As filed with the Securities and Exchange Commission on September 29, 1998
Registration No. 333-63005
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SSB VEHICLE SECURITIES INC.
(Sponsor of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
Delaware 13-4010808
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
Seven World Trade Center
New York, New York 10048
(212) 783-7000
(Address, Including ZIP Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Zachary Snow
Secretary
SSB Vehicle Securities Inc.
Seven World Trade Center
New York, New York 10048
(212) 783-7000
(Name, Address, Including ZIP Code, and Telephone Number, Including Area Code,
of Agent for Service)
Copies to:
Jack M. Costello, Jr., Esq.
Brown & Wood LLP
One World Trade Center
New York, New York 10048
(212) 839-5816
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Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /_______
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. :
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Amount to Be Amount of
Securities Registered(1) Proposed Maximum Offering Proposed Maximum Aggregate Registration Fee(3)
to Be Registered Price Per Unit (2) Offering Price(2)
=================== =================== ============================= ============================= ========================
<S> <C> <C> <C> <C>
Asset Backed $3,000,000,000 100% $3,000,000,000 $885,000
Securities
=================== =================== ============================= ============================= ========================
</TABLE>
(1) This Registration Statement relates to the initial offering from time to
time of the Asset Backed Notes and Asset Backed Certificates and to any resales
thereof in market making transactions by Salomon Smith Barney Inc. or its
affiliates to the extent required.
(2) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
(3) Previously paid.
PURSUANT TO RULE 429, THE PROSPECTUS AND FORMS OF PROSPECTUS SUPPLEMENT
CONTAINED IN THIS REGISTRATION STATEMENT ALSO RELATE TO, AND THIS REGISTRATION
STATEMENT CONSTITUTES A POST-EFFECTIVE AMENDMENT TO, REGISTRATION STATEMENT NO.
333-41949, WHICH BECAME EFFECTIVE ON MARCH 26, 1998, AND ANY UNSOLD SECURITIES
THEREUNDER.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
INTRODUCTORY NOTE
This Registration Statement contains a form of Prospectus relating to the
offering of series of Asset Backed Notes and/or Asset Backed Certificates by
various Trusts created from time to time by SSB Vehicle Securities Inc. and two
forms of Prospectus Supplement relating to the offering by a Trust of the
particular series of Asset Backed Notes and Asset Backed Certificates or of
Asset Backed Certificates, as applicable, described therein. Each form of
Prospectus Supplement relates only to the securities described therein and is a
form that may be used by the Registrant to offer Asset Backed Notes and/or Asset
Backed Certificates under this Registration Statement.
<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 supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Subject to completion, September 29, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 199__)
$[ ]
[________________________] TRUST 199 -[ ]
[FLOATING RATE] ASSET BACKED NOTES, CLASS [ ]
[FLOATING RATE] ASSET BACKED NOTES, CLASS [ ]
[ %] ASSET BACKED CERTIFICATES
SSB VEHICLE SECURITIES INC.
DEPOSITOR
[--------------------------------]
SERVICER
--------------------
[________________] Trust 199 [ ] (the "TRUST") will be governed pursuant to a
Trust Agreement to be dated as of , ____ 199 ____ , ____ between _____ SSB _____
Vehicle _____ Securities _____ Inc. _____ (the _____ "DEPOSITOR") _____ and ____
[ ____ ], ____ as [Owner] Trustee. The Trust will issue $ aggregate principal
amount of [Floating Rate] Asset Backed Notes, Class [ ] (the "CLASS [ ] NOTES")
and $ aggregate principal amount of [Floating Rate] Asset Backed Notes, Class [
] (the "CLASS [ ] NOTES" and, together with the Class [ ] Notes, the "NOTES")
pursuant to an Indenture to be dated ____ as of , ____ 199 , ____ between ____
the ____ Trust ____ and , as ____ Indenture ____ Trustee. ____ [No ____
principal payments shall be made on the Class [ ] Notes until the Class [ ]
Notes have been paid in full and, to that extent, the rights of the holders of
the Class [ ] Notes to receive distributions with respect to the Receivables are
subordinated to the rights of the holders of the Class [ ] Notes, as more fully
described herein.
(Cover continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH UNDER "RISK
FACTORS" ON PAGE S-10 HEREOF AND BEGINNING ON PAGE 8 OF THE ACCOMPANYING
PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN
SSB VEHICLE SECURITIES INC., THE SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES.
NONE OF THE NOTES, THE CERTIFICATES OR THE RECEIVABLES IS INSURED OR GUARANTEED
BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
ORIGINAL PRICE UNDERWRITING PROCEEDS TO
PRINCIPAL TO DISCOUNT THE
AMOUNT PUBLIC(1) DEPOSITOR (1)(2)
Per Class [ ] Note $ % % %
Per Class [ ] Note % % %
Per Certificate.... % % %
Total $ $ $ $
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The Notes and the Certificates are offered by Salomon Smith Barney Inc. (the
"UNDERWRITER") subject to prior sale when, as and if issued and accepted by the
Underwriter, and subject to the Underwriter's right to reject any order in whole
or in part. It is expected that delivery of the Notes and the Certificates will
be made in book-entry form only through the facilities of The Depository Trust
Company and, in the case of the Notes, Cedel Bank, societe anonyme, and the
Euroclear System against payment therefor in immediately available funds, on or
about ______________ , 199 .
SALOMON SMITH BARNEY
, 199
(Continued from previous page)
The Trust will also issue $ ____________________ aggregate principal amount of
[ %] Asset Backed Certificates (the "CERTIFICATES" and, together with the
Notes, the "SECURITIES"). The assets of the Trust will include a pool of retail
installment sale contracts, retail installment loans, purchase money notes or
other notes (the "RECEIVABLES"), secured by security interests in new or used
automobiles, light duty trucks, recreational vehicles and motorcycles (the
"FINANCED VEHICLES") and certain monies due or received thereunder on or after
_______________ , 199 , transferred to the Trust by the Seller on the Closing
Date. The Notes will be secured by the assets of the Trust pursuant to the
Indenture.
Interest on the Class [ ] and Class [ ] Notes will accrue at the respective
[floating] interest rates specified above. Interest on the Notes will generally
be payable on the _________ day of each month or, if any such day is not a
Business Day, on the next succeeding Business Day (each, a "DISTRIBUTION
DATE"), commencing __________ , 199 . Principal of the Notes will be payable on
each Distribution Date to the extent described herein; however, no principal
payments will be made on the Class [ ] Notes until the Class [ ] Notes have
been paid in full.
The Certificates will represent fractional undivided interests in the Trust.
Interest, to the extent of the Pass Through Rate specified above, will be
distributed to the Certificateholders on each Distribution Date. Distributions
of interest on, and principal of, the Certificates will be subordinated in
priority of payment to interest due and payable on the Notes. No distributions
of principal on the Certificates will be made until all the Notes have been
paid in full.
Each class of Securities 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. 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. Each class of Notes
or Certificates will differ as to the timing and priority of payment, interest
rate or amount of distributions in respect of principal or interest or both.
[Each class of Securities may be entitled to distributions in respect of
principal with disproportionate, nominal or no interest distributions, or to
interest distributions with disproportionate, nominal or no distributions in
respect of principal.] The rate of payment in respect of principal of any class
of Notes and distributions in respect of the Certificate Balance of the
Certificates of any class will depend on the priority of payment of such class
and the rate and timing of payments (including prepayments, defaults,
liquidations and repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted
average life of each class of Securities in the manner described herein.
Each class of Securities will be payable in full on the applicable final
scheduled Distribution Date as set forth herein. However, payment in full of a
class of Notes or of the Certificates could occur earlier than such dates as
described herein. In addition, the Notes will be subject to redemption in
whole, but not in part, and the Certificates will be subject to prepayment in
whole, but not in part, on any Distribution Date on which the Servicer
exercises its option to purchase the Receivables. The Servicer may purchase the
Receivables when the aggregate principal balance of the Receivables shall have
declined to % or less of the initial aggregate principal balance of the
Receivables purchased by the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED
IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR THE
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS
PROSPECTUS SUPPLEMENT CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE
STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
Certain persons participating in this offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the Securities. Such
transactions may include stabilizing and the purchase of Securities. Such
transactions may include stabilizing and the purchase of Securities to cover
syndicate short positions. For a description of these activities, see
"Underwriting" herein.
[This Prospectus Supplement may be used by the Underwriter, an
affiliate of the Depositor, in connection with offers and sales related to
market making transactions in the Securities.]
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
monthly and annual unaudited reports containing information concerning the
Receivables will be prepared by the Servicer and sent on behalf of the Trust
only to Cede & Co. ("CEDE"), as nominee of The Depository Trust Company ("DTC")
and registered holder of the Notes and the Certificates. See "Description of
the Notes -General", "Description of the Certificates -- General" and "Certain
Information Regarding the Securities -- Book-Entry Registration" and "--
Reports to Securityholders" in the accompanying Prospectus (the "PROSPECTUS").
Such reports will not constitute financial statements prepared in accordance
with generally accepted accounting principles. The Depositor, as originator of
the Trust, will file with the Securities and Exchange Commission (the
"COMMISSION") such periodic reports as are required under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and
regulations of the Commission thereunder.
SUMMARY OF TERMS
The following summary is qualified by reference to the detailed
information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
Issuer.................................. [_____________________] Trust
199 -[ ] (the "TRUST" or the
"Issuer"), a [___________]
business trust to be governed
pursuant to a Trust Agreement
dated as of , 199 (as amended
and supplemented from time to
time, the "TRUST AGREEMENT"),
between the Depositor and the
Owner Trustee.
Depositor............................... SSB Vehicle Securities Inc.
(the "DEPOSITOR").
Servicer................................ [____________________________]
(in such capacity, the
"Servicer").
Indenture
Trustee....................... , as trustee under the
Indenture (the "INDENTURE
TRUSTEE").
Owner
Trustee...........................
, as trustee under the Trust
Agreement (the "OWNER
TRUSTEE").
The Notes...............................
The Trust will issue Asset
Backed Notes pursuant to an
Indenture to be dated as of ,
199 (as amended and
supplemented from time to
time, the "INDENTURE"),
between the Trust and the
Indenture Trustee, as
follows: (i) [Floating Rate]
Asset Backed Notes, Class [ ]
(the "CLASS [ ] NOTES") in
the aggregate initial
principal amount of $ ; and
(ii) [Floating Rate] Asset
Backed Notes, Class [ ] (the
"CLASS [ ] NOTES") in the
aggregate initial principal
amount of $ . The Class [ ]
Notes and the Class [ ] Notes
are collectively referred to
herein as the "NOTES".
The Notes will be secured by
the assets of the Trust
pursuant to the Indenture.
The Certificates........................
The Trust will issue [ %]
Asset Backed Certificates
(the "CERTIFICATES" and,
together with the Notes, the
"SECURITIES") with an
aggregate initial Certificate
Balance of $ . The
Certificates will represent
fractional undivided
interests in the Trust and
will be issued pursuant to
the Trust Agreement.
The Receivables........................
On (the "CLOSING DATE"), the
Trust will purchase
Receivables having an
aggregate principal balance
of approximately $ (the
"INITIAL POOL BALANCE") as of
, 199 (the "CUT-OFF DATE")
from the Depositor pursuant
to a Sale and Servicing
Agreement to be dated as of ,
199 (as amended and
supplemented from time to
time, the "SALE AND SERVICING
AGREEMENT"), among the Trust,
the Depositor and the
Servicer. See "Description of
the Transfer and Servicing
Agreements -- Sale and
Assignment of Receivables"
herein and in the Prospectus.
The Receivables will consist
of retail installment sale
contracts, retail installment
loans, purchase money notes
or other notes between
Obligors and Dealers secured
by new or used automobiles,
light-duty trucks,
recreational vehicles and
motorcycles (the "FINANCED
VEHICLES"). The Receivables
were purchased by __________
(the "SELLER"). The
Receivables will be
transferred by the Depositor
to the Trust, based on the
criteria specified in the
Sale and Servicing Agreement
and described herein and in
the Prospectus. As of the
Cut-off Date, the weighted
average annual percentage
interest rate of the
Receivables was approximately
%, the weighted average
remaining maturity of the
Receivables was approximately
months, and the weighted
average original maturity of
the Receivables was
approximately months. No
Receivable has a scheduled
maturity later than , 20__
(the "FINAL SCHEDULED
MATURITY DATE"). See "The
Receivables Pool" herein.
The "POOL BALANCE" at any
time will represent the
aggregate principal balance
of the Receivables at the end
of the preceding Collection
Period, after giving effect
to all payments (other than
Payaheads) received from
Obligors, Advances and
Purchase Amounts to be
remitted by the Servicer or
the Depositor, as the case
may be, all for such
Collection Period, and all
losses realized on
Receivables liquidated during
such Collection Period.
Terms of the Notes.....................
The principal terms of the
Notes will be as described
below:
A. Distribution Dates........
Payments of interest on and
principal of the Notes will
be made on the day of each
month or, if any such day is
not a Business Day, on the
next succeeding Business Day
(each, a "DISTRIBUTION
DATE"), commencing ____ in
199 . Each ____ reference
____ to a "PAYMENT DATE" in
the Prospectus shall refer to
a Distribution Date herein.
Payments will be made to
holders of record of the
Notes (the "NOTEHOLDERS") as
of the day immediately
preceding such Distribution
Date or, if Definitive Notes
are issued, as of the day of
the preceding month (each, a
"RECORD DATE"). A "BUSINESS
DAY" is a day other than a
Saturday, a Sunday or a day
on which banking institutions
or trust companies in the
States of [_________] are
authorized by law, regulation
or executive order to be
closed.
B. Interest Rates.............
The Class [ ] Notes will bear
interest at a [Floating Rate]
of interest per annum (the
"CLASS [ ] RATE") and the
Class [ ] Notes will bear
interest at a [Floating Rate]
of interest per annum (the
"CLASS [ ] RATE"). [The rate
of interest per annum with
respect to the Class [ ]
Notes for each Interest Reset
Period (the "CLASS [ ] RATE")
will equal LIBOR (as defined
in the Prospectus) for such
Interest Reset Period plus %;
provided that the Class [ ]
Rate shall not exceed % per
annum.]
The interest rates for the
various classes of Notes are
referred to herein
collectively as "INTEREST
RATES".
C. Interest....................
Interest on the outstanding
principal amount of the Notes
[other than the Class [ ]
Notes] will accrue at the
applicable Interest Rate from
the Closing Date (in the case
of the first Distribution
Date) or from the day of the
month preceding the month of
a Distribution Date to and
including the day of the
month of such Distribution
Date (each an "INTEREST
ACCRUAL PERIOD"). [Interest
on the outstanding principal
amount of the Class [ ] Notes
will accrue at the Class [ ]
Rate from the Closing Date
(in the case of the first
Distribution Date) or from
the most recent Distribution
Date on which interest has
been paid to but excluding
the following Distribution
Date (each, a "FLOATING RATE
INTEREST ACCRUAL PERIOD").]
Interest on the Class [ ]
Notes will be calculated on
the basis of a 360-day year
consisting of twelve 30-day
months. Interest on the Class
[ ] Notes will be calculated
on the basis of the actual
number of days in each
Floating Rate Interest
Accrual Period divided by
360. See "Description of the
Notes -- Payments of
Interest" 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
calendar month (the
"COLLECTION PERIOD")
preceding such Distribution
Date (in the case of the
first Distribution Date, the
period from and including ,
199 to and including , 199
(exclusive of the scheduled
payments of principal due on
the Precomputed Receivables
during that period)) to the
extent of funds available
therefor. The "NOTEHOLDERS'
PRINCIPAL DISTRIBUTABLE
AMOUNT" will equal the sum of
(i) the Regular Principal
Distribution Amount plus (ii)
the Accelerated Principal
Distribution Amount. The
"REGULAR PRINCIPAL
DISTRIBUTION AMOUNT" with
respect to any Distribution
Date will equal the amount of
principal paid or, in certain
circumstances, scheduled to
be paid with respect to the
Receivables (exclusive of
Payaheads allocable to
principal that have not been
applied as payments under the
related Receivables in the
related Collection Period and
inclusive of Payaheads
allocable to principal that
have been applied as payments
under the related Receivables
in such Collection Period)
plus, in certain
circumstances, the principal
balance of defaulted
Receivables, as calculated by
the Servicer as described
under "Description of the
Transfer and Servicing
Agreements -- Distributions"
herein. The "Accelerated
Principal Distribution
Amount" with respect to a
Distribution Date will equal
the portion, if any, of the
Total Distribution Amount for
the related Collection Period
that remains after payment of
(a) the Servicing Fee
(together with any portion of
the Servicing Fee that
remains unpaid from prior
Distribution Dates), (b) the
interest due on the Notes,
(c) the Regular Principal
Distribution Amount, (d) the
interest due on the
Certificates and (e) the
amount, if any, required to
be deposited in the Reserve
Account on such Distribution
Date.
On the Business Day
immediately preceding each
Distribution Date (each, a
"DETERMINATION DATE"), the
Indenture Trustee shall
determine the amount in the
Collection Account available
for distribution on the
related Distribution Date.
Payments to Securityholders
will be made on each
Distribution Date in
accordance with such
determination. The Servicing
Fee in respect of a
Collection Period (together
with any portion of the
Servicing Fee that remains
unpaid from prior
Distribution Dates) will be
paid at the beginning of such
Collection Period out of
collections for such
Collection Period.
No principal payments will be
made on the Class [ ] Notes
until the Class [ ] Notes
have been paid in full.
The outstanding principal
amount of the Class [ ]
Notes, to the extent not ____
previously ____ paid, ____
will ____ be ____ payable
____ on the [199 ____ ][20
____ ] ____ Distribution
_____ Date ____ (the ____
"CLASS [ ] FINAL SCHEDULED
DISTRIBUTION DATE"); and the
outstanding principal amount
of the Class [ ] Notes, to
the extent not previously
paid, will be payable on the
[199 ][20 ] Distribution Date
(the "CLASS [ ] FINAL
SCHEDULED DISTRIBUTION
DATE").
E. Optional Redemption...........
The Notes will be redeemed in
whole, but not in part, on
any Distribution Date on
which the Servicer exercises
its option to purchase the
Receivables. The Servicer
will have the option to
purchase all, but not less
then all, of the Receivables
on any Distribution Date on
or after the Distribution
Date on which the Pool
Balance has declined to [ ] %
or less of the Initial Pool
Balance. The price at which
the Servicer will be required
to purchase the Receivables
in order to exercise such
option will be equal to the
aggregate of the Purchase
Amounts of the Receivables as
of the end of the related
Collection Period. The
Servicer will be required to
give not less than [ ] days'
notice to the Trustee of its
intention to exercise such
option. In addition, the
Servicer will not be
permitted to exercise such
option unless the resulting
distribution would be
sufficient to retire the
Notes at a redemption price
equal to the unpaid principal
amount of the Notes plus
accrued and unpaid interest
thereon. See "Description of
the Notes -- Optional
Redemption" herein.
Terms of the Certificates................
The principal terms of the
Certificates will be as
described below:
A. Distribution Dates............
Distributions with respect to
the Certificates will be made
on each Distribution Date,
commencing , 199 .
Distributions will be made to
holders of record of the
Certificates (the
"CERTIFICATEHOLDERS" and,
together with the
Noteholders, the
"SECURITYHOLDERS") as of the
related Record Date (which
will be the day of the
preceding month if Definitive
Certificates are issued).
B. Pass Through Rate............. [ ]% per annum (the "PASS
THROUGH RATE").
C. Interest......................
On each Distribution Date,
the Owner Trustee will
distribute pro rata to
Certificateholders 30 days of
accrued interest at the Pass
Through Rate on the
outstanding Certificate
Balance generally to the
extent of funds available
following payment of the
Servicing Fee and
distributions in respect of
the Notes from the Total
Distribution Amount and the
Reserve Account. Interest
will be calculated on the
basis of a 360-day year
consisting of twelve 30-day
months. Interest in respect
of a Distribution Date will
accrue from the Closing Date
(in the case of the first
Distribution Date) or from
the day of the month
preceding the month of the
Distribution Date to and
including the day of the
month of such Distribution
Date.
D. Principal.....................
No distributions of principal
on the Certificates will be
made until all of the Notes
have been paid in full. On
each Distribution Date
commencing on the
Distribution Date on which
the Class [ ] Notes are paid
in full, principal of the
Certificates will be payable
in an amount generally equal
to the Certificateholders'
Principal Distributable
Amount for the Collection
Period preceding such
Distribution Date, to the
extent of funds available
therefor following payment of
the Servicing Fee, payments
of interest and principal, if
any, due in respect of the
Notes and the distribution of
interest in respect of the
Certificates. The
Certificateholders' Principal
Distributable Amount will be
the Regular Principal
Distribution Amount (less, on
the Distribution Date on
which the Notes are paid in
full, the portion thereof
payable on the Notes) and
will be calculated by the
Servicer in the manner
described under "Description
of the Transfer and Servicing
Agreements -- Distributions".
E. Optional Prepayment...........
If the Servicer exercises its
option to purchase the
Receivables (the terms of
which option are summarized
above under "-- Terms of the
Notes -- E. Optional
Redemption"), the
Certificates will be retired.
The Servicer will not be
permitted to exercise such
option unless the resulting
distribution to
Certificateholders would
equal the outstanding
Certificate Balance together
with accrued interest thereon
at the Pass Through Rate. See
"Description of the
Certificates -- Optional
Prepayment" herein.
Reserve Account..........................
[DESCRIBE RESERVE ACCOUNT
FORMULA]
Collection Account; Priority of
Payments.................................
Except under certain
conditions described herein
or as otherwise acceptable to
each Rating Agency, the
Servicer will be required to
remit collections received
with respect to the
Receivables within Business
Days after receipt thereof to
one or more accounts in the
name of the Indenture Trustee
(together, the "COLLECTION
ACCOUNT"). At the beginning
of each Collection Period,
the Indenture Trustee will
apply collections in the
Collection Account to pay to
the Servicer the Servicing
Fee for such Collection
Period and any overdue
Servicing Fees. Pursuant to
the Sale and Servicing
Agreement, the Servicer will
have the revocable power to
instruct the Indenture
Trustee to withdraw funds on
deposit in the Collection
Account and to apply such
funds on each Distribution
Date to the following (in the
priority indicated): (i) the
Servicing Fee, together with
any unpaid Servicing Fees
from prior Distribution Dates
(if for any reason such
amount was not paid at the
beginning of the Collection
Period as described above),
to the Servicer, (ii) the
Noteholders' Interest
Distributable Amount and the
Noteholders' Principal
Distributable Amount into the
Note Distribution Account,
(iii) the Certificateholders'
Interest Distributable Amount
and, after the Notes have
been paid in full, the
Certificateholders' Principal
Distributable Amount into the
Certificate Distribution
Account and (iv) the
remaining balance, if any, to
the Reserve Account.
Tax Status...............................
In the opinion of Brown &
Wood LLP, counsel to the
Trust ("TAX COUNSEL"), for
federal income tax purposes,
the Notes will be
characterized as debt, and
the Trust will not be
characterized as an
association (or a publicly
traded partnership) taxable
as a corporation. Each
Noteholder, by the acceptance
of a Note, will agree to
treat the Notes as
indebtedness, and each
Certificateholder, by the
acceptance of a Certificate,
will agree to treat the Trust
as a partnership in which the
Certificateholders are
partners for federal income
and state income tax
purposes. Alternative
characterizations of the
Trust and the Certificates
are possible, but would not
result in materially adverse
tax consequences to
Certificateholders. See
"Material Federal Income Tax
Consequences" and "State Tax
Consequences" herein and
"Material Federal Income Tax
Consequences -- Trusts for
Which a Partnership Election
is Made" in the Prospectus
for additional information
concerning the application of
federal income and state tax
laws to the Trust and the
Securities.
[In the Opinion of Brown &
Wood LLP, Counsel for the
Trust, for federal income tax
purposes, the Trust will, on
the startup date be treated
as a financial asset
securitization investment
trust ("FASIT") and its
proposed method of operation
will enable it to continue to
meet the requirements for
qualification and taxation as
a FASIT under the Internal
Revenue Code of 1986, as
amended (the "Code") assuming
a timely FASIT election is
made. The Class [ ] and the
Class [ ] will be treated as
FASIT regular interests, the
Class [ ] will be treated as
FASIT high-yield regular
interests and the Class [ ]
will be treated as the single
class of FASIT ownership
interests. Holders of FASIT
Regular Securities must
report income from such
Securities under an accrual
method of accounting, even if
they otherwise would have
used the cash receipts and
disbursements method and
accordingly, may report
income prior to the receipt
of any cash distribution
corresponding to such income.
For additional information
regarding federal income tax
consequences regarding a
FASIT, see "Material Federal
Income Tax Consequences"
herein and "Material Federal
Income Tax Consequences --
Trusts for which a FASIT
Election is Made" in the
Prospectus for additional
information concerning the
application of federal income
tax laws to the Trust and the
Securities.]
ERISA Considerations.....................
Subject to the considerations
discussed under "ERISA
Considerations" herein and in
the Prospectus, the Notes are
eligible for purchase by
employee benefit plans. The
Certificates may not be
acquired by any employee
benefit plan subject to the
Employee Retirement Income
Security Act of 1974, as
amended ("ERISA"), or Section
4975 of the Internal Revenue
Code of 1986, as amended (the
"CODE"), or by an individual
retirement account. See
"ERISA Considerations" herein
and in the Prospectus.
Rating of the Notes......................
It is a condition to the
issuance of the Notes that
they be rated " " by at least
one nationally recognized
rating agency (a "RATING
AGENCY"). The rating of the
Notes by at Rating Agency
reflects such Rating Agency's
assessment of the likelihood
that the Noteholders will
receive payments of principal
and interest but it does not
address the timing of
distributions of principal of
the Notes prior to the Final
Scheduled Distribution Date.
A rating is not a
recommendation to buy, sell
or hold securities and may be
subject to revision or
withdrawal at any time by the
assigning Rating Agency. Each
rating should be evaluated
independently of any other
rating. See "Risk Factors --
Ratings of the Securities"
herein. There can be no
assurance that a rating will
not be lowered or withdrawn
by a Rating Agency if
circumstances so warrant.
Rating of the Certificates...............
It is a condition to the
issuance of the Certificates
that they be rated at least
in the " " category or its
equivalent by at least one
Rating Agency. The rating of
the Certificates by a Rating
Agency reflects such Rating
Agency's assessment of the
likelihood that the
Certificateholders will
receive payments of principal
and interest but it does not
address the timing of
distributions of principal of
the Certificates prior to the
Final Scheduled Distribution
Date. A rating is not a
recommendation to buy, sell
or hold securities and may be
subject to revision or
withdrawal at any time by the
assigning Rating Agency. Each
rating should be evaluated
independently of any other
rating. See "Risk Factors --
Ratings of the Securities"
herein.
RISK FACTORS
Investors should consider, among other things, the matters discussed
under "Risk Factors" in the Prospectus and the following risk factors in
connection with purchases of the Notes and/or Certificates.
LIMITED LIQUIDITY; ABSENCE OF A SECONDARY MARKET MAY LIMIT THE
ABILITY OF THE SECURITYHOLDER TO SELL THE SECURITIES. There is currently no
secondary market for the Securities. Each Underwriter currently intends to make
a market in the Securities, but it is under no obligation to do so. There can
be no assurance that a secondary market will develop or, if a secondary market
does develop, that it will provide the Securityholders with liquidity of
investment or that it will continue for the life of the Securities offered
hereby.
[SIGNIFICANT GEOGRAPHIC CONCENTRATION MAY INCREASE THE EXPOSURE OF
THE TRUST TO THE ECONOMIC CONDITIONS IN CERTAIN STATES. Economic conditions in
states where Obligors reside may affect the delinquency, loan loss and
repossession experience of the Trust with respect to the Receivables. Obligors
on Receivables representing approximately _____% by principal balance of the
Receivables were located in [__________________] at the Cut-off Date. As a
result, economic conditions in such states may have a disproportionate effect
on prepayments and/or defaults in respect of the Receivables and thus on
amounts available for distribution to Securityholders. In particular, an
economic downturn in one or more of such states could adversely affect the
performance of the Trust as a whole (even if national economic conditions
remain unchanged or improve) as Obligors in such state or states experience the
effects of such a downturn and face greater difficulty in making payments on
their Financed Vehicles. See "The Receivables Pool" herein.]
SUBORDINATION OF THE CERTIFICATES TO THE NOTES WILL INCREASE THE RISK
OF THE CERTIFICATES OF NOT RECEIVING FULL DISTRIBUTION OF INTEREST AND
PRINCIPAL. Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the Notes.
Consequently, the Certificateholders will not receive any distributions with
respect to a Collection Period until the full amount of interest on and
principal of the Notes due on such Distribution Date has been deposited in the
Note Distribution Account. The Certificateholders will not receive any
distributions of principal until the Distribution Date on which all of the
Notes have been paid in full.
SECURITYHOLDERS ARE LIMITED TO DEPOSITS IN THE RESERVE ACCOUNT AND
PAYMENTS ON THE RECEIVABLES FOR PAYMENT ON THE SECURITIES. The Trust will not
have, nor is it permitted or expected to have, any significant assets or
sources of funds other than the Receivables and the Reserve Account. Holders of
the Notes and the Certificates must rely for repayment upon payments on the
Receivables and, if and to the extent available, amounts on deposit in the
Reserve Account. Although funds in the Reserve Account will be available on
each Distribution Date to cover shortfalls in distributions of interest on and
principal of the Notes and the Certificates, amounts to be deposited in the
Reserve Account are limited in amount. If the Reserve Account is exhausted, the
Trust will depend solely on current distributions on the Receivables to make
payments on the Notes and the Certificates.
RATINGS OF THE SECURITIES ARE SUBJECT TO DOWN-GRADES BY THE RATING
AGENCIES. It is a condition to the issuance of the Securities that each class
of the Notes be rated in the highest investment rating category, and that the
Certificates be rated at least in the " " category or its equivalent, by at
least one nationally recognized rating agency (the "RATING AGENCY"). A rating
is not a recommendation to buy, sell or hold securities inasmuch as it does not
address market price or suitability for a particular investor. The ratings of
the Securities address the likelihood of the payment of principal of, and
interest on, the Securities pursuant to their terms but not the timing of the
distributions of principal prior to the Final Scheduled Distribution Date of
the Securities. 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 it judges future circumstances to so warrant.
THE TRUST
GENERAL
The Issuer, [____________________________________] Trust 199 -[ ], is
a business trust formed under the laws of the State of [________] pursuant to
the Trust Agreement for the transactions described in this Prospectus
Supplement. After its formation, the Trust will not engage in any activity
other than (i) acquiring, holding and managing the Receivables and the other
assets of the Trust and proceeds therefrom, (ii) issuing the Notes and the
Certificates, (iii) making payments on the Notes and the Certificates and (iv)
engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity in an amount
equal to the Certificate Balance of $ ___________________ , excluding amounts
deposited in the Reserve Account. The equity of the Trust, together with the
net proceeds from the sale of the Notes, will be used by the Trust to purchase
the Receivables from the Depositor pursuant to the Sale and Servicing
Agreement.
If the protection provided to the investment of the Securityholders
by the Reserve Account is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale of
Financed Vehicles which secure defaulted Receivables. In such event, certain
factors, such as the Trust's not having first priority perfected security
interests in some of the Financed Vehicles, may affect the Trust's ability to
realize on the collateral securing the Receivables, and thus may reduce the
proceeds to be distributed to Securityholders with respect to the Securities.
See "Description of the Transfer and Servicing Agreements -- Distributions" and
"-- Reserve Account" herein and "Certain Legal Aspects of the Receivables" in
the Prospectus.
The Trust's principal offices are in , , in care of [ ], as Owner
Trustee, at the address listed below under "-- The Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of
the Closing Date, as if the issuance and sale of the Notes and the Certificates
had taken place on such date:
Class [ ] Notes..............................
Class [ ] Notes..............................
Certificates..................................
____________
Total................................ $
============
THE OWNER TRUSTEE
is the Owner Trustee under the Trust Agreement. is a [state] banking
corporation and its principal offices are located at , , . The Depositor and
its affiliates may maintain normal commercial banking relations with the Owner
Trustee and its affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "RECEIVABLES POOL") will include only
the Receivables purchased on the Closing Date. The Receivables [will be][have
been] purchased by the Depositor from the Seller which purchased the
Receivables, directly or indirectly, from Dealers in the ordinary course of
business. The Receivables were selected from the Depositor's portfolio for
inclusion in the Receivables Pool by several criteria, certain of which are set
forth in the Prospectus under "The Receivables Pools", as well as in accordance
with the requirement that, as of the Cut-off Date, each Receivable (i) had an
outstanding gross balance of at least $ and (ii) was not more than 60 days past
due (an account not being considered past due, however, if the amount past due
is less than % of the scheduled monthly payment). As of the Cut-off Date, no
Obligor on any Receivable was noted in the related records of the Seller as
being the subject of a bankruptcy proceeding. No selection procedures believed
by the Depositor to be adverse to Securityholders were used in selecting the
Receivables.
[Description of any underwriting criteria applicable to Subsequent
Receivables.]
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate ("APR") and the geographic
distribution of the Receivables Pool as of the Cut-off Date.
<TABLE>
<CAPTION>
[ ] TRUST 199 -[ ]
COMPOSITION OF THE RECEIVABLES POOL
Weighted Aggregate Number of Weighted Weighted Average
Average Principal Receivables Average Average Principal
APR of Balance Remaining Original Balance
Receivables Term Term
<S> <C> <C> <C> <C> <C>
_____% $________________ __________ ____ months ____ months $__________
[______________________] TRUST 199 - [ ]
DISTRIBUTION BY APR OF THE RECEIVABLES POOL
APR Range Number of Aggregate Percent of
Receivables Principal Balance Aggregate
Principal
Balance(1)
0.00% - 5.00%............. $ %
5.01% - 6.00%.............
