thereof under the Agreement, (i) each
Receivable shall be secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Related Originator as secured
party or (ii) application has been made with the appropriate governmental
authority for a valid perfected first priority security interest in the Financed
Vehicle in favor of the Related Originator, and such security interest is or
shall be prior to all other Liens upon and security interests in such Financed
Vehicle which now exist or may hereafter arise or be created (except, as to
priority, for any tax liens or mechanics' liens which may arise after the
Closing Date).
(i) RECEIVABLES IN FORCE. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from the
Lien granted by the related Receivable in whole or in part unless another
vehicle has been substituted as collateral securing the Receivable without any
other modification to such Receivable.
(j) NO WAIVER. No provision of a Receivable has been modified
or waived except as reflected in the Receivable File relating to such
Receivable.
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(k) NO AMENDMENTS. No Receivable has been amended, except as
permitted pursuant to Section 4.2.
(l) NO DEFENSES. No right of rescission, setoff, counterclaim or
defense has been asserted or threatened with respect to any Receivable. The
operation of the terms of any Receivable or the exercise of any right thereunder
will not render such Receivable unenforceable in whole or in part or subject to
any such right of rescission, setoff, counterclaim, or defense.
(m) NO LIENS. As of the Cutoff Date, there are no Liens or
claims, including Liens for work, labor, materials or unpaid state or federal
taxes relating to any Financed Vehicle securing the related Receivable, that are
or may be prior to or equal to the Lien granted by such Receivable.
(n) NO DEFAULT. Except for payment delinquencies continuing for
a period of not more than thirty days as of the Cutoff Date and, except as
permitted in this paragraph, no default, breach, violation or event (in any such
case) permitting acceleration under the terms of any Receivable has occurred;
and no continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has arisen; and the Depositor has
not waived and shall not waive any of the foregoing.
(o) MATURITY OF RECEIVABLES. Each Receivable has an original
maturity of not more than ___ months; the weighted average original maturity of
the Receivables is ___ months as of the Cutoff Date; the remaining term of each
Receivable is ___ months or less as of the Cutoff Date; the weighted average
remaining term of the Receivables is ___ months as of the Cutoff Date; and the
latest scheduled maturity of any Receivable shall be no later than the Final
Scheduled Maturity Date.
(p) NO BANKRUPTCIES. No Obligor on any Receivable was noted in
the related Receivable File as having filed for bankruptcy in a proceeding which
remained undischarged as of the Cutoff Date.
(q) NO REPOSSESSIONS. As of the Cutoff Date, no Financed Vehicle
securing any Receivable is in repossession status.
(r) CHATTEL PAPER. Each Receivable constitutes "chattel paper"
as defined in the UCC.
(s) APR. The weighted average Annual Percentage Rate of the
Receivables as of the Cutoff Date is approximately ___%.
(t) PRINCIPAL BALANCE. Each Receivable has an outstanding
principal balance as of the Cutoff Date of not less than ___ or more than $____.
The average principal balance of the Receivables as of the Cutoff Date is $___.
The aggregate principal balance of the Receivables as of the Cutoff Date is
$___.
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(u) FINANCING. Approximately ___% of the aggregate principal
balance of the Receivables, constituting approximately ___% of the number of
Receivables, as of the Cutoff Date, represents financing of new vehicles; the
remainder of the Receivables represents financing of used vehicles.
Approximately ___% of the aggregate principal balance of the Receivables,
constituting approximately ___% of the number of Receivables, as of the Cutoff
Date, represents financing of Balloon Loans. Approximately ___% of the aggregate
Principal Balance of the Receivables, constituting approximately ___% of the
number of Receivables, as of the Cutoff Date, represents financing of Simple
Interest Receivables; the remainder of the Receivables represents financing of
Actuarial Receivables.
(v) PAID-AHEAD. Approximately ___% of the aggregate Principal
Balance of the Receivables, constituting approximately ___% of the number of
Receivables are paid-ahead for a period of one to six months. No Receivable is
paid-ahead more than eight months.
(w) INSURANCE; OTHER. The Servicer, in accordance with its
customary procedures, has confirmed (A) that each Obligor has obtained insurance
covering the Financed Vehicle as of the date of execution of the Related
Receivable insuring against loss and damage due to fire, theft, collision and
other risks generally covered by comprehensive and collision coverage and that
each Receivable requires the Obligor to maintain such insurance naming the
applicable Originator and its successors and assigns as a loss payee, (B) each
Receivable that finances the cost of premiums for credit life and credit
accident and health insurance is covered by an insurance policy or certificate
of insurance naming the applicable Originator as loss payee (lienholder) under
each such insurance policy and certificate of insurance and (C) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.
(x) LAWFUL ASSIGNMENT. No Receivable has been originated in, or
as of the Closing Date is subject to the laws of, any jurisdiction under which
the sale, transfer and assignment of such Receivable or this Agreement or the
pledge of such Receivable to the Trustee under the Indenture (i) is unlawful,
void, voidable or unenforceable in accordance with its terms or (ii) would
render such Receivable void, voidable or unenforceable in accordance with its
terms. None of any Originator or the Depositor has entered into any agreement
with any account debtor that prohibits, restricts or conditions the assignment
of all or any portion of the Receivable.
(y) NO INSURANCE PREMIUMS. As of the Cutoff Date, no portion of
the principal balance of any Receivable included amounts attributable to the
payment of any physical damage or theft insurance premium.
(z) ONE ORIGINAL. There is only one manually executed original
copy of each Receivable.
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(aa) ORIGINATION OF RECEIVABLES. Based on the billing address of
the Obligors and the principal balance of Receivables as of the Cutoff Date,
approximately ___% of the Receivables were originated in ___, approximately ___%
of the Receivables were originated in ___ and approximately ___% of the
Receivables were originated in ___, each Obligor has been approved by the
Originator based on the Originator's standard underwriting procedures as in
effect at the time the related Receivable was entered into. Based on the billing
address of the Obligors and the principal balance of the Receivables as of the
Cutoff Date, not more than 10% of the Receivables were originated in any one
state other than ___, ___ and ___.
(bb) RECEIVABLE FILES. The Receivable Files are kept at the
Depositor's office listed in Schedule B and are segregated from any other
Receivable Files. The Receivable Files have been marked to indicate the
Depositor's ownership interest therein.
(cc) COMPUTER RECORDS. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Depositor and each
Originator have been marked to show the absolute ownership by the Owner Trustee
on behalf of the Trust of the Receivables.
SECTION 3.2. REPURCHASE UPON BREACH. The Sponsor, the Depositor,
the Servicer or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement and the Trustee promptly, in writing, upon its
discovery of any breach of the Depositor's and the Sponsor's representations and
warranties made pursuant to Section 3.1. Unless any such breach shall have been
cured by the last day of the first Collection Period following the discovery
thereof by the Owner Trustee or receipt by the Owner Trustee of written notice
from the Sponsor, the Depositor or the Servicer of such breach, the Sponsor and
the Depositor shall be jointly and severally obligated to repurchase any
Receivable in which the interests of the Noteholders or Certificateholders are
materially and adversely affected by any such breach as of the last day of such
Collection Period. In consideration of and simultaneously with the repurchase of
the Receivable, the Sponsor and/or the Depositor shall remit to the Collection
Account the Purchase Amount in the manner specified in Section 5.4 and the
Issuer shall execute such assignments and other documents reasonably requested
by the Sponsor and/or the Depositor in order to effect such repurchase. The sole
remedy of the Issuer, the Owner Trustee, the Trustee, the Noteholders or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 3.1 and the agreement contained in this Section shall be to
require the Sponsor and/or the Depositor to repurchase Receivables pursuant to
this Section, subject to the conditions contained herein. Neither the Owner
Trustee nor the Trustee shall have a duty to conduct any affirmative
investigation as to the occurrence of any conditions requiring the repurchase of
any Receivable pursuant to this Section.
SECTION 3.3. CUSTODY OF RECEIVABLE FILES. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Issuer and the Trustee hereby revocably appoints the Servicer, and the Servicer
hereby accepts such appointment, to act as the agent of the Issuer and the
Trustee as custodian of the following documents or instruments which are hereby
constructively delivered to the Trustee, as pledgee of the Issuer with respect
to each Receivable:
(a) the original of the Receivable;
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(b) a record of the information supplied by the Obligor in the
original credit application;
(c) the original certificate of title or such documents that the
Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the Depositor in the Financed Vehicle (it
being understood that the original certificates of title generally are not
delivered to the Servicer for 90 days but that promptly upon delivery they shall
be delivered to the Servicer as custodian hereunder); and
(d) any and all other documents that the Servicer shall keep on
file, in accordance with its customary procedures, relating to a Receivable, an
Obligor or a Financed Vehicle.
SECTION 3.4. DUTIES OF SERVICER AS CUSTODIAN. (a) SAFEKEEPING.
The Servicer shall hold the Receivable Files on behalf of the Issuer and the
Trustee 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 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 Trustee to verify the accuracy of the Servicer's record keeping.
The Servicer shall promptly report to the Issuer and the Trustee any failure on
its part to hold the Receivable Files and maintain its accounts, records and
computer systems as herein provided and promptly take appropriate action to
remedy any such failure.
(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 Issuer and
the Trustee by written notice not later than 90 days after any change in
location. Upon reasonable prior notice, the Servicer shall make available to the
Issuer and the Trustee or their respective duly authorized representatives,
attorneys or auditors a list of locations of the Receivable Files and records
and computer systems maintained by the Servicer at such times during normal
business hours as the Issuer or the Trustee shall instruct.
(c) RELEASE OF DOCUMENTS. Upon written 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 and upon the release
and delivery of any such document in accordance with the instructions of the
Trustee, the Servicer shall be released from any further liability and
responsibilities under this Section 3.4 with respect to such documents unless
and until such time as such document may be returned to the Servicer.
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SECTION 3.5. 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
Trustee.
SECTION 3.6. CUSTODIAN'S INDEMNIFICATION. The Servicer as
custodian shall indemnify and hold harmless the Trust, the Owner Trustee and the
Trustee and each of their officers, directors, employees and agents for any and
all liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including reasonable attorneys' fees and expenses) that may be imposed
on, incurred by or asserted against the Trust, the Owner Trustee or the Trustee
or any of their 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 where the final determination
that any such improper act or omission by the Servicer resulted in such
liability, obligation, loss, damage, payment, cost or expense is established by
a court of law, by an arbitrator or by way of settlement agreed to by the
Servicer; PROVIDED, HOWEVER, that the Servicer shall not be liable to the Trust
or 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 Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Trustee.
This provision shall not be considered to limit the Servicer's or any other
party's rights, obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this Agreement.
SECTION 3.7. 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
BDFS 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 8.1, the appointment of such Servicer as custodian
shall be terminated by the 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 Trustee or such
Holders may terminate the rights and obligations of the Servicer under Section
8.1. The Trustee or, with the consent of the 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 and the Rating Agencies. 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 in writing. If the Servicer
shall be terminated as custodian hereunder for any reason but shall continue to
serve as Servicer, the Trustee shall, or shall cause its agent to, make the
Receivable Files available to the Servicer during normal business hours upon
reasonable notice so as to permit the Servicer to perform its obligations as
Servicer hereunder.
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ARTICLE IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. DUTIES OF SERVICER. The Servicer, as agent for 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 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 or periodic statements or
invoices to Obligors, reporting any tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Owner Trustee
and the Trustee with respect to distributions and making Advances pursuant to
Section 5.7. Subject to the provisions of Section 4.2, 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 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 Vehicles
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
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 (as certified
to the Owner Trustee by the Servicer) to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 4.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS.
(a) 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 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 receivables that it services for itself or others.
(b) The Servicer may not grant extensions or modify the original
due dates of a Receivable; PROVIDED, HOWEVER, that the Servicer may (i) grant
one extension with respect to a Receivable of one month in any rolling twelve
month period and may change the original due date once during the term of a
Receivable to a new due date within 20 days of the original scheduled due date
of such Receivable and (ii) grant extensions or modify the original due dates of
a Receivable with respect to a Receivable for which a court of appropriate
jurisdiction in a bankruptcy or insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments or other terms on such Receivable;
provided, however, that the Servicer may not extend the date for final payment
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by the Obligor of any Receivable beyond the last day of the Collection Period
preceding the Certificate Final Scheduled Distribution Date. The Servicer may in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. The Servicer shall
not voluntarily agree to any reduction of (i) the original interest rate, (ii)
the amount of any Scheduled Payment on a Precomputed Receivable or the original
regular scheduled payment on a Simple Interest Receivable, or (iii) the
Principal Balance of any Receivable.
SECTION 4.3. REALIZATION UPON RECEIVABLES. On behalf of the
Issuer, the Servicer shall use all reasonable efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert the ownership
of the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any Receivable, the Owner Trustee
shall, upon written request of the Servicer, execute such documents as shall be
necessary to prosecute any such proceedings. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize proceeds from Receivables repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of representation or
warranty in the related Dealer Agreement or a default by an Obligor resulting in
the repossession of the Financed Vehicle under such Dealer Agreement. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its reasonable discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses.
SECTION 4.4. PHYSICAL DAMAGE INSURANCE; OTHER INSURANCE. (a) The
Servicer shall, in accordance with its customary servicing procedures, verify
(i) that each Obligor shall have obtained insurance covering the Financed
Vehicle, as of the date of the execution of the Receivable, insuring against
loss and damage due to fire, theft, collision and other risks generally covered
by comprehensive and collision coverage and that each Receivable requires the
Obligor to maintain such physical loss and damage insurance naming the Related
Originator and its successors and assigns as a loss payee, (ii) that each
Receivable that finances the cost of premiums for credit life and credit
accident and health insurance is covered by an insurance policy or certificate
naming the Originator as policyholder (creditor) and (iii) as to each Receivable
that finances the cost of an extended service contract, the respective Financed
Vehicle which secures the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any of the insurance policies
referred to in Section 4.4(a) which, but for the actions of the Servicer, would
have been covered thereunder. The Servicer, on behalf of the Trustee shall take
such reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies, shall be deposited in the Collection Account
pursuant to Section 5.2. The parties hereto acknowledge that the Servicer shall
not be required to force place any insurance coverage referred to in Section
4.4(a)(i) above, or any other insurance coverage.
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SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED
VEHICLES. The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of (i) the
security interest created by each Receivable in the related Financed Vehicle and
(ii) the interest of the Trust in the Receivables created by this Agreement,
including but not limited to obtaining the execution by the Obligors and the
recording, registering, filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by
Obligors under the respective Receivables, the Originators under the Loan Sale
Agreement, BDFS under the Loan Purchase Agreement, the Depositor hereunder and
the Issuer under the Indenture. 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 Trustee in the event of the relocation of a Financed Vehicle or
for any other reason.
SECTION 4.6. COVENANTS OF SERVICER. The Servicer shall not
release the Financed Vehicle securing any Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession or except as may be required by
an insurer in order to receive proceeds from insurance covering such Financed
Vehicle, nor shall the Servicer impair the rights of the Issuer, the Trustee,
the Certificateholders or the Noteholders in such Receivables (it being
understood that no action of the Servicer taken in compliance with the terms of
this Agreement shall be deemed to impair such rights), nor shall the Servicer
increase the number of scheduled payments due under a Receivable.
Notwithstanding the foregoing, the Servicer may grant extensions or modify the
original due dates of a Receivable or make such other changes with respect to a
Receivable for which a court of appropriate jurisdiction in a bankruptcy or
insolvency proceeding shall have issued an order reducing the amount owed on
such Receivable or otherwise modifying or restructuring the scheduled payments
on such Receivable; provided, however, that the Servicer may not extend the date
for final payment by the Obligor of any Receivable beyond the last day of the
Collection Period preceding the Certificate Final Scheduled Distribution Date.