6.01% - 7.00%.............
7.01% - 8.00%.............
8.01% - 9.00%.............
9.01% - 10.00%.............
10.01% - 11.00%.............
11.01% - 12.00%.............
12.01% - 13.00%.............
13.01% - 14.00%.............
14.01% - 15.00%.............
15.01% - 16.00%.............
16.01% - 17.00%.............
17.01% - 18.00%.............
Greater than 18.00%......... _____________ __
- ---------------
(1) Percentages may not add to 100.0% because of rounding.
</TABLE>
[______________________] TRUST 199 -[ ]
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
PERCENTAGE AGGREGATE
STATE(2) PRINCIPAL BALANCE(1)
------- --------------------
%
___________%
- ---------------
(1) Percentages may not add to 100.0% because of rounding.
(2) Based on physical addresses of the Obligors at the Cut-off Date.
Approximately % of the aggregate principal balance of the
Receivables, constituting % of the number of the Receivables, represent
previously titled vehicles.
By aggregate principal balance, approximately % of the receivables
are Precomputed Receivables and % of the Receivables are Simple Interest
Receivables. See "The Receivables Pools" in the Prospectus for a further
description of the characteristics of Precomputed Receivables and Simple
Interest Receivables.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning the experience of
the Seller pertaining to (i) retail new and used [automobile and light-duty
truck] [recreational vehicle] [motorcycle] receivables, including those
previously sold which the Servicer continues to service. There can be no
assurance that the delinquency, repossession and net loss experience on the
Receivables will be comparable to that set forth below.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE(1)
AT DECEMBER 31, AT ____________________,
199 199 199 199
---- ---- ---- ---
NUMBER OF AMOUNT NUMBER OF AMOUNT NUMBER OF AMOUNT NUMBER OF AMOUNT
CONTRACTS CONTRACTS CONTRACTS CONTRACTS
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Portfolio..... $ $ $ $
Period of
Delinquency
31-60 Days..
61 Days or
More..........
Total $ $ $ $
Delinquencies.
Total % % % % % % % %
Delinquencies
as a Percent of the
Portfolio...
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
199 199 199
---- ---- ---
NUMBER OF AMOUNT NUMBER OF AMOUNT NUMBER OF AMOUNT
CONTRACTS CONTRACTS CONTRACTS
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Portfolio............... $ $ $
Period of Delinquency
31-60 Days............
61 Days or More.......
Total Delinquencies..... $ $ $
Total Delinquencies % % % % % %
as a Percent of the
Portfolio.............
---------------
(1) All amounts and percentages are based on the gross amount scheduled to
be paid on each contract, including unearned finance and other charges.
The information in the table includes an immaterial amount of retail
installment sale contracts on vehicles other than automobiles and light
duty trucks and includes previously sold contracts which the Servicer
continues to service.
</TABLE>
<TABLE>
<CAPTION>
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
_____________ ENDED
March , YEAR ENDED DECEMBER 31,
199 199 199 199 199 199 199
---- ---- ---- ---- ---- ---- ---
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding $ $ $ $ $ $ $
During the Period................
Average Number of Contracts
Outstanding During the Period....
Percent of Contracts Acquired % % % % % % %
During the
Period with Recourse to the
Dealer.............................
Repossessions as a Percent of % % % % % % %
Average
Number of Contracts Outstanding..
Net Losses as a Percent of % % % % % % %
Liquidations(3)(4)...............
Net Losses as a Percent of Average % % % % % % %
Amount Outstanding(2)(3).........
- --------------------
</TABLE>
(1) [Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each contract, including unearned finance and
other charges. The information in the table includes previously sold contracts
that the Servicer continues to service.]
(2) Percentages have been annualized for the _____ months ended ____________,
199 and 199 and are not necessarily indicative of the experience for the year.
(3) [Net losses are equal to the aggregate of the balances of all contracts
which are determined to be uncollectible in the period, less any recoveries on
contracts charged off in the period or any prior periods, including any losses
resulting from disposition expenses and any losses resulting from the failure
to recover commissions to dealers with respect to contracts that are prepaid or
charged off.]
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of monthly cash payments and
charge-offs.
[The net loss figures above reflect the fact that Seller had recourse
to Dealers on a portion of its retail installment sale contracts. By aggregate
principal balance, approximately % of the Receivables represent contracts with
recourse to Dealers. The Seller applies underwriting standards to the purchase
of contracts without regard to whether recourse to Dealers is provided.
However, the net loss experience of contracts without recourse to Dealers is
higher than that of contracts with recourse to Dealers because, under its
recourse obligation, the Dealer is responsible to the Seller for payment of the
unpaid balance of the contract, provided that the Seller repossesses the
vehicle from the retail buyer and returns it to the Dealer within a specified
time. In the event of a Dealer's bankruptcy, a bankruptcy trustee might attempt
to characterize recourse sales of contracts as loans to the Dealer secured by
the contracts. Such an attempt, if successful, could result in payment delays
or losses on the affected Receivables.]
THE SELLER
[DESCRIPTION OF SELLER AND ITS UNDERWRITING AND SERVICING STANDARDS]
THE DEPOSITOR
[DESCRIPTION OF DEPOSITOR]
THE SERVICER
[DESCRIPTION OF SERVICER AND ITS SERVICING STANDARDS]
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Weighted Average Life of the
Securities" in the Prospectus. No principal payments will be made on the Class
[ ] Notes until all Class [ ] Notes have been paid in full. In addition, no
principal payments on the Certificates will be made until all of the Notes have
been paid in full. See "Description of the Notes -- Payments of Principal" and
"Description of the Certificates -Distributions of Principal Payments" herein.
As the rate of payment of principal of each class of Notes and the Certificates
depends primarily on the rate of payment (including prepayments) of the
principal balances of the Receivables, final payment of any class of the Notes
and the final distribution in respect of the Certificates could occur
significantly earlier than their respective Final Scheduled Distribution Dates.
In addition, the rate of payment of principal of each class of Notes will be
affected by the Accelerated Principal Distribution Amounts applied to the
payment of the principal of the Notes. Securityholders will bear the risk of
being able to reinvest principal payments of the Securities at yields at least
equal to the yields on their respective Securities.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a
form of which has been filed as an exhibit to the Registration Statement. A
copy of the Indenture will be filed with the Commission following the issuance
of the Securities. The following summary describes certain terms of the Notes
and the Indenture. The summary does not purport to be complete and is subject
to, and is qualified by reference to, all the provisions of the Notes and the
Indenture. The following summary supplements and, to the extent inconsistent
therewith, replaces the description of the general terms and provisions of the
Notes of any given series and the related Indenture set forth in the
Prospectus, to which description reference is hereby made. , a , will be the
Indenture Trustee under the Indenture.
PAYMENTS OF INTEREST
The Notes will constitute Floating Rate Securities, as such term is
defined under "Certain Information Regarding the Securities -- Floating Rate
Securities" in the Prospectus. The Base Rate with respect to the Notes will be
[ ]. Interest on the principal balances of the classes of the Notes will accrue
at their respective Interest Rates per annum and will be payable to the
Noteholders monthly on each Distribution Date, commencing , 199 . Interest on
the outstanding principal amount of the Notes [other than the Class [ ] Notes]
will accrue at the applicable Interest Rate from the Closing Date (in the case
of the first Distribution Date) or from the day of the month preceding the
month of a Distribution Date to and including the day of the month of the
Distribution Date (each, an "INTEREST ACCRUAL PERIOD"). Interest on the
outstanding principal amount of the Class [ ] Notes will accrue at the Class [
] Rate from the Closing Date (in the case of the first Distribution Date) or
from the most recent Distribution Date on which interest has been paid to but
excluding the following Distribution Date (each, a "FLOATING RATE INTEREST
ACCRUAL PERIOD"). Interest on the Notes [other than the Class [ ] Notes] will
be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest on the Class [ ] Notes will be calculated on the basis of the
actual number of days in each applicable Floating Rate Interest Accrual Period
divided by 360. Interest payments on the Notes will generally be derived from
the Total Distribution Amount remaining after the payment of the Servicing Fee
and from the Reserve Account. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Reserve Account" herein.
Interest payments to all classes of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Distribution Date, in which case each class of Noteholders will receive their
ratable share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each
Distribution Date in an amount generally equal to the sum of (i) the Regular
Principal Distribution Amount plus (ii) the Accelerated Principal Distribution
Amount. The "REGULAR PRINCIPAL DISTRIBUTION AMOUNT" with respect to any
Distribution Date will equal the sum of principal payments received with
respect to the Receivables during the preceding Collection Period or, in
certain cases, scheduled to be paid during such Collection Period (exclusive of
Payaheads allocable to principal that have not been applied as payments under
the related Receivables in such Collection Period and inclusive of Payaheads
allocable to principal that have been applied as payments under the related
Receivables in such Collection Period) plus the principal balances of defaulted
Receivables written off in respect of such Collection Period, subject to
certain limitations. The "ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT" with
respect to any Distribution Date will equal the portion, if any, of the Total
Distribution Amount for the related Collection Period that remains after
payment of (a) the Servicing Fee, (b) the Noteholders' Interest Distributable
Amount, (c) the Regular Principal Distribution Amount, (d) the
Certificateholders' Interest Distributable Amount, and (e) the amount, if any,
required to be deposited in the Reserve Account on such Distribution Date.
Principal payments on the Notes will generally be derived from the Total
Distribution Amount and the amount, if any, in the Reserve Account up to the
Available Amount remaining after the payment of the Servicing Fee and the
Noteholders' Interest Distributable Amount and, in the case of any Accelerated
Principal Distribution Amount, the Certificateholders' Interest Distributable
Amount and the amount, if any, required to be deposited into the Reserve
Account. See "Description of the Transfer and Servicing Agreements --
Distributions" and "-- Reserve Account" herein.
On the Business Day immediately preceding each Distribution Date (a
"DETERMINATION DATE"), the Indenture Trustee shall determine the amount in the
Collection Account for the related Collection Period allocable to interest and
the amount allocable to principal on an actual basis, and payments to
Securityholders on the following Distribution Date will be based on such
allocation.
On each Distribution Date, principal payments on the Notes will be
applied in the following order of priority: (i) to the principal balance of the
Class [ ] Notes until the principal balance of the Class [ ] Notes is reduced
to zero; and (ii) to the principal balance of the Class [ ] Notes until the
principal balance of the Class [ ] Notes is reduced to zero. The principal
balance of the Class [ ] Notes, to the extent not previously paid, will be due
on the Class [ ] Final Scheduled Distribution Date; and the principal balance
of the Class [ ] Notes, to the extent not previously paid, will be due on the
Class [ ] Final Scheduled Distribution Date. The actual date on which the
aggregate outstanding principal amount of any class of Notes is paid may be
earlier than the respective Final Scheduled Distribution Dates set forth above
based on a variety of factors, including those described under "Weighted
Average Life of the Securities" herein and in the Prospectus.
OPTIONAL REDEMPTION
The Class [ ] Notes will be redeemed in whole, but not in part, on
any Distribution Date after all the other classes of Notes have been paid in
full on which the Servicer exercises its option to purchase the Receivables.
The Servicer will have the option to purchase all, but not less than all of the
Receivables on or after any Distribution Date on which the Pool Balance shall
have declined to [ ]% or less of the Initial Pool Balance. The price at which
the Servicer will be required to purchase the Receivables in order to exercise
such option will be equal to the aggregate of the Purchase Amounts of the
Receivables as of the end of the related Collection Period. The Servicer will
be required to give not less than [ ] days' notice to the Trustee of its
intention to exercise such option. In addition, the Servicer will not be
permitted to exercise such option unless the resulting distribution would be
sufficient to retire the Notes at a redemption price equal to the unpaid
principal amount of such Notes plus accrued and unpaid interest thereon (the
"REDEMPTION PRICE"). See "Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does not
purport to be complete and is subject to, and qualified by reference to, all
the provisions of the Certificates and the Trust Agreement. The following
summary supplements and, to the extent inconsistent therewith, replaces the
description of the general terms and provisions of the Certificates of any
given series and the related Trust Agreement set forth in the Prospectus, to
which description reference is hereby made.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing , [199 ][20 ] , the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest that would accrue on the Certificate Balance at the Pass
Through Rate. The Certificates will constitute Fixed Rate Securities, as such
term is defined under "Certain Information Regarding the Securities -- Fixed
Rate Securities" in the Prospectus. Interest in respect of a Distribution Date
will accrue from the Closing Date (in the case of the first Distribution Date)
or from the day of the month preceding the month of the Distribution Date to
and including the day of the month of such Distribution Date. Interest in
respect of the Certificates will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Interest distributions due for any
Distribution Date but not distributed on such Distribution Date will be due on
the next Distribution Date increased by an amount equal to interest on such
amount at the Pass Through Rate (to the extent lawful). Interest distributions
with respect to the Certificates will generally be funded from the portion of
the Total Distribution Amount and the funds in the Reserve Account remaining
after the distribution of the Servicing Fee and the Noteholders' Distributable
Amount. See "Description of the Transfer and Servicing Agreements
- -Distributions" and "-- Reserve Account" herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions of principal on
each Distribution Date, commencing with the Distribution Date on which the
Notes are paid in full, in an amount generally equal to the Regular Principal
Distribution Amount (less, on the Distribution Date on which the Notes are paid
in full, the portion thereof payable on the Notes). Distributions with respect
to principal payments will generally be funded from the portion of the Total
Distribution Amount and funds in the Reserve Account remaining after the
distribution of the Servicing Fee, the Noteholders' Distributable Amount (on
the Distribution Date on which the Notes are paid in full) and the
Certificateholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements -- Distributions" and "-- Reserve Account".
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables (the
terms of which option are described under "Description of the Notes -- Optional
Redemption" herein), the Certificates will be retired. The Servicer shall not
be permitted to exercise such option unless the resulting distribution to the
Certificateholders would be equal to the outstanding Certificate Balance
together with accrued interest at the Pass Through Rate. See "Description of
the Transfer and Servicing Agreements -Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement, the Administration Agreement and the Trust Agreement
(collectively, the "TRANSFER AND SERVICING AGREEMENTS"). Forms of the Transfer
and Servicing Agreements have been filed as exhibits to the Registration
Statement. A copy of the Sale and Servicing Agreement will be filed with the
Commission following the issuance of the Securities. The summary does not
purport to be complete and is subject to, and qualified by reference to, all
the provisions of the Transfer and Servicing Agreements. The following summary
supplements and, to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Transfer and Servicing Agreements
set forth in the Prospectus, to which description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information regarding the conveyance of the Receivables by
the Depositor to the Trust on the Closing Date pursuant to the Sale and
Servicing Agreement is set forth in the Prospectus under "Description of the
Transfer and Servicing Agreements -Sale and Assignment of Receivables".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for the
Servicer will be % per annum of the Pool Balance as of the first day of the
related Collection Period. The Servicing Fee in respect of a Collection Period
(together with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates) will be paid at the beginning of such Collection Period out
of collections for such Collection Period. See "Description of the Transfer and
Servicing Agreements -- Servicing Compensation and Payment of Expenses" in the
Prospectus.
DISTRIBUTIONS
DEPOSITS TO COLLECTION ACCOUNT. On or before each Distribution Date,
the Servicer will cause all collections and other amounts constituting the
Total Distribution Amount to be deposited into the Collection Account. The
"TOTAL DISTRIBUTION AMOUNT" for a Distribution Date shall be the sum of the
Interest Distribution Amount and the Regular Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses). "REALIZED
LOSSES" means the excess of the principal balance of any Liquidated Receivable
over Liquidation Proceeds to the extent allocable to principal.
The "INTEREST DISTRIBUTION AMOUNT" on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(including Payaheads) allocable to interest plus that portion of Payaheads
allocable to principal (less an amount equal to Payaheads, if any, that have
been returned to the related Obligors during such Collection Period); (ii) all
proceeds of the liquidation of defaulted Receivables ("LIQUIDATED
RECEIVABLES"), net of expenses incurred by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivables ("LIQUIDATION PROCEEDS"), to the extent
attributable to interest due thereon in accordance with the Servicer's
customary servicing procedures, and all recoveries in respect of Liquidated
Receivables which were written off in prior Collection Periods; (iii) all
Advances made by the Servicer of interest due on the Receivables; (iv) the
Purchase Amount of each Receivable that was repurchased by the Depositor and
simultaneously repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period, to the extent
attributable to accrued interest thereon; and (v) Investment Earnings for such
Distribution Date. The Interest Distribution Amount shall be determined on the
related Determination Date on an actual basis.
The "REGULAR PRINCIPAL DISTRIBUTION AMOUNT" on any Distribution Date
will generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(exclusive of Payaheads allocable to principal that have not been applied as
payments under the related Receivables in such Collection Period and inclusive
of Payaheads allocable to principal that have been applied as payments under the
related Receivables in such Collection Period) allocable to principal; (ii) all
Liquidation Proceeds attributable to the principal amount of Receivables which
became Liquidated Receivables during such Collection Period in accordance with
the Servicer's customary servicing procedures, plus the amount of Realized
Losses with respect to such Liquidated Receivables; (iii) all Precomputed
Advances made by the Servicer of principal due on the Precomputed Receivables;
(iv) to the extent attributable to principal, the Purchase Amount received with
respect to each Receivable repurchased by the Seller or purchased by the
Servicer under an obligation which arose during the related Collection Period;
(v) partial prepayments relating to refunds of extended warranty protection plan
costs or of physical damage, credit life or disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor as of the date of the original contract; and (vi) on the Distribution
Date immediately following the Final Scheduled Maturity Date (the "FINAL
SCHEDULED DISTRIBUTION DATE"), any amounts advanced by the Servicer with respect
to principal on the Receivables. The Regular Principal Distribution Amount shall
be determined on the related Determination Date on an actual basis.
The Interest Distribution Amount and the Regular Principal
Distribution Amount on any Distribution Date shall exclude the following:
(i) amounts received on Precomputed Receivables to the
extent that the Servicer has previously made an unreimbursed
Precomputed Advance;
(ii) Liquidation Proceeds with respect to a particular
Precomputed Receivable to the extent of any unreimbursed Precomputed
Advances thereon;
(iii) all payments and proceeds (including Liquidation
Proceeds) of any Receivables, the Purchase Amount of which has been
included in the Total Distribution Amount in a prior Collection
Period;
(iv) amounts received in respect of interest on Simple
Interest Receivables during the preceding Collection Period in excess
of the amount of interest that would have been due during the
Collection Period on Simple Interest Receivables at their respective
APRs (assuming that a payment is received on each Simple Interest
Receivable on the due date thereof); and
(v) Liquidation Proceeds with respect to a Simple Interest
Receivable attributable to accrued and unpaid interest thereon (but
not including interest for the then current Collection Period) but
only to the extent of any unreimbursed Simple Interest Advances.
DEPOSITS TO THE DISTRIBUTION ACCOUNTS. At the beginning of each
Collection Period, the Indenture Trustee will apply funds available in the
Collection Account to pay to the Servicer the Servicing Fee for such Collection
Period and any overdue Servicing Fees. On each Distribution Date, the Servicer
will instruct the Indenture Trustee to make the following deposits and
distributions, to the extent of the amount then on deposit in the Collection
Account, in the following order of priority:
(i) to the Servicer, from the Interest Distribution Amount
(as so allocated) the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods, to the extent, if any, such amounts
shall not have been paid at the beginning of the related Collection
Period;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the payment of the Servicing Fee
for such Collection Period and all unpaid Servicing Fees from prior
Collection Periods, the Noteholders' Interest Distributable Amount;
(iii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
and (ii), the Noteholders' Principal Distributable Amount;
(iv) to the Certificate Distribution Account, from the
Total Distribution Amount remaining after the application of clauses
(i) through (iii), the Certificateholders' Interest Distributable
Amount;
(v) after all of the Notes have been paid in full, to the
Certificate Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (i) through (iv), the
Certificateholders' Principal Distributable Amount; and
(vi) the remaining balance, if any, to the Reserve Account.
For purposes hereof, the following terms shall have the
following meanings:
"NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the sum of the Noteholders'
Principal Distributable Amount and the Noteholders' Interest
Distributable Amount.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the
Noteholders' Monthly Interest Distributable Amount for such
Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date.
"NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, interest accrued
for the related Interest Accrual Period or Floating Rate
Interest Accrual Period, as applicable, on each class of Notes
at the respective Interest Rate for such class on the
outstanding principal balance of the Notes of such class on
the immediately preceding Distribution Date (or, in the case
of the first Distribution Date, on the Closing Date), after
giving effect to all payments of principal to the Noteholders
of such class on or prior to such Distribution Date.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means,
with respect to any Distribution Date, the excess of the
Noteholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due
but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the respective
Interest Rates borne by each class of the Notes for the
related Interest Accrual Period or Floating Rate Interest
Accrual Period, as applicable.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the
Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding Distribution Date;
provided, however, that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding
principal balance of the Notes; and provided, further, that
(i) the Noteholders' Principal Distributable Amount on the
Class [ ] Final Scheduled Distribution Date shall not be less
than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account
on such Distribution Date and allocable to principal) to
reduce the outstanding principal balance of the Class [ ]
Notes to zero; and (ii) the Noteholders' Principal
Distributable Amount on the Class [ ] Final Scheduled
Distribution Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be
deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the
outstanding principal balance of the Class [ ] Notes to zero.
"NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to each Distribution Date, the sum of (i)
the Regular Principal Distribution Amount and (ii) the
Accelerated Principal Distribution Amount.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means,
as of the close of any Distribution Date, the excess of the
Noteholders' Monthly Principal Distributable Amount and any
outstanding Noteholders' Principal Carryover Shortfall from
the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution
Account.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means,
with respect to any Distribution Date, the sum of the
Certificateholders' Principal Distributable Amount and the
Certificateholders' Interest Distributable Amount.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the sum of the
Certificateholders' Monthly Interest Distributable Amount for
such Distribution Date and the Certificateholders' Interest
Carryover Shortfall for such Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE
AMOUNT" means, with respect to any Distribution Date, 30 days
of interest (or, in the case of the first Distribution Date,
interest accrued from and including the Closing Date to but
excluding such Distribution Date, calculated on the basis of a
360-day year consisting of twelve 30-day months) at the Pass
Through Rate on the Certificate Balance on the immediately
preceding Distribution Date, after giving effect to all
payments allocable to the reduction of the Certificate Balance
made on or prior to such Distribution Date (or, in the case of
the first Distribution Date, on the Closing Date).
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL"
means, with respect to any Distribution Date, the excess of
the Certificateholders' Monthly Interest Distributable Amount
for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at
the Pass Through Rate for the related Interest Accrual Period.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT"
means, with respect to any Distribution Date, the sum of the
Certificateholders' Monthly Principal Distributable Amount for
such Distribution Date and the Certificateholders' Principal
Carryover Shortfall as of the close of the preceding
Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not
exceed the Certificate Balance. In addition, on the Final
Scheduled Distribution Date, the principal required to be
deposited into the Certificate Distribution Account will
include the lesser of (a) (i) any scheduled payments of
principal due and remaining unpaid on each Precomputed
Receivable and (ii) any principal due and remaining unpaid on
each Simple Interest Receivable, in each case, in the Trust as
of the Final Scheduled Distribution Date and (b) the amount
that is necessary (after giving effect to the other amounts to
be deposited in the Certificate Distribution Account on such
Distribution Date and allocable to principal) to reduce the
Certificate Balance to zero.
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE
AMOUNT" means, with respect to any Distribution Date prior to
the Distribution Date on which the Notes are paid in full,
zero; and with respect to any Distribution Date commencing on
the Distribution Date on which the Notes are paid in full, the
Regular Principal Distribution Amount (less, on the
Distribution Date on which the Notes are paid in full, the
portion thereof payable on the Notes).
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL"
means, as of the close of any Distribution Date, the excess of
the Certificateholders' Monthly Principal Distributable Amount
and any outstanding Certificateholders' Principal Carryover
Shortfall from the preceding Distribution Date, over the
amount in respect of principal that is actually deposited in
the Certificate Distribution Account.
"CERTIFICATE ____ BALANCE" ____ equals, _____
initially, ____ $ ____ and, ____ thereafter, _____ equals ____
the ____ initial Certificate Balance, reduced by all amounts
allocable to principal previously distributed to
Certificateholders.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account (other than Investment Earnings) will generally be paid in
the following order of priority:
(i) to the applicable Noteholders, accrued and unpaid
interest on the outstanding principal balance of the applicable class
of Notes at the applicable Interest Rate;
(ii) the Noteholders' Principal Distributable Amount in
the following order of priority:
(a) to the Class [ ] Noteholders in reduction
of principal until the principal balance of the Class [ ]
Notes is reduced to zero; and
(b) to the Class [ ] Noteholders in reduction
of principal until the principal balance of the Class [ ]
Notes is reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with
respect to the Receivables will generally be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve Account
will be created with an initial deposit by the [________] on the Closing Date of
cash or Eligible Investments in the amount of $ _____________________ .
[DESCRIBE RESERVE ACCOUNT FORMULA]
If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to all deposits therein or other withdrawals therefrom
on such Distribution Date) is greater than the Specified Reserve Account Balance
for such Distribution Date, except as described below and subject to certain
limitations, the Servicer shall instruct the Indenture Trustee to distribute
such excess to the Depositor. Upon any distribution to the Depositor of amounts
from the Reserve Account, neither the Noteholders nor the Certificateholders
will have any rights in, or claims to, such amounts. Subsequent to any reduction
or withdrawal by any Rating Agency of its rating of any class of Notes, unless
such rating shall have been restored, any such excess released from the Reserve
Account on a Distribution Date will be deposited in the Note Distribution
Account for payment to Noteholders as an accelerated payment of principal on
such Distribution Date.
Amounts held from time to time in the Reserve Account will continue to
be held for the benefit of Noteholders and Certificateholders. On each
Distribution Date, funds will be withdrawn from the Reserve Account up to the
Available Amount to the extent that the Total Distribution Amount (after the
payment of the Servicing Fee) with respect to any Collection Period is less than
the Noteholders' Distributable Amount and will be deposited in the Note
Distribution Account. In addition, after giving effect to such withdrawal, funds
will be withdrawn from the Reserve Account up to the Available Amount (as
reduced by any withdrawal pursuant to the preceding sentence) to the extent that
the portion of the Total Distribution Amount remaining after the payment of the
Servicing Fee and the deposit of the Noteholders' Distributable Amount in the
Note Distribution Account is less than the Certificateholders' Distributable
Amount and will be deposited in the Certificate Distribution Account. If funds
applied in accordance with the preceding sentence are insufficient to distribute
interest due on the Certificates, subject to certain limitations, funds will be
withdrawn from the Reserve Account and applied to distribute interest due on the
Certificates to the extent of the Certificate Interest Reserve Amount. On each
Distribution Date, the Reserve Account will be reinstated up to the Specified
Reserve Account Balance to the extent of the portion, if any, of the Total
Distribution Amount remaining after payment of the Servicing Fee, the deposit of
the Noteholders' Distributable Amount into the Note Distribution Account and the
deposit of the Certificateholders' Distributable Amount into the Certificate
Distribution Account.
"AVAILABLE AMOUNT" means, with respect to any Distribution Date, the
amount of funds on deposit in the Reserve Account on such Distribution Date
(other than Investment Earnings) less the Certificate Interest Reserve Amount
with respect to such Distribution Date, in each case, before giving effect to
any reduction thereto on such Distribution Date.
"CERTIFICATE INTEREST RESERVE AMOUNT" means the lesser of (i) $ less
the amount of any application of the Certificate Interest Reserve Amount to pay
interest on the Certificates on any prior Distribution Date and (ii) % of the
Certificate Balance on such Distribution Date (before giving effect to any
reduction thereof on such Distribution Date); provided, however, that the
Certificate Interest Reserve Amount shall be zero subsequent to any reduction by
any Rating Agency to less than " " or its equivalent, or withdrawal by any
Rating Agency, of its rating of any class of Notes, unless such rating shall
have been restored.
If on any Distribution Date the entire Noteholders' Distributable
Amount for such Distribution Date (after giving effect to any amounts withdrawn
from the Reserve Account) is not deposited in the Note Distribution Account, the
Certificateholders generally will not receive any distributions other than
those, if any, in respect of interest made from the Certificate Interest Reserve
Amount.
After the payment in full, or the provision for such payment, of (i)
all accrued and unpaid interest on the Securities and (ii) the outstanding
principal balance of the Securities, any funds remaining on deposit in the
Reserve Account, subject to certain limitations, will be paid to the Depositor.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full amount
of principal and interest due them and to decrease the likelihood that the
Noteholders will experience losses. In addition, the Reserve Account is intended
to enhance the likelihood of receipt by Certificateholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Certificateholders will experience losses. However, in certain circumstances,
the Reserve Account could be depleted. If the amount required to be withdrawn
from the Reserve Account to cover shortfalls in collections on the Receivables
exceeds the amount of available cash in the Reserve Account, Noteholders or
Certificateholders could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders or the Certificateholders could result, which
could, in turn, increase the average life of the Notes or the Certificates.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, counsel for the Trust, for federal
income tax purposes, the Notes will be characterized as debt, and the Trust will
not be characterized as an association (or a publicly traded partnership)
taxable as a corporation. The Notes, including the Class [ ] Notes, will not be
issued with original issue discount ("OID"). [The Class [ ] Notes provide for
stated interest at a floating rate based on __________, subject to a cap of %
per year.] Under Treasury regulations, stated interest payable at a variable
rate is not treated as OID or contingent interest if the variable rate is a
qualified floating rate or a qualifying objective rate. The stated interest on
the Class [ ] Notes represents interest payable at a qualified floating rate and
thus will be taxable to holders of Class [ ] Notes as interest and not as OID or
contingent interest. For additional information regarding federal income tax
consequences, see "Material Federal Income Tax Consequences -- Trusts for Which
a Partnership Election is Made" in the Prospectus.
[In the Opinion of Brown & Wood LLP, Counsel for the Trust, for federal
income tax purposes, the Trust will, on the startup date, be treated as a
financial asset securitization investment trust ("FASIT") and its proposed
method of operation will enable it to continue to meet the requirements for
qualification and taxation as a FASIT under the Internal Revenue Code of 1986,
as amended (the "Code") assuming a timely FASIT election is made. The Class [ ]
and the Class [ ] will be treated as FASIT regular interests, the Class [ ] will
be treated as FASIT high-yield regular interests and the Class [ ] will be
treated as the single class of FASIT ownership interests. Holders of FASIT
Regular Securities must report income from such Securities under an accrual
method of accounting, even if they otherwise would have used the cash receipts
and disbursements method and accordingly, may report income prior to the receipt
of any cash distribution corresponding to such income. For additional
information regarding federal income tax consequences regarding a FASIT, see
"Material Federal Income Tax Consequences -- Trusts for which a FASIT Election
is Made" in the Prospectus.]
ERISA CONSIDERATIONS
THE NOTES
The Notes may be purchased by an employee benefit plan or an individual
retirement account (a "PLAN ") subject to ERISA or Section 4975 of the Code. A
fiduciary of a Plan must determine that the purchase of an Note is consistent
with its fiduciary duties under ERISA and does not result in a nonexempt
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the
Code. For additional information regarding treatment of the Notes under ERISA,
see "ERISA Considerations" in the Prospectus.
The Notes may not be purchased with the assets of a Plan if the Seller,
the Indenture Trustee, the Owner Trustee or any of their affiliates (a) has
investment or administrative discretion with respect to such Plan assets; (b)
has authority or responsibility to give, or regularly gives, investment advice
with respect to such Plan assets for a fee and pursuant to an agreement or
understanding that such advice (i) will serve as a primary basis for investment
decisions with respect to such Plan assets and (ii) will be based on the
particular investment needs for such Plan; or (c) is an employer maintaining or
contributing to such Plan.
THE CERTIFICATES
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity or which uses plan assets to acquire Certificates. By
its acceptance of a Certificate, each Certificateholder will be deemed to have
represented and warranted that it is not subject to the foregoing limitation. In
this regard, purchasers that are insurance companies should consult with their
counsel with respect to the United States Supreme Court case interpreting the
fiduciary responsibility rules of ERISA, John Hancock Life Ins. Co. v. Harris
Trust and Sav. Bank, 114 S. Ct. 517 (1993). In John Hancock, the Supreme Court
ruled that assets held in an insurance company's general account may be deemed
to be "plan assets" for ERISA purposes under certain circumstances. Prospective
purchasers should determine whether the decision affects their ability to make
purchases of the Certificates. In particular, such an insurance company should
consider the exemptive relief granted by the Department of Labor for
transactions involving insurance company general accounts in Prohibited
Transactions Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995). For additional
information regarding treatment of the Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "UNDERWRITING AGREEMENT"), the Depositor has agreed to cause the
Trust to sell to the Underwriter, and the Underwriter has agreed to purchase,
the entire principal amount of the Notes and the Certificates.
The Depositor has been advised by the Underwriter that it proposes
initially to offer the Notes to the public at the prices set forth herein, and
to certain dealers at such prices less the initial concession not in excess of %
per Class [ ] Note and % per Class [ ] Note. The Underwriter may allow and such
dealers may reallow a concession not in excess of % per Class [ ] Note and % per
Class [ ] Note to certain other dealers. After the initial public offering of
the Notes, the public offering price and such concessions may be changed.
The Depositor has been advised by the Underwriter that it proposes
initially to offer the Certificates to the public at the price set forth herein
and to certain dealers at such price less the initial concession not in excess
of % per Certificate. The Underwriter may allow and such dealers may reallow a
concession not in excess of % per Certificate to certain other dealers. After
the initial public offering of the Certificates, the public offering price and
such concessions may be changed.