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or
the Owner Trustee shall inform the other party and the Trustee and the Depositor
promptly, in writing, upon the discovery of any breach pursuant to Section
4.2(b), 4.5 or 4.6. Unless the breach shall have been cured by the last day of
the second Collection Period following such discovery thereof by the Owner
Trustee or the receipt by the Owner Trustee of notice of such breach, the
Servicer shall be obligated to purchase any Receivable in which the interests of
the Noteholders or the Certificateholders are materially and adversely affected
by such breach as of the last day of such second Collection Period (or, at the
Servicer's option, the last day of the first Collection Period following the
discovery). In consideration of the purchase of any such Receivable pursuant to
the preceding sentence, the Servicer shall remit the Purchase Amount in the
manner specified in Section 5.4. The sole remedy of the Issuer, the Owner
Trustee, the Trustee, the Certificateholders or the Noteholders with respect to
a breach of Section 4.2(b), 4.5 or 4.6 shall be to require the Servicer to
purchase Receivables pursuant to this Section. Neither the Trustee nor the Owner
Trustee shall have any duty to conduct any affirmative investigation as to the
occurrence of any condition requiring the purchase of any Receivable pursuant to
this Section.
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SECTION 4.8. SERVICING FEE. The servicing fee for (a) the
___Distribution Date shall equal $___ and (b) for each Distribution Date
thereafter shall equal the product of (i) one-twelfth, (ii) the Servicing Fee
Rate and (iii) the Pool Balance as of the first day of the related Collection
Period (the "Servicing Fee"). In addition, the "Servicing Fee" described in (a)
and (b) above shall include late fees, prepayment charges and other similar
charges allowed by applicable law with respect to Receivables collected (from
whatever source) on the Receivables.
SECTION 4.9. SERVICER'S CERTIFICATE. Not later than 11:00 a.m.
(New York time) on each Determination Date, the Servicer shall deliver to the
Owner Trustee, the Trustee and the Depositor, with a copy to the Rating
Agencies, a Servicer's Certificate containing all information necessary to make
the distributions pursuant to Sections 5.5 and 5.6 (including, if required,
withdrawals from or deposits to the Payahead Account and Advances by the
Servicer pursuant to Section 5.7) for the Collection Period preceding the date
of such Servicer's Certificate. Receivables to be purchased by the Servicer or
to be repurchased by the Depositor or the Sponsor 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 Trustee, on
or before April 30 of each year beginning April 30, 199_, an Officers'
Certificate, dated as of December 31 of the preceding year, stating that (i) a
review of the activities of the Servicer during the preceding 12-month period
(or, in the case of the first such report, during the period from the Closing
Date to December 31, 199_) 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, in the case of the first such
certificate, such longer period) 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 Owner
Trustee addressed to the Corporate Trust Office (as defined in the Trust
Agreement) or by any Noteholder by a request in writing to the Trustee addressed
to the Corporate Trust Office. Upon the telephone request of the Owner Trustee,
the 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 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 8.1(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 or the
Depositor, to deliver to the Depositor, the Owner Trustee and the Trustee on or
before April 30 of each year as of December 31 of the preceding fiscal year,
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beginning April 30, 199_, (1) 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 and therefor and that such examination was
made in accordance with generally accepted auditing standards (except as
otherwise noted therein), and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary in
the circumstances; and (2) a report on description of lease and loan servicing
operations and tests of operating effectiveness in form and substance as is
currently prepared on an annual basis with respect to Servicer. The Servicer
shall also concurrently cause the accountants to deliver a report addressed to
the Servicer, the Trustee and the Owner Trustee to the effect that (1) a review
in accordance with agreed upon procedures was made of three randomly selected
Servicer Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer Certificates were found; and (3) the delinquencies and
loss information, relating to the Receivables contained in the Servicer
Certificates were found to be accurate.
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 the Noteholders shall be required by applicable statutes
or regulations to review such documentation as demonstrated by evidence
satisfactory to the Servicer in its reasonable judgment. Access shall be
afforded without charge, but only upon reasonable request (not less than
seventy-two hours) and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section shall affect the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
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; PROVIDED FURTHER that the Servicer
shall remain obligated and be liable to the Issuer, the Owner Trustee, the
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 Trustee, the Certificateholders or the Noteholders shall have
any responsibility therefor.
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ARTICLE V.
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. 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 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. The Collection Account shall initially be established with
the Trustee.
(ii) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the 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. The Note Distribution Account shall
initially be established with the Trustee.
(iii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
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.
The Reserve Account shall be maintained with the Trustee as long as
the Trustee is an Eligible Institution.
(b) Funds on deposit in the Collection Account, the Note
Distribution Account, the Payahead Account and the Reserve Account
(collectively, the "Trust Accounts") and the Certificate Distribution Account
shall be invested by the Trustee with respect to Trust Accounts and by the Owner
Trustee with respect to the Certificate Distribution Account (or any custodian
with respect to funds on deposit in any such account) in Eligible Investments
selected in writing by the Servicer (pursuant to standing instructions delivered
to a Trust Officer of the Trustee and a Trust Officer of the Owner Trustee or
other written notice so delivered); PROVIDED, HOWEVER, it is understood and
agreed that neither the Trustee nor the Owner Trustee shall be liable for any
loss arising from such investment in Eligible Investments. All such Eligible
Investments shall be held by or on behalf of the Trustee or the Owner Trustee,
as applicable, for the benefit of the Noteholders or the Certificateholders, as
applicable; on each Distribution Date all interest and other investment income
(net of losses and investment expenses) on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Interest Distribution Amount. Other than as permitted by the
Rating Agencies, funds on deposit in the Collection Account, the Note
Distribution Account, the Certificate Distribution Account, the Payahead Account
and the Reserve Account shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of business on the
Transfer Date preceding the following Distribution Date. Funds deposited in a
Trust Account or the Certificate Distribution Account on a Transfer Date which
immediately precedes a Distribution Date upon the maturity of any Eligible
Investments are not required to be invested overnight.
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(c) (i) The 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 Owner Trust Estate. Except as otherwise
provided herein, the Trust Accounts shall be under the sole
dominion and control of the Trustee for the benefit of the
Noteholders and the Certificateholders, or the Noteholders, as
the case may be. If, at any time, any of the Trust Accounts or
the Certificate Distribution Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) or
the Owner Trustee, as applicable, shall within 10 Business Days
(or such longer period as to which each Rating Agency may
consent) establish a new Trust Account or new Certificate
Distribution Account, as applicable, as an Eligible Deposit
Account and shall transfer any cash and/or any investments to
such new Trust Account or a new Certificate Distribution Account,
as applicable. In connection with the foregoing, the Servicer
agrees that, in the event that (A) any of the Trust Accounts
(other than the Certificate Distribution Account) are not
accounts with the Trustee or (B) the Certificate Distribution
Account is not an account with the Owner Trustee, the Servicer
shall notify the Trustee or the Owner Trustee, as applicable, in
writing promptly upon any of such Trust Accounts ceasing to be an
Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Trustee,
and with respect to the Certificate Distribution Account, the Owner
Trustee, agrees, by its respective acceptance hereof, that:
(A) any Trust Account Property or any property in the
Certificate Distribution Account that is held in deposit
accounts shall be held solely in Eligible Deposit Accounts
subject to the penultimate sentence of Section 5.1(c)(i); and,
except as otherwise provided herein, each such Eligible
Deposit Account shall be subject to the exclusive custody and
control of the Trustee with respect to the Trust Accounts and
the Owner Trustee with respect to the Certificate Distribution
Account, and the Trustee or the Owner Trustee, as applicable,
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes
Physical Property shall be delivered to the Trustee in
accordance with paragraph (a) of the definition of "Delivery"
and shall be held, pending maturity or disposition, solely by
the Trustee or a financial intermediary (as such term is
defined in Section 8-313(4) of the UCC) acting solely for the
Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations
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shall be delivered in accordance with paragraph
(b) of the definition of "Delivery" and shall be maintained by
the 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 8 of the UCC and that
is not governed by clause (C) above shall be delivered to the
Trustee in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Trustee, pending
maturity or disposition, through continued registration of the
Trustee's (or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the
Trustee or by the Owner Trustee with the consent of the Trustee, to
instruct the 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
Trustee to carry out its duties under the Indenture.
(d) (i) The Servicer shall establish and maintain with the Trustee an
Eligible Deposit Account (the "Payahead Account"). On the Closing Date,
the Depositor shall cause to be deposited $___in the Payahead Account
representing all collected funds received in connection with the
Actuarial Receivables prior to the Cutoff Date that are due on or after
the Cutoff Date, consisting of all or a portion of the Scheduled
Payments due on the Actuarial Receivables in any Collection Period
following the first Collection Period.
(ii) The Servicer shall on or prior to each Distribution Date
(and prior to deposits to the Note Distribution Account or the
Certificate Distribution Account) transfer from the Collection Account
to the Payahead Account all Payaheads as described in Section 5.3
received by the Servicer during the Collection Period. Notwithstanding
the foregoing and the first sentence of Section 5.2, for so long as the
Servicer is permitted to make monthly remittances to the Collection
Account pursuant to Section 5.2, 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
5.5(a).
SECTION 5.2. COLLECTIONS. On the Closing Date, the Depositor
shall cause to be deposited $___in the Collection Account representing all
collected funds received on the Receivables after the Cutoff Date and prior to
the Closing Date. The Servicer shall remit within two Business Days of receipt
thereof to the Collection Account all collected funds received from payments by
or on behalf of the Obligors with respect to the Receivables, and all
Liquidation Proceeds, both as collected during the Collection Period.
Notwithstanding the foregoing, for so long as (i) the Servicer is BDFS, (ii) no
Servicer Default shall have occurred and be continuing,
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(iii) if the Servicer does not have a short term debt rating or deposit rating
as applicable, of at least A-1 from Standard & Poor's and P-1 from Moody's, a
guaranty, letter of credit, surety bond or other similar instrument is issued
covering collections, any amounts referred to in clause (e) of the definition of
Available Principal and Liquidation Proceeds held by BDFS, which is acceptable
to the Rating Agencies and issued by an entity, which has a short-term debt or
deposit rating, as applicable, of at least A-1 from Standard & Poor's and P-1
from Moody's; and (iv) 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 to the
Collection Account on the related Transfer 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, the Sponsor or
the Depositor.
SECTION 5.3. APPLICATION OF COLLECTIONS. (a) All
collections for the Collection Period shall be applied by the
Servicer as follows:
With respect to each Actuarial Receivable (other than a
Purchased Receivable), payments by or on behalf of the Obligor shall be applied
first to reduce Outstanding Advances as described in Section 5.7(a). Next, any
excess shall be applied, in the case of Actuarial Receivables, to the Scheduled
Payment and, shall be applied in the case of Simple Interest Receivables, to
interest and principal in accordance with the Simple Interest Method. With
respect to Actuarial Receivables, any remaining excess shall be added to the
Payahead Balance, and shall be applied to prepay the Actuarial Receivable, but
only if the sum of such excess and the previous Payahead Balance shall be
sufficient to prepay the Actuarial Receivable in full. Otherwise, any such
remaining excess payments shall constitute a Payahead and shall increase the
Payahead Balance.
(b) All Liquidation Proceeds shall be applied to the
related Receivable in accordance with the Servicer's customary
servicing procedures.
SECTION 5.4. ADDITIONAL DEPOSITS. The Servicer shall deposit
in the Collection Account the aggregate Advances pursuant to Section 5.7. The
Servicer, the Sponsor and the Depositor shall deposit or cause to be deposited
in the Collection Account the aggregate Purchase Amount with respect to any
Purchased Receivables and the Depositor shall deposit therein any amounts to be
paid under Section 9.1. The Servicer will deposit or cause to be deposited the
aggregate Purchase Amount with respect to Purchased Receivables within two
Business Days after such obligations become due, unless the Servicer shall not
be required to make deposits within two Business Days of receipt pursuant to
Section 5.2 (in which case such deposit will be made by the related Transfer
Date). All such other deposits shall be made on the Transfer Date following the
end of the related Collection Period.
SECTION 5.5. DISTRIBUTIONS. (a) On each Distribution Date, the
Trustee shall cause to be transferred from the Payahead Account, or from the
Servicer in the event the provisions of Section 5.1(d)(ii) are applicable, (i)
to the Collection Account, in immediately available funds, the aggregate
previous Payaheads to be applied to Scheduled Payments on Actuarial Receivables
for the related Collection Period or prepayments for the related Collection
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Period, pursuant to Sections 5.3 and 5.7, in the amounts set forth in the
Servicer's Certificate for such Distribution Date and (ii) to the Depositor, in
immediately available funds, the investment earnings, net of losses on the
Payaheads for the related Collection Period. A single, net transfer may be made.
(b) On each Determination Date, the Servicer shall calculate
all amounts required to determine the amounts to be deposited from the Reserve
Account into the Collection Account and from the Collection Account into the
Note Distribution Account and the Certificate Distribution Account.
(c) On or before each Distribution Date, the Servicer shall
instruct the Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section 4.9)
to withdraw from the Reserve Account and deposit in the Collection Account and
the Trustee shall so withdraw and deposit the Reserve Account Transfer Amount
for such Distribution Date.
(d) The Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9) to make, and the Trustee shall make,
a distribution from the Collection Account to the Servicer by 11:00 a.m. (New
York time), amounts in respect of Outstanding Advances to the extent that the
Servicer is entitled to reimbursement in respect thereof in accordance with
Section 5.7. Subject to the last paragraph of this Section 5.5(d), no later than
each Distribution Date, the Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9) to make, and the Trustee shall make,
the following deposits and distributions from the Collection Account for deposit
in the applicable Account by 10:00 a.m. (New York time), to the extent of the
Total Distribution Amount, in the following order of priority:
(i) to the Servicer, from the Total Distribution
Amount, the Total Servicing Fee;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i), the
Noteholders' Interest Distributable Amount;
(iii) to the Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clause (i) and clause (ii), the
Certificateholders' Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii), the Noteholders' Principal Distributable Amount;
(v) to the Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i) through
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(iv), the Certificateholders' Principal Distributable Amount; and
(vi) to the Trustee for deposit in the Reserve Account, from
the Total Distribution Amount, the amounts remaining after the
application of clauses (i) through (v) above PROVIDED, HOWEVER, that
following the occurrence of an Event of Default pursuant to Section
5.1(i), 5.1(ii), 5.1(iv) or 5.1(v) of the Indenture, an acceleration of
the Notes pursuant to Section 5.2 of the Indenture or an Insolvency
Event with respect to the holder of the GP Interest, amounts on deposit
in the Collection Account will be deposited in the Note Distribution
Account to the extent necessary to pay accrued and unpaid interest on
the Notes and then, to the extent funds are available therefore,
principal on the Notes until the principal balance of the Notes has
been reduced to zero, before any amounts are deposited in the
Certificate Distribution Account. Following the payment in full of the
Notes, amounts on deposit in the Collection Account will be deposited
in the Certificate Distribution Account to the extent necessary to pay
accrued and unpaid interest on the Certificates and then, to the extent
funds are available therefore, principal on the Certificates until the
principal balance thereof has been reduced to zero.
In the event that the Collection Account is maintained with
an institution other than the Trustee, the Servicer shall instruct and cause
such institution to make all deposits and distributions pursuant to this Section
5.5(d) on the related Transfer Date.