Until the distribution of the Notes and Certificates is completed,
rules of the Commission may limit the ability of the Underwriter and certain
selling group members to bid for and purchase the Notes and the Certificates. As
an exception to these rules, the Underwriter is permitted to engage in certain
transactions that stabilize the price of the Notes and the Certificates. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Certificates.
If the Underwriter creates a short position in the Notes and
Certificates in connection with the offering, i.e., if it sells more Notes and
Certificates than are set forth on the cover page of this Prospectus Supplement,
the Underwriter may reduce that short position by purchasing Notes and
Certificates in the open market.
In general, the purchase of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Depositor nor any Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Notes and Certificates. In
addition, Neither the Depositor nor any Underwriter makes any representation
that the Underwriter will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
The Underwriter has represented and agreed that (a) it has not offered
or sold, and will not offer or sell, any Notes to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances that do not constitute an offer
to the public in the United Kingdom for the purposes of the Public Offers of
Securities Regulations 1995, (b) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Notes in, from or otherwise involving the
United Kingdom and (c) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document in connection with the issue of the
Notes to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom the document may otherwise lawfully be issued or passed on.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from the Underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a Prospectus Supplement and Prospectus, the Seller or the Underwriter
will promptly deliver, or cause to be delivered, without charge, a paper copy of
the Prospectus Supplement and Prospectus.
LEGAL OPINIONS
Certain legal matters relating to the Notes and the Certificates and
certain federal income tax matters and certain state tax matters will be passed
upon for the Depositor by Brown & Wood LLP New York, New York. [Certain legal
matters relating to the Notes and the Certificates will be passed upon for the
Underwriter by Brown & Wood LLP.]
INDEX OF TERMS
Accelerated Principal Distribution Amount..................................S-16
APR........................................................................S-12
Available Amount...........................................................S-22
Business Day................................................................S-5
Cede....................................................................S-3, 38
Certificate Balance....................................................S-21, 26
Certificate Interest Reserve Amount........................................S-22
Certificateholders..........................................................S-7
Certificateholders' Distributable Amount...................................S-20
Certificateholders' Interest Carryover Shortfall...........................S-20
Certificateholders' Interest Distributable Amount..........................S-20
Certificateholders' Monthly Interest Distributable Amount..................S-20
Certificateholders' Monthly Principal Distributable Amount.................S-20
Certificateholders' Principal Carryover Shortfall..........................S-21
Certificateholders' Principal Distributable Amount.........................S-20
Certificates...........................................................S-2, S-4
Class [ ] Final Scheduled Distribution Date................................S-6
Class [ ] Final Scheduled Distribution Date................................S-6
Class [ ] Notes.....................................................Cover, S-4
Class [ ] Notes.....................................................Cover, S-4
Class [ ] Rate.............................................................S-5
Class [ ] Rate.............................................................S-5
Closing Date................................................................S-4
Code........................................................................S-8
Collection Account..........................................................S-7
Collection Period...........................................................S-5
Commission..................................................................S-3
Cut-off Date................................................................S-4
Depositor............................................................Cover, S-4
Determination Date....................................................S-6, S-16
Distribution Date......................................................S-2, S-5
DTC...................................................................S-3, S-38
ERISA.......................................................................S-8
Exchange Act................................................................S-3
Final Scheduled Distribution Date..........................................S-18
Final Scheduled Maturity Date.........................................S-5, S-30
Financed Vehicles......................................................S-2, S-4
Floating Rate Interest Accrual Period.................................S-15, S-5
Indenture...................................................................S-4
Indenture Trustee...........................................................S-4
Initial Pool Balance........................................................S-4
Interest Accrual Period...............................................S-15, S-5
Interest Distribution Amount...............................................S-18
Interest Rates..............................................................S-5
Issuer......................................................................S-4
Liquidated Receivables.....................................................S-18
Liquidation Proceeds.......................................................S-18
Noteholders.................................................................S-5
Noteholders' Distributable Amount..........................................S-19
Noteholders' Interest Carryover Shortfall..................................S-19
Noteholders' Interest Distributable Amount.................................S-19
Noteholders' Monthly Interest Distributable Amount.........................S-19
Noteholders' Monthly Principal Distributable Amount........................S-20
Noteholders' Principal Carryover Shortfall.................................S-20
Noteholders' Principal Distributable Amount............................S-6, S19
Notes................................................................Cover, S-4
OID........................................................................S-22
Owner Trustee...............................................................S-4
Pass Through Rate...........................................................S-7
Payment Date................................................................S-5
Plan.......................................................................S-23
Pool Balance................................................................S-5
Prospectus..................................................................S-3
Rating Agency.........................................................S-8, S-10
Realized Losses............................................................S-18
Receivables.................................................................S-2
Receivables Pool...........................................................S-11
Record Date.................................................................S-5
Redemption Price...........................................................S-16
Regular Principal Distribution Amount...........................S-6, S-16, S-18
Sale and Servicing Agreement................................................S-4
Securities.............................................................S-2, S-4
Securityholders.............................................................S-7
Seller......................................................................S-4
Servicer....................................................................S-4
Tax Counsel.................................................................S-8
Total Distribution Amount..................................................S-18
Transfer and Servicing Agreements..........................................S-17
Trust................................................................Cover, S-4
Trust Agreement.............................................................S-4
Underwriter...............................................................Cover
Underwriting Agreement.....................................................S-23
<TABLE>
<S> <C>
[BACK COVER OF PROSPECTUS SUPPLEMENT] $[ ]
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE [________________] TRUST
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DEPOSITOR 199 -[ ]
OR BY THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND $
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE 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 [FLOATING RATE][ %]
TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE ASSET BACKED NOTES, CLASS [ ]
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. $
___________________ [FLOATING RATE][ %]
ASSET BACKED NOTES, CLASS [ ]
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
REPORTS TO SECURITYHOLDERS...........................S-3 $
SUMMARY OF TERMS ....................................S-4 [FLOATING RATE][ %]
RISK FACTORS .......................................S-10 ASSET BACKED CERTIFICATES
THE TRUST ..........................................S-11
THE SELLER .........................................S-15
THE DEPOSITOR ......................................S-15
THE SERVICER .......................................S-15
WEIGHTED AVERAGE LIFE OF THE SECURITIES ............S-15 SSB VEHICLE SECURITIES INC.
DESCRIPTION OF THE NOTES ...........................S-15 DEPOSITOR
DESCRIPTION OF THE CERTIFICATES ....................S-16
DESCRIPTION OF THE TRANSFER AND SERVICING
AGREEMENTS ....................................S-17
MATERIAL FEDERAL INCOME TAX CONSEQUENCES............S-22
ERISA CONSIDERATIONS ...............................S-22
UNDERWRITING .......................................S-23
LEGAL OPINIONS .....................................S-24
PROSPECTUS
Available Information................................. 2
Incorporation of Certain Documents by Reference....... 2
Summary of Terms...................................... 3
Risk Factors...........................................8
The Trusts............................................12
The Receivables Pools.................................14
Weighted Average Life of the Securities...............16
Pool Factors and Trading Information..................16
Use of Proceeds.......................................17
The Company...........................................18
Description of the Notes..............................18
Description of the Certificates.......................23
Certain Information Regarding the Securities..........24 PROSPECTUS SUPPLEMENT
Description of the Transfer and Servicing Agreements..33
Certain Legal Aspects of the Receivables..............41 , 199__
Material Federal Income Tax Consequences..............45
ERISA Considerations..................................59 SALOMON SMITH BARNEY
Plan of Distribution..................................60
Legal Opinions........................................61
Index of Terms........................................62
Annex I..............................................I-1
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT, ALL DEALERS EFFECTING TRANSACTIONS IN THE
SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY
BE REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS WHEN ACTING AS UNDERWRITER[S] AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS AND SUBSCRIPTIONS.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
</TABLE>
Subject to completion, dated September 29, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ____________ , 199__)
$[ ]
__________________ TRUST 199 -[ ]
[ %] ASSET BACKED CERTIFICATES, CLASS A
[ %] ASSET BACKED CERTIFICATES, CLASS B
SSB VEHICLE SECURITIES INC.
DEPOSITOR
- ----------------------------------
SERVICER ____________________
The Asset Backed Certificates, Series 199 - [ ] (the "CERTIFICATES") will
consist of two Classes of Certificates, the Class A Certificates and the Class B
Certificates. The Class A Certificates will evidence in the aggregate an
undivided ownership interest of approximately ___% in a trust (the "TRUST") to
be formed pursuant to a Pooling and Servicing Agreement to be entered into among
SSB Vehicle Securities Inc., as Depositor (the "DEPOSITOR"),
_______________________, as Servicer (the "SERVICER"), and
_____________________, as Trustee (the "TRUSTEE"). The Class B Certificates will
evidence in the aggregate an undivided ownership interest of approximately ___%
in the Trust. The Trust property will include a pool of retail installment sale
contracts or retail installment loans (the "RECEIVABLES") secured by new or used
automobiles, light-duty trucks, recreational vehicles and motorcycles (the
"FINANCED VEHICLES"), all monies due thereunder on or after __________, security
interests in the Financed Vehicles and certain other property. The rights of the
Class B Certificateholders to receive distributions with respect to the
Receivables are subordinated to the rights of the Class A Certificateholders, to
the extent described herein.
Principal, and interest at the Pass-Through Rate of ___% per annum, will be
distributed on the __th day of each month (or the next following business day)
beginning ________, 199 (the "DISTRIBUTION DATE"). The "FINAL SCHEDULED
DISTRIBUTION DATE" on the Certificates will be __________.
[IN THE CASE OF ANY CERTIFICATES PURCHASED AT A PREMIUM, AND PARTICULARLY THE
CLASS IO CERTIFICATES, THE RISK THAT A FASTER THAN ANTICIPATED RATE OF PRINCIPAL
PAYMENTS ON THE RECEIVABLES COULD RESULT IN AN ACTUAL YIELD THAT IS LOWER THAN
THE ANTICIPATED YIELD. HOLDERS OF THE CLASS IO CERTIFICATES SHOULD CAREFULLY
CONSIDER THE RISK THAT A RAPID RATE OF PRINCIPAL PAYMENTS ON THE RECEIVABLES
COULD RESULT IN THE FAILURE OF SUCH HOLDERS TO RECOVER THEIR INITIAL
INVESTMENTS.]
[In the case of any Certificates purchased at a discount, and particularly the
Class PO Certificates, the risk that a slower than anticipated rate of principal
payments on the Mortgage Loans could result in an actual yield that is lower
than the anticipated yield.]
(Cover continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH UNDER "RISK
FACTORS" AT PAGE S-7 HEREOF AND BEGINNING ON PAGE 8 OF THE ACCOMPANYING
PROSPECTUS.
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN SSB VEHICLE SECURITIES INC., THE
SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF THE CERTIFICATES OR THE
RECEIVABLES IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
ORIGINAL PRICE TO UNDERWRITING PROCEEDS TO THE
PRINCIPAL PUBLIC(1) DISCOUNT DEPOSITOR(1)(2)
AMOUNT
<S> <C> <C> <C> <C>
Per Class A Certificate... $ % % %
Per Class B Certificate... % % %
[Per Class IO Certificate (3)]
[Per Class PO Certificate (4)]
Total $ $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
[(3) The Class IO Certificates will have no principal balance and will bear
interest on their Notional Amount.]
[(4) The Class PO Certificates will be principal only certificates and will
not bear interest.]
The Certificates are offered by Salomon Smith Barney Inc. (the "UNDERWRITER")
subject to prior sale, when, as and if issued and accepted by the Underwriter,
and subject to the Underwriter's right to reject any order in whole or in part.
It is expected that delivery of the Certificates will be made in book-entry form
only through the facilities of The Depository Trust Company, Cedel Bank, societe
anonyme, and the Euroclear System against payment therefor in immediately
available funds on or about ___________ , 199 .
SALOMON SMITH BARNEY
, 199
(Continued from previous page)
Each class of Certificates 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. The rights of the Class
B Certificates to receive payments are subordinate to the rights of the Class A
Certificates. The Certificates may differ as to the timing and priority of
payment, interest rate or amount of distributions in respect of principal or
interest or both. [The Certificates may be entitled to distributions in respect
of principal with disproportionate, nominal or no interest distributions, or to
interest distributions with disproportionate, nominal or no distributions in
respect of principal.] The rate of payment in respect of principal of any class
of 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.
The Servicer may purchase the Receivables when the aggregate principal balance
of the Receivables shall have declined to [ ]% or less of the initial aggregate
principal balance of the Receivables purchased by the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT
CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT SHALL CONTROL.
Certain persons participating in this offering may engage in transactions that
stabilize, maintain, or otherwise affect the price of the Certificates. Such
transactions may include stabilizing and the purchase of Certificates to cover
syndicate short positions. For a description of these activities, see
"Underwriting" herein.
[This Prospectus Supplement may be used by the Underwriter, an affiliate of the
Depositor, in connection with offers and sales related to market making
transactions in the Certificates.]
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co.
("CEDE"), as nominee of The Depository Trust Company ("DTC") and registered
holder of the Certificates. See "Description of the Certificates -- Book-Entry
Registration", "-- Reports to Certificateholders" and "Certain Information
Regarding the Securities -- Book-Entry Registration" in the accompanying
Prospectus (the "PROSPECTUS"). Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
The Depositor, as originator of the Trust, will file with the Securities and
Exchange Commission (the "COMMISSION") such periodic reports as are required
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
the rules and regulations of the Commission thereunder.
SUMMARY OF TERMS
The following summary is qualified by reference to the detailed
information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
Issuer...................................
_______________ Trust 199 -[
] (the "TRUST" or the
"ISSUER"), to be formed
pursuant to a Pooling and
Servicing Agreement to be
dated as of __________, 199
among the Depositor, the
Servicer and the Trustee (the
"POOLING AND SERVICING
AGREEMENT")
Depositor................................
SSB Vehicle Securities Inc.
(the "DEPOSITOR").
Servicer.................................
______________________ (in
such capacity, the
"SERVICER").
Trustee..................................
, as trustee under the
Pooling and Servicing
Agreement (the "TRUSTEE").
The Certificates.........................
The Certificates will consist
of two classes, entitled [ ]%
Asset Backed Certificates,
Class A (the "CLASS A
CERTIFICATES") and [ ]% Asset
Backed Certificates, Class B
(the "CLASS B CERTIFICATES").
Each Certificate will
represent a fractional
undivided ownership interest
in the Trust.
The Class A Certificates will
evidence in the aggregate an
undivided ownership interest
(the "CLASS A PERCENTAGE") of
approximately [ ]% of the
Trust (initially representing
$[ ]) and the Class B
Certificates will evidence in
the aggregate an undivided
ownership interest (the
"CLASS B PERCENTAGE") of
approximately [ ]% of the
Trust (initially representing
$[____________]). The Class B
Certificates are subordinated
to the Class A Certificates,
to the extent described
herein.
The Receivables..........................
The Receivables will have an
aggregate principal balance
of approximately $ (the
"INITIAL POOL BALANCE") as of
, 199 (the "CUT-OFF DATE").
"The RECEIVABLES" will
consist of retail installment
sale contracts, retail
installment loans, purchase
money notes or other notes
between Obligors and Dealers
secured by new or used
automobiles, light duty
trucks, recreational vehicles
and motorcycles (the
"FINANCED VEHICLES"). The
Receivables were purchased by
__________ (the "SELLER").
The Receivables will be
transferred by the Depositor
to the Trust on (the "CLOSING
DATE"), based on the criteria
specified in the Pooling and
Servicing Agreement and
described herein and in the
Prospectus. As of the Cut-off
Date, the weighted average
annual percentage interest
rate of the Receivables was
approximately %, the weighted
average remaining maturity of
the Receivables was
approximately months, and the
weighted average original
maturity of the Receivables
was approximately months. No
Receivable has a scheduled
maturity later than , 20__
(the "FINAL SCHEDULED
MATURITY DATE"). See "The
Receivables Pool" herein. The
"POOL BALANCE" at any time
will represent the aggregate
principal balance of the
Receivables at the end of the
preceding Collection Period,
after giving effect to all
payments (other than
Payaheads) received from
Obligors, Advances and
Purchase Amounts to be
remitted by the Servicer or
the Depositor, as the case
may be, all for such
Collection Period, and all
losses realized on
Receivables liquidated during
such Collection Period.
Distribution Dates.......................
Distributions with respect to
the Certificates will be made
on the day of each month or,
if any such day is not a
Business Day, on the next
succeeding Business Day
(each, a "DISTRIBUTION DATE")
commencing , 199 . The
Servicer shall determine the
amount to be distributed on
the Distribution Date on or
before the Business Day
preceding such Distribution
Date (the "DETERMINATION
Date"). Distributions will be
made to holders of the
Certificates (the
"CERTIFICATEHOLDERS") of
record as of the day
immediately preceding such
Distribution Date or, if
Definitive Certificates are
issued, as of the day of the
preceding month (a "RECORD
DATE").
Class A Pass Through Rate................ ___% per annum.
Class B Pass Through Rate................ ___% per annum.
Interest.................................
On each Distribution Date,
the Trustee will distribute
to the Class A
Certificateholders 30 days of
interest at the Class A Pass
Through Rate on the Class A
Certificate Balance as of the
last day of the preceding
calendar month (before giving
effect to distributions of
principal on the related
Distribution Date) generally
to the extent of funds
available from (i) the Class
A Percentage of the Interest
Distribution Amount; (ii) the
Reserve Account and (iii) the
Class B Percentage of the
Total Distribution Amount.
The "CLASS A CERTIFICATE
BALANCE" shall equal,
initially, the Class A
Percentage of the Pool
Balance as of the Cut-off
Date and thereafter shall
equal the initial Class A
Certificate Balance, reduced
by all principal
distributions on the Class A
Certificates. Interest on the
Certificates will be
calculated on the basis of a
360- day year consisting of
twelve 30-day months.
Class A Principal........................
On each Distribution Date,
the Trustee will distribute
to Class A Certificateholders
an amount equal to the Class
A Percentage of the Principal
Distribution Amount for the
Collection Period preceding
such Distribution Date to the
extent of funds available
therefor. The "PRINCIPAL
DISTRIBUTION AMOUNT" is the
amount of principal paid or,
in certain circumstances, the
principal balance of
defaulted Receivables, as
calculated by the Servicer as
described under "Description
of the Certificates --
Distributions." The Class A
Percentage of the Principal
Distribution Amount will be
passed through on each
Distribution Date to the
Class A Certificateholders to
the extent of funds available
from (i) the Class A
Percentage of the Principal
Distribution Amount
(exclusive of the portion
thereof attributable to
Realized Losses), (ii) the
Reserve Account and (iii) the
Class B Percentage of the
Total Distribution Amount.
"REALIZED LOSSES" means the
excess of the principal
balance of any Liquidated
Receivable over Liquidation
Proceeds to the extent
allocable to principal
received in the Collection
Period in which the
Receivable became a
Liquidated Receivable. A
"COLLECTION PERIOD" with
respect to a Distribution
Date will be the calendar
month preceding the month in
which such Distribution Date
occurs.
Class B Interest......................... On each Distribution Date,
the Trustee will distribute
to the Class B
Certificateholders 30 days of
interest at the Class B Pass
Through Rate on the Class B
Certificate Balance as of the
last day of the preceding
calendar month (before giving
effect to distributions of
principal on such
Distribution Date) generally
to the extent of funds
available, after giving
effect to the prior rights of
the Class A
Certificateholders to receive
the distribution of principal
and interest due them as
described above, from (i) the
Class B Percentage of the
Interest Distribution Amount
and (ii) the Reserve Account.
The "CLASS B CERTIFICATE
BALANCE" will equal,
initially, $ and, thereafter,
will equal the initial Class
B Certificate Balance reduced
by all amounts previously
distributed to Class B
Certificateholders (or
deposited in the Reserve
Account, exclusive of the
Reserve Account Initial
Deposit) and allocable to
principal and by Realized
Losses.
Class B Principal........................
On each Distribution Date,
the Trustee will distribute
the Class B Percentage of the
Principal Distribution Amount
to the Class B
Certificateholders to the
extent of funds available
(after giving effect to the
distribution of the interest
and principal due to the
Class A Certificateholders
and the interest due to the
Class B Certificateholders)
from (i) the Class B
Percentage of the Principal
Distribution Amount
(exclusive of the portion
thereof attributable to
Realized Losses) and (ii) the
Reserve Account.
Optional Prepayment......................
The Servicer will have the
option to purchase all, but
not less than all, of the
Receivables on any
Distribution Date on or after
the Distribution Date on
which the Pool Balance has
declined to [ ]% or less of
the Initial Pool Balance. The
price at which the Servicer
will be required to purchase
the Receivables in order to
exercise such option will be
equal to the aggregate of the
Purchase Amounts of the
Receivables as of the end of
the related Collection
Period. The Servicer will be
required to give not less
than [ ] days' notice to the
Trustee of its intention to
exercise such option. In
addition, the Servicer will
not be permitted to exercise
such option unless the
resulting distribution would
be sufficient to distribute
to the Class A
Certificateholders an amount
equal to the Class A
Certificate Balance together
with accrued interest at the
Class A Pass Through Rate,
and to the Class B
Certificateholders an amount
equal to the Class B
Certificate Balance together
with accrued interest at the
Class B Pass Through Rate.
Upon such distribution, the
Certificates will be retired.
Reserve Account..........................
The Reserve Account will be
created with an initial
deposit ("the RESERVE ACCOUNT
INITIAL DEPOSIT") by
__________ on the Closing
Date of cash or Eligible
Investments having a value of
at least $ .
Certain amounts in the
Reserve Account on any
Distribution Date (after
giving effect to all
distributions to be made on
such Distribution Date) in
excess of the Specified
Reserve Account Balance for
such Distribution Date will
be released to the ______.
The "SPECIFIED RESERVE
ACCOUNT BALANCE" with respect
to any Distribution Date
generally will be equal to
[state formula]. The amount
in the Reserve Account will
be increased by the deposit
thereto on each Distribution
Date of the amount, if any,
of the Total Distribution
Amount remaining after the
payment of the Servicing Fee
and any prior unpaid
Servicing Fee, the Class A
Distributable Amount and the
Class B Distributable Amount
until the amount in the
Reserve Account equals the
Specified Reserve Account
Balance. Amounts in the
Reserve Account on any
Distribution Date (after
giving effect to all
distributions made on such
Distribution Date) in excess
of the Specified Reserve
Account Balance for such
Distribution Date generally
will be released to the
______ and will no longer be
available to the
Certificateholders. The
Reserve Account will be
maintained with the Trustee
as a segregated trust account
but will not be part of the
Trust.
Collection Account.......................
Except under certain
conditions described herein,
the Servicer will be required
to remit collections received
with respect to the
Receivables within two
Business Days after receipt
thereof to one or more
accounts in the name of the
Trustee (together, the
"COLLECTION ACCOUNT").
Pursuant to the Pooling and
Servicing Agreement, the
Servicer will have the
revocable power to instruct
the Trustee to withdraw funds
on deposit in the Collection
Account and to apply such
funds on each Distribution
Date to the following (in the
priority indicated): (i) the
Servicing Fee for the prior
Collection Period and any
overdue Servicing Fees to the
Servicer, (ii) the Class A
Distributable Amount to the
Class A Certificateholders,
(iii) the Class B
Distributable Amount to the
Class B Certificateholders,
and (iv) the remaining
balance, if any, to the
Reserve Account.
Tax Status...............................
In the opinion of Brown &
Wood LLP, counsel to the
Trust ("TAX Counsel"), the
Trust will be treated as a
grantor trust for federal
income tax purposes and will
not be subject to federal
income tax. Certificate
Owners will report their pro
rata share of all income
earned on the Receivables
(other than amounts, if any,
treated as "stripped
coupons") and, subject to
certain limitations in the
case of Certificate Owners
who are individuals, trusts,
or estates, may deduct their
pro rata share of reasonable
servicing and other fees. See
"Material Federal Income Tax
Consequences - Trusts Treated
as a Grantor Trust" in the
Prospectus for additional
information concerning the
application of federal income
tax laws to the Trust and the
Certificates.
ERISA Considerations.....................
Subject to the considerations
discussed under "ERISA
Considerations" herein and in
the Prospectus, the Class A
Certificates are eligible for
purchase by employee benefit
plans.
The Class B Certificates may
not be acquired by any
employee benefit plan subject
to the Employee Retirement
Income Security Act of 1974,
as amended ("ERISA"), or
Section 4975 of the Internal
Revenue Code of 1986, as
amended (the "CODE"), or by
an individual retirement
account. See "ERISA
Considerations" herein and in
the Prospectus.
Ratings of the Class A
Certificates.............................
It is a condition to the
issuance of the Class A
Certificates that they be
rated at least " " by at
least one nationally
recognized rating agency (a
"RATING AGENCY"). The rating
of the Class A Certificates
by a Rating Agency reflects
such Rating Agency's
assessment of the likelihood
that the holders of the Class
A Certificates will receive
payments of principal and
interest but it does not
address the timing of
distributions of principal of
the Class A Certificates
prior to the Final Scheduled
Distribution Date. A rating
is not a recommendation to
buy, sell or hold securities
and may be subject to
revision or withdrawal at any
time by the assigning Rating
Agency. Each rating should be
evaluated independently of
any other rating. See "Risk
Factors -- Ratings of the
Securities" herein.
Ratings of the Class B
Certificates............................. It is a condition to the
issuance of the Class B
Certificates that they be
rated at least " " by at
least one nationally
recognized rating agency (a
"RATING AGENCY"). The rating
of the Class B Certificates
by a Rating Agency reflects
such Rating Agency's
assessment of the likelihood
that the holders of the Class
B Certificates will receive
payments of principal and
interest but it does not
address the timing of
distributions of principal of
the Class B Certificates
prior to the Final Scheduled
Distribution Date. A rating
is not a recommendation to
buy, sell or hold securities
and may be subject to
revision or withdrawal at any
time by the assigning Rating
Agency. Each rating should be
evaluated independently of
any other rating. See "Risk
Factors -- Ratings of the
Securities" herein.
RISK FACTORS
Investors should consider, among other things, the matters discussed
under "Risk Factors" in the Prospectus and the following risk factors in
connection with purchases of the Certificates.
LIMITED LIQUIDITY; ABSENCE OF A SECONDARY MARKET MAY LIMIT THE ABILITY
OF THE SECURITYHOLDER TO SELL THE SECURITIES. There is currently no secondary
market for the Certificates. Each Underwriter currently intends to make a market
in the Certificates, but it is under no obligation to do so. There can be no
assurance that a secondary market will develop or, if a secondary market does
develop, that it will provide the Certificateholders with liquidity of
investment or that it will continue for the life of the Certificates offered
hereby.
[SIGNIFICANT GEOGRAPHIC CONCENTRATION MAY INCREASE THE EXPOSURE OF THE
TRUST TO THE ECONOMIC CONDITIONS IN CERTAIN STATES. Economic conditions in
states where Obligors reside may affect the delinquency, loan loss and
repossession experience of the Trust with respect to the Receivables. Obligors
on Receivables representing approximately _____% by principal balance of the
Receivables were located in [ __________ ] as of the Cut-off Date. As a result,
economic conditions in such states may have a disproportionate impact on the
Trust. In particular, an economic downturn in one or more of such states could
adversely affect the performance of the Trust as a whole (even if national
economic conditions remain unchanged or improve) as Obligors in such state or
states experience the effects of such a downturn and face greater difficulty in
making payments on their Financed Vehicles. See "The Receivables Pool" herein.]
SUBORDINATION OF THE CERTIFICATES TO THE NOTES WILL INCREASE THE RISK
OF THE CERTIFICATES OF NOT RECEIVING FULL DISTRIBUTION OF INTEREST AND
PRINCIPAL. Distributions of interest and principal on the Class B Certificates
will be subordinated in priority of payment to interest and principal due on the
Class A Certificates. Consequently, the Class B Certificateholders will not
receive any distributions with respect to a Collection Period until the full
amount of interest on and principal of the Class A Certificates due on such
Distribution Date has been deposited in the Certificate Distribution Account.
SECURITYHOLDERS ARE LIMITED TO DEPOSITS IN THE RESERVE ACCOUNT AND
PAYMENTS ON THE RECEIVABLES FOR PAYMENT ON THE SECURITIES. The Trust will not
have, nor is it permitted or expected to have, any significant assets or sources
of funds other than the Receivables and the Reserve Account. Holders of the
Certificates must rely for repayment upon payments on the Receivables and, if
and to the extent available, amounts on deposit in the Reserve Account. Although
funds in the Reserve Account will be available on each Distribution Date to
cover shortfalls in distributions of interest and principal on the Certificates,
amounts to be deposited in the Reserve Account are limited in amount. If the
Reserve Account is exhausted, the Trust will depend solely on current
distributions on the Receivables to make payments on the Certificates.
THE EFFECTIVE YIELD ON THE CERTIFICATES MAY BE LOWER THAN EXPECTED
BECAUSE ACCRUED INTEREST WILL NOT BE DISTRIBUTED UNTIL THE DISTRIBUTION DATE OF
THE SUCCEEDING MONTH. The effective yield on the Certificates will be reduced
below the yield otherwise produced because interest accrued through the end of
each calendar month will not be distributed until the Distribution Date in the
following month, and the amount distributable on such Distribution Date will not
bear interest during such delay. As a result, the market value of the
Certificates will be lower than would be the case if there was no such delay.
RATINGS OF THE SECURITIES ARE SUBJECT TO DOWN-GRADES BY THE RATING
AGENCIES. It is a condition to the issuance of the Certificates that the Class A
Certificates be rated in the highest investment rating category, and that the
Class B Certificates be rated at least in the " " category or its equivalent, by
at least one nationally recognized rating agency (a "RATING AGENCY"). A rating
is not a recommendation to purchase, hold or sell Certificates, inasmuch as such
rating does not address market price or suitability for a particular investor.
The ratings of the Certificates address the likelihood of the payment of the
principal of and interest on the Certificates pursuant to their terms but not
the timing of the distributions of principal prior to the Final Scheduled
Distribution Date of 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 entirely by a Rating Agency if it judges future circumstances to so
warrant.
[THE VALUE OF INTEREST ONLY CERTIFICATES WILL GENERALLY DECREASE IF THE
RATE OF PREPAYMENTS INCREASE. The yield of investors in the Class IO
Certificates will be sensitive to the rate of principal payments (including
prepayments) of the Receivables (particularly those with high interest rates),
which generally can be prepaid at any time. In general, Receivables with higher
interest rates tend to prepay at higher rates than Receivables with relatively
lower interest rates in response to a given change in market interest rates. As
a result, the Receivables with higher interest rates may prepay at higher rates,
thereby reducing the Pass-Through Rate and Notional Amount of the Class IO
Certificates.
[THE VALUE OF PRINCIPAL ONLY CERTIFICATES WILL GENERALLY DECREASE IF
THE RATE OF PREPAYMENTS DECREASE. The Class PO Certificates will be "principal
only" certificates and will not bear interest. Lower than anticipated rate of
principal payments (including prepayments) on the Receivables will have a
negative effect on the yield on investors in the Principal Only Certificates.]
THE TRUST
GENERAL
The Depositor will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the Pooling
and Servicing Agreement and will be compensated for acting as the Servicer. See
"Description of the Certificates -Servicing Compensation and Payment of
Expenses" herein. To facilitate servicing and to minimize administrative burden
and expense, the Servicer will be appointed custodian for the Receivables by the
Trustee, but will not stamp the Receivables to reflect the sale and assignment
of the Receivables to the Trust. In addition, due to administrative burden and
expense, (i) the certificates of title to the Financed Motor Vehicles and those
Financed Recreational Vehicles financed in states where security interests in
recreational vehicles are subject to certificate of title statutes will not be
amended to reflect such assignments and (ii) UCC financing statements in respect
of those Financed Recreational Vehicles financed in states where security
interests in recreational vehicles, as applicable, are perfected by filing a
UCC-1 financing statement will not be amended to reflect such assignments. In
the absence of such procedures, such Trust may not have a perfected in the
Financed Vehicles in some states and will not have a perfected security interest
in the Financed Vehicles documented under Federal law. See "Certain Legal
Aspects of the Receivables" in the Prospectus.
If the protection provided to the Certificateholders by the Reserve
Account and, in the case of the Class A Certificateholders, the subordination of
the Class B Certificates is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale of
Financed Vehicles which secure defaulted Receivables. In such event, certain
factors, such as the Trust's not having first priority perfected security
interests in some of the Financed Vehicles, may affect the Trust's ability to
realize on the Financed Vehicles securing the Receivables, and thus may reduce
the proceeds to be distributed to Certificateholders with respect to the
Certificates. See "Description of the Certificates -- Distributions" and "--
Reserve Account" herein and "Certain Legal Aspects of the Receivables" in the
Prospectus.
Each Certificate represents a fractional undivided ownership interest
in the Trust. The Trust property includes retail installment sale contracts
between Dealers and Obligors, and all payments due thereunder on or after the
related Cut-off Date with respect to the Precomputed Receivables and all
payments received thereunder on or after the related Cut-off Date with respect
to the Simple Interest Receivables. The Trust property also includes (i) such
amounts as from time to time may be held in one or more trust accounts
established and maintained by the Servicer pursuant to the Pooling and Servicing
Agreement, as described below; (ii) security interests in the Financed Vehicles
and any accessions thereto; (iii) the rights to proceeds with respect to the
Receivables from claims on physical damage, credit life and disability insurance
policies covering the Financed Vehicles or the Obligors, as the case may be;
(iv) the interest of the Seller in any proceeds with respect to the Receivables
from recourse, if any, to Dealers on Receivables or Financed Vehicles with
respect to which the Servicer has determined that eventual repayment in full is
unlikely; (v) any property that shall have secured a Receivable and that shall
have been acquired by the Trustee; and (vi) any and all proceeds of the
foregoing. The Reserve Account will be maintained by the Trustee for the benefit
of the Certificateholders, but will not be part of the Trust.