SECTION 5.6. RESERVE ACCOUNT. (a) On the Closing Date, the
Depositor shall deposit the Reserve Account Initial Deposit into the Reserve
Account. In no circumstances will the Depositor be required to deposit from its
own funds any amounts in the Reserve Account other than the Reserve Account
Initial Deposit to be made on the Closing Date.
(b) If the amount on deposit in the Reserve Account on any
Distribution Date (after giving effect to any and all deposits and withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Servicer shall instruct the
Trustee to distribute, and the Trustee shall distribute, the amount of the
excess to the Depositor. Amounts properly distributed to the Depositor pursuant
to Section 5.6(b) shall be deemed released from the Trust and the security
interest therein granted to the Trustee and the Depositor shall in no event
thereafter be required to refund any such distributed amounts.
SECTION 5.7. 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 an Actuarial 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 an "Advance"), to the extent that the Servicer, at its sole
discretion, shall determine that the Advance shall be recoverable from the
Obligor, the Purchase Amount, Liquidation Proceeds or proceeds of any other
Actuarial Receivables. With respect to each Actuarial Receivable, the Advance
shall increase Outstanding Advances. Outstanding Advances shall be reduced by
subsequent payments by or on behalf of the Obligor, collections of Liquidation
Proceeds in respect of the related Receivable or payments of the Purchase Amount
of the related Receivable.
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If the Servicer shall determine that an Outstanding Advance
with respect to any Actuarial Receivable shall not be recoverable as aforesaid,
the Servicer shall be reimbursed from any collections (including Liquidation
Proceeds) on other Actuarial Receivables in the Trust and Outstanding Advances
with respect to such Actuarial Receivables shall be reduced accordingly.
(b) The Servicer shall not make any advance with
respect to interest on or principal of Simple Interest
Receivables.
SECTION 5.8. STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS.
On each Determination Date, the Servicer shall provide to the Trustee (with a
copy to the Rating Agencies) for the Trustee to forward to each Noteholder of
record, to each Paying Agent, if any, and to the Owner Trustee for the Owner
Trustee to forward to each Certificateholder of record, a statement
substantially in the form of Exhibit A, 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 of the Notes and to the Certificate Balance of
the Certificates;
(ii) the amount of such distribution allocable to
interest on or with respect to the Notes and to the
Certificates;
(iii) the Pool Balance 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 (i) above;
(iv) the aggregate outstanding principal balance of the Notes,
the Note Pool Factor for the Notes, the Certificate Balance and the
Certificate Pool Factor after giving effect to payments allocated to
principal reported under (i) above;
(v) the amount of the Total Servicing Fee paid to the
Servicer with respect to the related Collection Period;
(vi) the amount of the aggregate Realized Losses, net
of Recoveries, if any, for such Collection Period;
(vii) the Reserve Account Transfer Amount, if any, for such
Distribution Date, the average of the Charge-off Rates and the
Delinquency Percentages for the three preceding Collection Periods, the
Specified Reserve Account Balance for such Distribution Date, the
amount distributed to the Depositor from the Reserve Account on such
Distribution Date, and the balance of the Reserve Account (if any) on
such Distribution Date, after giving effect to changes therein on such
Distribution Date;
(viii) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, and the Certificateholders' Principal
Carryover Shortfall;
(ix) the aggregate Purchase Amount paid by the Sponsor, the
Depositor or the Servicer with respect to the related Collection
Period;
(x) the aggregate Payahead Balance;
(xi) the amounts collected by the Servicer;
(xii) the amounts received by the Trust from the Servicer;
and
(xiii) delinquency information relating to the Receivables
which are 30, 60 and 90 days delinquent.
Each amount set forth pursuant to paragraph (i), (ii), (v) or
(viii) above shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the Notes or the initial Certificate Balance, as
applicable.
SECTION 5.9. NET DEPOSITS. As an administrative convenience,
if the Servicer is not required to remit collected funds within two Business
Days of receipt thereof, the Servicer will be permitted to make the deposit of
such funds, 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 to be made a single,
net transfer, from the Collection Account to the Payahead Account, or vice
versa. The Servicer, however, will account to the Owner Trustee, the Trustee,
the Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
SECTION 5.10. RESERVED.
ARTICLE VI.
THE DEPOSITOR
SECTION 6.1. 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 shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the 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 New York 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 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
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require such qualifications.
(c) POWER AND AUTHORITY OF THE DEPOSITOR. The Depositor has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under each of the Basic Documents to which the Depositor
is a party; the Depositor has full corporate power and authority to sell and
assign the property to be sold and assigned to and deposited with the Issuer and
the Depositor has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance of each
of the Basic Documents to which the Depositor is a party has been duly
authorized by the Depositor by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement and each of the Basic
Documents to which the Depositor is a party constitute legal, valid and binding
obligations of the Depositor, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Depositor, or any material indenture, agreement or
other instrument to which the Depositor is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law or,
to the best of its 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. There are no proceedings or investigations
pending against the Depositor or, to its best knowledge, threatened against the
Depositor, 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 any of the 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 or any of the Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Depositor of its obligations under, or
the validity or enforceability of the Basic Documents, the Notes or the
Certificates or (iv) seeking to affect adversely the Federal or state income tax
or ERISA attributes of the Issuer, the Notes or the Certificates.
(g) ALL CONSENTS. All authorizations, licenses, consents,
orders or approvals of or registrations or declarations with any court,
regulatory body, administrative agency or other government instrumentality
required to be obtained, effected or given by the Depositor in connection with
the execution and delivery by the Depositor of this Agreement or any of the
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Basic Documents to which it is a party and the performance by the Depositor of
the transactions contemplated by this Agreement or any of the Basic Documents to
which it is a party, have been duly obtained, effected or given and are in full
force and effect, except where failure to obtain the same would not have a
material adverse effect upon the rights of the Issuer, the Noteholders or the
Certificateholders.
SECTION 6.2. CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 6.4, 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.
(b) During the term of this Agreement, the Depositor shall
observe the applicable legal requirements for the recognition of the Depositor
as a legal entity separate and apart from its affiliates, including as follows:
(i) the Depositor shall maintain corporate records and books
of account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement, the
Depositor shall not commingle its assets and funds with those of its
affiliates;
(iii) the Depositor shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Depositor's corporate actions required by law to be authorized by the
Board of Directors, shall keep minutes of such meetings and of
meetings of its stockholder(s) and observe all other customary
corporate formalities (and any successor Depositor not a corporation
shall observe similar procedures in accordance with its governing
documents and applicable law);
(iv) the Depositor shall at all times hold itself out to the
public under the Depositor's own name as a legal entity separate and
distinct from its affiliates; and (v) all transactions and dealings
between the Depositor and its affiliates will be conducted on an
arm's-length basis.
SECTION 6.3. LIABILITY OF DEPOSITOR; INDEMNITIES. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Depositor under this Agreement and
the representations made by the Depositor in this Agreement.
(a) The Depositor shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee and the Trustee and their respective officers,
directors, employees and agents from and against any taxes that may at any time
be asserted against any such Person with respect to the transactions
contemplated in this Agreement and any of the Basic Documents (except any income
taxes arising out of fees paid to the Owner Trustee or the Trustee and except
any taxes to
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which the Owner Trustee or the Trustee may otherwise be subject to), 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
and the Notes) and reasonable costs and expenses in defending against the same
or in connection with any application relating to the Notes or Certificates
under any state securities laws.
(b) The Depositor shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Trustee, the Certificateholders and the
Noteholders and the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Trustee from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent arising out of, or imposed
upon such Person through (i) the Depositor's willful misfeasance, bad faith or
gross 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 or in connection with any application relating to the Notes or
Certificates under any state securities laws.
(c) The Depositor shall be liable as primary obligor for, and
shall indemnify, defend and hold harmless the Owner Trustee and its officers,
directors, employees and agents from and against any and all losses, claims,
damages and liabilities and reasonable costs and expenses arising out of, or
incurred in connection with, this Agreement or any of the Basic Documents, the
Owner Trust Estate, the acceptance or performance of the trusts and duties set
forth herein and in the Trust Agreement or the action or the inaction of the
Owner Trustee hereunder and under the Trust Agreement, except to the extent that
such cost, expense, loss, claim, damage or liability: (i) shall be due to the
willful misfeasance, bad faith or negligence of the Owner Trustee, or (ii) shall
arise from the breach by the Owner Trustee of any of its representations or
warranties set forth in Section 7.3 of the Trust Agreement. Such liability and
indemnification shall survive the termination of the Trust. In the event of any
claim, action or proceeding for which indemnity will be sought pursuant to this
paragraph, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Depositor, which approval shall not be unreasonably withheld.
(d) The Depositor shall pay any and all taxes levied or
assessed upon all or any part of the Trust Estate (other than those taxes
expressly excluded from the Depositor's responsibilities pursuant to the
parentheticals in paragraph (a) above).
Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee or the Trustee and the termination
of this Agreement or the Indenture or the Trust Agreement, as applicable, and
shall include reasonable fees and expenses of counsel and other reasonable
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
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thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Depositor, without interest.
SECTION 6.4. 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, shall be the successor to the
Depositor without the execution or filing of any document or any further act by
any of the parties to this Agreement; PROVIDED, HOWEVER, that the Depositor
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Depositor if other
than Barnett Auto Receivables Corp. executes an agreement of assumption to
perform every obligation of the Depositor under this Agreement, (ii) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 3.1 or 6.1 shall have been breached and no Event of Default,
and no event that, after notice or lapse of time, or both, would become an Event
of Default shall have happened and be continuing, (iii) the Depositor shall have
delivered to the Owner Trustee and 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, and that the Rating Agency Condition shall
have been satisfied with respect to such transaction, (iv) the surviving
Depositor shall have a consolidated net worth at least equal to that of the
predecessor Depositor, (v) such transaction will not result in a material
adverse federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders and (vi) unless Barnett Auto Receivables Corp., is the
surviving entity, the Depositor shall have delivered to the Owner Trustee and
the 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 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.
SECTION 6.5. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS.
The Depositor and any director or officer or employee or agent of the Depositor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising under any Basic Document (provided that such reliance shall not limit in
any way the Depositor's obligations under Section 3.2). 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 6.6. 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.
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SECTION 6.7. SECURITY INTEREST. During the term of this
Agreement, the Depositor will not take any action to assign the security
interest in any Financed Vehicles other than pursuant to the Basic Documents.
ARTICLE VII.
THE SERVICER AND THE SPONSOR
SECTION 7.1. REPRESENTATIONS OF BDFS. BDFS 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 the
Agreement and shall survive the sale of the Receivables to the Issuer and the
pledge thereof to the Trustee pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. BDFS is duly organized and
validly existing as a corporation in good standing under the laws of the State
of New York 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 power,
authority and legal right to service the Receivables.
(b) DUE QUALIFICATION. BDFS is duly qualified to do business
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 OF BDFS. BDFS has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement have been duly authorized by BDFS by all necessary corporate action.
All authorizations, consents, orders or approvals of or registrations or
declarations with any court, regulatory body, administrative agency or other
government instrumentality required to be obtained, effected or given by BDFS in
connection with the execution and delivery by BDFS of this Agreement or any of
the Basic Documents to which it is a party and the performance by BDFS of the
transactions contemplated by this Agreement or any of the Basic Documents to
which it is a party, have been duly obtained, effected or given and are in full
force and effect, except where failure to obtain the same would not have a
material adverse effect upon the rights of the Issuer, the Noteholders or the
Certificateholders.
(d) BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of BDFS, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws now or hereafter in effect relating to
creditors' rights generally and subject to general principles of equity (whether
applied in a proceeding of law or in equity).
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms
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and provisions of, nor constitute (with or without notice or lapse of time or
both) a default under the certificate of incorporation or by-laws of BDFS, or
any material indenture, agreement or other instrument to which BDFS is a party
or by which it shall be bound; nor result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic Documents); nor
violate any law or, to the best of its knowledge, any order, rule or regulation
applicable to BDFS of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over BDFS or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending against BDFS, or, to its best knowledge, threatened against BDFS, before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over BDFS or its properties: (i) asserting
the invalidity of this Agreement or any of the 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 or any of the Basic Documents, (iii) seeking any determination or
ruling that could reasonably be expected to have a material and adverse effect
on the performance by BDFS of its obligations under, or the validity or
enforceability of this Agreement or any of the Basic Documents, the Notes or the
Certificates or (iv) seeking to affect adversely the federal or state income tax
or ERISA attributes of the Issuer, the Notes or the Certificates.
(g) NO AMENDMENT OR WAIVER. No provision of any Receivable has
been waived, altered or modified in any respect, except pursuant to a document,
instrument or writing included in the relevant Receivable File, and no such
amendment, waiver, alteration or modification causes such Receivable not to
conform to the other warranties contained in this Section or those of the
Depositor and the Sponsor contained in Section 3.1.
(h) APPROVALS. All approvals, licenses, authorizations,
consents, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official, required
in connection with the execution and delivery of this Agreement have been or
will be taken or obtained on or prior to the Closing Date.
(i) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept
in the offices of the Servicer, specified in Schedule B, or at such other office
specified in accordance with Section 3.4(b).
(j) DEMAND NOTE. The Sponsor has contributed the Demand Note
(as defined in the Trust Agreement) to the Depositor on or before the Closing
Date.
SECTION 7.2. 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.
The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Depositor, the Certificateholders
and the Noteholders and any of the officers, directors, employees and agents of
the Issuer, the Owner Trustee, the Trustee or the
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Depositor from any and all losses, claims, damages, liabilities and reasonable
costs and expenses (including reasonable attorneys' fees and expenses) to the
extent arising out of, or imposed upon any such Person through, the gross
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its obligations and duties under this Agreement or in the performance of the
obligations and duties of any subservicer under any subservicing agreement or by
reason of the reckless disregard of its obligations and duties under this
Agreement or by reason of the reckless disregard of the obligations of any
subservicer under any subservicing agreement, where the final determination that
any such cost, expense, loss, claim, damage or liability arose out of, or was
imposed upon any such Person through, any such gross negligence, willful
misfeasance, bad faith or recklessness on the part of the Servicer or any
subservicer, is established by a court of law, by an arbitrator or by way of
settlement agreed to by the Servicer. Notwithstanding the foregoing, if the
Servicer is rendered unable, in whole or in part, by virtue of an act of God,
act of war, fires, earthquake or other natural disasters, to satisfy its
obligations under this Agreement, the Servicer shall not be deemed to have
breached any such obligation upon the sending of written notice of such event to
the other parties hereto, for so long as the Servicer remains unable to perform
such obligation as a result of such event. This provision shall not be construed
to limit the Servicer's or any other party's rights, obligations, liabilities,
claims or defenses which arise as a matter of law or pursuant to any other
provision of this Agreement.
The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Depositor, the Certificateholders
and the Noteholders or any of the officers, directors, employees and agents of
the Issuer, the Owner Trustee, the Trustee or the Depositor from any and all
losses, claims, damages, liabilities and reasonable costs and expenses
(including reasonable attorneys' fees and expenses) to the extent arising out of
or imposed upon any such Person as a result of any compensation payable to any
subcustodian or subservicer (including any fees payable in connection with the
release of any Receivable File from the custody of such subservicer or in
connection with the termination of the servicing activities of such subservicer
with respect to any Receivable) whether pursuant to the terms of any
subservicing agreement or otherwise.