THE RECEIVABLES POOL
The pool of Receivables (the "RECEIVABLES POOL") will include only the
Receivables purchased on the Closing Date. The Receivables [will be] [have been]
purchased by the Depositor from the Seller, which purchased the Receivables,
directly or indirectly, from Dealers in the ordinary course of business or in
acquisitions. The Receivables were selected from the Depositor's portfolio for
inclusion in the Receivables Pool by several criteria, some of which are set
forth in the Prospectus under "The Receivables Pools", as well as the
requirement that, as of the Cut-off Date, each Receivable (i) had an outstanding
gross balance of at least $ and (ii) was not more than 60 days past due (an
account is not considered past due if the amount past due is less than % of the
scheduled monthly payment). As of the Cut-off Date, no Obligor on any Receivable
was noted in the related records of the Seller as being the subject of a
bankruptcy proceeding. No selection procedures believed by the Depositor to be
adverse to Certificateholders were used in selecting the Receivables.
[Description of any underwriting criteria applicable to Subsequent Receivables.]
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate ("APR") and the geographic
distribution of the Receivables Pool as of the Cut-off Date.
_____________ TRUST 199 -[ ]
COMPOSITION OF THE RECEIVABLES POOL
Weighted Aggregate Number of Weighted Weighted Average
Average Principal Receivables Average Average Principal
APR of Balance Remaining Original Balance
Receivables Term Term
-----% $------------- ---------- ----- ----- $----------
months months
_______________ TRUST 199 - [ ]
DISTRIBUTION BY APR OF THE RECEIVABLES POOL
APR Range Number of Aggregate Percent of
Receivables Principal Balance Aggregate
Principal
Balance(1)
0.00% - 5.00%............. $ %
5.01% - 6.00%.............
6.01% - 7.00%.............
7.01% - 8.00%.............
8.01% - 9.00%.............
9.01% - 10.00%.............
10.01% - 11.00%.............
11.01% - 12.00%.............
12.01% - 13.00%.............
13.01% - 14.00%.............
14.01% - 15.00%.............
15.01% - 16.00%.............
16.01% - 17.00%.............
17.01% - 18.00%.............
Greater than 18.00%.........
- ---------------
(1) Percentages may not add to 100.0% because of rounding.
_______________ TRUST 199 -[ ]
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
STATE(2) PERCENTAGE AGGREGATE
PRINCIPAL BALANCE(1)
.............................. %
..............................
..............................
..............................
..............................
---------%
- ---------------
(1) Percentages may not add to 100.0% because of rounding.
(2) Based on physical addresses of the Obligors as of the Cut-off Date.
Approximately % of the aggregate principal balance of the Receivables,
constituting % of the number of the Receivables, represent previously titled
vehicles.
By aggregate principal balance, approximately % of the receivables are
Precomputed Receivables and % of the Receivables are Simple Interest
Receivables. See "The Receivables Pools" in the Prospectus for a further
description of the characteristics of Precomputed Receivables and Simple
Interest Receivables.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning the experience of the
Seller pertaining to new and used automobile, light duty truck and motorcycle
receivables, recreational vehicle receivables, including those previously sold
which the Servicer continues to service. There can be no assurance that the
delinquency, repossession and net loss experience on the Receivables will be
comparable to that set forth below.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE(1)
AT , AT DECEMBER 31,
199 199 199 199
---- ---- ---- ---
NUMBER OF AMOUNT NUMBER OF AMOUNT NUMBER OF AMOUNT NUMBER OF AMOUNT
CONTRACTS CONTRACTS CONTRACTS CONTRACTS
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio..... $ $ $ $
Period of
Delinquency
31-60 Days..
61 Days or
More..........
Total $ $ $ $
Delinquencies.
Total % % % % % % % %
Delinquencies
as a
Percent of the
Portfolio...
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
199 199 199
---- ---- ---
NUMBER OF AMOUNT NUMBER OF AMOUNT NUMBER OF AMOUNT
CONTRACTS CONTRACTS CONTRACTS
<S> <C> <C> <C> <C> <C> <C>
Portfolio............... $ $ $
Period of Delinquency
31-60 Days............
61 Days or More....... $ $ $
------------ --------------------------- ---------------------------- -
Total Delinquencies.....
Total Delinquencies % % % % % %
as a Percent of the
Portfolio.............
</TABLE>
---------------
(1) All amounts and percentages are based on the gross amount scheduled to
be paid on each contract, including unearned finance and other charges.
<TABLE>
<CAPTION>
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
_____________ ENDED
, YEAR ENDED DECEMBER 31,
199 199 199 199 199 199 199
---- ---- ---- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding
During the Period................ $ $ $ $ $ $ $
Average Number of Contracts
Outstanding During the Period....
Percent of Contracts Acquired % % % % % % %
During the
Period with Recourse to the
Dealer.............................
Repossessions as a Percent of % % % % % % %
Average
Number of Contracts Outstanding..
Net Losses as a Percent of % % % % % % %
Liquidations(3)(4)...............
Net Losses as a Percent of Average % % % % % % %
Amount Outstanding(2)(3).........
--------------------
</TABLE>
(1) [Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each contract, including unearned finance
and other charges. The information in the table includes previously sold
contracts that the Servicer continues to service.]
(2) Percentages have been annualized for the _____ months ended ____________,
199 and 199 and are not necessarily indicative of the experience for the
year.
(3) [Net losses are equal to the aggregate of the balances of all contracts
which are determined to be uncollectible in the period, less any
recoveries on contracts charged off in the period or any prior periods,
including any losses resulting from disposition expenses and any losses
resulting from the failure to recover commissions to dealers with respect
to contracts that are prepaid or charged off.]
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of monthly cash payments and charge-offs.
[The net loss figures above reflect the fact that Seller
had recourse to Dealers on a portion of its retail installment sale
contracts. By aggregate principal balance, approximately % of the
Receivables represent contracts with recourse to Dealers. The Seller
applies underwriting standards to the purchase of contracts without
regard to whether recourse to Dealers is provided. However, the net
loss experience of contracts without recourse to Dealers is higher
than that of contracts with recourse to Dealers because, under its
recourse obligation, the Dealer is responsible to the Seller for
payment of the unpaid balance of the contract, provided that the
Originator repossesses the vehicle from the retail buyer and returns
it to the Dealer within a specified time. In the event of a Dealer's
bankruptcy, a bankruptcy trustee might attempt to characterize
recourse sales of contracts as loans to the Dealer secured by the
contracts. Such an attempt, if successful, could result in payment
delays or losses on the affected Receivables.]
THE SELLER
[Description of Seller and its underwriting and servicing standards.]
THE DEPOSITOR
[Description of Depositor.]
THE SERVICER
[Description of Servicer and its servicing standards.]
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations
with respect to the Certificates is set forth under "Weighted Average Life of
the Certificates" in the Prospectus. As the rate of payment of principal of the
Certificates depends primarily on the rate of payment (including prepayments on
liquidations due to default) of the principal balance of the Receivables, the
final distribution in respect of the Certificates could occur significantly
earlier than their Final Scheduled Distribution Date. Certificateholders will
bear the risk of being able to reinvest principal payments of the Certificates
at yields at least equal to the yields on their respective Certificates.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Pooling
and Servicing Agreement, a form of which has been filed as an exhibit to the
Registration Statement. A copy of the Pooling and Servicing Agreement will be
filed with the Commission following the issuance of the Certificates. The
following summary describes certain terms of the Certificates and the Pooling
and Servicing Agreement. The summary does not purport to be complete and is
subject to, and qualified by reference to, all the provisions of the
Certificates and the Pooling and Servicing Agreement. The following summary
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Certificates of any given series and
the related Pooling and Servicing Agreement set forth in the Prospectus, to
which description reference is hereby made.
In general, it is intended that Class A Certificateholders receive, on
each Distribution Date, the Class A Percentage of the Principal Distribution
Amount plus interest at the Class A Pass Through Rate on the Class A Certificate
Balance. Subject to the prior rights of the Class A Certificateholders, it is
intended that the Class B Certificateholders receive, on each Distribution Date,
the Class B Percentage of the Principal Distribution Amount plus interest at the
Class B Pass Through Rate on the Class B Certificate Balance.
The Certificates will evidence interests in the Trust created pursuant
to the Pooling and Servicing Agreement. The Class A Certificates will evidence
in the aggregate an undivided ownership interest (the "CLASS A PERCENTAGE") of
approximately % of the Trust and the Class B Certificates will evidence in the
aggregate an undivided ownership interest (the "CLASS B PERCENTAGE") of
approximately % of the Trust.
OPTIONAL PREPAYMENT
The Servicer will have the option to purchase all, but not less than
all, of the Receivables when the Pool Balance shall have declined to [__]% or
less of the Initial Pool Balance. The price at which the Servicer will be
required to purchase the Receivables in order to exercise such option will be
equal to the aggregate of the Purchase Amounts of the Receivables as of the end
of the related Collection Period. The Servicer will be required to give not less
than [ ] days' notice to the Trustee of its intention to exercise such option.
In addition, the Servicer will not be permitted to exercise such option unless
the resulting distribution to the Class A Certificateholders would be equal to
the outstanding Class A Certificate Balance together with accrued interest at
the Class A Pass Through Rate and to the Class B Certificateholders an amount
equal to the outstanding Class B Certificate Balance together with accrued
interest at the Class B Pass Through Rate. See "Description of the Pooling and
Servicing Agreement -- Termination" in the Prospectus.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information regarding the conveyance of the Receivables by the
Depositor to the Trust on the Closing Date pursuant to the Pooling and Servicing
Agreement is set forth in the Prospectus under "Description of the Pooling and
Servicing Agreement -- Sale and Assignment of Receivables".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for the
Servicer will be % per annum of the Pool Balance as of the first day of the
related Collection Period. The Servicing Fee in respect of a Collection Period
(together with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates) will be paid at the beginning of such Collection Period out
of collections for such Collection Period. See "Description of the Pooling and
Servicing Agreement -- Servicing Compensation and Payment of Expenses" in the
Prospectus.
DISTRIBUTIONS
DEPOSITS TO COLLECTION ACCOUNT. On or before each Distribution Date,
the Servicer will cause all collections and other amounts constituting the Total
Distribution Amount to be deposited into the Collection Account. The "TOTAL
DISTRIBUTION AMOUNT" for a Distribution Date shall be the sum of the Interest
Distribution Amount and the Principal Distribution Amount (other than the
portion thereof attributable to Realized Losses). "REALIZED LOSSES" means the
excess of the principal balance of any Liquidated Receivable over Liquidation
Proceeds to the extent allocable to principal received in the Collection Period
in which the Receivable became a Liquidated Receivable.
The "INTEREST DISTRIBUTION AMOUNT" on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(including Payaheads that have been applied as payments on the related
Receivables in that Collection Period) allocable to interest; (ii) all proceeds
of the liquidation of defaulted Receivables ("LIQUIDATED RECEIVABLES"), net of
expenses incurred by the Servicer in connection with such liquidation and any
amounts required by law to be remitted to the Obligor on such Liquidated
Receivables ("LIQUIDATION PROCEEDS"), to the extent attributable to interest due
thereon in accordance with the Servicer's customary servicing procedures, and
all recoveries in respect of Liquidated Receivables which were written off in
prior Collection Periods; (iii) all Advances made by the Servicer of interest
due on the Receivables; (iv) the Purchase Amount of each Receivable that was
repurchased by the Seller or purchased by the Servicer under an obligation which
arose during the related Collection Period, to the extent attributable to
accrued interest thereon; and (v) Investment Earnings for such Distribution
Date. The Interest Distribution Amount shall be determined on the related
Determination Date.
The "PRINCIPAL DISTRIBUTION AMOUNT" on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(exclusive of Payaheads allocable to principal that have not been applied as
payments under the related Receivables in such Collection Period and inclusive
of Payaheads allocable to principal that have been applied as payments under the
related Receivables in such Collection Period) allocable to principal; (ii) all
Liquidation Proceeds attributable to the principal amount of Receivables which
became Liquidated Receivables during such Collection Period in accordance with
the Servicer's customary servicing procedures, plus the amount of Realized
Losses with respect to such Liquidated Receivables; (iii) all Precomputed
Advances made by the Servicer of principal due on the Precomputed Receivables;
(iv) to the extent attributable to principal, the Purchase Amount received with
respect to each Receivable repurchased by the Seller or purchased by the
Servicer under an obligation which arose during the related Collection Period;
(v) partial prepayments relating to refunds of extended warranty protection plan
costs or of physical damage, credit life or disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligor as of the date of the original contract; and (vi) on the Distribution
Date immediately following the Final Scheduled Maturity Date (the "FINAL
SCHEDULED DISTRIBUTION DATE"), any amounts advanced by the Servicer with respect
to principal on the Receivables. The Regular Principal Distribution Amount shall
be determined on the related Determination Date.
The Interest Distribution Amount and the Regular Principal Distribution
Amount on any Distribution Date shall exclude the following:
(i) amounts received on Precomputed Receivables to the
extent that the Servicer has previously made an unreimbursed
Precomputed Advance;
(ii) Liquidation Proceeds with respect to a particular
Precomputed Receivable to the extent of any unreimbursed Precomputed
Advances thereon;
(iii) all payments and proceeds (including Liquidation
Proceeds) of any Receivables, the Purchase Amount of which has been
included in the Total Distribution Amount in a prior Collection
Period;
(iv) amounts received in respect of interest on Simple
Interest Receivables during the preceding Collection Period in excess
of the amount of interest that would have been due during the
Collection Period on Simple Interest Receivables at their respective
APRs (assuming that a payment is received on each Simple Interest
Receivable on the due date thereof); and
(v) Liquidation Proceeds with respect to a Simple Interest
Receivable attributable to accrued and unpaid interest thereon (but
not including interest for the then current Collection Period) but
only to the extent of any unreimbursed Simple Interest Advances.
CALCULATION OF DISTRIBUTABLE AMOUNTS. The "CLASS A DISTRIBUTABLE
AMOUNT" with respect to a Distribution Date will be an amount equal to the sum
of (i) the "CLASS A PRINCIPAL DISTRIBUTABLE AMOUNT", consisting of the Class A
Percentage of the Principal Distribution Amount, plus (ii) the "CLASS A INTEREST
DISTRIBUTABLE AMOUNT", consisting of thirty (30) days' interest at the Class A
Pass Through Rate on the Class A Certificate Balance as of the close of business
on the last day of the preceding Collection Period. In addition, on the Final
Scheduled Distribution Date, the Class A Principal Distributable Amount will
include the lesser of (A) the Class A Percentage of any payments of principal
due and remaining unpaid on each Receivable in the Trust as of the last day of
the preceding Collection Period and (B) the portion of such amount necessary
(after giving effect to the other amounts described above to be distributed to
the Class A Certificateholders on such Distribution Date and allocable to
principal) to reduce the Class A Certificate Balance to zero.
The "CLASS A CERTIFICATE BALANCE" will equal, initially, $ and,
thereafter, shall equal the initial Class A Certificate Balance reduced by all
amounts previously distributed to Class A Certificateholders and allocable to
principal.
The "CLASS B DISTRIBUTABLE AMOUNT" with respect to a Distribution Date
shall be an amount equal to the sum of (i) the "CLASS B PRINCIPAL DISTRIBUTABLE
AMOUNT", consisting of the Class B Percentage of the Principal Distribution
Amount plus (ii) the "CLASS B INTEREST DISTRIBUTABLE AMOUNT", consisting of
thirty (30) days' interest at the Class B Pass Through Rate to the Class B
Certificate Balance as of the close of business on the last day of the preceding
Collection Period. In addition, on the Final Scheduled Distribution Date, the
principal required to be distributed on the Class B Certificateholders will
include the lesser of (i) the Class B Percentage of any payments of principal
due and remaining unpaid with respect to the Receivables in the Trust as of the
last day of the preceding Collection Period and (ii) the portion of the amount
in clause (i) above that is necessary (after giving effect to all other amounts
distributed to Class A and Class B Certificateholders on such Distribution Date
and allocable to principal) to reduce the Class B Certificate Balance to zero.
The "CLASS B CERTIFICATE BALANCE" shall equal, initially, $__________
and, thereafter, shall equal the initial Class B Certificate Balance, reduced by
all amounts previously distributed to Class B Certificateholders (or deposited
in the Reserve Account, but not including the Reserve Account Initial Deposit)
and allocable to principal and by Realized Losses.
CALCULATION OF AMOUNTS TO BE DISTRIBUTED. Prior to each Distribution
Date, the Servicer will calculate the Total Distribution Amount, the Class A
Distributable Amount and the Class B Distributable Amount.
The holders of the Class A Certificates will receive on any
Distribution Date, to the extent of available funds, the Class A Distributable
Amount and any outstanding Class A Interest Carryover Shortfall and Class A
Principal Carryover Shortfall (each as defined below) as of the close of the
preceding Distribution Date. On each Distribution Date on which the sum of the
Class A Interest Distributable Amount and any outstanding Class A Interest
Carryover Shortfall from the preceding Distribution Date (plus interest on such
Class A Interest Carryover Shortfall at the Class A Pass Through Rate from such
preceding Distribution Date to the current Distribution Date, to the extent
permitted by law) exceeds the Class A Percentage of the Interest Distribution
Amount (after payment of the Servicing Fee) on such Distribution Date, the Class
A Certificateholders shall be entitled generally to receive such amounts, first,
from the Class B Percentage of the Interest Distribution Amount; second, if such
amounts are insufficient, from the amounts available in the Reserve Account; and
third, if such amounts are insufficient, from the Class B Percentage of the
Principal Distribution Amount (other than the portion thereof attributable to
Realized Losses). The "CLASS A INTEREST CARRYOVER SHORTFALL" as of the close of
any Distribution Date means the excess of the Class A Interest Distributable
Amount for such Distribution Date, plus any outstanding Class A Interest
Carryover Shortfall from the preceding Distribution Date, plus interest on such
outstanding Class A Interest Carryover Shortfall, to the extent permitted by
law, at the Class A Pass Through Rate from such preceding Distribution Date
through the current Distribution Date, over the amount of interest that the
holders of the Class A Certificates actually received on such current
Distribution Date.
On each Distribution Date on which the sum of the Class A Principal
Distributable Amount and any outstanding Class A Principal Carryover Shortfall
from the preceding Distribution Date exceeds the Class A Percentage of the
Principal Distribution Amount (exclusive of the portion thereof attributable to
Realized Losses) on such Distribution Date, the Class A Certificateholders shall
be entitled to receive such amounts, first, from the Class B Percentage of the
Principal Distribution Amount (other than the portion thereof attributable to
Realized Losses); second, if such amounts are insufficient, from amounts
available in the Reserve Account; and third, if such amounts are insufficient,
from the Class B Percentage of the Interest Distribution Amount. The "CLASS A
PRINCIPAL CARRYOVER SHORTFALL" as of the close of any Distribution Date means
the excess of the Class A Principal Distributable Amount plus any outstanding
Class A Principal Carryover Shortfall from the preceding Distribution Date over
the amount of principal that the holders of the Class A Certificates actually
received on such current Distribution Date.
The holders of the Class B Certificates will receive on any
Distribution Date, to the extent of available funds, the Class B Distributable
Amount and any outstanding Class B Interest Carryover Shortfall and Class B
Principal Carryover Shortfall (each as defined below) as of the close of the
preceding Distribution Date. On each Distribution Date on which the sum of the
Class B Interest Distributable Amount and any outstanding Class B Interest
Carryover Shortfall from the preceding Distribution Date (plus interest on such
Class B Interest Carryover Shortfall at the Class B Pass Through Rate from such
preceding Distribution Date to the current Distribution Date, to the extent
permitted by law) exceeds the Class B Percentage of the Interest Distribution
Amount (after payment of the Servicing Fee) on such Distribution Date less any
portion thereof required to be distributed to the Class A Certificateholders
pursuant to their prior rights as described above, the Class B
Certificateholders shall be entitled generally to receive such amounts, first,
from the Class A Percentage of the Interest Distribution Amount that is not
otherwise required to be distributed to the Class A Certificateholders as
described above and, second, from the amount, if any, available in the Reserve
Account (after giving effect to any withdrawals therefrom for distribution to
the Class A Certificateholders on such Distribution Date). The "CLASS B INTEREST
CARRYOVER SHORTFALL" as of the close of any Distribution Date means the excess
of the Class B Interest Distributable Amount for such Distribution Date, plus
any outstanding Class B Interest Carryover Shortfall from the preceding
Distribution Date, plus interest on such outstanding Class B Interest Carryover
Shortfall, to the extent permitted by law, at the Class B Pass Through Rate from
such preceding Distribution Date through the current Distribution Date, over the
amount of interest that the holders of the Class B Certificates actually
received on such current Distribution Date.
On each Distribution Date on which the sum of the Class B Principal
Distributable Amount and any outstanding Class B Principal Carryover Shortfall
from the preceding Distribution Date exceeds the Class B Percentage of the
Principal Distribution Amount (exclusive of the portion thereof attributable to
Realized Losses) on such Distribution Date less any portion thereof required to
be distributed to the Class A Certificateholders pursuant to their prior rights
as described above, the Class B Certificateholders shall be entitled to receive
such amounts, first, from the Interest Distribution Amount that is not otherwise
required to be distributed to the Class A or Class B Certificateholders as
described above and, second, from amounts available in the Reserve Account
(after giving effect to any withdrawals therefrom on such Distribution Date for
distribution to the Class A Certificateholders and for distribution of interest
to the Class B Certificateholders). The "CLASS B PRINCIPAL CARRYOVER SHORTFALL"
as of the close of any Distribution Date means the excess of the Class B
Principal Distributable Amount plus any outstanding Class B Principal Carryover
Shortfall from the preceding Distribution Date over the amount of principal that
the holders of Class B Certificates actually received on such current
Distribution Date.
SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE ACCOUNT
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables generally will be subordinated to the rights of
the Class A Certificateholders in the event of defaults and delinquencies on the
Receivables as described herein and provided in the Pooling and Servicing
Agreement. The protection afforded to the Class A Certificateholders through
subordination will be effected both by the preferential right of the Class A
Certificateholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve Account
will be created with an initial deposit by the Seller of the Reserve Account
Initial Deposit and will be augmented by deposit therein on each Distribution
Date of the amount, if any, remaining from the Total Distribution Amount after
the distributions due to the Certificateholders have been made until the amount
in the Reserve Account reaches the Specified Reserve Account Balance for such
Distribution Date.
The Reserve Account will not be part of or otherwise includible in the
Trust and will be a segregated trust account held by the Trustee. On each
Distribution Date, (i) if the amounts on deposit in the Reserve Account are less
than the Specified Reserve Account Balance for such Distribution Date, the
Trustee will, after payment of any amounts required to be distributed to
Certificateholders and the payment of the Servicing Fee due with respect to the
related Collection Period (including any unpaid Servicing Fees with respect to
prior Collection Periods), withdraw from the Collection Account and deposit in
the Reserve Account the amount, if any, remaining in the Collection Account that
would otherwise be distributed to the Seller, or such lesser portion thereof as
is sufficient to restore the amount in the Reserve Account to such Specified
Reserve Account Balance for such Distribution Date, and (ii) if the amount on
deposit in the Reserve Account on such Distribution Date (after giving effect to
all deposits or withdrawals therefrom on such Distribution Date) is greater than
the Specified Reserve Account Balance for such Distribution Date, the Trustee
will release and distribute any such excess to the Seller. Upon any such
distribution to the Seller, the Certificateholders will have no rights in, or
claims to, such amounts.
Amounts held from time to time in the Reserve Account will continue to
be held for the benefit of holders of the Class A Certificates and holders of
the Class B Certificates. Funds in the Reserve Account shall be invested as
provided in the Pooling and Servicing Agreement in Eligible Investments. The
Seller will be entitled to receive all investment earnings on amounts in the
Reserve Account. Investment income on amounts in the Reserve Account will not be
available for distribution to the Certificateholders or otherwise subject to any
claims or rights of the Certificateholders.
The time necessary for the Reserve Account to reach and maintain the
Specified Reserve Account Balance at any time after the Closing Date will be
affected by the delinquency, credit loss, repossession and prepayment experience
of the Receivables and, therefore, cannot be accurately predicted.
The subordination of the Class B Certificates and the Reserve Account
described above are intended to enhance the likelihood of receipt by Class A
Certificateholders of the full amount of principal and interest on the Class A
Certificates due them and to decrease the likelihood that the Class A
Certificateholders will experience losses. However, in certain circumstances,
the Reserve Account could be depleted and shortfalls could result.
If on any Distribution Date the holders of the Class A Certificates do
not receive the sum of the Class A Distributable Amount, the Class A Interest
Carryover Shortfall and the Class A Principal Carryover Shortfall for such
Distribution Date (after giving effect to any amounts withdrawn from the Reserve
Account and the Class B Percentage of the Total Distribution Amount and applied
to such deficiency, as described above), the holders of the Class B Certificates
generally will not receive any portion of the Total Distribution Amount. While
the Class B Certificateholders are entitled to receive amounts from the Reserve
Account as described above, such entitlement is subordinated to the rights of
the Class A Certificateholders to receive amounts from the Reserve Account as
described above. If the Reserve Account becomes depleted, the Class B
Certificateholders may experience shortfalls in the distributions due them and
incur a loss on their investment.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, the Trust will be treated as a
grantor trust for federal income tax purposes and will not be subject to federal
income tax. For additional information regarding federal income tax
consequences, see "Material Federal Income Tax Consequences--Trusts Treated as
Grantor Trusts" in the Prospectus.
ERISA CONSIDERATIONS
THE CLASS A CERTIFICATES
Subject to the considerations set forth under "ERISA Considerations --
Senior Certificates" in the Prospectus, the Class A Certificates may be
purchased by an employee benefit plan or an individual retirement account (a
"PLAN") subject to ERISA or Section 4975 of the Code. A fiduciary of a Plan must
determine that the purchase of a Class A Certificate is consistent with its
fiduciary duties under ERISA and does not result in a nonexempt prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Code. For
additional information regarding treatment of the Class A Certificates under
ERISA, see "ERISA Considerations" in the Prospectus.
The Class A Certificates may not be purchased with the assets of a Plan
if the Seller, the Trustee or any of their affiliates (a) has investment or
administrative discretion with respect to such Plan assets; (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such Plan assets for a fee and pursuant to an agreement or understanding that
such advice (i) will serve as a primary basis for investment decisions with
respect to such Plan assets and (ii) will be based on the particular investment
needs for such Plan; or (c) is an employer maintaining or contributing to such
Plan.
THE CLASS B CERTIFICATES
The Class B Certificates may not be acquired by (a) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity or which uses plan assets to acquire Class B
Certificates. By its acceptance of a Class B Certificate, each Class B
Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitation. In this regard, purchasers that are
insurance companies should consult with their counsel with respect to the United
States Supreme Court case interpreting the fiduciary responsibility rules of
ERISA, John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114 S. Ct. 517
(1993). In John Hancock, the Supreme Court ruled that assets held in an
insurance company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. Prospective purchasers should determine
whether the decision affects their ability to make purchases of the Class B
Certificates. In particular, such an insurance company should consider the
exemptive relief granted by the Department of Labor for transactions involving
insurance company general accounts in Prohibited Transactions Exemption 95-60,
60 Fed. Reg. 35925 (July 12, 1995). For additional information regarding
treatment of the Class B Certificates under ERISA, see "ERISA Considerations" in
the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "UNDERWRITING AGREEMENT"), the Depositor has agreed to cause the
Trust to sell to the Underwriter, and the Underwriter has agreed to purchase,
the entire principal amount of the Certificates.
The Depositor has been advised by the Underwriter that it proposes
initially to offer the Certificates to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession not in
excess of % per Class A Certificate and % per Class B Certificate. The
Underwriter may allow and such dealers may reallow a concession not in excess of
% per Class A Certificate and % per Class B Certificate to certain other
dealers. After the initial public offering of the Certificates, the public
offering prices and such concessions may be changed.
Until the distribution of the Certificates is completed, rules of the
Commission may limit the ability of the Underwriter and certain selling group
members to bid for and purchase the Notes and the Certificates. As an exception
to these rules, the Underwriter is permitted to engage in certain transactions
that stabilize the price of the Notes and the Certificates. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Certificates.
If the Underwriter creates a short position in the Certificates in
connection with the offering, i.e., if it sells more Certificates than are set
forth on the cover page of this Prospectus Supplement, the Underwriter may
reduce that short position by purchasing Certificates in the open market.
In general, the purchase of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Depositor nor any Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Notes and the Certificates. In
addition, neither the Depositor nor any Underwriter makes any representation
that the Underwriter will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
The Underwriter has represented and agreed that (a) it has not offered
or sold, and will not offer or sell, any Certificates to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances that do not
constitute an offer to the public in the United Kingdom for the purposes of the
Public Offers of Securities Regulation 1995, (b) it has complied and will comply
with all applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Certificates in, from or otherwise
involving the United Kingdom and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document in connection with the
issue of the Certificates to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom the document may otherwise
lawfully be issued or passed on.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from the Underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a Prospectus Supplement and Prospectus, the Seller or the Underwriter
will promptly deliver, or cause to be delivered, without charge, a paper copy of
the Prospectus Supplement and Prospectus.
LEGAL OPINIONS
Certain legal matters relating to the Certificates and certain federal
income tax matters will be passed upon for the Depositor by Brown & Wood LLP,
New York, New York. [Certain legal matters relating to the Certificates will be
passed upon for the Underwriter by Brown & Wood LLP.]
INDEX OF TERMS
APR.............................................................. S-8
Cede........................................................Cover, S-2
Certificates.....................................................Cover
Certificateholders.................................................S-4
Class A Certificate Balance...................................S-4,S-14
Class A Certificates...............................................S-3
Class A Distributable Amount......................................S-14
Class A Interest Carryover Shortfall..............................S-14
Class A Interest Distributable Amount.............................S-14
Class A Percentage...........................................S-3, S-12
Class A Principal Carryover Shortfall.............................S-15
Class A Principal Distributable Amount............................S-14
Class B Certificate Balance..................................S-4, S-14
Class B Certificates...............................................S-3
Class B Distributable Amount......................................S-14
Class B Interest Carryover Shortfall..............................S-15
Class B Interest Distributable Amount.............................S-14
Class B Percentage...........................................S-3, S-12
Class B Principal Carryover Shortfall.............................S-15
Class B Principal Distributable Amount............................S-14
Closing Date...................................................... S-3
Code............................................................. S-6
Collection Account............................................... S-5
Collection Period................................................ S-4
Commission.........................................................S-2
Cut-off Date..................................................... S-3
Depositor...................................................Cover, S-3
Determination Date............................................... S-4
Distribution Date...........................................Cover, S-4
DTC................................................................S-2
ERISA............................................................ S-6
Exchange Act.......................................................S-2
Final Scheduled Distribution Date........................ Cover, S-13
Final Scheduled Maturity Date.................................... S-3
Financed Vehicles...........................................Cover, S-3
Initial Pool Balance...............................................S-3
Interest Distribution Amount.................................... S-13
Issuer........................................................... S-3
Liquidated Receivables.......................................... S-13
Liquidation Proceeds............................................ S-13
Plan............................................................ S-16
Pool Balance..................................................... S-3
Pooling and Servicing Agreement....................................S-3
Principal Distribution Amount................................S-4, S-13
Prospectus.........................................................S-2
Rating Agency.................................................S-6, S-7
Realized Losses............................................ S-4, S-13
Receivables.................................................Cover, S-3
Receivables Pool................................................. S-8
Record Date...................................................... S-4
Reserve Account Initial Deposit.................................. S-5
Seller........................................................... S-3
Servicer....................................................Cover, S-3
Specified Reserve Account Balance................................ S-5
Tax Counsel........................................................S-6
Total Distribution Amount....................................... S-13
Trust.......................................................Cover, S-3
Trustee.....................................................Cover, S-3
Underwriter.................................................... Cover
Underwriting Agreement............................................S-17
<TABLE>
[BACK COVER OF PROSPECTUS SUPPLEMENT]
<S> <C>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO $[ ]
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DEPOSITOR OR ______________ TRUST 199_ -[ ]
BY THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
OF AN OFFER TO BUY, THE CERTIFICATES OFFERED HEREBY TO ANYONE IN
ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE
ANY SUCH OFFER OR SOLICITATION. NEITHER THE SALE MADE HEREUNDER $ , ____%
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY ASSET BACKED CERTIFICATES, CLASS A
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 ASSET BACKED CERTIFICATES, CLASS B
Reports to Certificateholders................................S-2
Summary of Terms.............................................S-3
Risk Factors.................................................S-7
The Trust....................................................S-8 SSB VEHICLE SECURITIES INC.
The Receivables Pool.........................................S-8 DEPOSITOR
The Seller..................................................S-13
The Depositor...............................................S-13
The Servicer................................................S-13
Weighted Average Life of the Certificates...................S-13
Description of the Certificates.............................S-13
Material Federal Income Tax Consequences....................S-16
ERISA Considerations........................................S-16
Underwriting................................................S-17
Legal Opinions..............................................S-17
Index of Terms..............................................S-18
PROSPECTUS
Available Information......................................... 2
Incorporation of Certain Documents by Reference............... 2
Summary of Terms.............................................. 3
Risk Factors...................................................8
The Trusts....................................................12
The Receivables Pools.........................................14
Weighted Average Life of the Securities.......................16
Pool Factors and Trading Information..........................16
Use of Proceeds...............................................17
The Company...................................................18
Description of the Notes......................................18
Description of the Certificates...............................23
Certain Information Regarding the Securities..................24
Description of the Transfer and Servicing Agreements..........33
Certain Legal Aspects of the Receivables......................41
Material Federal Income Tax Consequences......................45
ERISA Considerations..........................................59
Plan of Distribution..........................................60
Legal Opinions................................................61
Index of Terms................................................62
Annex I......................................................I-1
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL PROSPECTUS SUPPLEMENT
DEALERS EFFECTING TRANSACTIONS IN THE CERTIFICATES OFFERED BY
THIS PROSPECTUS SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER THIS PROSPECTUS , 199
SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND SALOMON SMITH BARNEY
THE PROSPECTUS WHEN ACTING AS UNDERWRITER AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
</TABLE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED September 29, 1998
PROSPECTUS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
(EACH ISSUABLE IN SERIES)
SSB VEHICLE SECURITIES INC.
The Asset Backed Notes (the "NOTES") and the Asset Backed
Certificates (the "CERTIFICATES" and, together with the Notes, the
"SECURITIES") described herein may be sold from time to time in one or more
series, in amounts, at prices and on terms to be determined at the time of sale
and to be set forth in a supplement to this Prospectus (a "PROSPECTUS
SUPPLEMENT"). Each series of Securities, which may include one or more classes
of Notes and/or one or more classes of Certificates, will be issued by a trust
to be formed with respect to such series (each, a "TRUST"). Each Trust will be
formed pursuant to either (i) a Trust Agreement to be entered into between SSB
Vehicle Securities Inc. (the "COMPANY") or a limited purpose finance subsidiary
of the Company organized and established by the Company (each such limited
purpose finance subsidiary, a "Transferor"), as depositor (the "DEPOSITOR" and
the Trustee specified in the related Prospectus Supplement (the "TRUSTEE"), or
(ii) a Pooling and Servicing Agreement to be entered into among the Trustee,
the Depositor and the servicer specified in the related Prospectus Supplement
(the "SERVICER"). If a series of Securities includes Notes, such Notes will be
issued and secured pursuant to an Indenture between the Trust and the Indenture
Trustee specified in the related Prospectus Supplement (the "INDENTURE
TRUSTEE") and will represent indebtedness of the related Trust. The
Certificates of a series will represent fractional undivided interests in the
related Trust. The related Prospectus Supplement will specify which class or
classes of Notes, if any, and which class or classes of Certificates, if any,
of the related series are being offered thereby. The property of each Trust
will include a pool of retail installment sale contracts, retail installment
loans, purchase money notes or other notes (the "RECEIVABLES") secured by new
or used (i) automobiles, light-duty trucks and motorcycles and/or (ii)
recreational vehicles, certain monies due or received thereunder on and after
the applicable Cut-off Date set forth in the related Prospectus Supplement,
security interests in the items financed thereby and certain other property,
all as described herein and in the related Prospectus Supplement. In addition,
if so specified in the related Prospectus Supplement, the property of the Trust
will include monies on deposit in a trust account (the "PRE-FUNDING ACCOUNT")
to be established with the Indenture Trustee, which will be used to purchase
additional Receivables (the "SUBSEQUENT RECEIVABLES") from the Depositor from
time to time during the Funding Period specified in the related Prospectus
Supplement. For additional information, please see "Risk Factors--Risks
Associated with Subsequent Receivables and the Pre-Funding Account" below.
Each class of Securities of any series will represent the right to
receive a specified amount of payments of principal and/or 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 disproportionate, nominal or no distributions in respect of
principal. The rate of payment in respect of principal of any class of Notes
and distributions in respect of the Certificate Balance of the Certificates of
any class will depend on the priority of payment of such class and the rate and
timing of payments (including prepayments, defaults, liquidations and
repurchases of Receivables) on the related Receivables. A rate of payment lower
or higher than that anticipated may affect the weighted average life of each
class of Securities in the manner described herein and in the related
Prospectus Supplement.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH UNDER "RISK
FACTORS" BEGINNING ON PAGE 8 HEREOF AND IN THE RELATED PROSPECTUS SUPPLEMENT.
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A SERIES
REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED BY, SSB
VEHICLE SECURITIES INC., THE SERVICER, THE SELLER(S) OR ANY OF THEIR RESPECTIVE
AFFILIATES. NONE OF THE NOTES, THE CERTIFICATES OR THE RECEIVABLES IS GUARANTEED
OR INSURED BY ANY GOVERNMENT AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This
Prospectus may not be used to consummate sales of
Securities offered hereby unless accompanied by a
Prospectus Supplement.
, 199
AVAILABLE INFORMATION
SSB Vehicle Securities Inc. (the "COMPANY") has filed with the
Securities and Exchange Commission (the "COMMISSION") a Registration Statement
(together with all amendments and exhibits thereto, referred to herein as the
"REGISTRATION STATEMENT") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), with respect to the Notes and the Certificates offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement which may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; and at the Commission's regional offices at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site at http://www.sec.gov containing reports, proxy
and information statements and other information regarding registrants,
including SSB Vehicle Securities Inc., that file electronically with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Company 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. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is delivered,
on the written or oral request of any such person, a copy of any or all of the
documents incorporated herein or in any related Prospectus Supplement by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Chris Hawke, SSB Vehicle Securities Inc., Seven
World Trade Center, New York, New York 10048; telephone 212-783-7000.
SUMMARY OF TERMS
The following summary is qualified by reference to the detailed information
appearing elsewhere in this Prospectus and by reference to the information with
respect to the Securities of any series contained in the related Prospectus
Supplement to be prepared and delivered in connection with the offering of such
Securities. Certain capitalized terms used in this summary are defined
elsewhere in this Prospectus on the pages indicated in the "Index of Terms".
Issuer...........................
With respect to each series
of Securities, the trust (the
"TRUST" or the "ISSUER") to
be formed pursuant to either
a Trust Agreement (as amended
and supplemented from time to
time, a "TRUST AGREEMENT")
among the Depositor and the
trustee specified in the
related Prospectus Supplement
(the "TRUSTEE") and, if so
specified in the related
Prospectus Supplement, a
limited purpose affiliate of
the Seller (the "SELLER
AFFILIATE") or a Pooling and
Servicing Agreement (as
amended and supplemented from
time to time, a "POOLING AND
SERVICING AGREEMENT") among
the Trustee, the Depositor
and the servicer specified in
the related Prospectus
Supplement (the "SERVICER").
Company..........................
SSB Vehicle Securities Inc.
(the "COMPANY"). See "The
Company".
Depositor........................
With respect to each series
of Securities, either the
Company or a limited purpose
finance subsidiary of the
Company (each such limited
purpose finance subsidiary, a
"TRANSFEROR").
Seller(s)........................
With respect to each series
of Securities, the Seller(s)
will be specified in the
related Prospectus
Supplement.
Servicer.........................
With respect to each series
of Securities, the Servicer
will be specified in the
related Prospectus
Supplement.
Trustee..........................
With respect to each series
of Securities, the Trustee
will be specified in the
related Prospectus
Supplement.
Indenture Trustee................
With respect to any
applicable series of
Securities, the Indenture
Trustee will be specified in
the related Prospectus
Supplement.
The Notes........................
A series of Securities may
include one or more classes
of Notes, which will be
issued pursuant to an
Indenture between the Trust
and the Indenture Trustee (as
amended and supplemented from
time to time, an
"INDENTURE"). The related
Prospectus Supplement will
specify which class or
classes, if any, of Notes of
the related series are being
offered thereby.
Unless otherwise specified in
the related Prospectus
Supplement, Notes will be
available for purchase in
minimum denominations of
$1,000 and will be available
in book-entry form only.
Unless otherwise specified in
the related Prospectus
Supplement, Noteholders will
be able to receive Definitive
Notes only in the limited
circumstances described
herein or in the related
Prospectus Supplement. See
"Certain Information
Regarding the Securities--
Definitive--Securities".
Except in the case of any
Strip Notes (as defined
below), each class of Notes
will have a stated principal
amount and will bear interest
at a specified rate or rates
(with respect to each class
of Notes, the "INTEREST
RATE"). Each class of Notes
may have a different Interest
Rate, which may be a fixed,
variable or adjustable
Interest Rate, or any
combination of the foregoing.
The related Prospectus
Supplement will specify the
Interest Rate, or the method
for determining the Interest
Rate, for each class of
Notes.
With respect to a series that
includes two or more classes
of Notes, each class may
differ as to the timing and
priority of payments,
seniority, allocations of
losses, Interest Rate or
amount of payments of
principal or interest, or
payments of principal or
interest in respect of any
such class or classes may or
may not be made upon the
occurrence of specified
events or on the basis of
collections from designated
portions of the Receivables
Pool.
In addition, a series may
include one or more classes
of Notes ("STRIP NOTES")
entitled to (i) principal
payments with
disproportionate, nominal or
no interest payments or (ii)
interest payments with
disproportionate, nominal or
no principal payments.
If the Servicer exercises its
option to purchase the
Receivables of a Trust (or,
if not and, if and to the
extent provided in the
related Prospectus
Supplement, satisfactory bids
for the purchase of such
Receivables are received), in
the manner and on the
respective terms and
conditions described under
"Description of the Transfer
and Servicing Agreements--
Termination", the outstanding
Notes will be redeemed as set
forth in the related
Prospectus Supplement. In
addition, if the related
Prospectus Supplement
provides that the property of
a Trust will include a
Pre-Funding Account (as such
term is defined in the
related Prospectus
Supplement, the "PRE-FUNDING
ACCOUNT"), one or more
classes of the outstanding
Notes may be subject to
partial redemption on or
immediately following the end
of the Funding Period (as
such term is defined in the
related Prospectus
Supplement, the "FUNDING
PERIOD") in an amount and
manner specified in the
related Prospectus
Supplement. In the event of
such partial redemption, the
Noteholders may be entitled
to receive a prepayment
premium from the Trust, in
the amount and to the extent
provided in the related
Prospectus Supplement.
The Certificates................. A series may include one or
more classes of Certificates
and may not include any
Notes. The related Prospectus
Supplement will specify which
class or classes, if any, of
the Certificates are being
offered thereby.
Unless otherwise specified in
the related Prospectus
Supplement, Certificates will
be available for purchase in
a minimum denomination of
$1,000 and will be available
in book-entry form only.
Unless otherwise specified in
the related Prospectus
Supplement, Certificateholders
will be able to receive
Definitive Certificates only
in the limited circumstances
described herein or in the
related Prospectus Supplement.
See "Certain Information
Regarding the Securities--
Definitive Securities".
Except in the case of any
Strip Certificates (as
defined below), each class of
Certificates will have a
stated Certificate Balance
specified in the related
Prospectus Supplement (the
"CERTIFICATE BALANCE") and
will accrue interest on such
Certificate Balance at a
specified rate (with respect
to each class of
Certificates, the "PASS
THROUGH RATE"). Each class of
Certificates may have a
different Pass Through Rate,
which may be a fixed,
variable or adjustable Pass
Through Rate, or any
combination of the foregoing.
The related Prospectus
Supplement will specify the
Pass Through Rate, or the
method for determining the
Pass Through Rate, for each
class of Certificates.
With respect to a series that
includes two or more classes
of Certificates, each class
may differ as to timing and
priority of distributions,
seniority, allocations of
losses, Pass Through Rate or
amount of distributions in
respect of principal or
interest, or distributions in
respect of principal or
interest in respect of any
such class or classes may or
may not be made upon the
occurrence of specified
events or on the basis of
collections from designated
portions of the Receivables
Pool. In addition, a series
may include one or more
classes of Certificates
("STRIP CERTIFICATES")
entitled to (i) distributions
in respect of principal with
disproportionate, nominal or
no interest distributions or
(ii) interest distributions
with disproportionate,
nominal or no distributions
in respect of principal.
If a series of securities
includes classes of Notes,
distributions in respect of
the Certificates may be
subordinated in priority of
payment to payments on the
Notes to the extent specified
in the related Prospectus
Supplement.
If the Servicer exercises its
option to purchase the
Receivables of a Trust (or,
if not, and if and to the
extent provided in the
related Prospectus
Supplement, satisfactory bids
for the purchase of such
Receivables are received), in
the manner and on the
respective terms and
conditions described under
"Description of the Transfer
and Servicing
Agreements--Termination",
Certificateholders will
receive as a prepayment an
amount in respect of the
Certificates as specified in
the related Prospectus
Supplement. In addition, if
the related Prospectus
Supplement provides that the
property of a Trust will
include a Pre-Funding
Account, Certificateholders
may receive a partial
prepayment of principal on or
immediately following the end
of the Funding Period in an
amount and manner specified
in the related Prospectus
Supplement. In the event of
such partial prepayment, the
Certificateholders may be
entitled to receive a
prepayment premium from the
Trust, in the amount and to
the extent provided in the
related Prospectus
Supplement.
The Trust Property............... The property of each Trust
will include a pool of retail
installment sale contracts,
retail installment loans,
purchase money notes or other
notes (the "RECEIVABLES")
secured by new or used (i)
automobiles, light-duty
trucks and motorcycles (the
"FINANCED MOTOR VEHICLES")
and/or (ii) recreational
vehicles (the "FINANCED
RECREATIONAL VEHICLES"),
including rights to receive
certain payments made with
respect to such Receivables,
security interests in the
Financed Motor Vehicles and
Financed Recreational
Vehicles (collectively, the
"FINANCED VEHICLES") financed
thereby, certain accounts and
the proceeds thereof and any
proceeds from claims on
certain related insurance
policies. On or prior to the
Closing Date specified in the
related Prospectus Supplement
with respect to a Trust, the
Seller(s) will sell or
transfer Receivables (the
"INITIAL RECEIVABLES") having
an aggregate principal
balance specified in the
related Prospectus Supplement
as of the dates specified
therein (the "INITIAL CUT-OFF
DATE") to the Depositor, and
the Depositor will transfer
the Initial Receivables to
such Trust on the Closing
Date pursuant to either a
Sale and Servicing Agreement
among the Depositor, the
Servicer and the Trustee (as
amended and supplemented from
time to time, a "SALE AND
SERVICING AGREEMENT") or, if
the Trust is to be treated as
a grantor trust for federal
income tax purposes, the
related Pooling and Servicing
Agreement among the
Depositor, the Servicer and
the Trustee. The property of
each Trust will also include
amounts on deposit in certain
trust accounts, including the
related Collection Account,
any Pre-Funding Account, any
Reserve Account and any other
account identified in the
applicable Prospectus
Supplement.
To the extent provided in the
related Prospectus
Supplement, the Seller(s)
will be obligated (subject
only to the availability
thereof) to sell to the
Depositor which will be
obligated to purchase and
sell to the related Trust,
and such Trust will then be
obligated to purchase
(subject to the satisfaction
of certain conditions
described in the applicable
Sale and Servicing Agreement
or Pooling and Servicing
Agreement), additional
Receivables (the "SUBSEQUENT
RECEIVABLES") from time to
time (as frequently as daily)
during the Funding Period
specified in the related
Prospectus Supplement having
an aggregate principal
balance approximately equal
to the amount on deposit in
the Pre-Funding Account (the
"PRE-FUNDED AMOUNT") on such
Closing Date. With respect to
any Trust that is to be
treated as a grantor trust
for federal income tax
purposes, the Funding Period,
if any, will not exceed the
period of 90 days after the
Closing Date, and with
respect to any other Trust
will not exceed the period of
one year after the Closing
Date. With respect to each
Trust, the Pre-Funded Amount
on the Closing Date will not
exceed 25% of the aggregate
initial principal balance of
the Securities.
The Receivables arise or will
arise from loans originated
by motor vehicle and
recreational vehicle dealers
(the "Dealers") and
purchased, directly or
indirectly, by a Seller(s)
and sold to the Depositor.
The Receivables will be
selected from the contracts
and loans owned by a
Seller(s) or the Depositor
based on the criteria
specified in the Sale and
Servicing Agreement or the
Pooling and Servicing
Agreement, as applicable, and
described herein and in the
related Prospectus Supplement.
Credit and Cash Flow
Enhancement...................... If and to the extent
specified in the related
Prospectus Supplement, credit
Enhancement and cash flow
enhancement with respect to a
Trust or any class or classes
of Securities may include any
one or more of the following:
subordination of one or more
other classes of Securities,
a Reserve Account,
overcollateralization,
letters of credit, credit or
liquidity facilities, surety
bonds, guaranteed investment
contracts, swaps or other
interest rate protection
agreements, repurchase
obligations, yield supplement
agreements or accounts, other
agreements with respect to
third party payments or other
support, cash deposits or
other arrangements. Unless
otherwise specified in the
related Prospectus
Supplement, any form of
credit or cash flow
enhancement will have certain
limitations and exclusions
from coverage thereunder,
which will be described in
the related Prospectus
Supplement.
Transfer and Servicing Agreements With respect to each Trust,
the Seller will sell the
related Receivables to the
Depositor, which, in turn,
will sell the related
Receivables to such Trust
pursuant to a Sale and
Servicing Agreement or a
Pooling and Servicing
Agreement. The rights and
benefits of any Trust under a
Sale and Servicing Agreement
will be assigned to the
Indenture Trustee as
collateral for the Notes of
the related series. The
Servicer will agree with such
Trust to be responsible for
servicing, managing,
maintaining custody of and
making collections on the
Receivables. If so specified
in the related Prospectus
Supplement, the person
specified therein as
Administrator will undertake
certain administrative duties
under an Administration
Agreement with respect to any
Trust that has issued Notes,
which duties, in the absence
of an Administrator, would be
performed for such Trust by
the related Indenture Trustee
or by the Depositor. Unless
otherwise specified in the
related Prospectus
Supplement, the Servicer will
advance scheduled payments
under each Precomputed
Receivable which shall not
have been timely made (a
"PRECOMPUTED ADVANCE"), to
the extent that the Servicer,
in its sole discretion,
expects to recoup the
Precomputed Advance from
subsequent payments on or
with respect to such
Receivable or from other
Precomputed Receivables. With
respect to Simple Interest
Receivables, the Servicer
shall advance any interest
shortfall (a "SIMPLE INTEREST
ADVANCE" and, together with a
Precomputed Advance, an
"ADVANCE"). The Servicer
shall be entitled to
reimbursement of Advances
from subsequent payments on
or with respect to the
Receivables to the extent
described herein and in the
related Prospectus
Supplement. Unless otherwise
provided in the related
Prospectus Supplement, the
Depositor will be obligated
to repurchase any Receivable
from the Trust, and the
related Seller will be
obligated to simultaneously
repurchase such Receivable
from the Depositor, if the
interest of the applicable
Trust in such Receivable is
materially adversely affected
by a breach of any
representation or warranty
made by such Seller with
respect to the Receivable, if
the breach has not been cured
following the discovery by or
notice to such Seller and the
Depositor of the breach. If
so specified in the related
Prospectus Supplement, the
related Seller or the
Depositor will be permitted,
in a circumstance where it
would otherwise be required
to repurchase a Receivable as
described in the preceding
sentence, to instead
substitute a comparable
Receivable for the Receivable
otherwise requiring
repurchase, subject to
certain conditions and
eligibility criteria for the
substitute to be summarized
in the related Prospectus
Supplement. Unless otherwise
provided in the related
Prospectus Supplement, the
Servicer will be obligated to
purchase or make Advances
with respect to any
Receivable if, among other
things, it extends the date
for final payment by the
Obligor of such Receivable
beyond the applicable Final
Scheduled Maturity Date (as
defined in the related
Prospectus Supplement, the
"FINAL SCHEDULED MATURITY
DATE"), changes the annual
percentage rate ("APR") or
amount of a scheduled payment
of such Receivable or fails
to maintain a perfected
security interest in the
related Financed Vehicle.
Unless otherwise specified in
the related Prospectus
Supplement, the Servicer will
be entitled to receive a fee
for servicing the Receivables
of each Trust equal to a
specified percentage of the
aggregate principal balance
of the related Receivables
Pool, as set forth in the
related Prospectus
Supplement, plus certain late
fees, prepayment charges and
other administrative fees or
similar charges. See
"Description of the Transfer
and Servicing
Agreements--Servicing
Compensation and Payment of
Expenses" herein and in the
related Prospectus
Supplement.
Certain Legal Aspects of the
Receivables; Repurchase
Obligations...................... In connection with the sale
of Receivables to a Trust,
security interests in
Receivables; Repurchase
Obligations the Financed
Vehicles securing such
Receivables will be assigned,
directly or indirectly, by
the related Dealer to the
Seller(s) and by the
Seller(s) to the Depositor
and by the Depositor to such
Trust. Due to administrative
burden and expense, the
certificates of title to the
Financed Motor Vehicles and
those Financed Recreational
Vehicles financed in states
where security interests in
recreational vehicles are
subject to certificate of
title statutes will not be
amended to reflect any such
assignments, the Uniform
Commercial Code ("UCC")
financing statements in
respect of those Financed
Recreational Vehicles
financed in states where
security interests in
recreational vehicles are
perfected by filing a UCC-1
financing statement will not
be amended to reflect such
assignments. In the absence
of such procedures, such
Trust may not have a
perfected security interest
in the Financed Vehicles in
some states. If such Trust
does not have a perfected
security interest in a
Financed Vehicle, its ability
to realize on such Financed
Vehicle in the event of a
default may be adversely
affected. To the extent the
security interest is
perfected, such Trust will
have a prior claim over
subsequent purchasers of such
Financed Vehicle and holders
of subsequently perfected
security interests. However,
as against liens for repairs
of a Financed Vehicle or for
taxes unpaid by an Obligor
under a Receivable, or
because of fraud or
negligence, such Trust could
lose the priority of its
security interest or its
security interest in a
Financed Vehicle.
Federal and state consumer
protection laws impose
requirements upon creditors
in connection with extensions
of credit and collections of
retail installment loans, and
certain of these laws make an
assignee of such a loan
liable to the obligor thereon
for any violation by the
lender. Unless otherwise
specified in the related
Prospectus Supplement, the
Depositor will be obligated
to repurchase from the Trust
and the related Seller will
be obligated to
simultaneously repurchase
from the Depositor any
Receivable which fails to
comply with such
requirements. The Depositor's
obligation to make such
repurchase is contingent upon
the related Seller performing
its obligation to repurchase
such Receivable from the
Depositor on account of such
failure.
Tax Status....................... Owner Trust
Unless the Prospectus
Supplement specifies that the
related Trust will be treated
as a grantor trust, it is the
opinion of Tax Counsel to
such Trust that for federal
income tax purposes: (i) all
or certain specified classes
of Notes of such series will
be characterized as debt and
(ii) such Trust will not be
characterized as an
association (or a publicly
traded partnership) taxable
as a corporation. In respect
of any such series, each
Noteholder, by the acceptance
of a Note of such series,
will agree to treat such Note
as indebtedness, and each
Certificateholder, by the
acceptance of a Certificate
of such series, will agree to
treat such Trust as a
partnership in which such
Certificateholder is a
partner for federal income
and state income tax
purposes. Alternative
characterizations of such
Trust and such Certificates
are possible, but would not
result in materially adverse
tax consequences to
Certificateholders. See
"Material Federal Income Tax
Consequences--Trusts for
Which a Partnership Election
is Made" herein.
Grantor Trust
If the Prospectus Supplement
specifies that the related
Trust will be treated as a
grantor trust, it is the
opinion of Tax Counsel to
such Trust 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--"Material Federal
Income Tax
Consequences--Trusts Treated
as a Grantor Trust" herein.
FASIT
If the Prospectus Supplement
specifies that the related
Trust will be treated as a
financial asset
securitization investment
trust ("FASIT"), it is the
opinion of Tax Counsel that
such Trust will on the
startup date qualify as a
FASIT and its proposed method
of operation will enable it
to continue to meet the
requirements for
qualification and taxation as
a FASIT under the Code
assuming a timely FASIT
election is made. Based on
the foregoing and assuming
compliance with the
Transaction Documents,
certain of the Securities
will qualify as regular
interests in a FASIT
("REGULAR SECURITIES") which
will generally be treated as
debt for U.S. federal income
tax purposes. The beneficial
owners of FASIT Regular
Securities will be required
to include the interest
payable on such FASIT Regular
Securities in gross income as
such interest accrues,
regardless of the regular
method of tax accounting and
in advance of receipt of the
cash attributable to such
interest income. See
"Material Federal Income Tax
Consequences -- Trusts for
which a FASIT Election is
Made" herein.
ERISA Considerations............. Subject to the considerations
discussed under "ERISA
Considerations" herein and in
the related Prospectus
Supplement, and unless
otherwise specified therein,
any Notes of a series and any
Certificates that are issued
by a Trust that is a grantor
trust and are not
subordinated to any other
class of Certificates are
eligible for purchase by
employee benefit plans.
Unless otherwise specified in
the related Prospectus
Supplement, the Certificates
of any series that are
subordinated to any other
Security of that series may
not be acquired by any
employee benefit plan subject
to the Employee Retirement
Income Security Act of 1974,
as amended ("ERISA"), or by
any individual retirement
account. See "ERISA
Considerations" herein and in
the related Prospectus
Supplement.
RISK FACTORS
CERTAIN LEGAL ASPECTS--SECURITY INTERESTS IN FINANCED VEHICLES MAY BE LIMITED.
TRUSTS MAY NOT HAVE A PERFECTED SECURITY INTEREST IN CERTAIN FINANCED
VEHICLES. In connection with the sale of Receivables to a Trust, security
interests in the Financed Vehicles securing such Receivables will be, or will
have been, assigned by the Seller(s) to the Depositor and by the Depositor to
such Trust simultaneously with the sale of such Receivables to such Trust. Due
to administrative burden and expense, (i) the certificates of title to the
Financed Motor Vehicles and those Financed Recreational Vehicles financed in
states where security interests in recreational vehicles, are subject to
certificate of title statutes will not be amended to reflect such assignments,
and (ii) UCC financing statements in respect of those Financed Recreational
Vehicles financed in states where security interests in recreational vehicles
are perfected by filing a UCC-1 financing statement will not be amended to
reflect such assignments. In the absence of such procedures, such Trust may not
have a perfected security interest in the Financed Vehicles in some states.
Unless otherwise provided in the related Prospectus Supplement, the
Depositor will be obligated to repurchase from the related Trust and the related
Seller will be obligated simultaneously to repurchase from the Depositor any
Receivable sold to such Trust as to which a perfected security interest in the
name of the related Seller in the Financed Vehicle securing such Receivable
shall not exist as of the date such Receivable is transferred to such Trust, if
such failure shall materially adversely affect the interest of such Trust in
such Receivable and if such failure shall not have been cured by the last day of
the second month following the discovery by or notice to the Seller(s) of such
breach. The Depositor's obligation to make such repurchase is contingent upon
the related Seller performing its obligation to repurchase such Receivable from
the Depositor on account of such failure. Moreover, such repurchase obligations
will not address or remedy the circumstance where a perfected security interest
in the name of the related Seller in the Financed Vehicle securing a Receivable
has not been perfected in the related Trust as a result of the absence of the
procedures described in the preceding paragraph or for any other reason. If such
Trust does not have a perfected security interest in a Financed Vehicle, its
ability to realize on such Financed Vehicle in the event of a default may be
adversely affected and, as a result, the amount available for distribution to
the Securityholders may be adversely affected.
CERTAIN LIENS WILL HAVE PRIORITY OVER A PERFECTED SECURITY INTEREST. To
the extent the security interest is perfected, such Trust will have a prior
claim over subsequent purchasers of such Financed Vehicle and holders of
subsequently perfected security interests. However, as against liens for repairs
of a Financed Vehicle or for taxes unpaid by an Obligor under a Receivable, or
through fraud or negligence, such Trust could lose the priority of its security
interest or its security interest in a Financed Vehicle. None of the Seller(s),
the Servicer or the Depositor will have any obligation to repurchase a
Receivable as to which any of the aforementioned occurrences result in such
Trust's losing the priority of its security interest or its security interest in
such Financed Vehicle after the date such security interest was conveyed to such
Trust. See "Certain Legal Aspects of the Receivables--Security Interest in
Vehicles" herein.
CERTAIN LEGAL ASPECTS--SECURITY INTEREST IN RECEIVABLES MAY BE LIMITED.
The Receivables will be treated by each Trust as "chattel paper" as defined in
the UCC. Pursuant to the UCC, the sale of chattel paper is treated in a manner
similar to a security interest in chattel paper. Perfection of a security
interest in chattel paper may generally be made by filing UCC-1 financing
statements in respect thereof or by possession of the chattel paper. In order to
protect each Trust's ownership or security interest in its Receivables, the
Depositor will file UCC-1 financing statements with the appropriate authorities
in the States of New York and Delaware and any other states deemed advisable by
the Depositor to give notice of such Trust's ownership interest (and any related
Indenture Trustee's security interest) in the Receivables and proceeds thereof.
Under each Sale and Servicing Agreement and Pooling and Servicing Agreement, the
Servicer will be appointed Custodian of the Receivables by the Trustee and the
Servicer will otherwise be obligated to maintain the perfection of the interest
of each Trust and any related Indenture Trustee in the Receivables. The filing
of UCC-1 financing statements as described above and possession of the chattel
paper by the Servicer will reduce but not eliminate the risks involved in
perfection. A trust could lose priority of its security interest in the
Receivables to certain liens arising by operation of law or in certain cases by
fraud or negligence. Moreover, if the Servicer should lose or inadvertently give
up possession of the chattel paper, a good faith purchaser of the chattel paper
without knowledge who gives new value and takes possession of it in the ordinary
course of such purchaser's business has priority over a security interest
(including an ownership interest) in the chattel paper that is perfected by
filing UCC-1 financing statements.
CERTAIN LEGAL ASPECTS--CONSUMER PROTECTION LAWS MAY REDUCE PAYMENTS TO
SECURITYHOLDERS. Federal and state consumer protection laws impose requirements
upon creditors in connection with extensions of credit and collections of retail
installment loans and certain of these laws make an assignee of such a loan
(such as a Trust) liable to the obligor thereon for any violation by the lender.
The application of such laws could render a Receivable unenforceable or
otherwise uncollectible. The inability of a Trust to realize amounts would in
respect of such Receivable could adversely affect the amount available for
distribution to the Securityholders. Unless otherwise specified in the related
Prospectus Supplement, the Depositor will be obligated to repurchase from the
Trust and the related Seller will be obligated to simultaneously repurchase from
the Depositor any Receivable which fails to comply with such requirements. The
Depositor's obligation to make such repurchase is contingent upon the related
Seller performing its obligation to repurchase such Receivable from the
Depositor on account of such failure. See "Certain Legal Aspects of the
Receivables--Consumer Protection Laws" herein.
CERTAIN LEGAL ASPECTS--INSOLVENCY MAY RESULT IN DELAYS OR REDUCTIONS OF
PAYMENTS TO SECURITYHOLDERS. Each Seller will represent and warrant that the
transfer of Receivables by it to the Depositor will constitute a sale. In
addition, the Depositor intends that the transfer of Receivables by it to the
Trust will constitute a sale.
CONSIDERATIONS RELATING TO THE INSOLVENCY OF A NONBANK SELLER OR THE
DEPOSITOR. If either a Seller other than a Bank Seller (a "NONBANK SELLER") or
the Depositor were to become a debtor in a bankruptcy case (or if the parent of
either were to become a debtor in a bankruptcy case and the assets of the
Nonbank Seller or Depositor, as applicable, were consolidated with those of its
parent) and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to take the position that the transfer of Receivables to the
Depositor or such Trust, as the case may be, should, notwithstanding the intent
of the parties that it be treated as a sale, instead be treated as a pledge of
such Receivables to secure a borrowing of such debtor, delays in payments of
collections of Receivables to the related Securityholders could occur or (should
the court rule in favor of any such trustee, debtor or creditor) reductions in
the amounts of such payments could result. If the transfer of Receivables by a
Nonbank Seller to the Depositor or by the Depositor to a Trust is treated as a
pledge instead of a sale, a tax or government lien on the property of the
Nonbank Seller or the Depositor, as applicable, arising before such Receivables
transfer may have priority over such Trust's interest in such Receivables. If
the transactions contemplated herein are treated as a sale, the Receivables
would not be part of the Nonbank Seller's or Depositor's bankruptcy estate and
would not be available to their respective creditors.
CONSIDERATIONS RELATING TO AN INSOLVENCY EVENT OF THE DEPOSITOR OR THE
SELLER AFFILIATE RELATED TO CERTAIN Trusts. With respect to each Trust that is
not a grantor trust, if the related Prospectus Supplement so provides, upon the
occurrence of an Insolvency Event of either the Depositor or the Seller
Affiliate identified therein, 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, if any, 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 Certificateholders will be reduced and such Noteholders and
Certificateholders will incur a loss.
OCTAGON GAS CASE. In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948
(10th Cir. 1993), the U.S. Court of Appeals for the 10th Circuit determined that
"accounts," a defined term under the Uniform Commercial Code, would be included
in the bankruptcy estate of a transferor regardless of whether the transfer is
treated as a sale or a secured loan. Although the Receivables are likely to be
viewed as "chattel paper," as defined under the Uniform Commercial Code, rather
than as accounts, the Octagon holding is equally applicable to chattel paper.
The circumstances under which the Octagon holding 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 Octagon
were applied in a bankruptcy of the Depositor or a Seller, however, even if the
transfer of Receivables to the Depositor and the transfer of the Receivables to
the Trust were treated as a sale, the Receivables would be part of the
Depositor's or Seller's bankruptcy estate (as applicable) and would be subject
to claims of certain creditors, and delays and reductions in payments to the
Securityholders could result.
RELIANCE ON REPRESENTATIONS AND WARRANTIES BY THE DEPOSITOR, THE
SELLER(S) AND THE SERVICER WHICH PROVES TO BE INADEQUATE MAY RESULT IN DELAYS OR
REDUCTIONS OF PAYMENT TO SECURITYHOLDERS. None of the Seller(s), the Servicer,
the Depositor or any of their respective affiliates will generally be obligated
to make any payments in respect of any Notes, the Certificates or the
Receivables of a Trust. However, in connection with the sale of Receivables by
the Seller(s) to the Depositor and the Depositor to a Trust, the Seller(s) will
make representations and warranties with respect to the characteristics of such
Receivables and, in certain circumstances, the Depositor may be required to
repurchase from the Trust and the related Seller would be required to
simultaneously repurchase from the Depositor Receivables with respect to which
such representations and warranties have been breached. Alternatively, if so
specified in the related Prospectus Supplement, the related Seller or the
Depositor will be permitted, in a circumstance where it would otherwise be
required to repurchase a Receivable as described in the preceding sentence, to
instead substitute a comparable Receivable for the Receivable otherwise
requiring repurchase, subject to certain conditions and eligibility criteria for
the substitute Receivable to be summarized in the related Prospectus Supplement.