The Servicer shall indemnify, defend and hold harmless the
Trustee, the Owner Trustee, the Trust, the Depositor, the Certificateholders and
the Noteholders from and against any taxes that may at any time be asserted
against the Trustee, the Trust, the Owner Trustee, the Certificateholders, the
Noteholders or the Depositor (other than any taxes based upon the income of any
such person), with respect to the transactions contemplated herein including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
The Servicer shall indemnify, defend, and hold harmless the
Owner Trustee and Trustee from and against all reasonable costs and expenses,
losses, claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
contained, if any, except to the extent that such reasonable cost or expense,
reasonable loss, claim, damage or liability: (a) shall be due to the willful
misfeasance, bad faith, or gross negligence (except for errors in judgment) of
the Owner Trustee or Trustee; (b) relates to any tax other than the taxes with
respect to which the Servicer shall be required to
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indemnify the Owner Trustee or Trustee; or (c) shall arise from the Owner
Trustee's or Trustee's breach of any of its representations or warranties set
forth in the Trust Agreement or the Indenture, as applicable.
Indemnification under this Section shall survive the
resignation and removal of the Trustee and the Owner Trustee or the termination
of this Agreement.
SECTION 7.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, BDFS. Any Person (a) into which BDFS may be merged or
consolidated, (b) which may result from any merger or consolidation to which
BDFS shall be a party or (c) which may succeed to the properties and assets of
BDFS, substantially as a whole, shall be the successor to BDFS without the
execution or filing of any document or any further act by any of the parties to
this Agreement; PROVIDED, however, that BDFS hereby covenants that it will not
consummate any of the foregoing transactions except upon satisfaction of the
following: (i) the surviving Servicer if other than BDFS, executes an agreement
of assumption to perform every obligation of BDFS under this Agreement, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.1 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, (iii) the Servicer
shall have delivered to the Owner Trustee and 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, and that the Rating Agency
Condition shall have been satisfied with respect to such transaction, (iv) the
surviving Servicer shall have a consolidated net worth at least equal to that of
the predecessor Servicer, and (v) such transaction will not result in a material
adverse federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders.
SECTION 7.4. LIMITATION ON LIABILITY OF BDFS AND OTHERS.
Neither BDFS nor any of its directors, officers, employees or agents 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 by BDFS or any subservicer pursuant to this
Agreement or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect BDFS or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. BDFS or any subservicer and any of
their respective directors, officers, employees or agents 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 BDFS shall not be under any obligation
to appear in, prosecute or defend any legal action that shall 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 BDFS, may (but shall not be required to) undertake any reasonable
action that it may deem necessary or desirable in respect of the Basic Documents
to protect the interests of the Certificateholders under this Agreement and the
Noteholders under the Indenture.
SECTION 7.5. BDFS NOT TO RESIGN AS SERVICER. Subject to the
provisions of Section 7.3, BDFS hereby agrees not to resign from the obligations
and duties hereby imposed on it as Servicer under this Agreement except upon
determination that the performance of its duties hereunder shall no longer be
permissible under applicable law or if such resignation is required by
regulatory authorities. Notice of any such determination permitting the
resignation of BDFS, as Servicer shall be communicated to the Owner Trustee and
the 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 Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until the
earlier of the Trustee or a Successor Servicer having assumed the
responsibilities and obligations of the resigning Servicer in accordance with
Section 8.2 or the date upon which any regulatory authority requires such
resignation.
SECTION 7.6. CORPORATE EXISTENCE. (a) During the term of this
Agreement, subject to Section 6.4, BDFS 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.
(a) During the term of this Agreement, BDFS shall observe the
applicable legal requirements for the recognition of BDFS as a legal entity
separate and apart from its affiliates, including as follows:
(i) BDFS shall maintain corporate records and books
of account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement,
BDFS shall not commingle its assets and funds with those
of its affiliates;
(iii) BDFS shall hold such appropriate meetings of its Board
of Directors as are necessary to authorize all BDFS's corporate actions
required by law to be authorized by the Board of Directors, shall keep
minutes of such meetings and of meetings of its stockholder(s) and
observe all other customary corporate formalities (and any successor
Servicer not a corporation shall observe similar procedures in
accordance with its governing documents and applicable law);
(iv) BDFS shall at all times hold itself out to the
public under BDFS's own name as a legal entity separate
and distinct from its affiliates; and
(v) all transactions and dealings between BDFS and
its affiliates will be
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conducted on an arm's-length basis.
SECTION 7.7. DEMAND NOTE. (a) During the term of this
Agreement, the Sponsor will keep the Demand Note (as defined in the Trust
Agreement) issued to the Depositor in full force and effect and will not cancel,
waive or terminate such Demand Note.
ARTICLE VIII.
DEFAULT
SECTION 8.1. 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 Trustee for
deposit in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to direct the Trustee to make any required distributions
therefrom that shall continue unremedied for a period of five Business Days
after written notice of such failure is received by the Servicer from the Owner
Trustee or the Trustee or after discovery of such failure by an Authorized
Officer of the Servicer; or
(b) failure on the part of the Servicer duly to observe or to
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or any other Basic Document, which failure
shall (i) materially and adversely affect the rights of either the
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 by the Owner
Trustee or the Trustee or (B) to the Servicer and to the Owner Trustee and the
Trustee by the Holders of Notes evidencing not less than 25% of the Outstanding
Amount of the Notes or Holders of Certificates evidencing not less than 25% of
the outstanding Certificate Balance, as applicable (or for such longer period,
not in excess of 120 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 120 days and the
Servicer delivers an Officers' Certificate to the Owner Trustee and the Trustee
to such effect and to the effect that the Servicer has commenced or will
promptly commence, and will diligently pursue, all reasonable efforts to remedy
such default); or
(c) an Insolvency Event occurs with respect to the
Servicer or any successor;
then, and in each and every case, so long as the Servicer
Default shall not have been remedied, either the 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 the Owner Trustee (and to the
Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Section 7.2) 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 Trustee
or such successor Servicer as may be appointed under Section 8.2; and, without
limitation, the Trustee and the Owner Trustee are hereby authorized and
empowered to execute and deliver, on
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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, the 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 a Receivable. All reasonable costs and expenses (including reasonable
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 8.2. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's
receipt of notice of termination, pursuant to Section 8.1 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 earlier
of (x) the date 45 days from the delivery to the Owner Trustee and 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 Owner Trustee and 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 the Trustee shall be entitled to the Servicing Fee.
Notwithstanding the above, the Trustee shall, if it shall be unwilling or 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 $50,000,000 and
whose regular business shall include the servicing of automotive 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 the
rights granted to the predecessor Servicer by the terms and provisions of this
Agreement. No successor Servicer shall be liable for any acts or omissions of
any predecessor Servicer.
SECTION 8.3. PAYMENT OF SERVICING FEE; REPAYMENT OF ADVANCES.
If the Servicer shall change, the predecessor Servicer shall be entitled to (i)
receive any accrued and
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unpaid Servicing Fees through the date of the successor Servicer's acceptance
hereunder in accordance with Section 4.8. and (ii) reimbursement for Outstanding
Advances pursuant to Sections 5.3 and 5.7 with respect to all Advances made by
the predecessor Servicer.
SECTION 8.4. NOTIFICATION TO NOTEHOLDERS AND
CERTIFICATEHOLDERS. Upon the receipt by a Trust Officer of the Owner Trustee of
written notice of 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 Trustee shall give prompt
written notice thereof to Noteholders subject to the Rating Agency Condition.
SECTION 8.5. 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, as applicable, in
the case of any default which does not adversely affect the 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 9.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. (a) On the
last day of any Collection Period immediately preceding a Determination Date as
of which the then outstanding Pool Balance is 10% or less of the Initial Pool
Balance, the Depositor shall have the option to purchase the Owner Trust Estate,
other than the Trust Accounts and the Certificate Distribution Account. To
exercise such option, the Depositor shall deposit pursuant to Section 5.4 in the
Collection Account an amount which, when added to the amounts on deposit in the
Collection Account for such Distribution Date, equals the sum of (a) the unpaid
principal amount of the then outstanding Notes, plus accrued and unpaid interest
thereon, plus (b) the Certificate Balance plus accrued and unpaid interest
thereon. The Notes and the Certificates will be redeemed concurrently therewith.
(b) Upon any sale of the assets of the Trust pursuant to
Section 9.2 of the Trust Agreement, the Servicer shall instruct the Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
(including the expenses of such sale) 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 Trustee to make, and
the Trustee shall make, the following deposits and distributions (after the
application on such Distribution Date of the Total Distribution
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Amount pursuant to Section 5.5) from the Insolvency Proceeds and any funds
remaining on deposit in the Reserve Account (including the proceeds of any sale
of investments therein):
(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);
(iii) to the Owner Trustee for deposit in the Certificate
Distribution Account, any portion of the Certificateholders' Interest
Distributable Amount not otherwise deposited into the Certificate
Distribution Account on such Distribution Date; and
(iv) to the Owner Trustee for deposit in the Certificate
Distribution Account, the Certificate Balance and any
Certificateholders' Principal Carryover Shortfall Amount (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).
Any Insolvency Proceeds remaining after the deposits described
above shall be paid to the holder of the GP Interest.
(c) Notice of any termination of the Trust shall be given by
the Servicer to the Owner Trustee, the Trustee and the Rating Agencies 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 and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee pursuant to this Agreement.
SECTION 9.2. MANDATORY SALE OF ALL CONTRACTS. In accordance
with the procedures and schedule set forth in Exhibit C hereto (the "Auction
Procedures"), the Trustee (or, if the Notes have been paid in full and the
Indenture shall have been discharged in accordance with its terms, the Owner
Trustee) shall conduct or shall cause to be conducted an auction (the "Auction")
of the Receivables remaining in the Trust (such Receivables hereinafter referred
to as the "Auction Property") in order to effect a termination of the Trust
pursuant to Section 9.1 of the Trust Agreement on the second Distribution Date
succeeding the Record Date on which the Pool Balance is 5% or less of the
Initial Pool Balance and at such time as the Depositor shall have not exercised
its option contained in Section 9.1. Such Auction shall be conducted within 10
days following the Distribution Date following the Record Date on which the Pool
Balance is 5% or less of the Initial Pool Balance. The Depositor, the Sponsor,
or the Servicer may, but shall not be required to, bid at the Auction. Such
Trustee shall sell or shall cause the sale and transfer of the Auction Property
to the highest bidder therefor at the Auction provided that;
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(i) the Auction has been conducted in accordance with
the Auction Procedures;
(ii) such Trustee has received good faith bids for the Auction
Property from two prospective purchasers that are considered by such
Trustee, in its sole discretion, to be competitive participants in the
market for motor vehicle retail installment sale contracts and other
motor vehicle installment sale contracts;
(iii) a financial advisor, as advisor to such Trustee (in such
capacity, the "Advisor"), shall have advised such Trustee in writing
that at least two of such bidders (including the winning bidder) are
participants in the market for motor vehicle retail installment sale
contracts and other motor vehicle installment sale contracts willing
and able to purchase the Auction Property;
(iv) the highest bid in respect of the Auction Property is not
less than the aggregate fair market value of the Auction Property (as
determined by such Trustee in its sole discretion);
(v) any bid submitted by the Depositor, the Sponsor, the
Servicer or any affiliate of any of them shall reasonably represent the
fair market value of the Auction Property, as independently verified
and represented in writing by a qualified independent third party
evaluator (which may include the Advisor or an investment bank firm)
selected by such Trustee; and
(vi) the highest bid would result in proceeds from the sale of
the Auction Property which will be at least equal to the sum of (A) the
greater of (1) the aggregate Purchase Price for the Receivables
(including defaulted Receivables), plus the appraised value of any
other property held by the Trust (less liquidation expenses) or (2) an
amount that, when added to amounts on deposit in the Collection Account
and available for distribution to Securityholders on the second
Distribution Date following the consummation of such sale (the
"Liquidation Distribution Date"), would result in proceeds sufficient
to distribute to Securityholders the amounts of interest due to the
Securityholders for such Distribution Date and any unpaid interest
payable to the Securityholders with respect to one or more prior
Distribution Dates and the outstanding principal amount of the Notes
and the Certificate Balance, and (B) the Total Servicing Fee payable on
such second Distribution Date.
Provided that all of the conditions set forth in clauses (i)
through (vi) have been met, such Trustee shall sell and transfer the Auction
Property, without representation, warranty or recourse, to such highest bidder
in accordance with and upon completion of the Auction Procedures. Such Trustee
shall deposit the purchase price for the Auction Property in the
Collection Account at least one Business Day prior to such second succeeding
Distribution Date. In addition, the Auction must stipulate that the Servicer be
retained to service the Receivables on terms substantially similar to those in
the Agreement. In the event that any of such conditions are not met or such
highest bidder fails or refuses to comply with any of the Auction Procedures,
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such Trustee shall decline to consummate such sale and transfer. In the event
such sale and transfer is not consummated in accordance with the foregoing,
however, such Trustee may from time to time in the future, but shall not be
under any further obligation to, solicit bids for sale of the assets of the
Trust upon the same terms and conditions as set forth above.
If any of the foregoing conditions are not met, such Trustee
shall decline to consummate such sale and shall not be under any obligation to
solicit any further bids or otherwise negotiate any further sale of Receivables
remaining in the Trust. In such event, however, such Trustee may from time to
time solicit bids in the future for the purchase of such Receivables pursuant to
this Section 9.2.
If applicable, the Indenture Trustee shall provide notice to
the Owner Trustee of the termination of the Trust pursuant to this Section 9.2
as soon as practicable upon the consummation of the mandatory sale of the
Receivables pursuant to this Section 9.2.
ARTICLE X
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 10.1. ADMINISTRATIVE DUTIES. (a) DUTIES WITH RESPECT TO
THE INDENTURE AND DEPOSITORY AGREEMENTS. The Servicer shall perform all its
duties and the duties of the Issuer under the Depository Agreements. In
addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Indenture and the
Depository Agreements. The Servicer shall monitor the performance of the Issuer
and shall provide notice to the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture and the Depository Agreements. The
Servicer 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 as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture and the Depository
Agreements. In furtherance of the foregoing, the Servicer shall take all
appropriate action that is the duty of the Issuer to take pursuant to the
Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER. (i) In addition to the
duties of the Servicer set forth in this Agreement or any of the Basic
Documents, the Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to this Agreement or any of the
Basic Documents, and at the request of the Owner Trustee shall take all
appropriate action that it is the duty of the Issuer to take pursuant to this
Agreement or any of the Basic Documents. Subject to Section 10.4, and in
accordance with the directions of the Owner Trustee, the Servicer shall
administer, perform or supervise the performance of such other activities in
connection with the Collateral (including the Basic Documents) 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 Servicer.
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(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the Servicer shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding
tax is imposed on the Issuer's payments (or allocations of income) to
an Owner (as defined in the Trust Agreement) as contemplated in Section
5.2(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 Basic
Documents to the contrary, the Servicer shall be responsible for
performance of the duties of the Owner Trustee and the holder of the GP
Interest set forth in Section 5.6(a), (b), (c) and (d) of the Trust
Agreement with respect to, among other things, accounting and reports
to Owners (as defined in the Trust Agreement); PROVIDED, HOWEVER, that
the Owner Trustee shall retain responsibility for the distribution to
Certificateholders of the Schedule K-1s furnished to the Owner Trustee
by the Servicer which are necessary to enable each Certificateholder to
prepare its federal and state income tax returns.
(iv) The Servicer shall perform the duties of the Servicer
specified in Section 10.2 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
Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with 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 Servicer's opinion, no
less favorable to the Issuer in any material respect.
(c) TAX MATTERS. The Servicer shall prepare and file, on
behalf of the holder of the GP Interest, all tax returns, tax elections,
financial statements and such annual or other reports of the Issuer as are
necessary for preparation of tax reports as provided in Article V of the Trust
Agreement, including without limitation forms 1099 and 1066. All tax returns
will be signed by the holder of the GP Interest.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in
the reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
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(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);
(C) the amendment, change or modification of
this Agreement or any of the Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the
consent to the assignment by the Note Registrar, Paying Agent
or Trustee of its obligations under the Indenture; and
(E) the removal of the Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Basic
Documents, the Servicer, in its capacity hereunder, shall not be obligated to,
and shall not, (1) make any payments to the Noteholders or Certificateholders
under the Basic Documents, (2) sell the Indenture Trust Estate pursuant to
Section 5.4 of the Indenture, (3) take any other action that the Issuer directs
the Servicer not to take on its behalf or (4) in connection with its duties
hereunder assume any indemnification obligation of any other Person.
SECTION 10.2. RECORDS. The Servicer shall maintain appropriate
books of account and records relating to services performed under this
Agreement, which books of account and records shall be accessible for inspection
by the Issuer at any time during normal business hours.
SECTION 10.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE
ISSUER. The Servicer shall furnish to the Issuer from time to time such
additional information regarding the Collateral as the Issuer shall reasonably
request.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. AMENDMENT. This Agreement may be amended by the
Sponsor, the Depositor, the Servicer and the Owner Trustee, with the consent of
the Trustee (which consent may not be unreasonably withheld), but without the
consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity or defect, 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 Trustee, adversely affect in any material
respect the interests of any Noteholder or Certificateholder.
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This Agreement may also be amended from time to time by the
Sponsor, the Depositor, the Servicer and the Owner Trustee, with the consent of
the 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 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, 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 affected thereby.
Prior to its execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to the Rating Agencies. Promptly after its execution of any
such amendment or consent, the Owner Trustee shall furnish written notification
of the substance of such amendment or consent to each Rating Agency, each
Certificateholder and the Trustee.
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 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 that all conditions precedent to the execution
and delivery of such amendment have been satisfied and the Opinion of Counsel
referred to in Section 11.2(i)(1) has been delivered. The Owner Trustee and the
Trustee may, but shall not be obligated to, enter into any such amendment which
affects
the Owner Trustee's or the Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
SECTION 11.2. 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 the interests of the Trustee in the Receivables and in the proceeds
thereof. The Depositor shall deliver (or cause to be delivered) to the Owner
Trustee and 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 (nor shall
the Servicer permit an Originator to) 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
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paragraph (a) above seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Owner Trustee and 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 Owner Trustee and 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. 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 (and shall cause each Originator with
respect to the Related Receivables to) 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 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 Trustee
in such Receivable and that such Receivable is owned by the Issuer and has been
pledged to the Trustee. Indication of the Issuer's and the 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 by the Depositor or the Sponsor or purchased by the Servicer.
(f) If at any time the Sponsor, 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 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 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 at any time the Owner Trustee or the Trustee
shall have reasonable grounds to believe that such request is necessary in
connection with the performance
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of its duties under this Agreement or any of the Basic Documents, the Servicer
shall furnish to the Owner Trustee or to the Trustee, within five Business Days,
a list of all Receivables (by contract number and name of Obligor) then held as
part of the Trust, together with a reconciliation of such list to the Schedule
of Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee
and the Trustee:
(1) promptly after the execution and delivery of
this Agreement and of each amendment thereto, an Opinion of
Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation
statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner
Trustee and the Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest; and
(2) within 120 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 120-day
period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation
statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner
Trustee and the Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (l) 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.
(i) The Depositor shall, to the extent required by applicable
law, cause the Certificates and the Notes to be registered with the Securities
and Exchange Commission pursuant to Section 12(b) or Section 12(g) of the
Exchange Act within the time periods specified in such sections.
SECTION 11.3. NOTICES. All demands, notices and communications
upon or to the Depositor, the Servicer, the Owner Trustee, the Trustee or the
Rating Agencies under this Agreement shall be in writing, personally delivered,
sent by overnight courier 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 Barnett Auto Receivables Corp., 270 South Service Road,
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P.O. Box 888, Melville, New York 11747, Attention: General Counsel, (b) in the
case of the Sponsor, to Barnett Dealer Financial Services, Inc., 10401 Deerwood
Park Boulevard, Jacksonville, Florida 32256, Attention: General Counsel, (c) in
the case of the servicer, to Barnett Dealer Financial Services, Inc., 10401
Deerwood Park Boulevard, Jacksonville, Florida 32256, Attention: General
Counsel, (d) in the case of the Issuer or the Owner Trustee, at the Corporate
Trust Office (as defined in the Trust Agreement), (e) in the case of the
Trustee, at the Corporate Trust Office, (f) in the case of Moody's, to Moody's
Investors Service, Inc., to 99 Church Street, New York, New York 10004,
Attention: ABS Monitoring Department and (e) in the case of Standard & Poor's,
to Standard & Poor's Corporation, 26 Broadway (15th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department.
SECTION 11.4. ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 6.4 and 7.3 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 11.5. 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 and for the benefit of the Certificateholders
(including the holder of the GP Interest), the Trustee and the Noteholders, as
third-party beneficiaries, 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 11.6. 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 11.7. 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 11.8. 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 11.9. 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 11.10. ASSIGNMENT TO TRUSTEE. The Depositor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to
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the 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 Trustee.
SECTION 11.11. NONPETITION COVENANT. 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, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer 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 any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
SECTION 11.12. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND
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
____________, in its individual capacity or, except as expressly provided in the
Trust Agreement, as Owner Trustee have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or under 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 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.
SECTION 11.13. INDEPENDENCE OF THE SERVICER. For all purposes of
this Agreement, the Servicer 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 Servicer 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.
SECTION 11.14. NO JOINT VENTURE. Nothing contained in this
Agreement (i) shall constitute the Servicer 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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and year first above written.
BARNETT AUTO TRUST 199_-_
By: ----------------------------------
not in its individual
capacity but solely as
Owner Trustee on behalf of the Trust,
By---------------------------------------
Name:
Title:
BARNETT DEALER FINANCIAL SERVICES,
INC.,
Servicer and Sponsor,
By:----------------------------------------
Name: Robert B. Kay
Title: Vice President
BARNETT AUTO RECEIVABLES CORP.
Depositor,
By:-----------------------------------------
Name: Robert B. Kay
Title: Vice President
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Acknowledged and Accepted:
- ------------, not
in its individual capacity
but solely as Trustee,
By:----------------------------
Name:
Title:
Acknowledged and Accepted:
- ------------
not in its individual capacity
but solely as Owner Trustee,
By:---------------------------
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
Delivered to the Owner Trustee and the Trustee at Closing
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SCHEDULE B
LOCATION OF RECEIVABLES
Barnett Dealer Financial Services, Inc.
10401 Deerwood Park Boulevard
Jacksonville, Florida 32256
Oxford Resources Corp.
270 South Service Road
Melville, New York 11747
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EXHIBIT A
FORM OF MONTHLY SECURITYHOLDER STATEMENT
BARNETT AUTO TRUST 199_-_
___% Asset Backed Notes
___% Asset Backed Certificates
Distribution Date:
Collection Period:
Under the Sale and Servicing Agreement dated as of __________ __, 199_
among Barnett Dealer Financial Services, Inc., as servicer (the "Servicer") and
sponsor (the "Sponsor"), Barnett Auto Receivables Corp., as depositor (the
"Depositor"), Barnett Auto Trust 199_-_, as issuer (the "Trust"), the Servicer
is required to prepare certain information each month regarding current
distributions to Noteholders and 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 $1,000 per Note or Certificate, and certain other
information is presented based upon the aggregate amounts for the Trust as a
whole.
A. Information Regarding the Current Monthly Distribution.
1. Notes.
(a) The aggregate amount of the
distribution with respect to the
Notes................................................$--------
(b) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of interest on the Notes.....................$--------
(c) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of principal of the Notes....................$--------
(d) The amount of the distributions set
forth in paragraph A.1(a) payable
out of amounts withdrawn from the Reserve
Account with respect to the Notes....................$--------
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(e) The amount of the distribution set
forth in paragraph A.1.(a) above
per $1,000 interest in the Notes.....................$--------
(f) The amount of the distribution set
forth in paragraph A.1.(b) above
per $1,000 interest in the Notes.....................$--------
(g) The amount of the distribution set
forth in paragraph A.1.(c) above
per $1,000 interest in the Notes.....................$--------
(h) The amount of the distribution set
forth in paragraph A.1.(d) above
per $1,000 interest in the Notes.....................$--------
2. Certificates.
(a) The aggregate amount of the
distribution with respect to the
Certificates.........................................$--------
(b) The amount of the distribution set
forth in paragraph A.2.(a) above in
respect of interest on the Certificates...............$-------
(c) The amount of the distribution set
forth in paragraph A.2.(a) above in
respect of principal of the Certificates..............$-------
(d) The amount of the distributions set
forth in paragraph A.2(a) payable
out of amounts withdrawn from the Reserve
Account with respect to the Certificates.............$--------
(e) The amount of the distribution set
forth in paragraph A.2.(a) above
per $1,000 interest in the Certificates..............$--------
(f) The amount of the distribution set
forth in paragraph A.2.(b) above
per $1,000 interest in the Certificates...............$-------
(g) The amount of the distribution set
forth in paragraph A.2.(c) above
per $1,000 interest in the Certificates...............$-------
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(h) The amount of the distribution set
forth in paragraph A.2.(d) above
per $1,000 interest in the Certificates..............$--------
B. Information Regarding the Performance of the Trust.
1. Pool Balance, Note Principal Balance and Certificate Principal Balance.
(a) The Pool Balance at the close of business on
the last day of the Collection Period..............$--------
(b) The Note Balance after
giving effect to payments allocated to
principal as set forth in Paragraph A.1(c)........$--------
(c) The Note Pool Factor after
giving affect to the payments set
forth in paragraph A.1(c).........................$--------
(d) The Certificate Balance after
giving effect to payments allocated to
principal as set forth in Paragraph A.2(c)........$--------
(e) The Certificate Pool Factor after
giving affect to the payments set
forth in paragraph A.2(c).........................$--------
(f) The aggregate Purchase Amount for
all Receivables that were repurchased
in the preceding Collection Period................$--------
(g) The aggregate Payahead Balance on
such Distribution Date............................$--------
(h) The change in the Payahead Balance
from the preceding Distribution Date..............$--------
(i) The amount of Outstanding Advances on such
Distribution Date.................................$--------
(j) The change in Outstanding Advances
from the preceding Distribution Date..............$--------
(k) Total Collections by the Servicer.................$--------
(l) All amounts received by the Trust from
the Servicer......................................$--------
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2. Servicing Fee.
The aggregate amount of the Servicing
Fee paid to the Servicer with respect
to the preceding Collection Period $--------
3. Payment Shortfalls.
(a) The amount of the Noteholders'
Interest Carryover Shortfall after
giving effect to the payments set forth
in paragraph A.1(b) above...........................$---------
(b) The amount of the Noteholders'
Interest Carryover Shortfall set
forth in paragraph B.3.(a) above per
$1,000 interest with respect to
the Notes:..........................................$----------
(c) The amount of the Certificateholders'
Interest Carryover Shortfall after
giving effect to the payments set forth
in paragraph A.2(b) above...........................$----------
(d) The amount of the Certificateholders'
Interest Carryover Shortfall set
forth in paragraph B.3.(c) above per
$1,000 interest with respect to
the Certificates:...................................$---------
4. Losses and Delinquencies
(a) The change in the aggregate amount
of Cumulative Net Losses from the preceding
Distribution Date...................................$---------
(b) The aggregate amount of Cumulative Net Losses
on the Distribution Date set forth above for
the related Collection Period......................$---------
(c) The Cumulative Net Loss Ratio on the
Distribution Date set forth above...................$---------
(d) The aggregate amount scheduled to
be paid, including unearned finance
and other charges, for which Obligors
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are delinquent 60 days or more.......................$--------
(e) The Delinquency Percentage on the
Distribution Date set forth above....................$--------
5. Reserve Account
(a) The Reserve Account balance as of
the last day of the preceding
Collection Period, including earnings................$--------
(b) Earnings included in above balance...................$--------
(c) Transfer to Reserve Account from
Collection Account on Distribution
Date.................................................$--------
(d) The Reserve Account balance as of
the Distribution Date set forth above
after giving effect to the Collection
Account on such Distribution Date....................$--------
6. Delinquency
(a) Percentage of principal balance of
Receivables delinquent 1 to 30 days.................-------%
(b) Percentage of principal balance of
Receivables delinquent 31 to 60 days................-------%
(c) Percentage of principal balance of
Receivables delinquent 61 to 90 days................-------%
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EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
BARNETT DEALER FINANCIAL SERVICES, INC.
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is the [title], of Barnett
Dealer Financial Services, Inc., a corporation organized under the laws of the
State of Florida ("BDFS") and that as such he is duly authorized to execute and
deliver this certificate on behalf of BDFS pursuant to Section 4.9 of the Sale
and Servicing Agreement, dated as of __________ __, 199_ (the "Agreement") by
and among BDFS as servicer (the "Servicer") and sponsor (the "Sponsor"), Barnett
Auto Receivables Corp., as depositor (the "Depositor") and Barnett Auto Trust
199_-_, as issuer (the "Issuer"), (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Monthly Securityholder Statement for the period from
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
2. As of the date hereof, no Servicer Default or event that with
notice or lapse of time or both would become a Servicer Default has occurred.
[If a Servicer Default has occurred, such Servicer Default shall be specified
and its current status reported.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures this
day of, .
BARNETT DEALER FINANCIAL
SERVICES, INC.
as Servicer
By:----------------------
Name:
Title:
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EXHIBIT C
TERMINATION - AUCTION PROCEDURES
The following sets forth the auction procedures to be followed
in connection with a sale effected pursuant to Section 9.2 of the Sale and
Servicing Agreement (the "Agreement"), dated as of __________ __, 199_ by and
among Barnett Auto Trust 199_-_ (the "Trust"), Barnett Dealer Financial
Services, Inc., as servicer (the "Servicer") and sponsor (the "Sponsor") and
Barnett Auto Receivables Corp., as depositor (the "Depositor"). Capitalized
terms used herein that are not otherwise defined shall have the meanings
ascribed thereto in the Agreement. All references herein to "Trustee" shall be
references to ____________, as Indenture Trustee, pursuant to an Indenture,
dated as of __________ __, 199_, between the Trust and the Indenture Trustee.
However, if the Notes have been paid in full, and the Indenture has been
discharged in accordance with its terms, all references herein to "Trustee"
shall be references to the Owner Trustee.
PRE-AUCTION PROCESS
(a) Upon receiving notice of the Auction, the Advisor will
initiate its general Auction procedures consisting of the following:
(i) with the assistance of the Servicer, prepare a general
solicitation package along with a confidentiality agreement; (ii)
derive a list of qualified bidders, in a commercially reasonable
manner; (iii) initiate contact with all qualified bidders; (iv) send a
confidentiality agreement to all qualified bidders; (v) upon receipt
of a signed confidentiality agreement, send solicitation packages to
all interested bidders on behalf of the applicable Trustee; and (vi)
notify the Servicer of all potential bidders and anticipated
timetable.