The Depositor's obligation to make such repurchase or substitution is contingent
upon the related Seller performing its obligation to repurchase or substitute
for such Receivable from the Depositor. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables". In addition, under
certain circumstances, the Servicer may be required to purchase Receivables. See
"Description of the Transfer and Servicing Agreements--Servicing Procedures". If
collections on any Receivable should be reduced as a result of any matter giving
rise to a repurchase or purchase obligation on the part of the Depositor, the
Seller and/or the Servicer, as the case may be, and the Depositor, the Seller
and/or the Servicer should fail for any reason to perform in accordance with
that obligation, then delays in payments on the Securities and reductions in the
amount of those payments could occur. Moreover, if the Servicer were to cease
acting as Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Securityholders.
SUBORDINATION OF CERTAIN CERTIFICATES MAY RESULT IN REDUCED PAYMENTS TO
THOSE 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 interest
and principal due on the Notes, if any, of such series or one or more other
classes of Certificates of such series.
LIMITED ASSETS AND RISK THAT SUCH ASSETS WILL NOT BE SUFFICIENT TO PAY
SECURITIES IN FULL. Moreover, each Trust will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
Receivables and, to the extent provided in the related Prospectus Supplement, a
Pre-Funding Account, a Reserve Account and any other credit enhancement. The
Notes of any series will represent obligations solely of, and the Certificates
of any series will represent interests solely in, the related Trust and neither
the Notes nor the Certificates of any series will be insured or guaranteed by
any of the Seller(s), the Depositor, the applicable Trustee, any Indenture
Trustee or any other person or entity. Consequently, holders of the Securities
of any series must rely for repayment upon payments on the related Receivables
and, if and to the extent available, amounts on deposit in the Pre-Funding
Account (if any), the Reserve Account (if any) and any other credit enhancement,
all as specified in the related Prospectus Supplement. If such amounts and
credit enhancement are exhausted, the related Trust will depend solely on
payments on the Receivables to make distributions on the Securities, and the
Securities will bear the risk of delinquencies, loan losses and repossessions
with respect to the Receivables.
RISK THAT PREPAYMENTS WILL ADVERSELY AFFECT AVERAGE LIFE AND YIELDS OF
SECURITIES. All the Receivables are prepayable at any time. (For this purpose
the term "prepayments" includes prepayments in full, partial prepayments
(including those related to rebates of extended warranty contract costs and
insurance premiums) and liquidations due to default, as well as receipts of
proceeds from physical damage, credit life and disability insurance policies and
certain other Receivables repurchased for administrative reasons). The rate of
prepayments on the Receivables may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer the Financed Vehicle securing a Receivable without causing the
related loan to become due and payable. The rate of prepayment on the
Receivables may also be influenced by the structure of the loan evidencing the
Receivable. In addition, under certain circumstances, the Depositor will be
obligated to repurchase from the Trust, and the related Seller will be obligated
to simultaneously repurchase from the Depositor (or in either case, if so
specified in the related Prospectus Supplement and subject to the conditions
summarized therein, substitute for) Receivables pursuant to a Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of certain breaches of
representations and warranties and, under certain circumstances, the Servicer
will be obligated to purchase Receivables pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of certain
covenants. See "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables". Any reinvestment risks resulting from a faster or
slower incidence of prepayment of Receivables held by a given Trust will be
borne entirely by the Securityholders of the related series of Securities. See
also "Description of the Transfer and Servicing Agreements--Termination"
regarding the Servicer's option to purchase the Receivables of a given
Receivables Pool. In addition, as described above under the caption "Certain
Legal Aspects--Insolvency Considerations--Considerations Relating to an
Insolvency Event of the Depositor or the Seller Affiliate Related to Certain
Trust", in the case of a Trust that is not a grantor trust if so specified in
the related Prospectus Supplement, the sale of the Receivables owned by such
Trust will be required if an Insolvency Event with respect to the Depositor or
any Seller Affiliate occurs.
RISK OF COMMINGLING BY THE SERVICER MAY LEAD TO FUNDS NOT BEING
AVAILABLE FOR DISTRIBUTION. With respect to each Trust, the Servicer will
deposit all payments on the related Receivables (from whatever source) and all
proceeds of such Receivables collected during each Collection Period into the
Collection Account of such Trust within two business days of receipt thereof.
However, in the event that the Servicer satisfies certain requirements for
monthly or less frequent remittances and the Rating Agencies (as such term is
defined in the related Prospectus Supplement, the "RATING AGENCIES") affirm
their ratings of the related Securities at the initial level, then for so long
as the servicer specified in the related Prospectus Supplement is the Servicer
and provided that (i) there exists no Servicer Default and (ii) each other
condition to making such monthly or less frequent deposits as may be specified
by the Rating Agencies and described in the related Prospectus Supplement is
satisfied, the Servicer will not be required to deposit such amounts into the
Collection Account of such Trust until on or before the business day preceding
each Distribution Date or Payment 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 or Payment 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 should be unable
to remit such funds, such funds would not be available for distribution to the
applicable Securityholders and such Securityholders might incur a loss. To the
extent set forth in the related Prospectus Supplement, the Servicer may, in
order to satisfy the requirements described above, obtain a letter of credit or
other security for the benefit of the related Trust to secure timely remittances
of collections on the related Receivables and payment of the aggregate Purchase
Amount with respect to Receivables purchased by the Servicer.
RISKS ASSOCIATED WITH SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING
ACCOUNT. If so specified in the related Prospectus Supplement, the Seller(s)
will be obligated to sell, and the Depositor will be obligated to purchase and
then transfer to the related Trust which Trust will then be obligated to
purchase, Subsequent Receivables from time to time during the Funding Period
specified in the related Prospectus Supplement. With respect to any Trust that
is to be treated as a grantor trust for federal income tax purposes, the Funding
Period, if any, will not exceed the period of 90 days from and after the Closing
Date and, with respect to any other Trust, will not exceed the period of one
year from and after the Closing Date. With respect to each Trust, the Pre-Funded
Amount on the Closing Date will not exceed 25% of the aggregate initial
principal balance of the Securities.
CHANGES IN CHARACTERISTICS OF RECEIVABLES POOL DUE TO SUBSEQUENT
RECEIVABLES. Amounts on deposit in any Pre-Funding Account may be invested only
in Eligible Investments. Subsequent Receivables may be originated by the Dealers
at a later date using credit criteria different from those which were applied to
any Initial Receivables and may be of a different credit quality and seasoning.
Underwriting criteria, if any, applicable to Subsequent Receivables will be set
forth in the applicable Prospectus Supplement. In addition, following the
transfer of Subsequent Receivables to the applicable Trust, the characteristics
of the entire pool of Receivables included in such Trust may vary from those of
the Initial Receivables transferred to such Trust. However, except as otherwise
set forth in the applicable Prospectus Supplement and unless the applicable
underwriting criteria so permit, it is not expected that such variance in the
characteristics of the entire pool due to the inclusion of Subsequent
Receivables will be materially different from the characteristics of the pool of
Initial Receivables. Nevertheless, it is possible that the credit quality of the
Receivables in a Trust, as a whole, may decline as a result of the inclusion of
Subsequent Receivables and may result in a higher rate of payment to the
applicable Securityholders as a result of an increased level of defaults on such
Receivables.
SUBSEQUENT RECEIVABLES MAY AFFECT WEIGHTED AVERAGE MATURITY OF NOTES
ISSUED BY A FASIT. Subsequent Receivables could extend the weighted average life
of Notes in a particular FASIT. The outstanding principal amount of each Class
of Notes will be payable on their respective Final Scheduled Distribution Dates.
The Final Scheduled Distribution Date for each Class of Notes will not be
extended or shortened by the addition of Subsequent Receivables.
USE OF BALANCE IN PRE-FUNDING ACCOUNT TO PREPAY SECURITIES MAY
ADVERSELY AFFECT AVERAGE LIFE AND YIELDS OF SECURITIES. A higher than expected
rate of payment may result in a reduction in the yield to maturity of any class
of Securities to which such payments are distributed. To the extent that amounts
on deposit in the Pre-Funding Account have not been fully applied to the
conveyance of Subsequent Receivables to a Trust by the end of the Funding Period
and such amount exceeds the applicable amount described in the related
Prospectus Supplement, the holders of Securities issued by the related Trust
will receive, on the Distribution Date or Payment Date on or immediately
following the last day of the applicable Funding Period, a prepayment of
principal in an amount equal to the amount remaining in the Pre-Funding Account
following the purchase of any Subsequent Receivables on or immediately preceding
such Distribution Date or Payment Date. It is anticipated that the principal
balance of Subsequent Receivables sold to a Trust will not be exactly equal to
the amount on deposit in the Pre-Funding Account, and that therefore there will
be at least a nominal amount of principal prepaid to the holders of the
Securities issued by such Trust. Securityholders will bear all reinvestment risk
associated with any such distribution of amounts on deposit in the Pre-Funding
Account after termination of the applicable Funding Period. Any such
distribution will have the effect of a prepayment on the related Receivables and
may result in a reduction in the yield to maturity of any class of Securities to
which such amounts are distributed.
RIGHTS OF THE NOTEHOLDERS TO DIRECT CERTAIN MATTERS MAY ADVERSELY
AFFECT CERTIFICATEHOLDERS. In general, with respect to any Trust issuing Notes,
until the Notes have been paid in full the right to direct the related Trust
with respect to certain actions permitted to be taken under the related Transfer
and Servicing Agreements rests with the related Indenture Trustee and the
Noteholders instead of the Certificateholders.
For example, with respect to a Trust issuing Notes, in the event a
Servicer Default occurs, the Indenture Trustee or the Noteholders with respect
to such series, as described under "Description of the Transfer and Servicing
Agreements--Rights upon Servicer Default", may remove the Servicer without the
consent of the Trustee or any of the Certificateholders with respect to such
series. The Trustee or the Certificateholders with respect to such series will
not have the ability to remove the Servicer if a Servicer Default occurs. In
addition, the Noteholders of such series have the ability, with certain
specified exceptions, to waive defaults by the Servicer, including defaults that
could materially adversely affect the Certificateholders of such series. See
"Description of the Transfer and Servicing Agreements--Waiver of Past Defaults".
BOOK-ENTRY REGISTRATION MAY REDUCE THE LIQUIDITY OF THE SECURITIES.
Unless otherwise specified in the related Prospectus Supplement, each class of
Securities of a given series will be initially represented by one or more
certificates registered in the name of Cede & Co. ("CEDE"), or any other nominee
for the Depository Trust Company ("DTC") set forth in the related Prospectus
Supplement (Cede, or such other nominee, "DTC'S NOMINEE"), and will not be
registered in the names of the holders of the Securities of such series or their
nominees. Because of this, unless and until Definitive Securities for such
series are issued, holders of such Securities will not be recognized by the
Trustee or any applicable Indenture Trustee as "Certificateholders",
"Noteholders" or "Securityholders", as the case may be (as such terms are used
herein or in the related Pooling and Servicing Agreement or related Indenture
and Trust Agreement, as applicable). Hence, until Definitive Securities are
issued, holders of such Securities will only be able to exercise the rights of
Securityholders indirectly through DTC and its participating organizations. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Definitive Securities".
THE TRUSTS
With respect to each series of Securities, the Depositor will establish
a separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein and in
the related Prospectus Supplement. The property of each Trust will include a
pool (a "RECEIVABLES POOL") of retail installment sales contracts, purchase
money notes or other notes between dealers (the "DEALERS") and purchasers (the
"OBLIGORS") of new and used (i) automobiles, light-duty trucks and motorcycles
("FINANCED MOTOR VEHICLES," and the Receivables with respect thereto, "MOTOR
VEHICLE RECEIVABLES") and/or (ii) recreational vehicles ("FINANCED RECREATIONAL
VEHICLES," and the Receivables with respect thereto, "RECREATIONAL VEHICLE
RECEIVABLES") or installment loans made to Obligors for such purchases and all
payments due thereunder on and after the applicable cutoff date (as such term is
defined in the related Prospectus Supplement, a "Cut-off Date ") in the case of
Precomputed Receivables and all payments received thereunder on and after the
applicable Cut-off Date in the case of Simple Interest Receivables. A
Receivables Pool may consist solely of Motor Vehicle Receivables, Recreational
Vehicle Receivables or a combination of such Receivables, all as specified in
the related Prospectus Supplement. The Receivables of each Receivables Pool were
or will be originated by the Dealers or lenders, purchased by the Seller(s),
directly or indirectly, pursuant to agreements with Dealers ("DEALER
AGREEMENTS") or such lenders and sold to the Depositor. Such Receivables will be
serviced by the Servicer. On or prior to the applicable Closing Date, the
Seller(s) will sell the Receivables to the Depositor. On the applicable Closing
Date, the Depositor will sell the Initial Receivables of the applicable
Receivables Pool to the Trust to the extent, if any, specified in the related
Prospectus Supplement. To the extent so provided in the related Prospectus
Supplement, Subsequent Receivables will be conveyed to the Trust as frequently
as daily during the Funding Period. Any Subsequent Receivables so conveyed will
also be assets of the applicable Trust, subject to the prior rights of the
related Indenture Trustee and the Noteholders, if any, therein. The property of
each Trust will also include (i) such amounts as from time to time may be held
in separate trust accounts established and maintained pursuant to the related
Sale and Servicing Agreement or Pooling and Servicing Agreement and the proceeds
of such accounts, as described herein and in the related Prospectus Supplement;
(ii) security interests in the Financed Vehicles and any other interest of the
Depositor in such Financed Vehicles; (iii) the rights to proceeds from claims on
certain physical damage, credit life and disability insurance policies covering
the Financed Vehicles or the Obligors, as the case may be; (iv) the interest of
the Depositor in any proceeds from recourse to Dealers on Receivables or
Financed Vehicles with respect to which the Servicer has determined that
eventual repayment in full is unlikely; (v) any property that shall have secured
a Receivable and that shall have been acquired by the applicable Trust; and (vi)
any and all proceeds of the foregoing. To the extent specified in the related
Prospectus Supplement, a Pre-Funding Account, a Reserve Account or other form of
credit enhancement may be a part of the property of any given Trust or may be
held by the Trustee or an Indenture Trustee for the benefit of holders of the
related Securities. Additionally, pursuant to the Dealer Agreements, the Dealers
have an obligation after origination to repurchase Receivables as to which
Dealers have made certain misrepresentations.
The Servicer will continue to service the Receivables held by each
Trust and will receive fees for such services. See "Description of the Transfer
and Servicing Agreements--Servicing Compensation and Payment of Expenses" herein
and in the related Prospectus Supplement. To facilitate the servicing of the
Receivables, each Trustee will authorize the Servicer to retain physical
possession of the Receivables held by each Trust and other documents relating
thereto as custodian for each such Trust. Due to the administrative burden and
expense, the certificates of title or UCC financing statements, as applicable,
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. See "Risk
Factors--Certain Legal Aspects--Security Interest in Financed Vehicles,"
"Certain Legal Aspects of the Receivables" and "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" herein.
If the protection provided to any holders of a series of Notes 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 or, if applicable, under federal law, may affect the
Servicer's ability to repossess and sell the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to the holders
of the Securities of such series. See "Description of the Transfer and Servicing
Agreements--Distributions", "_Credit and Cash Flow Enhancement" and "Certain
Legal Aspects of the Receivables" herein.
The principal offices of each Trust and the related Trustee will be
specified in the applicable Prospectus Supplement.
FASIT ELECTION
If specified in the related Prospectus Supplement, principal
collections received on the Receivables may be applied to purchase additional
Receivables which will become part of the Trust Fund for a series. Such
additions may be made in connection with a Trust Fund that is taxed as a
partnership or with respect to which a FASIT election has been made. The related
Prospectus Supplement will set forth the characteristics that such additional
Receivables will be required to meet. Such characteristics will be specified in
terms of the categories described in this section.
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale of
the related Securities is limited solely to the express obligations of such
Trustee set forth in the related Trust Agreement and the Sale and Servicing
Agreement or the related Pooling and Servicing Agreement, as applicable. A
Trustee may resign at any time, in which event the Servicer, or its successor,
will be obligated to appoint a successor trustee. The Administrator, if any, of
a Trust that is not a grantor trust and the Servicer in respect of a Trust that
is a grantor trust may also remove the Trustee if the Trustee ceases to be
eligible to continue as Trustee under the related Trust Agreement or Pooling and
Servicing Agreement, as applicable, or if the Trustee becomes insolvent. In such
circumstances, the Administrator or Servicer, as applicable, will be obligated
to appoint a successor trustee. Any resignation or removal of a Trustee and
appointment of a successor trustee will not become effective until acceptance of
the appointment by the successor trustee.
THE RECEIVABLES POOLS
GENERAL
The Receivables in each Receivables Pool are and will be retail
installment sales contracts, retail installment loans, purchase money orders or
other notes that have been or will be originated by a Dealer and purchased by a
Seller pursuant to a Dealer Agreement between the related seller (the "SELLER")
and the Dealer and will be Motor Vehicle Receivables and/or Recreational Vehicle
Receivables. Receivables held by any Seller may have been acquired from other
Sellers. The Sellers of each of the Motor Vehicle Receivables and/or
Recreational Vehicle Receivables may include banks, finance companies or other
financial institutions and will be entities involved in the financing of each of
the particular types of assets (i.e., new and used automobiles, light duty
trucks and motorcycles, and new and used recreational vehicles) securing the
Receivables being sold by such Seller and in the origination, secondary market
purchasing and/or servicing of retail installment sales contracts, retail
installment loans and other receivables secured by each of such asset types.
Each Seller with respect to a series of Securities will be identified in the
related Prospectus Supplement. A Receivables Pool may consist solely of Motor
Vehicle Receivables, Recreational Vehicle Receivables or a combination of such
Receivables, all as specified in the related Prospectus Supplement. In addition,
to the extent described in any Prospectus Supplement, the related Receivables
Pool may include Receivables acquired by an Affiliate through acquisitions.
Receivables of a Seller will be transferred to the Depositor pursuant to a
Receivables Purchase Agreement for sale by the Depositor to the applicable
Trust.
The Receivables to be held by each Trust will be purchased by the
Depositor from the portfolio of the Seller(s) for inclusion in a Receivables
Pool in accordance with several criteria, including that each Receivable (i) is
secured by a new or used motor vehicle or motorcycle recreational vehicle, (ii)
was originated in the United States, (iii) is a Simple Interest Receivable or a
Precomputed Receivable and (iv) as of the Cut-off Date (a) had an outstanding
principal balance of at least the amount set forth in the related Prospectus
Supplement, (b) was not more than 30 days (or such other number of days
specified in the related Prospectus Supplement) past due, (c) had a remaining
number of scheduled payments not more than the number set forth in the related
Prospectus Supplement, (d) had an original number of scheduled payments not more
than the number set forth in the related Prospectus Supplement and (e) had an
APR of not less than the rate per annum set forth in the related Prospectus
Supplement. No selection procedures believed by the Depositor to be adverse to
the Securityholders of any series were or will be used in selecting the related
Receivables. Terms of the retail installment sales contracts, retail installment
loans, purchase money orders or notes constituting such Receivables which are
material to investors are described herein or in the related Prospectus
Supplement.
"SIMPLE INTEREST RECEIVABLES" are receivables that provide for the
amortization of the amount financed under each receivable over a series of fixed
level payment monthly installments. However, unlike the monthly installment
under an Actuarial Receivable, each monthly installment consists of an amount of
interest which is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated Contract Rate and further multiplied
by the period elapsed (as a fraction of a calendar year) since the preceding
payment of interest was made. As payments are received under a Simple Interest
Receivable, the amount received is applied, first, to interest accrued to the
date of payment, second, to reduce the unpaid principal balance, and third, to
late fees and other fees and charges, if any. Accordingly, if an Obligor pays a
fixed monthly installment before its scheduled due date, the portion of the
payment allocable to interest for the period since the preceding payment was
made will be less than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid principal
balance will be correspondingly greater. Conversely, if an Obligor pays a fixed
monthly installment after its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made will
be greater than it would have been had the payment been made as scheduled, and
the portion of the payment applied to reduce the unpaid principal balance will
be correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance and unpaid accrued interest. If a Simple Interest
Receivable is prepaid, the Obligor is required to pay interest only to the date
of prepayment.
"PRECOMPUTED RECEIVABLES" consist of either (i) monthly actuarial
receivables ("ACTUARIAL RECEIVABLES") or (ii) receivables that provide for
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method, similar to the "Rule of 78's" ("RULE OF 78'S
RECEIVABLES"). An Actuarial Receivable provides for amortization of the loan
over a series of fixed level payment monthly installments. Each monthly
installment, including the monthly installment representing the final payment on
the Receivable, consists of an amount of interest equal to 1/12 of the APR of
the loan multiplied by the unpaid principal balance of the loan, and an amount
of principal equal to the remainder of the monthly payment. A Rule of 78's
Receivable provides for the payment by the Obligor of a specified total amount
of payments, payable in equal monthly installments on each due date, which total
represents the principal amount financed and add-on interest in an amount
calculated at the stated APR for the term of the receivable. The rate at which
such amount of add-on interest is earned and, correspondingly, the amount of
each fixed monthly payment allocated to reduction of the outstanding principal
are calculated in accordance with the "Rule of 78's".
Information with respect to each Receivables Pool will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition, the geographic distribution and distribution by APR and the portion
of such Receivables Pool consisting of Precomputed Receivables and of Simple
Interest Receivables and the portion of such Receivables Pool made up by Motor
Vehicle Receivables and/or Recreational Vehicle Receivables and the portion of
each category secured by new Financed Vehicles and by used Financed Vehicles.
SUBSEQUENT RECEIVABLES
Subsequent Receivables may be originated by the Dealers at a later date
using credit criteria different from those which were applied to any Initial
Receivables and may be of a different credit quality and seasoning. In addition,
following the transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust may
vary significantly from those of the Initial Receivables transferred to such
Trust. Each Prospectus Supplement will describe the effects that including such
Subsequent Receivables may have on the Receivables Pool included in the Trust
Property of each Trust issuing Securities.
UNDERWRITING
The related Prospectus Supplement will describe the Seller(s)'
underwriting procedures and guidelines, including the type of information
reviewed in respect of an applicant.
SERVICING AND COLLECTIONS
The related Prospectus Supplement will describe the Servicer's
servicing procedures, including the steps customarily taken in respect of
delinquent Receivables and the maintenance of physical damage insurance.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the Seller(s)' loss and delinquency
experience with respect to its portfolio of motor vehicle loans and/or
recreational vehicle loans (including previously sold contracts which a Seller
continues to service) will be set forth in each Prospectus Supplement. There can
be no assurance that the delinquency, repossession and net loss experience on
any Receivables Pool will be comparable to prior experience or to such
information.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates,
if any, of any series will generally be influenced by the rate at which the
principal balances of the related Receivables are paid, which payment may be in
the form of scheduled amortization or prepayments. (For this purpose, the term
"prepayments" includes prepayments in full, partial prepayments (including those
related to rebates of extended warranty contract costs and insurance premiums),
liquidations due to default, as well as receipts of proceeds from physical
damage, credit life and disability insurance policies and certain other
Receivables repurchased by the Depositor or the Servicer for administrative
reasons.) All of the Receivables are prepayable at any time without penalty to
the Obligor. The rates of prepayment of motor vehicle loans and recreational
vehicle loans are influenced by a variety of economic, social and other factors,
including the fact that an Obligor generally may not sell or transfer the
Financed Vehicle securing a Receivable without the consent of the Servicer. The
rate of prepayment on the Receivables may also be influenced by the structure of
the loan. In addition, under certain circumstances, the Depositor will be
obligated to repurchase from a Trust and the related Seller will be obligated
simultaneously to repurchase from the Depositor (or in either case, if so
specified in the related Prospectus Supplement and subject to the conditions
summarized therein, substitute for) Receivables pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement as a result of breaches
of representations and warranties and the Servicer will be obligated to purchase
Receivables from such Trust pursuant to such Sale and Servicing Agreement or
Pooling and Servicing Agreement as a result of breaches of certain covenants. In
the case of any Security purchased at a discount to its principal amount, a
slower than anticipated rate of principal payments is likely to result in a
lower than anticipated yield. In the case of a Security purchased at a premium
to its principal amount, a faster than anticipated rate of principal payments is
likely to result in a lower than anticipated yield. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" and
"_Servicing Procedures". See also "Description of the Transfer and Servicing
Agreements--Termination" regarding the Servicer's option to purchase the
Receivables from a given Trust. No prediction can be made as to the rate of
prepayment that the Receivables will experience.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes, if any, or the
Certificates, if any, of a given series on each Payment Date or Distribution
Date, as applicable, since such amount will depend, in part, on the amount of
principal collected on the related Receivables Pool during the applicable
Collection Period. Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables will be borne entirely by the
Noteholders, if any, and the Certificateholders of a given series. The related
Prospectus Supplement may set forth certain additional information with respect
to the maturity and prepayment considerations applicable to the particular
Receivables Pool and the related series of Securities.
POOL FACTORS AND TRADING INFORMATION
The "NOTE POOL FACTOR" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with respect
to such class of Notes indicating the remaining outstanding principal balance of
such class of Notes, as of the applicable Payment Date (after giving effect to
payments to be made on such Payment Date), as a fraction of the initial
outstanding principal balance of such class of Notes. The "CERTIFICATE POOL
FACTOR" for each class of Certificates will be a seven-digit decimal which the
Servicer will compute prior to each distribution with respect to such class of
Certificates indicating the remaining Certificate Balance of such class of
Certificates, as of the applicable Distribution Date (after giving effect to
distributions to be made on such Distribution Date), as a fraction of the
initial Certificate Balance of such class of Certificates. Each Note Pool Factor
and each Certificate Pool Factor will initially be 1.0000000 and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable class of Notes, or the reduction of the Certificate Balance of the
applicable class of Certificates, as the case may be. A Noteholder's portion of
the aggregate outstanding principal balance of the related class of Notes is the
product of (i) the original denomination of such Noteholder's Note and (ii) the
applicable Note Pool Factor. A Certificateholder's portion of the aggregate
outstanding Certificate Balance for the related class of Certificates is the
product of (a) the original denomination of such Certificateholder's Certificate
and (b) the applicable Certificate Pool Factor.
Unless otherwise provided in the related Prospectus Supplement with
respect to a Trust, the Noteholders and the Certificateholders, as applicable,
will receive reports on or about each Payment Date concerning (i) with respect
to the Collection Period immediately preceding such Payment Date, payments
received on the Receivables, the Pool Balance (as such term is defined in the
related Prospectus Supplement, the "POOL BALANCE"), each Certificate Pool Factor
or Note Pool Factor, as applicable, and various other items of information, and
(ii) with respect to the Collection Period second preceding such Payment Date,
as applicable, amounts allocated or distributed on the preceding Payment Date
and any reconciliation of such amounts with information provided by the Servicer
prior to such current Payment Date. In addition, Securityholders of record
during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by law. See "Certain
Information Regarding the Securities--Reports to Securityholders".
USE OF PROCEEDS
Unless the related Prospectus Supplement provides for other
applications, the net proceeds from the sale of the Securities of a given series
will be applied by the applicable Trust (i) to the purchase of the Receivables
from the Depositor, (ii) to make the initial deposit into the Reserve Account,
if any, and (iii) to make the deposit of the Pre-Funded Amount into the
Pre-Funding Account, if any. The Depositor will use that portion of such net
proceeds paid to it with respect to any such Trust to purchase Receivables from
the Seller(s) and to pay for certain expenses incurred in connection with the
purchase of Receivables and sale of Securities.
THE COMPANY
SSB Vehicle Securities Inc. (the "COMPANY") was incorporated in the
State of Delaware on November 7, 1997 as a wholly-owned subsidiary of Salomon
Smith Barney Holdings Inc. The Depositor maintains its principal office at
Seven World Trade Center, New York, New York 10048. Its telephone number is
(212) 783-7000.
The only obligations, if any, of the Company with respect to a series
of Certificates and/or Notes may be pursuant to certain limited representations
and warranties and limited undertakings to repurchase (or, if so specified in
related Prospectus Supplement, substitute for) Receivables under certain
circumstances, but only to the extent the related Seller simultaneously performs
its obligation to repurchase such Receivables. The Company will have no ongoing
servicing obligations or responsibilities with respect to any Financed Vehicle.
The Company does not have, is not required to have, and is not expected in the
future to have, any significant assets.
As specified in the related Prospectus Supplement, the Servicer with
respect to any series of Certificates and/or Notes may be an affiliate of the
Company. The Company anticipates that it will acquire Receivables in the open
market or in privately negotiated transactions, which may be through or from a
Seller or Transferor.
None of the Company, the Seller(s) or any of their respective
affiliates will insure or guarantee the Receivables or the Certificates and/or
Notes of any series.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of
Notes of the related series will be issued pursuant to the terms of an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary does not
purport to be complete and is subject to, and is qualified by reference to, all
the provisions of the Notes and the Indenture.
Unless otherwise specified in the related Prospectus Supplement, each
class of Notes will initially be represented by one or more Notes, in each case
registered in the name of the nominee of DTC (together with any successor
depository selected by the Trust, the "DEPOSITORY") except as set forth below.
Unless otherwise specified in the related Prospectus Supplement, the Notes will
be available for purchase in denominations of $1,000 and integral multiples
thereof in book-entry form only. The Depositor has been informed by DTC that
DTC's nominee will be Cede, unless another nominee is specified in the related
Prospectus Supplement. Accordingly, such nominee is expected to be the holder of
record of the Notes of each class. Unless and until Definitive Notes are issued
under the limited circumstances described herein or in the related Prospectus
Supplement, no Noteholder will be entitled to receive a physical certificate
representing a Note. All references herein and in the related Prospectus
Supplement to actions by Noteholders refer to actions taken by DTC upon
instructions from its participating organizations (the "PARTICIPANTS") and all
references herein and in the related Prospectus Supplement to distributions,
notices, reports and statements to Noteholders refer to distributions, notices,
reports and statements to DTC or its nominee, as the registered holder of the
Notes, for distribution to Noteholders in accordance with DTC's procedures with
respect thereto. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "_Definitive Securities".
PRINCIPAL OF AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal and
interest on each class of Notes of a given series will be described in the
related Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to the
rights of holders of any other class or classes of Notes of such series, as
described in the related Prospectus Supplement. Unless otherwise provided in the
related Prospectus Supplement, payments of interest on the Notes of such series
will be made prior to payments of principal thereon. To the extent provided in
the related Prospectus Supplement, a series may include one or more classes of
Strip Notes entitled to (i) principal payments with disproportionate, nominal or
no interest payments or (ii) interest payments with disproportionate, nominal or
no principal payments. Each class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest Rate (and which may be
zero for certain classes of Strip Notes), or any combination of the foregoing.
The related Prospectus Supplement will specify the Interest Rate for each class
of Notes of a given series or the method for determining such Interest Rate. See
also "Certain Information Regarding the Securities--Fixed Rate Securities" and
"_Floating Rate Securities". One or more classes of Notes of a series may be
redeemable in whole or in part under the circumstances specified in the related
Prospectus Supplement, including at the end of the Funding Period (if any) or as
a result of the Servicer's exercising its option to purchase the related
Receivables Pool.
To the extent specified in any Prospectus Supplement, one or more
classes of Notes of a series may have fixed principal payment schedules, as set
forth in such Prospectus Supplement; Noteholders of such Notes would be entitled
to receive as payments of principal on any Payment Date the applicable amounts
set forth on such schedule with respect to such Notes, in the manner and to the
extent set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement,
payments to Noteholders of all classes within a series in respect of interest
will have the same priority. Under certain circumstances, the amount available
for such payments could be less than the amount of interest payable on the Notes
on any of the dates specified for payments in the related Prospectus Supplement
(each, a "PAYMENT DATE"), in which case each class of Noteholders will receive
its ratable share (based upon the aggregate amount of interest due to such class
of Noteholders) of the aggregate amount available to be distributed in respect
of interest on the Notes of such series. See "Description of the Transfer and
Servicing Agreements--Distributions" and "_Credit and Cash Flow Enhancement".
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
THE INDENTURE
MODIFICATION OF INDENTURE. With respect to each Trust that has issued
Notes pursuant to an Indenture, the Trust and the Indenture Trustee may, with
the consent of the holders of a majority of the outstanding Notes of the related
series, execute a supplemental indenture to add provisions to, change in any
manner or eliminate any provisions of, the related Indenture, or modify (except
as provided below) in any manner the rights of the related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, in the absence of the consent of the holder of
each such outstanding Note affected thereby, no supplemental indenture will: (i)
change the due date of any installment of principal of or interest on any such
Note or reduce the principal amount thereof, the interest rate specified thereon
or the redemption price with respect thereto or change any place of payment
where or the coin or currency in which any such Note or any interest thereon is
payable; (ii) impair the right to institute suit for the enforcement of certain
provisions of the related Indenture regarding payment; (iii) reduce the
percentage of the aggregate amount of the outstanding Notes of such series, the
consent of the holders of which is required for any such supplemental indenture
or the consent of the holders of which is required for any waiver of compliance
with certain provisions of the related Indenture or of certain defaults
thereunder and their consequences as provided for in such Indenture; (iv) modify
or alter the provisions of the related Indenture regarding the voting of Notes
held by the applicable Trust, any other obligor on such Notes, the Depositor,
the Seller(s) or an affiliate of any of them; (v) reduce the percentage of the
aggregate outstanding amount of such Notes, the consent of the holders of which
is required to direct the related Indenture Trustee to sell or liquidate the
Receivables if the proceeds of such sale would be insufficient to pay the
principal amount of and accrued but unpaid interest on the outstanding Notes of
such series; (vi) decrease the percentage of the aggregate principal amount of
such Notes required to amend the sections of the related Indenture which specify
the applicable percentage of aggregate principal amount of the Notes of such
series necessary to amend such Indenture or certain other related agreements; or
(vii) permit the creation of any lien ranking prior to or on a parity with the
lien of the related Indenture with respect to any of the collateral for such
Notes or, except as otherwise permitted or contemplated in such Indenture,
terminate the lien of such Indenture on any such collateral or deprive the
holder of any such Note of the security afforded by the lien of such Indenture.
The Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders of the
related series, for the purpose of, among other things, adding any provisions to
or changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders; provided
that such action will not materially and adversely affect the interest of any
such Noteholder.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to the
Notes of a given series, unless otherwise specified in the related Prospectus
Supplement, "EVENTS OF DEFAULT" under the related Indenture will consist of: (i)
a default for five days (or such longer period specified in the related
Prospectus Supplement) or more in the payment of any interest on any such Note;
(ii) a default in the payment of the principal of or any installment of the
principal of any such Note when the same becomes due and payable; (iii) a
default in the observance or performance of any covenant or agreement of the
applicable Trust made in the related Indenture and the continuation of any such
default for a period of 30 days after notice thereof is given to such Trust by
the applicable Indenture Trustee or to such Trust and such Indenture Trustee by
the holders of at least 25% in principal amount of such Notes then outstanding;
(iv) any representation or warranty made by such Trust in the related Indenture
or in any certificate delivered pursuant thereto or in connection therewith
having been incorrect in a material respect as of the time made, and such breach
not having been cured within 30 days after notice thereof is given to such Trust
by the applicable Indenture Trustee or to such Trust and such Indenture Trustee
by the holders of at least 25% in principal amount of such Notes then
outstanding; or (v) certain events of bankruptcy, insolvency, receivership or
liquidation of the applicable Trust. However, the amount of principal required
to be paid to Noteholders of such series under the related Indenture will
generally be limited to amounts available to be deposited in the applicable Note
Distribution Account. Therefore, unless otherwise specified in the related
Prospectus Supplement, the failure to pay principal on a class of Notes
generally will not result in the occurrence of an Event of Default until the
final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to
the Notes of any series, the related Indenture Trustee or holders of a majority
in principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in the
related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount of
such Notes then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have the
applicable Trust maintain possession of such Receivables and continue to apply
collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
however, such Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days or more in the payment of any
interest on any Note of such series, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes at the date of such sale or (iii) such Indenture Trustee
determines that the proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on such Notes as such payments would have
become due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 66 2/3% of the aggregate
outstanding principal amount of such Notes.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such Indenture
at the request or direction of any of the holders of such Notes, if such
Indenture Trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which might be incurred by it in
complying with such request. Subject to the provisions for indemnification and
certain limitations contained in the related Indenture, the holders of a
majority in principal amount of the outstanding Notes of a given series will
have the right to direct the time, method and place of conducting any proceeding
or any remedy available to the applicable Indenture Trustee, and the holders of
a majority in principal amount of such Notes then outstanding may, in certain
cases, waive any default with respect thereto, except a default in the payment
of principal or interest or a default in respect of a covenant or provision of
such Indenture that cannot be modified without the waiver or consent of all the
holders of such outstanding Notes.
Unless otherwise specified in the related Prospectus Supplement, no
holder of a Note of any series will have the right to institute any proceeding
with respect to the related Indenture, unless (i) such holder previously has
given to the applicable Indenture Trustee written notice of a continuing Event
of Default, (ii) the holders of not less than 25% in principal amount of the
outstanding Notes of such series have made written request to such Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee, (iii)
such holder or holders have offered such Indenture Trustee reasonable indemnity,
(iv) such Indenture Trustee has for 60 days failed to institute such proceeding
and (v) no direction inconsistent with such written request has been given to
such Indenture Trustee during such 60-day period by the holders of a majority in
principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor
the related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the related Notes or for the agreements of such Trust contained in the
applicable Indenture.
CERTAIN COVENANTS. Each Indenture will provide that the related Trust
may not consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the laws
of the United States, any state or the District of Columbia, (ii) such entity
expressly assumes such Trust's obligation to make due and punctual payments upon
the Notes of the related series and the performance or observance of every
agreement and covenant of such Trust under the Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) such Trust has been advised that the rating of the Notes or
the Certificates of such series then in effect would not be reduced or withdrawn
by the Rating Agencies as a result of such merger or consolidation and (v) such
Trust has received an opinion of counsel to the effect that such consolidation
or merger would have no material adverse tax consequence to the Trust or to any
related Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Transfer and Servicing
Agreements or certain related documents with respect to such Trust
(collectively, the "RELATED DOCUMENTS"), sell, transfer, exchange or otherwise
dispose of any of the assets of such Trust, (ii) claim any credit on or make any
deduction from the principal and interest payable in respect of the Notes of the
related series (other than amounts withheld under the Code or applicable state
law) or assert any claim against any present or former holder of such Notes
because of the payment of taxes levied or assessed upon such Trust, (iii)
dissolve or liquidate in whole or in part, (iv) permit the validity or
effectiveness of the related Indenture to be impaired or permit any person to be
released from any covenants or obligations with respect to such Notes under such
Indenture except as may be expressly permitted thereby or (v) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance to be
created on or extend to or otherwise arise upon or burden the assets of such
Trust or any part thereof, or any interest therein or the proceeds thereof.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust". No Trust will
incur, assume or guarantee any indebtedness other than indebtedness incurred
pursuant to the related Notes and the related Indenture, pursuant to any
Advances made to it by the Servicer or otherwise in accordance with the Related
Documents.
ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the Indenture, the
amount, interest rate and maturity date of certain indebtedness owing by such
Trust to the applicable Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be
discharged with respect to the collateral securing the related Notes upon the
delivery to the related Indenture Trustee for cancellation of all such Notes or,
with certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may resign
at any time, in which event the Issuer will be obligated to appoint a successor
trustee for such series. The Issuer may also remove any such Indenture Trustee
if such Indenture Trustee ceases to be eligible to continue as such under the
related Indenture or if such Indenture Trustee becomes insolvent. In such
circumstances, the Issuer will be obligated to appoint a successor trustee for
the applicable series of Notes. Any resignation or removal of the Indenture
Trustee and appointment of a successor trustee for any series of Notes does not
become effective until acceptance of the appointment by the successor trustee
for such series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of the
related series will be issued pursuant to the terms of a Trust Agreement or a
Pooling and Servicing Agreement, a form of each of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summary does not purport to be complete and is subject to, and is
qualified by reference to, all the provisions of the Certificates and the Trust
Agreement or Pooling and Servicing Agreement, as applicable.
Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a given series purchased by the
Depositor, each class of Certificates will initially be represented by one or
more Certificates registered in the name of the Depository, except as set forth
below. Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a given series purchased by the
Depositor, the Certificates will be available for purchase in minimum
denominations of $1,000 in book-entry form only. The Depositor has been informed
by DTC that DTC's nominee will be Cede, unless another nominee is specified in
the related Prospectus Supplement. Accordingly, such nominee is expected to be
the holder of record of the Certificates of any series that are not purchased by
the Depositor. Unless and until Definitive Certificates are issued under the
limited circumstances described herein or in the related Prospectus Supplement,
no Certificateholder (other than the Depositor) will be entitled to receive a
physical certificate representing a Certificate. All references herein and in
the related Prospectus Supplement to actions by Certificateholders refer to
actions taken by DTC upon instructions from the Participants and all references
herein and in the related Prospectus Supplement to distributions, notices,
reports and statements to Certificateholders refer to distributions, notices,
reports and statements to DTC or its nominee, as the case may be, as the
registered holder of the Certificates, for distribution to Certificateholders in
accordance with DTC's procedures with respect thereto. See "Certain Information
Regarding the Securities--Book-Entry Registration" and "--Definitive
Securities". Any Certificates of a given series owned by the Depositor will be
entitled to equal and proportionate benefits under the applicable Trust
Agreement or Pooling and Servicing Agreement, except that such Certificates will
be deemed not to be outstanding for the purpose of determining whether the
requisite percentage of Certificateholders have given any request, demand,
authorization, direction, notice, consent or other action under the Related
Documents.
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 of and interest on 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. With respect to any Trust that
issues both Notes and Certificates, the Distribution Date for the Certificates
may coincide with the Payment Date for the Notes, in which case such date will
be referred to in the related Prospectus Supplement as a Payment Date with
respect to both the Notes and the 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" herein.
Unless otherwise provided in the related Prospectus Supplement, distributions in
respect of the Certificates of a given series that includes Notes may be
subordinate to payments in respect of the Notes of such series as more fully
described in the related Prospectus Supplement. Distributions in respect of
interest on and principal of any class of Certificates will be made on a pro
rata basis among all the Certificateholders of such class.
In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment or
amount of distributions in respect of interest and principal, and any schedule
or formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable Interest Rate or Pass Through Rate per annum, as the case may be,
specified 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 of and Interest on the
Notes" and "Description of the Certificates--Distributions of Principal and
Interest".
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities, the
"INTEREST RESET PERIOD") at a rate per annum determined by reference to an
interest rate basis (the "BASE RATE"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "SPREAD" is the number of basis points (one
basis point equals one-hundredth of a percentage point) that may be specified in
the applicable Prospectus Supplement as being applicable to such class, and the
"SPREAD MULTIPLIER" is the percentage that may be specified in the applicable
Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate one of the
following Base Rates as applicable to a given Floating Rate Security: (i) LIBOR
(a "LIBOR SECURITY"), (ii) the Commercial Paper Rate (a "COMMERCIAL PAPER RATE
Security"), (iii) the Treasury Rate (a "TREASURY RATE SECURITY"), (iv) the
Federal Funds Rate (a "FEDERAL FUNDS RATE Security"), (v) the CD Rate (a "CD
RATE SECURITY") or (vi) such other Base Rate as is set forth in such Prospectus
Supplement. The "INDEX MATURITY" for any class of Floating Rate Securities is
the period of maturity of the instrument or obligation from which the Base Rate
is calculated.
"H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates", or any successor publication, published by
the Board of Governors of the Federal Reserve System. "COMPOSITE QUOTATIONS"
means the daily statistical release entitled "Composite 3:30 p.m. Quotations for
U.S. Government Securities" published by the Federal Reserve Bank of New York.
"INTEREST RESET DATE" will be the first day of the applicable Interest Reset
Period or such other day as may be specified in the related Prospectus
Supplement with respect to a class of Floating Rate Securities.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation agent
(each, a "CALCULATION AGENT") to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The applicable Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given series, which may be either the
related Trustee or Indenture Trustee with respect to such series. All
determinations of interest by the Calculation Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given class. Unless otherwise specified in the
applicable Prospectus Supplement, all percentages resulting from any calculation
of the rate of interest on a Floating Rate Security will be rounded, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward.
CD RATE SECURITIES. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the CD
Rate and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"CD RATE" for each Interest Reset Period shall be the rate as of the second
business day prior to the Interest Reset Date for such Interest Reset Period (a
"CD RATE DETERMINATION DATE") for negotiable certificates of deposit having the
Index Maturity designated in the applicable Prospectus Supplement as published
in H.15(519) under the heading "CDs (Secondary Market)". In the event that such
rate is not published prior to 3:00 p.m., New York time, on the Calculation Date
pertaining to such CD Rate Determination Date, then the "CD Rate" for such
Interest Reset Period will be the rate on such CD Rate Determination Date for
negotiable certificates of deposit of the Index Maturity designated in the
applicable Prospectus Supplement as published in Composite Quotations under the
heading "Certificates of Deposit". If by 3:00 p.m., New York 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 time, on
such CD Rate Determination Date, of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for such CD Rate Security for negotiable certificates of
deposit of major United States money center banks of the highest credit standing
(in the market for negotiable certificates of deposit) with a remaining maturity
closest to the Index Maturity designated in the related Prospectus Supplement in
a denomination of $5,000,000; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the "CD Rate" for such Interest Reset Period will be the same
as the CD Rate for the immediately preceding Interest Reset Period.
The "CALCULATION DATE" pertaining to any CD Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment is
required to be made for any period following the applicable Interest Reset Date.
COMMERCIAL PAPER RATE SECURITIES. Each Commercial Paper Rate Security
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any, specified in such Security and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"COMMERCIAL PAPER RATE" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Security as of the second
business day prior to the Interest Reset Date for such Interest Reset Period (a
"COMMERCIAL PAPER RATE DETERMINATION DATE") and shall be the Money Market Yield
on such Commercial Paper Rate Determination Date of the rate for commercial
paper having the Index Maturity specified in the applicable Prospectus
Supplement, as such rate shall be published in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not published prior to 3:00
p.m., New York time, on the Calculation Date pertaining to such Commercial Paper
Rate Determination Date, then the "Commercial Paper Rate" for such Interest
Reset Period shall be the Money Market Yield on such Commercial Paper Rate
Determination Date of the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper". If by 3:00 p.m., New York 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
time, on such Commercial Paper Rate Determination Date of three leading dealers
of commercial paper in The City of New York selected by the Calculation Agent
for such Commercial Paper Rate Security for commercial paper of the specified
Index Maturity placed for an industrial issuer whose bonds are rated "AA" or the
equivalent by a nationally recognized rating agency; provided, however, that if
the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "Commercial Paper Rate" for
such Interest Reset Period will be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = ---------- x 100
360 - (D x M)
where "D" refers to the applicable rate per annum 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 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 time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall
be the rate on such Federal Funds Rate Determination Date made publicly
available by the Federal Reserve Bank of New York which is equivalent to the
rate which appears in H.15(519) under the heading "Federal Funds (Effective)";
provided, however, that if such rate is not made publicly available by the
Federal Reserve Bank of New York by 3:00 p.m., New York 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.
LIBOR SECURITIES. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and in
the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
with respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Security as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR DETERMINATION DATE"), the
Calculation Agent for such LIBOR Security will determine the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period of
the Index Maturity specified in the applicable Prospectus Supplement,
commencing on such Interest Reset Date, which appear on either, as
specified in the related Prospectus Supplement, (a) the Reuters Screen
LIBO Page at approximately 11:00 a.m., London time, on such LIBOR
Determination Date, if at least two such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR REUTERS") or (b) the Telerate Page 3750
("LIBOR TELERATE"). For purposes of calculating LIBOR, "LONDON BANKING
DAY" means any business day on which dealings in deposits in United States
dollars are transacted in the London interbank market; "REUTERS SCREEN
LIBO PAGE" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank
offered rates of major banks); and "TELERATE PAGE 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as
may replace the 3750 page on that service or services as may be nominated
by the British Bankers' Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits). If LIBOR is LIBOR
Reuters and at least two such offered rates appear on the Reuters Screen
LIBO Page, "LIBOR" for such Interest Reset Period will be the arithmetic
mean of such offered rates as determined by the Calculation Agent for such
LIBOR Security. If neither LIBOR Reuters or LIBOR Telerate is specified in
the related Prospectus Supplement, LIBOR will be determined as if LIBOR
Telerate had been specified.
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO
Page, or if no rate appears on the Telerate Page 3750, as applicable, on
such LIBOR Determination Date, the Calculation Agent for such LIBOR
Security will request the principal London offices of each of four major
banks in the London interbank market selected by such Calculation Agent to
provide such Calculation Agent with its offered quotations for deposits in
U.S. dollars for the period of the specified Index Maturity, commencing on
such Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date
and in a principal amount equal to an amount of not less than $1,000,000
that, in the Calculation Agent's judgment, is representative of a single
transaction in such market at such time. If at least two such quotations
are provided, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of such quotations. If fewer than two such quotations are
provided, "LIBOR" for such Interest Reset Period will be the arithmetic
mean of rates quoted by three major banks in The City of New York selected
by the Calculation Agent for such LIBOR Security at approximately 11:00
a.m., New York time, on such LIBOR Determination Date for loans in U.S.
dollars to leading European banks, for the period of the specified Index
Maturity, commencing on such Interest Reset Date, and in a principal
amount equal to an amount of not less than $1,000,000 that, in the
Calculation Agent's judgment, is representative of a single transaction in
such market at such time; provided, however, that if the banks selected as
aforesaid by such Calculation Agent are not quoting rates as mentioned in
this sentence, "LIBOR" for such Interest Reset Period will be the same as
LIBOR for the immediately preceding Interest Reset Period.
TREASURY RATE SECURITIES. Each Treasury Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"TREASURY RATE" for each Interest Reset Period will be the rate for the auction
held on the Treasury Rate Determination Date for such Interest Reset Period of
direct obligations of the United States ("TREASURY BILLS") having the Index
Maturity specified in the applicable Prospectus Supplement, as such rate shall
be published in H.15(519) under the heading "U.S. Government
Securities--Treasury bills--auction average (investment)" or, in the event that
such rate is not published prior to 3:00 p.m., New York time, on the Calculation
Date pertaining to such Treasury Rate Determination Date, the auction average
rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury. In
the event that the results of the auction of Treasury bills having the specified
Index Maturity are not published or reported as provided above by 3:00 p.m., New
York 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 time, on such Treasury Rate Determination
Date, of three leading primary United States government securities dealers
selected by such Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the specified Index Maturity; provided, however,
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for
such Interest Reset Period will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period.
The "TREASURY RATE DETERMINATION DATE" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned. Treasury
bills are normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction date
shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Security, then such Interest Reset Date shall instead be the
business day immediately following such auction date.
The "CALCULATION DATE" pertaining to any Treasury Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Treasury Rate Determination Date or, if such a day is not a business day, the
next succeeding business day or (b) the second business day preceding the date
any payment is required to be made for any period following the applicable
Interest Reset Date.
BOOK-ENTRY REGISTRATION
Holders of the Certificates or the Notes may hold through DTC (in the
United States) or, solely in the case of the Notes, Cedel or Euroclear (in
Europe) if they are participants of such systems, or indirectly through
organizations that are participants in such systems. The Certificates may not be
held, directly or indirectly, through Cedel or Euroclear. Cede, as nominee for
DTC, will hold the Securities. Cedel and Euroclear will hold omnibus positions
in the Notes on behalf of the Cedel Participants and the Euroclear Participants,
respectively, through customers' securities accounts in Cedel's and Euroclear's
names on the books of their respective depositaries (collectively, the
"DEPOSITARIES"), which in turn will hold such positions in customers' securities
accounts in the Depositaries' names on the books of DTC.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the DTC system also is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("INDIRECT PARTICIPANTS").
Transfers between DTC's participating organizations (the
"PARTICIPANTS") will occur in accordance with DTC rules. Transfers between Cedel
Participants and Euroclear Participants will occur in the ordinary way in
accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
Unless otherwise specified in the related Prospectus Supplement,
Securityholders that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
Securities may do so only through Participants and Indirect Participants. In
addition, Securityholders will receive all distributions of principal and
interest from the related Indenture Trustee or the related Trustee, as
applicable (the "APPLICABLE Trustee"), through Participants. Under a book-entry
format, Securityholders may experience some delay in their receipt of payments,
since such payments will be forwarded by the Applicable Trustee to DTC's
nominee. DTC will forward such payments to its Participants, which thereafter
will forward them to Indirect Participants or Securityholders. Except to the
extent the Depositor holds Certificates with respect to any series of
Securities, it is anticipated that the only "Securityholder", "Noteholder" and
"Certificateholder" will be DTC's nominee. Noteholders will not be recognized by
each Indenture Trustee as Noteholders, as such term is used in each Indenture,
and Noteholders will be permitted to exercise the rights of Noteholders only
indirectly through DTC and its Participants. Similarly, Certificateholders will
not be recognized by each Trustee as Certificateholders as such term is used in
each Trust Agreement or Pooling and Servicing Agreement, and Certificateholders
will be permitted to exercise the rights of Certificateholders only indirectly
through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "RULES"), DTC is required to make book-entry transfers
of Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Securityholders. Accordingly, although
Securityholders will not possess Securities, the Rules provide a mechanism by
which Participants will receive payments and will be able to transfer their
interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise to act with respect to such
Securities, may be limited due to the lack of a physical certificate for such
Securities.
DTC has advised the Depositor that it will take any action permitted to
be taken by a Noteholder under the related Indenture or a Certificateholder
under the related Trust Agreement or Pooling and Servicing Agreement only at the
direction of one or more Participants to whose accounts with DTC the applicable
Notes or Certificates are credited. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.
Cedel Bank, societe anonyme ("CEDEL"), is incorporated under the laws
of Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("CEDEL PARTICIPANTS") and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriter(s) for the
related Notes. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("EUROCLEAR PARTICIPANTS") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in Euroclear
in any of 32 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing, and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "EUROCLEAR OPERATOR" or "EUROCLEAR"), under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation (the "COOPERATIVE").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriter(s)
for the related Notes. Indirect access to the Euroclear System is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "TERMS AND CONDITIONS"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Material Federal Income Tax Consequences" in the Prospectus and "Global
Clearance, Settlement and Tax Documentation Procedures" in Annex I to this
Prospectus. Cedel or the Euroclear Operator, as the case may be, will take any
other action permitted to be taken by a Noteholder under the Indenture on behalf
of a Cedel Participant or a Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to effect
such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
In the event that any of DTC, Cedel or Euroclear should discontinue its
services, the Administrator, if any, or the Applicable Trustee would seek an
alternative depository (if available) or cause the issuance of Definitive
Securities to the owners thereof or their nominees in the manner described under
"Definitive Securities" below.
Except as required by law, neither the Administrator, if any, nor the
applicable Trustee will have any liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of the
Securities of any series held by DTC's nominee, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
DEFINITIVE SECURITIES
If so specified in the related Prospectus Supplement, the Notes, if
any, and the Certificates of a series will be issued in fully registered,
certificated form ("DEFINITIVE NOTES" and "DEFINITIVE CERTIFICATES",
respectively, and collectively referred to herein as "DEFINITIVE SECURITIES") to
Noteholders or Certificateholders or their respective nominees, rather than to
DTC or its nominee, only if (i) the related Applicable Trustee determines that
DTC is no longer willing or able to discharge properly its responsibilities as
depository with respect to such Securities and such Applicable Trustee is unable
to locate a qualified successor, (ii) the Applicable Trustee, at its option,
elects to terminate the book-entry system through DTC or (iii) after the
occurrence of an Event of Default or a Servicer Default with respect to such
Securities, holders representing at least a majority of the outstanding
principal amount of the Notes or the Certificates, as the case may be, of such
series advise the Applicable Trustee through DTC in writing that the
continuation of a book-entry system through DTC (or a successor thereto) with
respect to such Notes or Certificates is no longer in the best interest of the
holders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Securityholders of a given series through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing the corresponding Securities and receipt of instructions for
re-registration, the Applicable Trustee will reissue such Securities as
Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, such Definitive
Securities will thereafter be made by the Applicable Trustee in accordance with
the procedures set forth in the related Indenture or the related Trust Agreement
or Pooling and Servicing Agreement, as applicable, directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be made
by check mailed to the address of such holder as it appears on the register
maintained by the Applicable Trustee. The final payment on any such Definitive
Security, however, will be made only upon presentation and surrender of such
Definitive Security at the office or agency specified in the notice of final
distribution to the applicable Securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the Applicable Trustee or of a registrar named in a notice delivered
to holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the Applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
LIST OF SECURITYHOLDERS
Unless otherwise specified in the related Prospectus Supplement with
respect to the Notes of any series, three or more holders of the Notes of such
series or one or more holders of such Notes evidencing not less than 25% of the
aggregate outstanding principal balance of such Notes may, by written request to
the related Indenture Trustee, obtain access to the list of all Noteholders
maintained by such Indenture Trustee for the purpose of communicating with other
Noteholders with respect to their rights under the related Indenture or under
such Notes. Such Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of Noteholders if it agrees to mail the desired
communication or proxy, on behalf of and at the expense of the requesting
Noteholders, to all Noteholders of such series.
Unless otherwise specified in the related Prospectus Supplement with
respect to the Certificates of any series, three or more holders of the
Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the related Trustee, obtain access to the list of all
Certificateholders maintained by such Trustee for the purpose of communicating
with other Certificateholders with respect to their rights under the related
Trust Agreement or Pooling and Servicing Agreement or under such Certificates.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that includes Notes, on or
prior to each Payment Date, the Servicer will prepare and provide to the related
Indenture Trustee a statement to be delivered to the related Noteholders on such
Payment Date. With respect to each series of Securities, on or prior to each
Distribution Date, the Servicer will prepare and provide to the related Trustee
a statement to be delivered to the related Certificateholders. With respect to
each series of Securities, each such statement to be delivered to Noteholders
will include (to the extent applicable) the following information (and any other
information so specified in the related Prospectus Supplement) as to the Notes
of such series with respect to such Payment Date or the period since the
previous Payment Date, as applicable, and each such statement to be delivered to
Certificateholders will include (to the extent applicable) the following
information (and any other information so specified in the related Prospectus
Supplement) as to the Certificates of such series with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to principal of each
class of such Notes and to the Certificate Balance of each class of such
Certificates;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities of such series;
(iii) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(iv) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, each after
giving effect to all payments reported under clause (i) above on such
date;
(v) the amount of the Servicing Fee paid to the Servicer with respect
to the related Collection Period or Collection Periods, as the case may
be;
(vi) the Interest Rate or Pass Through Rate for the next period for
any class of Notes or Certificates of such series with variable or
adjustable rates;
(vii) the amount of the aggregate realized losses, if any, for the
second preceding Collection Period;
(viii) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall (each
as defined in the related Prospectus Supplement), if any, in each case as
applicable to each class of Securities, and the change in such amounts
from the preceding statement;
(ix) the aggregate Purchase Amounts for Receivables, if any, that were
repurchased or substituted for in such Collection Period;
(x) the balance of the Reserve Account (if any) on such date, after
giving effect to changes therein on such date;
(xi) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following the
end of the Funding Period (if any), the amount of any remaining Pre-Funded
Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii)
with respect to the Notes or the Certificates of any series will be expressed as
a dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year has
been a Securityholder with respect to such Trust and received any payment
thereon a statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Material
Federal Income Tax Consequences".
In addition, the filing with the Commission of periodic reports with
respect to each Trust will cease following completion of the reporting period
for such Trust required by Rule 15d-1 of Regulation D under the Exchange Act.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement pursuant to which a Trust
will purchase Receivables from the Depositor and the Servicer will agree to
service such Receivables, each Trust Agreement (in the case of a grantor trust,
the Pooling and Servicing Agreement) pursuant to which a Trust will be created
and Certificates will be issued and each Administration Agreement pursuant to
which the Servicer (or such other person named in the related Prospectus
Supplement) will undertake certain administrative duties with respect to a Trust
that issues Notes (collectively, the "TRANSFER AND SERVICING AGREEMENTS"). Forms
of the Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part. This summary does
not purport to be complete and is subject to, and qualified by reference to, all
the provisions of the Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On or prior to the closing date (the "CLOSING DATE") specified in the
Prospectus Supplement for a Trust, the Seller(s) specified in such Prospectus
Supplement will transfer and assign, without recourse, to the Depositor their
respective entire interests in the related Initial Receivables and their
security interests in the related Financed Vehicles pursuant to a receivables
purchase agreement (a "RECEIVABLES PURCHASE AGREEMENT"). On or prior to such
Closing Date, the Depositor will transfer and assign to the Applicable Trustee,
without recourse, pursuant to a Sale and Servicing Agreement or a Pooling and
Servicing Agreement, as applicable, its entire interest in such Initial
Receivables, including its security interests in the related Financed Vehicles.
Each such Receivable will be identified in a schedule appearing as an exhibit to
such Pooling and Servicing Agreement or Sale and Servicing Agreement (a
"SCHEDULE OF RECEIVABLES"). The Applicable Trustee will, concurrently with such
transfer and assignment, execute and deliver the related Notes and/or
Certificates. The Applicable Trustee will not verify the existence of the
Receivables or review the Receivables files. Unless otherwise provided in the
related Prospectus Supplement, the net proceeds received from the sale of the
Certificates and the Notes of a given series will be applied to the purchase of
the related Receivables from the Seller(s) and, to the extent specified in the
related Prospectus Supplement, to the deposit of the Pre-Funded Amount into the
Pre-Funding Account. The related Prospectus Supplement for a given Trust will
specify whether, and the terms, conditions and manner under which, Subsequent
Receivables will be sold by the Seller(s) to the Depositor and by the Depositor
to the applicable Trust from time to time during any Funding Period on each date
specified as a transfer date in the related Prospectus Supplement (each, a
"SUBSEQUENT TRANSFER DATE").
In each Receivables Purchase Agreement the related Seller will
represent and warrant to the Depositor and, in each Sale and Servicing Agreement
or Pooling and Servicing Agreement, the Depositor will represent and warrant to
the applicable Trust, among other things, that: (i) the information provided in
the related Schedule of Receivables is correct in all material respects; (ii)
the Obligor on each related Receivable is required to maintain physical damage
insurance covering the Financed Vehicle in accordance with the Seller(s)' normal
requirements; (iii) as of the applicable Closing Date or the applicable
Subsequent Transfer Date, if any, to the best of its knowledge, the related
Receivables are free and clear of all security interests, liens, charges and
encumbrances and no offsets, defenses or counterclaims have been asserted or
threatened; (iv) as of the Closing Date or the applicable Subsequent Transfer
Date, if any, each of such Receivables is or will be secured by a first
perfected security interest in favor of the Seller in the related Financed
Vehicle; (v) each related Receivable, at the time it was originated, complied
and, as of the Closing Date or the applicable Subsequent Transfer Date, if any,
complies in all material respects with applicable federal and state laws,
including, without limitation, consumer credit, truth in lending, equal credit
opportunity and disclosure laws; and (vi) any other representations and
warranties that may be set forth in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, as of
the last day of the second (or, if the Seller(s) elects, the first) month
following the discovery by or notice to the Seller(s) of a breach of any
representation or warranty of the Seller(s) that materially and adversely
affects the interests of the related Trust in any Receivable, the Depositor,
unless the breach is cured, will repurchase such Receivable from such Trust and
the related Seller will be obligated to simultaneously repurchase such
Receivable from the Depositor at a price equal to the unpaid principal balance
owed by the Obligor thereon plus interest thereon at the respective APR to the
last day of the month of repurchase (the "PURCHASE AMOUNT"). Alternatively, if
so specified in the related Prospectus Supplement, the related Seller or the
Depositor will be permitted, in a circumstance where it would otherwise be
required to repurchase a Receivable as described in the preceding sentence, to
instead substitute a comparable Receivable for the Receivable otherwise
requiring repurchase, subject to certain conditions and eligibility criteria for
the substitute Receivable to be summarized in the related Prospectus Supplement.
The repurchase obligation (or, if applicable, the substitution alternative with
respect thereto) constitutes the sole remedy available to the Certificateholders
or the Trustee and any Noteholders or Indenture Trustee in respect of such Trust
for any such uncured breach. The Depositor's obligation to make such purchase or
substitution is contingent upon the related Seller performing its corresponding
obligation to purchase (or, if applicable, substitute for) such Receivable from
the Depositor.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, to assure uniform quality in servicing the Receivables and to reduce
administrative costs, each Trust will designate the Servicer as custodian to
maintain possession, as such Trust's agent, of the related retail installment
sale contracts, retail installment loans, purchase money notes or other notes
and any other documents relating to the Receivables. The Depositor and the
Seller(s)' accounting records and computer systems will reflect the sale and
assignment of the related Receivables to the applicable Trust and Uniform
Commercial Code ("UCC") financing statements reflecting such sales and
assignments will be filed. The Receivables will not be segregated, stamped or
otherwise marked to indicate that they have been sold to the related Trust. If
through inadvertence or otherwise, another party purchases (or takes a security
interest in) the Receivables for new value in the ordinary course of business
and takes possession of the Receivables without actual knowledge of the related
Trust's interest, the purchaser (or secured party) will acquire an interest in
the Receivables superior to the interest of the related Trust.
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will
establish and maintain with the related Indenture Trustee one or more accounts,
in the name of the Indenture Trustee on behalf of the related Noteholders and
Certificateholders, into which all payments made on or with respect to the
related Receivables will be deposited (the "COLLECTION ACCOUNT"). The Servicer
will establish and maintain with such Indenture Trustee an account, in the name
of such Indenture Trustee on behalf of such Noteholders, into which amounts
released from the Collection Account and any Pre-Funding Account, Reserve
Account or other credit or cash flow 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
the related Certificateholders, into which amounts released from the Collection
Account and any Pre-Funding Account, Reserve Account or other credit or cash
flow enhancement for distribution to such Certificateholders will be deposited
and from which all distributions to such Certificateholders will be made (the
"CERTIFICATE DISTRIBUTION ACCOUNT"). With respect to each Trust that does not
issue Notes, the Servicer will also establish and maintain the Collection
Account and any other Trust Account in the name of the related Trustee on behalf
of the related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish for each series an additional account (the "PAYAHEAD ACCOUNT"), in the
name of the related Indenture Trustee, into which, to the extent required by the
Sale and Servicing Agreement, early payments by or on behalf of Obligors with
respect to Precomputed Receivables will be deposited until such time as the
payment becomes due. Until such time as payments are transferred from the
Payahead Account to the Collection Account, they will not constitute collected
interest or collected principal and will not be available for distribution to
the applicable Noteholders or Certificateholders. The Payahead Account will
initially be maintained with the applicable Indenture Trustee or, in the case of
each Trust that does not issue Notes, the applicable Trustee.