(b) The general solicitation package will include: (i) the
prospectus from the public offering of the Notes and Certificates;
(ii) a copy of all monthly servicing reports or a copy of all annual
servicing reports and the prior year's monthly servicing reports;
(iii) a form of a Purchase Agreement and Sale and Servicing Agreement;
(iv) a description of the minimum purchase price required to cause the
Trustee to sell the Auction Property as set forth in Section 9.2 of
the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and
(vii) a preliminary data tape of the Pool Balance as of the related
Distribution Date reflecting the same data attributes used to create
the Cutoff Date tables for the Prospectus Supplement dated ________
__, 199_ relating to the offering of the Notes and Certificates.
(c) The applicable Trustee, with the assistance of the
Servicer and the Advisor, will maintain an auction package beginning
at the time of closing of the transaction, which will contain terms
(i)-(iii) listed in the preceding paragraph. If the Advisor is unable
to perform its role as advisor to the applicable Trustee, the Servicer
acting in its capacity under the Agreement will select a successor
Advisor and inform the applicable Trustee of its actions.
(d) The Advisor will send solicitation packages to all
bidders at least 15 business days before the date of the Auction.
Bidders will be required to submit any due diligence questions in
writing to the Advisor for determination of their relevancy, no later
than 10 business days
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before the date of the Auction. The Servicer and the Advisor
will be required to satisfy all relevant questions at least five
Business Days prior to the date of the Auction and distribute the
questions and answers to all bidders.
AUCTION PROCESS
(a) --------------------, in its role as Advisor to the
applicable Trustee, will be allowed to bid in the Auction, but will
not be required to do so.
(b) The Servicer will also be allowed to bid in the Auction
if it deems appropriate, but will not be required to do so.
(c) On the date of the Auction, all bids will be due by
facsimile to the offices of the applicable Trustee by 1:00 p.m. New
York City time, with the winning bidder to be notified by 2:00 p.m.
New York City time. All acceptable bids (as described in Section 9.2
of the Agreement) will be due on a conforming basis on the bid sheet
contained in the solicitation package.
(d) If the applicable Trustee receives fewer than two market
value bids from participants in the market for motor vehicle retail
installment sale contracts and other motor vehicle installment sale
contracts willing and able to purchase the Auction Property, the
applicable Trustee shall decline to consummate the sale.
(e) Upon notification to the winning bidder, a good faith
deposit equal to one percent (1%) of the Pool Balance will be required
to be wired to the applicable Trustee upon acceptance of the bid. This
deposit, along with any interest income attributable to it, will be
credited to the purchase price but will not be refundable. The
applicable Trustee will establish a separate account for the
acceptance of the good faith deposit, until such time as the account
is fully funded and all monies are transferred into the Collection
Account, such time not to exceed one Business Day before the related
Distribution Date (as described above).
(f) The winning bidder will receive on the date of the
Auction a copy of the draft Purchase Agreement, Sale and Servicing
Agreement and Servicer's Representations and Warranties (which shall
be substantially identical to the representations and warranties set
forth in Section ______ of the Agreement).
(g) ----------------, in its capacity as Advisor to the
applicable Trustee, will provide to the applicable Trustee a letter
concluding whether or not the winning bid is a fair market value bid.
----------------- will also provide such letter if it is the winning
bidder. In the case where ---------- or the Servicer is the winning
bidder it will in its letter provide for market comparable valuations.
(h) The Auction will stipulate that the Servicer be retained
to service the Receivables sold pursuant to the terms of the Purchase
and Sale Agreement and Servicing Agreement.
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EXHIBIT 10.2
-----------------------------------------------------------
FORM OF LOAN PURCHASE AGREEMENT,
between
BARNETT DEALER FINANCIAL SERVICES, INC.,
as Seller
and
BARNETT AUTO RECEIVABLES CORP.,
as Purchaser
Dated as of _______ __, 199_
-----------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1. Purchase and Sale of Receivables 3
2.2. The Closing 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Purchaser 4
3.2. Representations and Warranties of the Seller 6
ARTICLE IV
CONDITIONS
4.1. Conditions to Obligation of the Purchaser 13
4.2. Conditions to Obligation of the Seller 14
ARTICLE V
COVENANTS OF THE SELLER
5.1. Protection of Right, Title and Interest 15
5.2. Other Liens or Interests 16
5.3. Chief Executive Office 17
5.4. Costs and Expenses 17
5.5. Delivery of Receivable Files 17
5.6. Indemnification 17
5.7. Sale 17
5.8. No Petition 18
5.9. Collected Funds 18
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ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1. Obligations of the Seller 18
6.2. Repurchase Events 18
6.3. Seller's Assignment of Purchased Receivables 19
6.4. [Reserved] 19
6.5. Trust 19
6.6. Amendment 19
6.7. Accountants' Letters 20
6.8. Waivers 20
6.9. Notices 20
6.10. Costs and Expenses 20
6.11. Representations of the Seller and the Purchaser 20
6.12. Confidential Information 21
6.13. Headings and Cross-References 21
6.14. Third Party Beneficiaries 21
6.15. Governing Law 21
6.16. Counterparts 21
EXHIBITS
Exhibit A Schedule of Receivables
Exhibit B Location of Receivables
-ii-
<PAGE>
LOAN PURCHASE AGREEMENT, dated as of _______ __, 199_, by and between
Barnett Dealer Financial Services, Inc., a Florida corporation, having its
principal executive office at 10401 Deerwood Park Boulevard, Jacksonville, FL
32256 (the "Seller") and Barnett Auto Receivables Corp., a New York corporation,
having its principal executive office at 270 South Service Road, Melville, New
York 11747 (the "Purchaser").
WHEREAS, in the regular course of the Seller's business, the Seller
purchased from certain subsidiaries of Oxford Resources Corp., certain motor
vehicle retail installment sale contracts and other motor vehicle installment
chattel paper secured by new and used automobiles (including passenger cars,
sport/utility vehicles, light trucks and minivans) pursuant to the Loan Sale
Agreement.
WHEREAS, the Seller and the Purchaser wish to set forth the terms
pursuant to which the Receivables (as hereinafter defined), are to be sold by
the Seller to the Purchaser, which Receivables will be transferred by the
Purchaser, pursuant to the [Sale and Servicing Agreement] or [Pooling and
Servicing Agreement] (as hereinafter defined) to the Barnett Auto Trust 199_-_
(the "TRUST") to be created thereunder, which Trust will issue [notes (the
"NOTES") and certificates (the "Certificates")] representing beneficial
ownership interests in such Receivables and the other property of the Trust.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth
in the [Sale and Servicing Agreement] or [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 Loan Purchase Agreement and all amendments
and supplements hereof.
"CERTIFICATES" shall have the meaning assigned to such term in the
PREAMBLE.
"CLOSING DATE" shall mean ________ __, 199_.
"CUTOFF DATE" shall mean _______ __, 199_.
"DISTRIBUTION DATE" shall mean, for each Collection Period, the 15th
day of the following month or, if such 15th day is not a Business Day, the next
succeeding Business Day.
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"FINAL PROSPECTUS" shall have the meaning assigned to such term in the
Underwriting Agreement.
"INDENTURE" shall mean the Indenture dated as of _______ __, 199_
between the Trust and ____________, as trustee.
"LOAN SALE AGREEMENT" shall mean the Loan Sale Agreement dated as of
_______ __ 199_ among certain subsidiaries of Oxford Resources Corp. and the
Seller.
"NOTES" shall have the meaning assigned to said term in the PREAMBLE.
"ORIGINAL PURCHASE PRICE" shall mean $__________ by wire transfer in
immediately available funds, representing (i) the amount of money paid by
__________ to or at the direction of the Purchaser pursuant to the Underwriting
Agreement on the Closing Date minus (ii) the Reserve Fund Initial Deposit.
"ORIGINATOR" the subsidiaries of Oxford Resources Corp. that were
parties to the Loan Sale Agreement with respect to the receivables originated by
such subsidiary and the Seller with respect to Receivables originated by the
Seller.
"PRELIMINARY PROSPECTUS" shall have the meaning assigned to such term
in the Underwriting Agreement.
"PURCHASER" shall have the meaning assigned to such term in the
PREAMBLE.
"RECEIVABLE" shall mean each motor vehicle retail installment sale
contract for a Financed Vehicle which shall appear on the Schedule of
Receivables.
"REPURCHASE EVENT" shall have the meaning specified in Section 6.2
hereof.
"RESERVE FUND INITIAL DEPOSIT" equals $________.
"[SALE AND SERVICING AGREEMENT] OR [POOLING AND SERVICING AGREEMENT]"
shall mean the [Sale and Servicing Agreement] or [Pooling and Servicing
Agreement] dated as of _________ __, 199_, among Barnett Auto Receivables Corp.,
as seller, the Seller, as servicer and sponsor and the Trust.
"SCHEDULE OF RECEIVABLES" shall mean the list of Receivables annexed
hereto as Exhibit A.
"SUBSEQUENT PAYMENTS" means any amounts released from the Reserve
Account to the Purchaser pursuant to the [Sale and Servicing Agreement] or
[Pooling and Servicing Agreement] at such time as the Purchaser receives such
amounts.
"TRUST" shall mean the Barnett Auto Trust 199_-_ created by the Trust
Agreement.
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"TRUST PROPERTY" shall have the meaning specified in Section 2.1
hereof.
"UCC" shall mean the Uniform Commercial Code, as in effect from time
to time in the relevant jurisdictions.
"UNDERWRITING AGREEMENT" shall mean the Underwriting Agreement dated
________ __, 199_, among ________________, the Purchaser and the Seller.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1. PURCHASE AND SALE OF RECEIVABLES. On the Closing Date, subject to
the terms and conditions of this Agreement, the Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Seller, the Receivables
and the other Trust Property relating thereto.
(a) TRANSFER OF RECEIVABLES. On the Closing Date and
simultaneously with the transactions to be consummated on the Closing Date
pursuant to the [Sale and Servicing Agreement] or [Pooling and Servicing
Agreement], the Seller shall sell, transfer, assign, grant, set over and
otherwise convey to the Purchaser, without recourse (subject to the obligations
herein), whether now or hereafter acquired:
(i) all right, title and interest of the Seller in
and to the Receivables and all monies received thereon (other than any
proceeds from any Dealer commission) on or after the Cutoff Date and,
with respect to Receivables which are Actuarial Receivables, all monies
received thereon prior to the Cutoff Date that are due on or after the
Cutoff Date;
(ii) all right, title and interest of the
Seller in and to the security interests of the Seller or
the related Originator in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other
interest of the Seller in such Financed Vehicles;
(iii) all right, title and interest of the Seller in
and to any proceeds from claims on any physical damage, repossession
loss, skip, credit life and credit accident, vendor's single interest
and health insurance policies or certificates relating to the Financed
Vehicles or the Obligors;
(iv) all right, title and interest of the Seller in
and to refunds for the costs of extended service contracts with respect
to Financed Vehicles, refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies or
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certificates covering an Obligor or Financed Vehicle or his or her
obligations with respect to a Financed Vehicle and any recourse to
Dealers for any of the foregoing;
(v) the interest of the Seller in any proceeds
from any Receivable repurchased by a Dealer, pursuant to
a Dealer Agreement, as a result of a breach of representation or
warranty in the related Dealer Agreement or a default by an Obligor
resulting in the repossession of the Financed Vehicle under such Dealer
Agreement; and
(vi) the proceeds of any and all of the
foregoing (collectively, the "TRUST Property").
It is the intention of the parties hereto that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables and the other Trust Property from the Seller to the Purchaser,
conveying good title thereto free and clear of any Liens (however the parties
hereto understand that the Lien of the applicable Originator will be noted on
the certificate of title to the Financed Vehicles), and the Receivables and the
other Trust Property shall not be part of the Seller's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy or similar law. In the event that, notwithstanding the intent of the
Seller, the transaction and assignment contemplated hereby is held not to be a
sale, this Agreement shall constitute a grant of a security interest in the
property referred to in this Section 2.1 for the benefit of the Purchaser.
2.2. THE CLOSING. The sale and purchase of the Receivables shall take
place at a closing (the "CLOSING") at the offices of Stroock & Stroock & Lavan
LLP, 180 Maiden Lane, New York, New York 10038 on the Closing Date,
simultaneously with the closings under: (a) the [Sale and Servicing Agreement]
or [Pooling and Servicing Agreement] pursuant to which (i) the Purchaser will
assign all of its right, title and interest in and to the Receivables and the
other Trust Property to the Trust for the benefit of the Certificateholders and
(ii) the Trust will issue and deliver to the Purchaser in exchange for the
Receivables and the other Trust Property, the Notes and the Certificates and (b)
the Underwriting Agreement pursuant to which the Purchaser shall sell the Notes
and Certificates (other than those Certificates retained by the Purchaser) to
_________________.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Seller as of the date hereof and as of the
Closing Date:
(a) ORGANIZATION AND GOOD STANDING. The Purchaser is duly
organized and is validly existing as a corporation in good standing under the
laws of the State of New York, with corporate power and authority to own its
properties and to conduct its business as such properties shall be currently
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owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority and legal right to acquire and own the
Receivables.
(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 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 has been duly
authorized by the Purchaser by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement shall constitute a
legal, valid and binding obligation of the Purchaser enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
now or hereafter in effect relating to creditors' rights generally and subject
to general principles of equity (whether applied in a proceeding at law or in
equity).
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any of the terms and provisions of, nor constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation, as
amended, or by-laws of the Purchaser, or any indenture, agreement, or other
instrument to which the Purchaser 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 indenture, agreement, or other instrument (other than the [Sale
and Servicing Agreement] or [Pooling and Servicing Agreement]); nor violate any
law, 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.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or to the Purchaser's best knowledge, threatened against the Purchaser,
before any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Purchaser or its properties: (A)
asserting the invalidity of this Agreement, the Notes or the Certificates; (B)
seeking to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement; (C)
seeking any determination or ruling that might materially and adversely affect
the performance by the Purchaser of its obligations under, or the validity or
enforceability of, this Agreement, the Notes or the Certificates; or (b) seeking
to affect adversely the Federal or state income tax or ERISA attributes of the
Trust, the Noteholders or the Certificateholders.
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(g) ALL CONSENTS. All authorizations, licenses, consents,
orders or approvals of or registrations or declarations with any court,
regulatory body, administrative agency or other government instrumentality
required to be obtained, effected or given by the Purchaser in connection with
the execution and delivery by the Purchaser of this Agreement and the
performance by the Purchaser of the transactions contemplated by this Agreement,
have been duly obtained, effected or given and are in full force and effect,
except where failure to obtain the same would not have a material adverse effect
upon the rights of the Issuer, the Noteholders or the Certificateholders.
(h) INSOLVENCY. The Purchaser is not insolvent, will not be
made insolvent after giving effect to the conveyance set forth in Article II of
this Agreement and is not aware of any pending insolvency of the Purchaser.
3.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) The Seller hereby severally represents and
warrants to the Purchaser as of the date hereof and as of the Closing Date:
(i) ORGANIZATION AND GOOD STANDING. The
Seller is duly organized and is validly existing as a
corporation in good standing under the laws of the state
of its incorporation designated in the preamble hereof,
with corporate power and authority to own its properties
and to conduct its business as such properties shall be
currently owned and such business is presently conducted
and had at all relevant times, and shall have, power,
authority and legal right to acquire, own and sell the
Receivables.
(ii) 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 where the failure to do so would have
a material adverse effect on its business or the transaction
contemplated in this Agreement.
(iii) POWER AND AUTHORITY. The Seller has the
corporate power and authority to execute and deliver this Agreement and
to carry out its terms; the Seller has full power and authority to sell
and assign the property sold and assigned to the Purchaser and has duly
authorized such sale and assignment to the Purchaser by all necessary
corporate action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Seller by all necessary
corporate action.
(iv) VALID SALE; BINDING OBLIGATION. This
Agreement effects a valid sale, transfer and assignment
of the Receivables and the other Trust Property conveyed
by the Seller to the Purchaser pursuant to Section 2.1,
enforceable against creditors of and purchasers from the
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Seller; and this Agreement constitutes a legal, valid and
binding obligation of the Seller enforceable in accordance
with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or
hereafter in effect relating to creditors' rights
generally and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(v) NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and the fulfillment of the
terms hereof do not result in any material breach of any of the terms
and provisions of, nor constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation, as amended, or
by-laws of the Seller, or any indenture, agreement, or other instrument
to which the Seller 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 the [Sale and Servicing Agreement] or [Pooling
and Servicing Agreement]); nor violate any law, order, rule or
regulation applicable to the Seller of any court or of any Federal or
State regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) NO PROCEEDINGS. There are no proceedings or
investigations pending, or to the Seller's best knowledge, threatened
against the Seller, before any court, regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Seller or its properties: (A) asserting the invalidity of this
Agreement, the Notes or the Certificates; (B) seeking to prevent the
issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement; (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Notes or the Certificates; or
(D) seeking to adversely affect the Federal or State tax or ERISA
attributes of the Trust, the Noteholders or the Certificateholders.
(vii) ALL CONSENTS. All authorizations, licenses,
consents, orders or approvals of or registrations or declarations with
any court, regulatory body, administrative agency or other government
instrumentality required to be obtained, effected or given by the
Seller in connection with the execution and delivery by the Seller of
this Agreement and the performance by the Seller of the transactions
contemplated by this Agreement, have been duly obtained, effected or
given and are in full force and effect, except where failure to obtain
the same would not have a material adverse effect upon the rights of
the Issuer, the Noteholders or the Certificateholders.
(vii) INSOLVENCY. The Seller is not insolvent, will
not be made insolvent after giving effect to the conveyance set forth
in Article II of this Agreement, and is not aware of any pending
insolvency of the Seller.
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(ix) SECURITY INTERESTS. The Financial
Vehicles sold by the Seller to the Purchaser hereunder
are not subject to any security interest.
(x) CHIEF EXECUTIVE OFFICES. The principal
place of business and chief executive office of the
Seller is as specified in the preamble of this Agreement.
(b) The Seller makes the following representations and
warranties relating to the Receivables and the other related Trust Property on
which the Purchaser relies in accepting such Receivables and the other Trust
Property relating thereto. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the sale, transfer,
and assignment of such Receivables and the other Trust Property relating thereto
to the Purchaser and the subsequent assignment and transfer thereof pursuant to
the [Sale and Servicing Agreement] or [Pooling and Servicing Agreement] and
Indenture:
(i) TITLE. It is the intention of the Seller that the
transfer and assignment contemplated by the Loan Sale Agreement
constitute a sale of the Receivables conveyed by the Originators to the
Purchaser and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the
filing of a petition for receivership by or against the Seller. No
Receivable has been sold or transferred, by any Originator to any
Person other than the Seller and no Receivable is subject to any lien
other than pursuant to the Loan Sale Agreement. Immediately prior to
the transfer and assignment therein contemplated, each Originator had
good and marketable title to each related Receivable, free and clear of
all Liens and, immediately upon the transfer thereof, the Seller had
good and marketable title to each such Receivable, free and clear of
all Liens; and the transfer of the Receivables to the Seller has been
perfected under the UCC. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables conveyed by the Seller to the Purchaser pursuant to Section
2.1 and that the beneficial interest in and title to such Receivables
not be part of the debtor's estate in the event of the filing of a
petition for receivership by or against the Seller. No Receivable has
been sold or transferred, by the Seller to any Person other than the
Trust and no Receivable is subject to any lien other than payment to
the Basic Documents. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable, free and clear of all Liens and, immediately upon the
transfer thereof, the Purchaser shall have good and marketable title to
each such Receivable, free and clear of all Liens; and the transfer of
the Receivables to the Purchaser has been perfected under the UCC.
(i) ALL FILINGS MADE. All filings (including UCC
filings) necessary in any jurisdiction to give the Purchaser a first
priority perfected security interest in the Receivables, shall have
been presented to the Trustee, or behalf of the Purchaser, for filing
in the appropriate filing office. Upon such filing, the Purchaser will
have a first priority protected security interest in the Trust
Property.
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(iii) CHARACTERISTICS OF RECEIVABLES. Each Receivable
(A) has been either originated by a Dealer in the regular course of
such Dealer's business and purchased from such Dealer by an Originator
in the ordinary course of the Originator's business or otherwise
originated by the Originator in the ordinary course of the
Originator's business, and each Obligor was approved in accordance
with the Seller's standard underwriting procedures in effect at the
time such Receivable was originated or purchased, (B) has created or
shall create a valid, subsisting and enforceable first priority
security interest in favor of the related Originator in the related
Financed Vehicle, which security interest has been assigned by the
related Originator to the Seller and by the Seller to the Purchaser and
which is assignable by the Purchaser to the Trust and by the Trust to
the Trustee, (C) contains customary and enforceable provisions
under the laws of the state governing such Receivable 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 that fully amortizes the Amount
Financed by maturity (except for the last payment, which may be
different from the level payment and except, with respect to a Balloon
Loan, to the extent of the Balloon Payment).
(iv) SCHEDULE OF RECEIVABLES. The information set
forth in Schedule A to this Agreement is true and correct in all
material respects as of the close of business on the Cutoff Date and no
selection procedures believed by the Seller to be adverse to the
Noteholders or the Certificateholders were utilized in selecting the
Receivables. The Computer Tape regarding the Receivables is true and
correct in all material respects as of the Cutoff Date.
(v) COMPLIANCE WITH LAW. Each Receivable, the sale of
the Financed Vehicle and the sale of any physical damage and credit
life and credit accident and health insurance and any extended service
contracts complied in all material respects at the time it was
originated or made and at the Closing Date (after giving effect to the
transactions contemplated by the Basic Documents) 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 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 Soldier's and Sailor's
Civil Relief Act of 1940, state adaptations of the National Consumer
Act and the Uniform Consumer Credit Code (if applicable), and other
consumer credit laws and equal credit opportunity and disclosure laws.
(vi) BINDING OBLIGATION. Each Receivable represents
the legal, valid and binding payment obligation in writing of the
Obligor thereunder, enforceable by the holder thereof in accordance
with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
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reorganization and similar laws now or hereafter in effect related to
or affecting creditors' rights generally and subject to general
principles of equity (whether applied in a proceeding at law or in
equity) and all parties to such Receivable had full legal capacity to
execute and deliver such Receivable and all other documents related
thereto and to grant the security interest purported to be granted
thereby.
(vii) NO GOVERNMENT OBLIGOR. None of the
Receivables is due from the United States of America or
any State or from any agency, department or instrumentality of the
United States of America or any State.
(viii) SECURITY INTEREST IN FINANCED VEHICLE.
Immediately prior to the sale, assignment, and transfer thereof under
the Agreement, (i) each Receivable shall be secured by a validly
perfected first priority security interest in the Financed Vehicle in
favor of the Seller as secured party, or (ii) application has been made
with the appropriate governmental authority for a valid perfected first
priority security interest in the Financed Vehicle in favor of the
Seller, and such security interest is or shall be prior to all other
Liens upon and security interests in such Financed Vehicle which now
exist or may hereafter arise or be created (except, as to priority, for
any tax liens or mechanics' liens which may arise after the Closing
Date).
(ix) RECEIVABLES IN FORCE. No Receivable has been
satisfied, subordinated or rescinded, nor has any Financed Vehicle been
released from the Lien granted by the related Receivable in whole or in
part unless another vehicle has been substituted as collateral securing
the Receivable without any other modification to such Receivable.
(x) NO WAIVER. No provision of a Receivable
has been modified or waived except as reflected in the
Receivable File relating to such Receivable.
(xi) NO AMENDMENTS. No Receivable has been amended,
except as would have been permitted pursuant to Section 4.2 of the
[Sale and Servicing Agreement] or [Pooling and Servicing Agreement] if
such Receivable had been owned by the Trust.
(xii) NO DEFENSES. No right of rescission,
setoff, counterclaim or defense has been asserted or
threatened with respect to any Receivable. The operation
of the terms of any Receivable or the exercise of any right thereunder
will not render such Receivable unenforceable in whole or in part or
subject to any such right of rescission, setoff, counterclaim, or
defense.
(xiii) NO LIENS. As of the Cutoff Date, there are no
Liens or claims, including Liens for work, labor, materials or unpaid
state or federal taxes relating to any Financed Vehicle securing the
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related Receivable, that are or may be prior to or equal to the Lien
granted by such Receivable.
(xiv) NO DEFAULT. Except for payment
delinquencies continuing for a period of not more than
thirty days as of the Cutoff Date and, except as permitted
in this paragraph, no default, breach, violation or event (in any such
case) permitting acceleration under the terms of any Receivable has
occurred; and no continuing condition that with notice or the lapse of
time would constitute a default, breach, violation or event (in any
such case) permitting acceleration under the terms of any Receivable
has arisen; and the Seller has not waived and shall not waive any of
the foregoing.
(xv) MATURITY OF RECEIVABLES. Each Receivable has an
original maturity of not more than __ months; the weighted average
original maturity of the Receivables is __ months as of the Cutoff
Date; the remaining term of each Receivable is __ months or less as of
the Cutoff Date; the weighted average remaining term of the Receivables
is __ months as of the Cutoff Date; and the latest scheduled maturity
of any Receivable shall be no later than the Final Scheduled Maturity
Date.
(xvi) NO BANKRUPTCIES. No Obligor on any
Receivable was noted in the related Receivable File as having filed
for bankruptcy in a proceeding which remained undischarged as of the
Cutoff Date.
(xvii) NO REPOSSESSIONS. As of the Cutoff
Date, no Financed Vehicle securing any Receivable is in
repossession status.
(xviii) CHATTEL PAPER. Each Receivable
constitutes "chattel paper" as defined in the UCC.
(xix) APR. The weighted average Annual
Percentage Rate of the Receivables as of the Cutoff Date
is approximately __ %.
(xx) PRINCIPAL BALANCE. Each Receivable has an
outstanding principal balance as of the Cutoff Date of not less than
$__ or more than $__. The average principal balance of the Receivables
as of the Cutoff Date is $__. The aggregate principal balance of the
Receivables as of the Cutoff Date is $__.
(xxi) FINANCING. Approximately __ % of the aggregate
principal balance of the Receivables, constituting approximately __ %
of the number of Receivables, as of the Cutoff Date, represents
financing of new vehicles; the remainder of the Receivables represents
financing of used vehicles. Approximately __ % of the aggregate
principal balance of the Receivables, constituting approximately __ %
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of the number of Receivables, as of the Cutoff Date, represents
financing of Balloon Loans. Approximately __ % of the aggregate
Principal Balance of the Receivables, constituting approximately __ %
of the number of Receivables, as of the Cutoff Date, represents
financing of Simple Interest Receivables; the remainder of the
Receivables represents financing of Actuarial Receivables.
(xxii) PAID-AHEAD. Approximately __ % of the
aggregate Principal Balance of the Receivables, constituting
approximately __ % of the number of Receivables are paid-ahead for a
period of one to six months. No Receivable is paid- ahead more than
eight months.
(xxiii) INSURANCE; OTHER. The related Originator, in
accordance with its customary procedures, has confirmed (A) that each
Obligor has obtained insurance covering the Financed Vehicle as of the
date of execution of the Receivable insuring against loss and damage
due to fire, theft, collision and other risks generally covered by
comprehensive and collision coverage and that each Receivable requires
the Obligor to maintain such insurance naming the applicable Originator
and its successors and assigns as a loss payee, (B) each Receivable
that finances the cost of premiums for credit life and credit accident
and health insurance is covered by an insurance policy or certificate
of insurance naming the applicable Originator as loss payee
(lienholder) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an
extended service contract, the respective Financed Vehicle which
secures the Receivable is covered by an extended service contract.
(xxiv) LAWFUL ASSIGNMENT. No Receivable has been
originated in, or as of the Closing Date is subject to the laws of, any
jurisdiction under which the sale, transfer and assignment of such
Receivable or this Agreement or the pledge of such Receivable to the
Trustee under the Indenture (i) is unlawful, void, voidable or
unenforceable in accordance with its terms or (ii) would render such
Receivable void, voidable or unenforceable in accordance with its
terms. No Originator has entered into
any agreement with any account debtor that prohibits, restricts or
conditions the assignment of all or any portion of the Receivable.
(xxv) NO INSURANCE PREMIUMS. As of the Cutoff
Date, no portion of the principal balance of any Receivable included
amounts attributable to the payment of any physical damage or theft
insurance premium.
(xxvi) ONE ORIGINAL. There is only one manually
executed original copy of each Receivable.
(xxvii) ORIGINATION OF RECEIVABLES. Based on
the billing address of the Obligors and the principal
balance of Receivables as of the Cutoff Date, approximately __ % of the
Receivables were originated in __, approximately, approximately __ % of
the Receivables were originated in __ and approximately __ % of the
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Receivables were originated in __, each Obligor has been approved by
the Originator based on the Originator's standard underwriting
procedures as in effect at the time the related Receivable was entered
into. Based on the billing address of the Obligors and the principal
balance of the Receivables as of the Cutoff Date, not more than 10% of
the Receivables were originated in any one state other than __, __ or
__.
(xxviii) RECEIVABLE FILES. The Receivable Files
are kept at the Purchaser's or an affiliate's office
listed in Exhibit B.
(xxix) COMPUTER RECORDS. As of the Closing
Date, the accounting and computer records relating to the
Receivables of the Seller have been marked to show the
absolute ownership by the Owner Trustee on behalf of the
Trust of the Receivables.
(xxx) RECEIVABLES. The only Receivables sold to the
Purchaser by the Seller pursuant to this Agreement are Receivables
originated by subsidiaries of Barnett Bank, N.A.
ARTICLE IV
CONDITIONS
4.1. 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 in all material
respects on the Closing Date with the same effect as if then made, and the
Seller shall have performed in all material respects all obligations to be
performed by it hereunder on or prior to the Closing Date.
(b) COMPUTER FILES MARKED. The Seller shall, at its own expense, on or
prior to the Closing Date, indicate in its computer files and cause each
Originator to indicate in its computer files that the Receivables have been sold
to the Purchaser pursuant to this Agreement and will be sold to the Trust
pursuant to the [Sale and Servicing Agreement] or [Pooling and Servicing
Agreement] and shall deliver to the Purchaser the Schedule of Receivables
certified by the Chairman, the President, any Vice President or the Treasurer of
the Seller to be true, correct and complete.
(c) RECEIVABLE FILES DELIVERED. The Seller shall deliver the
Receivable Files relating to the Receivables to the Purchaser at the offices
specified in Schedule B to the [Sale and Servicing Agreement] or [Pooling and
Servicing Agreement] on or prior to the Closing Date.
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(d) DOCUMENTS TO BE DELIVERED BY THE SELLER AT THE CLOSING.
(i) EVIDENCE OF UCC FILING. On or prior to the
Closing Date, the Seller shall present to the Trustee, on behalf of the
Purchaser, for filing, at its own expense, a UCC-3 financing statement
in each jurisdiction in which it or an Originator has granted a
security interest covering any Receivable to be conveyed by the Seller
to the Purchaser hereunder, executed by the related secured party. On
or prior to the Closing Date, the Seller shall present to the Trustee,
on behalf of the Purchaser, for filing, at its own expense, a UCC-1
financing statement in each jurisdiction in which such filing is
required by applicable law, executed by the Seller, as seller or debtor
(and the related Originator with respect to the transfer of Receivables
to the Seller under the Loan Sale Agreement), and naming the Purchaser,
as purchaser or secured party, naming the Receivables and the other
Trust Property conveyed hereafter as collateral,
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 such Receivables to the Purchaser. The Seller shall
deliver a file-stamped copy, or other evidence satisfactory to the
Purchaser of such filings, to the Purchaser as soon as practicable
after the Closing Date.
(ii) OTHER DOCUMENTS. Such other documents as
the Purchaser may reasonably request.
(e) OTHER TRANSACTIONS. The transactions contemplated by the [Sale and
Servicing Agreement] or [Pooling and Servicing Agreement] and the Underwriting
Agreement shall be consummated on the Closing Date.
4.2. 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 in all material
respects on the Closing Date with the same effect as if then made, and the
Purchaser shall have performed all obligations in all material respects to be
performed by it hereunder on or prior to the Closing Date.
(b) RECEIVABLES PURCHASE PRICE. At the Closing Date, the Purchaser
will pay to the Seller the Purchase Price represented by the aggregate principal
balance of the Receivables sold hereunder by the Seller. At such time as any
Subsequent Payments are to be made, the Purchaser will pay to the Seller the
Subsequent Payment to be made, represented by the aggregate principal balance of
the Receivables sold hereunder by the Seller.
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ARTICLE V
COVENANTS OF THE SELLERS
The Seller severally agrees with the Purchaser as follows; PROVIDED,
HOWEVER, that to the extent that any provision of this ARTICLE V conflicts with
any provision of the [Sale and Servicing Agreement] or [Pooling and Servicing
Agreement], the [Sale and Servicing Agreement] or [Pooling and Servicing
Agreement] shall govern:
5.1. 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 Purchaser in
and to the Receivables sold by it and the other related Trust Property to be
promptly filed, and at all times to be kept recorded, registered and filed, all
in such manner and in such places as may be required by law fully to preserve
and protect the right, title and interest of the Purchaser hereunder to such
Receivables and the other Trust Property. 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 Section
5.1(a).
(b) NAME AND OTHER CHANGES. If the Seller makes any change in its
name, identity or corporate structure which would make any financing statement
or continuation statement filed pursuant hereto seriously misleading within the
applicable provisions of the UCC or any title statute, the Seller shall give the
Owner Trustee, the Trustee, and the Purchaser written notice of any such change
and shall file appropriate amendments to all previously filed financing
statements or continuation statements within thirty days of the effectiveness
thereof. Upon any relocation of its principal executive office, the Seller shall
give the Owner Trustee, the Trustee, and the Purchaser written notice thereof
within a reasonable period of time (not to exceed 30 days) thereafter 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 the Seller shall within such
time file any such amendment or new financing statement.
(c) ACCOUNTS AND RECORDS. The Servicer shall maintain accounts and
records as to each Receivable accurately and in sufficient detail to permit 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).
(d) MAINTENANCE OF COMPUTER SYSTEMS. The Seller shall maintain its
computer systems and files so that, from and after the time of sale hereunder of
the Receivables to the Purchaser, the Servicer's master computer records
(including any back-up archives) and the Seller's files that refer to a
Receivable shall indicate clearly the interest of the Purchaser in such
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Receivable and that such Receivable is owned by the Purchaser. Indication of the
Purchaser's ownership of a Receivable shall be deleted from or modified on the
Servicer's computer systems and the Seller's files when, and only when, the
Receivable shall have been paid in full, by the Seller or Servicer, or sold to
the Trust under the Sale and Servicing Agreement.
(e) SALE OF OTHER RECEIVABLES. If at any time the Seller shall propose
to sell, grant a security interest in, or otherwise transfer any interest in any
automobile receivables (other than the Receivables) to any prospective
purchaser, lender, or other transferee, the Seller shall give to such
prospective purchaser, lender, or other transferee computer tapes, records, or
print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold and is owned by the Purchaser unless such
Receivable has been paid in full or repurchased.
(f) ACCESS TO RECORDS. The Servicer and each Originator shall permit
the Purchaser and its agents at their own cost and expense at any time during
normal business hours and upon reasonable written notice to inspect, audit, and
make copies of and abstracts from the applicable Originator's records regarding
any Receivable.
(g) LIST OF RECEIVABLES. Upon request, the Servicer shall furnish to
the Purchaser, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then owned by the Purchaser, together with a
reconciliation of such list to the Schedule of Receivables.
5.2. OTHER LIENS OR INTERESTS. Except for the conveyances hereunder
and pursuant to the Sale and Servicing Agreement, each Originator and the Seller
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any interest therein, and each
Originator and the Seller shall defend the right, title, and interest of the
Purchaser in, to and under such Receivables and each related Financed Vehicle
against all claims of third parties claiming through or under the Seller;
PROVIDED, HOWEVER, that the Seller's obligations under this Section 5.2 shall
terminate upon the termination of the Trust pursuant to the [Sale and Servicing
Agreement] or [Pooling and Servicing Agreement].
5.3. CHIEF EXECUTIVE OFFICE. During the term of the Receivables, each
Originator will maintain its principal place of business and chief executive
office in the State of New York and the Seller will maintain its principal place
of business in Florida.
5.4. 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 right, title and interest in and to the Receivables.
5.5. DELIVERY OF RECEIVABLE FILES. On or prior to the Closing Date,
the Seller shall deliver the Receivable Files relating thereto to the Purchaser
at the location specified in Exhibit B hereto and shall cause the Receivable
Files to be marked to indicate the sale thereof to the Purchaser.
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<PAGE>
5.6. INDEMNIFICATION. (a) The Seller shall indemnify the Purchaser for
any liability as a result of the failure of a Receivable originated by it to be
originated in compliance with all requirements of law and for any material
breach of any of its representations and warranties contained herein.
(b) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all reasonable costs, expenses, losses,
damages, claims, and liabilities, resulting from the use, ownership, or
operation by the Seller or any affiliate thereof of a Financed Vehicle related
to a Receivable originated by it.
(c) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all taxes, except for taxes on the net income
of the Purchaser, that may at any time be asserted against the Purchaser with
respect to the transactions contemplated herein with respect to the Receivables
originated by it, including, without limitation, any sales, gross receipts,
general corporation, tangible personal property, privilege, or license taxes and
reasonable costs and expenses in defending against the same.
(d) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all reasonable costs, expenses, losses,
damages, claims and liabilities to the extent that such reasonable cost,
expense, loss, damage, claim or liability resulted from the gross negligence,
willful misfeasance, or bad faith of the Seller in the performance of its duties
under the Agreement, or by reason of reckless disregard of the Seller's
obligations and duties under this Agreement.
5.7. SALE. The Seller agrees to treat this conveyance as a sale on all
relevant books, records and other applicable documents.
5.8. NO PETITION. The Seller, by entering into this Agreement, hereby
covenants and agrees that it will not at any time institute against the
Purchaser, or join in any institution against the Purchaser 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 this Agreement.
5.9. COLLECTED FUNDS. The Seller hereby covenants that on the Closing
Date it will deposit or cause to be deposited all collected funds received prior
to the Closing Date and conveyed to the Purchaser hereunder.
ARTICLE VI
MISCELLANEOUS PROVISIONS
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6.1. OBLIGATIONS OF THE SELLER . The obligations of the Seller under
this Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
6.2. REPURCHASE EVENTS. The Seller hereby covenants and agrees with
the Purchaser for the benefit of the Purchaser, the Owner Trustee, the Trustee,
the Noteholders and the Certificateholders, that the occurrence of a breach of
any representations and warranties contained in Section 3.2(b) hereof (without
regard to any limitations regarding knowledge) shall constitute events
obligating the Seller to repurchase the affected Receivables hereunder
("Repurchase Events"), at the Purchase Amount from the Trust. The provisions of
this Section 6.2 are intended to grant the Trustee a direct right against the
Seller to demand performance hereunder, and in connection therewith the Seller
waives any requirement of prior demand against the Purchaser and waives any
defaults it would have against the Purchaser with respect to such repurchase
obligation. Any such purchase shall take place in the manner specified in
[Section 3.2 of the [Sale and Servicing Agreement]] [Section ____ of the Pooling
and Servicing Agreement]. The sole remedy of the Noteholders, the
Certificateholders, the Trust, the Owner Trustee, the Trustee or the Purchaser
against the Seller, with respect to any Repurchase Event shall be to enforce the
Seller's obligation to purchase such Receivables pursuant to this Agreement;
PROVIDED, HOWEVER, that the Seller shall indemnify the Owner Trustee, the
Trustee, the Trust, the Noteholders and the Certificateholders against all
reasonable costs, reasonable expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted against
or incurred by any of them, as a result of third party claims arising out of the
events or facts giving rise to such breach. Upon receipt of the Purchase Amount,
the Purchaser shall cause the Trust to release the related Receivables File to
the Seller and to execute and deliver all instruments of transfer or assignment,
without recourse, as are necessary to vest in the Seller title to the
Receivable.
6.3. SELLER'S ASSIGNMENT OF PURCHASED RECEIVABLES. With respect to all
Receivables repurchased by the Seller pursuant to this Agreement, the Purchaser
shall assign, without recourse except as provided herein, representation or
warranty, to the Seller all the Purchaser's right, title and interest in and to
such Receivables, and all security and documents relating thereto.
6.4. [Reserved]
6.5. TRUST. The Seller acknowledges that the Purchaser will, pursuant
to the [Sale and Servicing Agreement] or [Pooling and Servicing Agreement], sell
the Receivables to the Trust and assign its rights under this Agreement to the
Trust for the benefit of the Noteholders and Certificateholders and that the
representations and warranties contained in this Agreement and the rights of the
Purchaser under this Agreement, including under Sections 6.2 and 6.3 hereof are
intended to benefit such Trust and the Noteholders and Certificateholders. The
Seller also acknowledges that the Trust on behalf of the Noteholders and
Certificateholders as assignee of the Purchaser's rights hereunder may directly
enforce, without making any prior demand on the Purchaser, all the rights of the
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Purchaser hereunder including the rights under Section 6.2 and 6.3 hereof. The
Seller hereby consents to such sale and assignment.
6.6. AMENDMENT. This Agreement may be amended by the Purchaser and the
Seller, with the consent of the Trustee and the Owner Trustee (which consent may
not be unreasonably withheld), but without the consent of any of the Noteholders
or the Certificateholders, to cure any ambiguity or defect, 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
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 Purchaser
and the Seller, with the consent of the Trustee and the Owner 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 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, 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 affected
thereby.
Prior to the execution of any such amendment or consent, the Trustee
and Owner Trustee shall furnish written notification of the substance of such
amendment or consent to the Rating Agencies. 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 and the
Trustee shall furnish written notification to each Noteholder.
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 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 that all conditions precedent to the execution and
delivery of such amendment have been satisfied and the Opinion of Counsel.
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6.7. ACCOUNTANTS' LETTERS. (a) ______________ will review the
characteristics of the Receivables described in the Schedule of Receivables set
forth as Exhibit A hereto and will compare those characteristics to the
information with respect to the Receivables contained in the Preliminary
Prospectus and the Final Prospectus; (b) the Seller will cooperate with the
Purchaser and ______________ in making available all information and taking all
steps reasonably necessary to permit such accountants to complete the review set
forth in Section 6.7(a) above and to deliver the letters required of them under
the Underwriting Agreement; (c) ______________ will deliver to the Purchaser a
letter, dated the date of the Final Prospectus, in the form previously agreed to
by the Seller and the Purchaser, with respect to the financial and statistical
information contained in the Preliminary Prospectus under the caption
"Delinquency Experience" and "Historical Net Loss Experience," certain
information relating to the Receivables on magnetic tape obtained from the
Seller and with respect to such other information as may be agreed in the form
of letter; and (d) ______________ will deliver to the Purchaser a letter, dated
the Closing Date, in the form previously agreed to by the Seller and the
Purchaser, with respect to the financial and statistical information contained
in the Final Prospectus under the caption "Delinquency Experience" and
"Historical Loss Experience," certain information relating to the Receivables on
magnetic tape obtained from the Seller and with respect to such other
information as may be agreed in the form of letter.
6.8. WAIVERS. No failure or delay on the part of the Purchaser in
exercising any power, right or remedy under this Agreement 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.
6.9. NOTICES. All communications and notices pursuant hereto to either
party shall be in writing or by telegraph or telex and addressed or delivered to
it at its address (or in case of telex, at its telex number at such address)
shown in the opening portion of this Agreement or at such other address as may
be designated by it by notice to the other party and, if mailed or sent by
telegraph or telex, shall be deemed given when mailed, communicated to the
telegraph office or transmitted by telex.
6.10. COSTS AND EXPENSES. The Seller will pay all expenses incident to
the performance of their respective 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 security interests in the Financed Vehicles and
the enforcement of any obligation of the Seller hereunder.
6.11. 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 2.2 hereof.
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6.12. 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] or [Pooling and
Servicing Agreement] or as required by law.
6.13. 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.
6.14. THIRD PARTY BENEFICIARIES. The parties hereto hereby expressly
agree that each of the Owner Trustee for the benefit of the Certificateholders
shall be third party beneficiaries and the Trustee for the benefit of the
Noteholders with respect to this Agreement, PROVIDED, HOWEVER, that no third
party other than the Owner Trustee or Trustee shall be deemed a third party
beneficiary of this Agreement.
6.15. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
6.16. 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.
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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date and year first above written.
BARNETT DEALER FINANCIAL SERVICES, INC.
By: ___________________________
Name:
Title:
BARNETT AUTO RECEIVABLES CORP.
By: ___________________________
Name:
Title:
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EXHIBIT A
Schedule of Receivables
<PAGE>
EXHIBIT B
Location of Receivables
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK NATIONAL ASSOCIATION
F.K.A. FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0417860
(State of Incorporation) (I.R.S. Employer Identification No.)
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
(Address of Principal Executive (Zip Code)
Offices)
BARNETT AUTO RECEIVABLES CORP.
(Exact name of registrant as specified in its charter)
New York APPLICATION PENDING
(State of Incorporation) (I.R.S. Employer
Identification No.)
270 South Service Road
Melville, New York 11747
(Address of Principal Executive (Zip Code)
Offices)
Asset-Backed Notes
(Title of the Indenture Securities)
<PAGE>
GENERAL
1. GENERAL INFORMATION Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising
authority to which it is subject. Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
(Yes)
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe
each such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which
the Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this
statement of eligibility and qualification.
*1. Copy of Articles of Association.
*2. Copy of Certificate of Authority to commence Business.
*3. Authorization of the Trustee to exercise corporate
trust powers (included in Exhibits 1 and 2; no separate
instrument).
*4. Copy of existing By-Laws.
5. Copy of each Indenture referred to in Item 4. N/A
6. The consents of the Trustee required by Section 321(b)
of the act.
**7. Copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
--------------
* INCORPORATED BY REFERENCE TO FILE NUMBER 333-30939
** INCORPORATED BY REFERENCE TO FILE NUMBER 333-26679
<PAGE>
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Chicago and State of Illinois on the 15th day of August, 1997.
U.S. BANK NATIONAL ASSOCIATION
/S/MELISSA A. ROSAL
MELISSA A. ROSAL
Vice President
/S/MICHAEL T. GOODWIN
MICHAEL T. GOODWIN
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: August 15, 1997
U.S. BANK NATIONAL ASSOCIATION
/S/MELISSA A. ROSAL
MELISSA A. ROSAL
Vice President