Any other accounts to be established with respect to a Trust, including
any Pre-Funding Account or any Reserve Account, will be described in the related
Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the Note
Distribution Account and any Pre-Funding Account, Reserve Account and other
accounts identified as such in the related Prospectus Supplement (collectively,
the "TRUST ACCOUNTS") will be invested as provided in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement in Eligible Investments.
"ELIGIBLE INVESTMENTS" are generally limited to investments acceptable to the
Rating Agencies rating such Securities as being consistent with the rating of
such Securities and may include motor vehicle, recreational vehicle retail sale
contracts or retail installment loans. Except as described below or in the
related Prospectus Supplement, Eligible Investments are limited to obligations
or securities that mature on or before the date of the next distribution for
such series. However, to the extent permitted by the Rating Agencies, funds in
any Reserve Account may be invested in securities that will not mature prior to
the date of the next distribution with respect to such Certificates or Notes and
will not be sold to meet any shortfalls. Thus, the amount of cash in any Reserve
Account at any time may be less than the balance of the Reserve Account. If the
amount required to be withdrawn from any Reserve Account to cover shortfalls in
collections on the related Receivables (as provided in the related Prospectus
Supplement) exceeds the amount of cash in the Reserve Account, a temporary
shortfall in the amounts distributed to the related Noteholders or
Certificateholders could result, which could, in turn, increase the average life
of the Notes or the Certificates of such series. Investment earnings on funds
deposited in the Trust Accounts, net of losses and investment expenses
(collectively, "INVESTMENT EARNINGS"), shall be allocated in the manner
described in the related Prospectus Supplement.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"ELIGIBLE INSTITUTION" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) which has either (A) a
long-term unsecured debt rating acceptable to the Rating Agencies or (B) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies and (ii) whose deposits are insured by the FDIC.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, follow
such collection procedures as it follows with respect to motor vehicle and/or
recreational vehicle retail installment sale contracts, installment loans,
purchase money notes or other notes that it services for itself or others and
that are comparable to such Receivables. Consistent with its normal procedures,
the Servicer may, in its discretion, arrange with the Obligor on a Receivable to
extend or modify the payment schedule, but no such arrangement will, for
purposes of any Sale and Servicing Agreement or Pooling and Servicing Agreement,
modify the original due dates or the amount of the scheduled payments or extend
the final payment date of any Receivable beyond the Final Scheduled Maturity
Date (as such term is defined with respect to any Receivables Pool in the
related Prospectus Supplement). Some of such arrangements may result in the
Servicer purchasing the Receivable for the Purchase Amount, while others may
result in the Servicer making Advances. The Servicer may sell the Financed
Vehicle securing the related Receivable at public or private sale or take any
other action permitted by applicable law. See "Certain Legal Aspects of the
Receivables".
The Servicer may from time to time perform any portion of its servicing
obligations under the applicable Sale and Servicing Agreement or Pooling and
Servicing Agreement through subservicing agreements with third party
subservicers approved by the Rating Agencies. Each Sale and Servicing Agreement
or Pooling and Servicing Agreement, as applicable, will provide that, not
withstanding the use of subservicers, the Servicer will remain liable for its
servicing duties and obligations as if the Servicer serviced the Receivables
directly.
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "COLLECTION PERIOD ") into the related Collection
Account within two business days after receipt thereof. However, at any time
that and for so long as (i) the Servicer (or its successor) is the Servicer,
(ii) there exists no Servicer Default and (iii) each other condition to making
deposits less frequently than daily as may be specified by the Rating Agencies
or set forth in the related Prospectus Supplement is satisfied, the Servicer
will not be required to deposit such amounts into the Collection Account until
on or before the applicable Distribution Date or Payment Date. Pending deposit
into the Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own funds.
If the Servicer were unable to remit such funds, Securityholders might incur a
loss. To the extent set forth in the related Prospectus Supplement, the Servicer
may, in order to satisfy the requirements described above, obtain a letter of
credit or other security for the benefit of the related Trust to secure timely
remittances of collections on the related Receivables and payment of the
aggregate Purchase Amount with respect to Receivables purchased by the Servicer.
Collections on a Precomputed Receivable made during a Collection Period
shall be applied first to repay any outstanding Precomputed Advances made by the
Servicer with respect to such Receivable (as described below), and to the extent
that collections on a Precomputed Receivable during a Collection Period exceed
the outstanding Precomputed Advances, the collections shall then be applied to
the scheduled payment on such Receivable. If any collections remaining after the
scheduled payment is made are insufficient to prepay the Precomputed Receivable
in full, then, generally such remaining collections (the "PAYAHEADS") shall be
transferred to and kept in the Payahead Account, until such later Collection
Period when the collections may be transferred to the Collection Account and
applied either to the scheduled payment or to prepay such Receivable in full.
ADVANCES
Precomputed Receivables. If so provided in the related Prospectus
Supplement, to the extent the collections of interest on and principal of a
Precomputed Receivable with respect to a Collection Period fall short of the
respective scheduled payment, the Servicer will make a Precomputed Advance in
the amount of the shortfall. The Servicer will be obligated to make a
Precomputed Advance on a Precomputed Receivable only to the extent that the
Servicer, in its sole discretion, expects to recoup such advance from subsequent
collections or recoveries on such Receivable or other Precomputed Receivables in
the related Receivables Pool. The Servicer will deposit the Precomputed Advance
in the applicable Collection Account on or before the business day preceding the
applicable Distribution Date or Payment Date. The Servicer will recoup its
Precomputed Advance from subsequent payments by or on behalf of the related
Obligor or from insurance or liquidation proceeds with respect to the Receivable
and will release its right to reimbursement in conjunction with its purchase of
the Receivable as Servicer, or, upon the determination that reimbursement from
the preceding sources is unlikely, will recoup its Precomputed Advance from any
collections made on other Precomputed Receivables in the related Receivables
Pool or from any other source of funds identified in the related Prospectus
Supplement.
Simple Interest Receivables. If so provided in the related Prospectus
Supplement, on or before the business day prior to each applicable Distribution
Date or Payment Date, the Servicer shall deposit into the related Collection
Account as a Simple Interest Advance an amount equal to the amount of interest
that would have been due on the related Simple Interest Receivables at their
respective APRs for the related Collection Period (assuming that such Simple
Interest Receivables are paid on their respective due dates) minus the amount of
interest actually received on such Simple Interest Receivables during the
related Collection Period. If such calculation results in a negative number, an
amount equal to such amount shall be paid to the Servicer in reimbursement of
outstanding Simple Interest Advances. In addition, in the event that a Simple
Interest Receivable becomes a Defaulted Receivable (as such term is defined in
the related Prospectus Supplement), the amount of accrued and unpaid interest
thereon (but not including interest for the then current Collection Period)
shall be withdrawn from the Collection Account and paid to the Servicer in
reimbursement of outstanding Simple Interest Advances. No advances of principal
will be made with respect to Simple Interest Receivables. As used herein,
"ADVANCES" means both Precomputed Advances and Simple Interest Advances.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the Prospectus Supplement with respect to
any Trust, the Servicer will be entitled to receive a servicing fee (the
"SERVICING FEE") for each Collection Period in an amount equal to a specified
percentage per annum (as set forth in the related Prospectus Supplement, the
"SERVICING FEE RATE") of the Pool Balance as of the first day of the related
Collection Period. The Servicing Fee (together with any portion of the Servicing
Fee that remains unpaid from prior Distribution Dates or Payment Dates) will be
paid out of the available funds for the related collection Period prior to any
distribution(s) on the related Payment Date or Distribution Date to the
Noteholders or the Certificateholders of the related series.
With respect to any Trust, the Servicer will generally collect and
retain any late fees, prepayment charges and other administrative fees or
similar charges allowed by applicable law with respect to the related
Receivables and will be entitled to reimbursement from such Trust for certain
liabilities. Payments by or on behalf of Obligors will be allocated to scheduled
payments and late fees and other charges in accordance with the Servicer's
normal practices and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of motor vehicle and/or recreational vehicle
as an agent for their beneficial owner, including collecting and posting all
payments, responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, paying costs of collections and disposition of defaults and policing
the collateral. The Servicing Fee also will compensate the Servicer for
administering the related Receivables Pool, including making Advances,
accounting for collections and furnishing monthly and annual statements to the
related Trustee and Indenture Trustee with respect to distributions and
generating federal income tax information for such Trust and for the related
Noteholders and Certificateholders. The Servicing Fee also will reimburse the
Servicer for certain taxes, the fees of the related Trustee and Indenture
Trustee, if any, accounting fees, outside auditor fees, data processing costs
and other costs incurred in connection with administering the related
Receivables Pool.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment
Date or Distribution Date, as applicable, specified in the related Prospectus
Supplement, distributions of principal of and interest (or, where applicable, of
principal of or interest only) on each class of such Securities entitled thereto
will be made by the Applicable Trustee to the Noteholders and the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments to each class of
Noteholders and all distributions to each class of Certificateholders of such
series will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Payment Date and Distribution Date,
as applicable, collections on the related Receivables will be transferred from
the Collection Account to the Note Distribution Account, if any, and the
Certificate Distribution Account for distribution to Noteholders, if any, and
Certificateholders to the extent provided in the related Prospectus Supplement.
Credit enhancement, such as a Reserve Account, will be available to cover any
shortfalls in the amount available for distribution on such date to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a class of Securities of a given series
will be subordinate to distributions in respect of interest on such class, and
distributions in respect of one or more classes of Certificates of such series
may be subordinate to payments in respect of Notes, if any, of such series or
other classes of Certificates of such series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Securities of a given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in the related Prospectus
Supplement, credit and cash flow enhancement may be in the form of subordination
of one or more classes of Securities, Reserve Accounts, over-collateralization,
letters of credit, credit or liquidity facilities, surety bonds, guaranteed
investment contracts, swaps or other interest rate protection agreements,
repurchase obligations, yield supplement agreements, other agreements with
respect to third party payments or other support, cash deposits or such other
arrangements as may be described in the related Prospectus Supplement or any
combination of two or more of the foregoing. If specified in the applicable
Prospectus Supplement, credit or cash flow enhancement for a class of Securities
may cover one or more other classes of Securities of the same series, and credit
or cash flow enhancement for a series of Securities may cover one or more other
series of Securities.
The presence of a Reserve Account and other forms of credit enhancement
for the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of such class or series of the full
amount of principal and interest due thereon and to decrease the likelihood that
such Securityholders will experience losses. The credit enhancement for a class
or series of Securities may not provide protection against all risks of loss and
may not guarantee repayment of the entire principal balance and interest
thereon; any such limitations will be described in the related Prospectus
Supplement. If losses occur which exceed the amount covered by any credit
enhancement or which are not covered by any credit enhancement, Securityholders
of any class or series will bear their allocable share of deficiencies, as
described in the related Prospectus Supplement. In addition, if a form of credit
enhancement covers more than one series of Securities, Securityholders of any
such series will be subject to the risk that such credit enhancement will be
exhausted by the claims of Securityholders of other series.
RESERVE ACCOUNT. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Depositor will establish for a series or class of Securities an
account, as specified in the related Prospectus Supplement (the "RESERVE
ACCOUNT"), which will be maintained with the related Trustee or Indenture
Trustee, as applicable. The Reserve Account will be funded by an initial deposit
by the Depositor or such other person specified in the related Prospectus
Supplement on the Closing Date in the amount set forth in the related Prospectus
Supplement and, if the related series has a Funding Period, will also be funded
on each Subsequent Transfer Date to the extent described in the related
Prospectus Supplement. As further described in the related Prospectus
Supplement, the amount on deposit in the Reserve Account will be increased on
each Distribution Date or Payment Date thereafter up to the Specified Reserve
Account Balance (as defined in the related Prospectus Supplement) by the deposit
therein of the amount of collections on the related Receivables remaining on
each such Distribution Date or Payment Date after the payment of all other
required payments and distributions on such date. The related Prospectus
Supplement will describe the circumstances and manner under which distributions
may be made out of the Reserve Account, either to holders of the Securities
covered thereby, to the Depositor or such other person specified in the related
Prospectus Supplement.
NET DEPOSITS
As an administrative convenience, unless the Servicer is required to
remit collections daily (see "--Collections" above), the Servicer will be
permitted to make the deposit of collections, aggregate Advances and Purchase
Amounts for any Trust for or with respect to the related Collection Period net
of distributions to be made to the Servicer for such Trust with respect to such
Collection Period. The Servicer may cause to be made a single net transfer from
the Collection Account to the related Payahead Account, if any, or vice versa.
The Servicer, however, will account to the Trustee, any Indenture Trustee, the
Noteholders, if any, and the Certificateholders with respect to each Trust as if
all deposits, distributions and transfers were made individually. With respect
to any Trust that issues both Certificates and Notes, if the related Payment
Dates do not coincide with the 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 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" herein.
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 annually
to the related Trust and the Applicable Trustee or Trustee statement as to
compliance by the Servicer during the preceding twelve months (or, in the case
of the first such certificate, from the applicable Closing Date) with certain
standards relating to the servicing of the applicable Receivables, the
Servicer's accounting records and computer files with respect thereto and
certain other matters.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will also provide for delivery to the related Trust and the Applicable Trustee,
substantially simultaneously with the delivery of such accountants' statement
referred to above, of a certificate signed by an officer of the Servicer stating
that the Servicer has fulfilled its obligations under the Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, throughout the
preceding twelve months (or, in the case of the first such certificate, from the
Closing Date) or, if there has been a default in the fulfillment of any such
obligation, describing each such default. The Servicer has agreed to give each
Applicable Trustee notice of certain Servicer Defaults under the related Sale
and Servicing Agreement or Pooling and Servicing Agreement, as applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Servicer may not resign from its obligations and duties as
Servicer thereunder, except upon determination that the Servicer's performance
of such duties is no longer permissible under applicable law. No such
resignation will become effective until the Applicable Trustee or a successor
servicer has assumed the Servicer's servicing obligations and duties under such
Sale and Servicing Agreement or Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will further provide that neither the Servicer nor any of its directors,
officers, employees and agents will be under any liability to the related Trust
or the related Noteholders or Certificateholders for taking any action or for
refraining from taking any action pursuant to such Sale and Servicing Agreement
or Pooling and Servicing Agreement or for errors in judgment; except that
neither the Servicer nor any such person will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of the Servicer's duties thereunder or by reason
of reckless disregard of its obligations and duties thereunder. In addition,
each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that the Servicer is under no obligation to appear in, prosecute or
defend any legal action that is not incidental to the Servicer's servicing
responsibilities under such Sale and Servicing Agreement or Pooling and
Servicing Agreement and that, in its opinion, may cause it to incur any expense
or liability.
Under the circumstances specified in each Sale and Servicing Agreement
and Pooling and Servicing Agreement, any entity into which the Servicer may be
merged or consolidated, or any entity resulting from any merger or consolidation
to which the Servicer is a party, or any entity succeeding to the business of
the Servicer, which corporation or other entity in each of the foregoing cases
assumes the obligations of the Servicer, will be the successor of the Servicer
under such Sale and Servicing Agreement or Pooling and Servicing Agreement.
SERVICER DEFAULT
"SERVICER DEFAULT" under each Sale and Servicing Agreement and Pooling
and Servicing Agreement will consist of (i) any failure by the Servicer to
deliver to the Applicable Trustee for deposit in any of the Trust Accounts or
the Certificate Distribution Account any required payment or to direct the
Applicable Trustee to make any required distributions therefrom, which failure
continues unremedied for three business days after written notice from the
Applicable Trustee is received by the Servicer or after discovery of such
failure by the Servicer; (ii) any failure by the Servicer duly to observe or
perform in any material respect any other covenant or agreement in such Sale and
Servicing Agreement or Pooling and Servicing Agreement, which failure materially
and adversely affects the rights of the Noteholders or the Certificateholders of
the related series and which continues unremedied for 60 days after the giving
of written notice of such failure (A) to the Servicer or the Depositor, as the
case may be, by the Applicable Trustee or (B) to the Servicer and to the
Applicable Trustee by holders of Notes or Certificates of such series, as
applicable, evidencing not less than 25% in principal amount of such outstanding
Notes or of such Certificate Balance; and (iii) the occurrence of an Insolvency
Event with respect to the Servicer. "INSOLVENCY EVENT" means, with respect to
any Person, any of the following events or actions: certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings with respect to such person and certain actions by such
person indicating its insolvency, reorganization pursuant to bankruptcy
proceedings or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
In the case of any Trust that has issued Notes, as long as a Servicer
Default under a Sale and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related series evidencing not less
than 25% of the principal amount of such Notes then outstanding may terminate
all the rights and obligations of the Servicer under such Sale and Servicing
Agreement, whereupon such Indenture Trustee or a successor servicer appointed by
such Indenture Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Sale and Servicing Agreement and will be
entitled to similar compensation arrangements. In the case of any Trust that has
not issued Notes, as long as a Servicer Default under the related Pooling and
Servicing Agreement remains unremedied, the related Trustee or holders of
Certificates of the related series evidencing not less than 25% of the principal
amount of such Certificates then outstanding may terminate all the rights and
obligations of the Servicer under such Pooling and Servicing Agreement,
whereupon such Trustee or a successor servicer appointed by such Trustee will
succeed to all the responsibilities, duties and liabilities of the Servicer
under such Pooling and Servicing Agreement and will be entitled to similar
compensation arrangements. If, however, a bankruptcy trustee or similar official
has been appointed for the Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
such Indenture Trustee, such Noteholders, such Trustee or such
Certificateholders from effecting a transfer of servicing. In the event that
such Indenture Trustee or Trustee is unwilling or unable to so act, it may
appoint, or petition a court of competent jurisdiction for the appointment of, a
successor with a net worth of at least $100,000,000 and whose regular business
includes the servicing of motor vehicle receivables. Such Indenture Trustee or
Trustee may make such arrangements for compensation to be paid, which in no
event may be greater than the servicing compensation to the Servicer under such
Sale and Servicing Agreement or Pooling and Servicing Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, the holders of Notes evidencing
at least a majority in principal amount of the then outstanding Notes of the
related series (or the holders of the Certificates of such series evidencing not
less than a majority of the outstanding Certificate Balance, in the case of any
Servicer Default which does not adversely affect the related Indenture Trustee
or such Noteholders) may, on behalf of all such Noteholders and
Certificateholders, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement and its consequences,
except a Servicer Default in making any required deposits to or payments from
any of the Trust Accounts or to the Certificate Distribution Account in
accordance with such Sale and Servicing Agreement. With respect to each Trust
that has not issued Notes, holders of Certificates of such series evidencing not
less than a majority of the principal amount of such Certificates then
outstanding may, on behalf of all such Certificateholders, waive any default by
the Servicer in the performance of its obligations under the related Pooling and
Servicing Agreement, except a Servicer Default in making any required deposits
to or payments from the Certificate Distribution Account or the related Trust
Accounts in accordance with such Pooling and Servicing Agreement. No such waiver
will impair such Noteholders' or Certificateholders' rights with respect to
subsequent defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each of
the Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such Transfer and Servicing Agreements or of modifying in
any manner the rights of such Noteholders or Certificateholders; provided that
such action will not, in the opinion of counsel satisfactory to the related
Trustee or Indenture Trustee, as applicable, materially and adversely affect the
interest of any such Noteholder or Certificateholder. Unless otherwise specified
in the related Prospectus Supplement, the Transfer and Servicing Agreements may
also be amended by the Depositor, the Servicer, the related Trustee and any
related Indenture Trustee with the consent of the holders of Notes evidencing at
least a majority in principal amount of then outstanding Notes, if any, of the
related series and the holders of the Certificates of such series evidencing at
least a majority of the principal amount of such Certificates then outstanding,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of such Transfer and Servicing Agreements or
of modifying in any manner the rights of such Noteholders or Certificateholders;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the related Receivables or distributions that are required to be
made for the benefit of such Noteholders or Certificateholders or (ii) reduce
the aforesaid percentage of the Notes or Certificates of such series which are
required to consent to any such amendment, without the consent of the holders of
all the outstanding Notes or Certificates, as the case may be, of such series.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
the related Trust without the unanimous prior approval of all Certificateholders
(including the Depositor) of such Trust and the delivery to such Trustee by each
such Certificateholder (including the Depositor) of a certificate certifying
that such Certificateholder reasonably believes that such Trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and
the satisfaction and discharge of the related Indenture, the related Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the
Depositor, the related Trustee and the related Indenture Trustee, if any,
pursuant to the Transfer and Servicing Agreements will terminate upon the
earlier of (i) the maturity or other liquidation of the last related Receivable
and the disposition of any amounts received upon liquidation of any such
remaining Receivables, (ii) the payment to Noteholders, if any, and
Certificateholders of the related series of all amounts required to be paid to
them pursuant to the Transfer and Servicing Agreements and (iii) the occurrence
of either event described below.
In order to avoid excessive administrative expense, the Servicer will
be permitted at its option to purchase from each Trust, as of the end of any
applicable Collection Period, if the then outstanding Pool Balance with respect
to the Receivables held by such Trust is 10% (or such other percentage not lower
than 5% as is specified in the related Prospectus Supplement) or less of the
Initial Pool Balance (as defined in the related Prospectus Supplement, the
"INITIAL POOL Balance"), all remaining related Receivables at a price equal to
the aggregate of the Purchase Amounts thereof as of the end of such Collection
Period.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the Applicable Trustee will, within ten days following a
Distribution Date or Payment Date as of which the Pool Balance is equal to or
less than the percentage of the Initial Pool Balance specified in the related
Prospectus Supplement, solicit bids for the purchase of the Receivables
remaining in such Trust, in the manner and subject to the terms and conditions
set forth in such Prospectus Supplement. If the Applicable Trustee receives
satisfactory bids as described in such Prospectus Supplement, then the
Receivables remaining in such Trust will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above, and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
If so specified in the related Prospectus Supplement, the person named
as such in the related Prospectus Supplement (the "ADMINISTRATOR"), will enter
into an agreement (as amended and supplemented from time to time, an
"ADMINISTRATION AGREEMENT") with each Trust that issues Notes and the related
Indenture Trustee pursuant to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the notices and to perform
other administrative obligations required by the related Indenture. Unless
otherwise specified in the related Prospectus Supplement with respect to any
such Trust, as compensation for the performance of the Administrator's
obligations under the applicable Administration Agreement and as reimbursement
for its expenses related thereto, the Administrator will be entitled to a
monthly administration fee in such an amount as may be set forth in the related
Prospectus Supplement (the "ADMINISTRATION FEE").
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The Receivables will be treated by each Trust as "chattel paper" as
defined in the UCC. Pursuant to the UCC, the sale of chattel paper is treated in
a manner similar to a security interest in chattel paper. In order to protect
each Trust's ownership or security interest in its Receivables, the Depositor
will file UCC-1 financing statements with the appropriate authorities in the
States of New York, Delaware and any other states deemed advisable by the
Depositor to give notice of such Trust's and any related Indenture Trustee's
ownership of and security interest in the Receivables and their proceeds. Under
each Sale and Servicing Agreement and Pooling and Servicing Agreement, the
Servicer will be obligated to maintain the perfection of each Trust's and any
related Indenture Trustee's interest in the Receivables. It should be noted,
however, that a purchaser of chattel paper who gives new value and takes
possession of it in the ordinary course of such purchaser's business has
priority over a security interest, including an ownership interest, in the
chattel paper that is perfected by filing UCC-1 financing statements, and not by
possession of such chattel paper by the original secured party, if such
purchaser acts in good faith without knowledge that the related chattel paper is
subject to a security interest, including an ownership interest. Any such
purchaser would not be deemed to have such knowledge because there are UCC
filings and would not learn of the sale of or security interest in the
Receivables from a review of the Receivables since they would not be marked to
show such sale.
SECURITY INTEREST IN VEHICLES
In states in which retail installment sale contracts and installment
loans such as the Motor Vehicle and Recreational Vehicle Receivables evidence
the credit sale of automobiles, light-duty trucks or recreational vehicles by
dealers to obligors, the contracts or loans also constitute personal property
security agreements and include grants of security interests in the vehicles
under the applicable UCC. Perfection of security interests in the automobiles
and recreational vehicles is generally governed by the motor vehicle
registration laws of the state in which the vehicle is located. In all states in
which the Receivables have been originated, except as noted below, a security
interest in Financed Vehicles is perfected by obtaining the certificate of title
to the Financed Vehicle or notation of the secured party's lien on the Financed
Vehicle's certificate of title. Notwithstanding the foregoing, in certain
states, folding camping trailers and/or slide-in campers, which may constitute
the Financed Vehicle with respect to certain Recreational Vehicle Receivables,
are not subject to state titling and vehicle registration laws and a security
interest in such recreation vehicles is perfected by filing pursuant to the
provisions of the UCC.
Unless otherwise specified in the related Prospectus Supplement, each
Seller will be obligated to have taken all actions necessary under the laws of
the state in which the Financed Vehicle is located to perfect its security
interest in the Financed Vehicle securing the related Receivable purchased by it
from a Dealer, including, where applicable, by having a notation of its lien
recorded on such vehicle's certificate of title or, if appropriate, by
perfecting its security interest in the related recreational vehicles under the
UCC. Because the Servicer will continue to service the contracts and loans, the
Obligors on the contracts and loans will not be notified of the sales from a
Seller to the Depositor or from the Depositor to the Trust, and no action will
be taken to record the transfer of the security interest from a Seller to the
Depositor or from the Depositor to the Trust by amendment of the certificates of
title for the Financed Vehicles or otherwise.
Pursuant to each Receivables Purchase Agreement, each Seller will
assign to the Depositor its interests in the Financed Vehicles securing the
Motor Vehicle and Recreational Vehicle Receivables assigned by that Seller to
the Depositor and, with respect to each Trust, pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, the Depositor will
assign its interests in the Financed Vehicles securing the related Receivables
to such Trust. However, because of the administrative burden and expense, none
of the Seller, the Depositor, the Servicer or the related Trustee will amend any
certificate of title to identify either the Depositor or such Trust as the new
secured party on such certificate of title relating to a Financed Vehicle nor
will any such entity execute and file any transfer instrument (including, among
other instruments, UCC-3 assignments for those Financed Recreational Vehicles
for which perfection is governed by the UCC).
In most states, an assignment such as that under each Receivables
Purchase Agreement, Sale and Servicing Agreement or Pooling and Servicing
Agreement is an effective conveyance of a security interest without amendment of
any lien noted on a vehicle's certificate of title or the execution or filing of
any transfer instrument, and the assignee succeeds thereby to the assignor's
rights as secured party. In some states, however, in the absence of such an
amendment, execution or filing, the assignment to the Applicable Trustee of a
security interest in Financed Vehicles registered therein may not be effective
or such security interest may not be perfected. If any otherwise effectively
assigned security interest in favor of the Applicable Trustee is not perfected,
such assignment of the security interest to such Trustee may not be effective
against creditors or a trustee in bankruptcy of the applicable Seller, which
continues to be specified as lienholder on any certificates of title or as
secured party on any UCC filing. However, UCC financing statements with respect
to the transfer of each Seller's security interest in related Financed Vehicles
to the Depositor and the transfer to the applicable Trust of the Seller's
security interest in such Financed Vehicles will be filed. In addition, the
Servicer will continue to hold any certificates of title relating to the
Financed Vehicles in its possession as custodian for such Trust pursuant to the
related Sale and Servicing Agreement or Pooling and Servicing Agreement. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables".
In addition, even in those states where an assignment such as that
under each Receivables Purchase Agreement, Sale and Servicing Agreement or
Pooling and Servicing Agreement is an effective conveyance of a security
interest without amendment of any lien noted on a vehicle's certificate of
title, by not identifying a Trust as the secured party on the certificate of
title, the security interest of such Trust in the vehicle could be defeated
through fraud or negligence. In such states, in the absence of fraud or forgery
by the vehicle owner or the Seller or administrative error by state or local
agencies, the notation of the Seller's lien on the certificates of title will be
sufficient to protect a Trust against the rights of subsequent purchasers of a
Financed Vehicle or subsequent lenders who take a security interest in a
Financed Vehicle. If there are any Financed Vehicles as to which the Seller
failed to obtain a perfected security interest, the security interest of the
related Trust would be subordinate to, among others, the interests of subsequent
purchasers of the Financed Vehicles and holders of perfected security interests
therein. Such a failure, however, would constitute a breach of the warranties of
the Depositor under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement and of the related Seller under the Receivables Purchase
Agreement and would create an obligation of the Depositor to repurchase the
related Receivable from the Trust and of the related Seller to simultaneously
repurchase the related Receivable from the Depositor unless the breach were
cured. See "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" and "Special Considerations--Certain Legal
Aspects--Security Interests in Financed Vehicles".
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the owner thereof re-registers the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to re-register a
vehicle. Accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle or, in the case of a vehicle registered in a
state providing for the notation of a lien on the certificate of title but not
possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. However, these procedural safeguards
will not protect the secured party if through fraud, forgery or administrative
error, the debtor somehow procures a new certificate of title that does not list
the secured party's lien. Additionally, in states that do not require a
certificate of title for registration of a motor vehicle or recreational
vehicle, re-registration could defeat perfection. In the ordinary course of
servicing motor vehicle or recreational vehicle receivables, the Servicer takes
steps to effect re-perfection upon receipt of notice of re-registration or
information from the obligor as to relocation. Similarly, when an obligor sells
a vehicle, the Servicer must surrender possession of the certificate of title or
will receive notice as a result of its lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related loan before release
of the lien. Under each Sale and Servicing Agreement and Pooling and Servicing
Agreement, the Servicer will be obligated to take appropriate steps, at the
Servicer's expense, to maintain perfection of security interests in the Financed
Vehicles and is obligated to purchase the related Receivable if it fails to do
so.
Under the laws of most states, liens for repairs performed on a motor
vehicle or recreational vehicle and liens for unpaid taxes take priority over
even a perfected security interest in a financed vehicle. The Code also grants
priority to certain federal tax liens over the lien of a secured party. The laws
of certain states and federal law permit the confiscation of vehicles by
governmental authorities under certain circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected security
interest in the confiscated vehicle. Under each Receivables Purchase Agreement,
the Seller will represent to the related Trust that, as of the date the related
Receivable is sold to such Trust, each security interest in a Financed Vehicle
is or will be prior to all other present liens (other than tax liens and other
liens that arise by operation of law) upon and security interests in such
Financed Vehicle. However, liens for repairs or taxes could arise, or the
confiscation of a Financed Vehicle could occur, at any time during the term of a
Receivable. No notice will be given to the Trustee, any Indenture Trustee, any
Noteholders or the Certificateholders in respect of a given Trust if such a lien
arises or confiscation occurs and any such lien or confiscation arising after
the applicable Closing Date would not give rise to the related Seller's
repurchase obligation under the applicable Receivables Purchase Agreement.
REPOSSESSION
In the event of default by vehicle purchasers, the holder of the motor
vehicle or recreational vehicle installment sale contract or installment loan
has all the remedies of a secured party under the UCC, except where specifically
limited by other state laws. Among the UCC remedies, the secured party has the
right to perform self-help repossession unless such act would constitute a
breach of the peace. Self-help is the method employed by the Servicer in most
cases and is accomplished simply by retaking possession of the financed vehicle.
In the event of default by the obligor, some jurisdictions require that the
obligor be notified of the default and be given a time period within which he
may cure the default prior to repossession. Generally, the right of
reinstatement may be exercised on a limited number of occasions in any one-year
period. In cases where the obligor objects or raises a defense to repossession,
or if otherwise required by applicable state law, a court order must be obtained
from the appropriate state court, and the vehicle must then be repossessed in
accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation plus reasonable
expenses for repossessing, holding and preparing the collateral for disposition
and arranging for its sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, by payment of delinquent installments or the unpaid
balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness. While some states impose prohibitions or limitations on deficiency
judgments if the net proceeds from resale do not cover the full amount of the
indebtedness, a deficiency judgment can be sought in those states that do not
prohibit or limit such judgments. However, the deficiency judgment would be a
personal judgment against the obligor for the shortfall, and a defaulting
obligor can be expected to have very little capital or sources of income
available following repossession. Therefore, in many cases, it may not be useful
to seek a deficiency judgment or, if one is obtained, it may be settled at a
significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC requires
the creditor to remit the surplus to any holder of a lien with respect to the
vehicle or if no such lienholder exists or there are remaining funds, the UCC
requires the creditor to remit the surplus to the former owner of the vehicle.
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 federal Truth in Lending Act, the
Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures
Act, the Magnuson--Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer
Credit Code, state adoptions of the National Consumer Act and of the Uniform
Consumer Credit Code and state motor vehicle retail installment sales acts,
retail installment sales acts and other similar laws. Also, state laws impose
finance charge ceilings and other restrictions on consumer transactions and
require contract disclosures in addition to those required under federal law.
These requirements impose specific statutory liabilities upon creditors who fail
to comply with their provisions. In some cases, this liability could affect an
assignee's ability to enforce consumer finance contracts such as the
Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC RULE"), the provisions of which are generally duplicated by
the Uniform Consumer Credit Code, other statutes or the common law, has the
effect of subjecting a seller in a consumer credit transaction (and certain
related creditors and their assignees) to all claims and defenses which the
obligor in the transaction could assert against the seller of the goods.
Liability under the FTC Rule is limited to the amounts paid by the obligor under
the contract and the holder of the contract may also be unable to collect any
balance remaining due thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable Financed
Vehicle may assert against the seller of the Financed Vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the Obligor on the
Receivable. If an Obligor were successful in asserting any such claim or
defense, such claim or defense would constitute a breach of the Seller's
warranties under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement and would create an obligation of the Seller to repurchase
the Receivable unless the breach is cured. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables".
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to borrowers.
Under each Receivables Purchase Agreement, the related Seller will
warrant to the related Depositor (who will in turn assign its rights under such
warranty to the applicable Trust under the related Sale and Servicing Agreement
or Pooling and Servicing Agreement) that each Receivable complies with all
requirements of law in all material respects. Accordingly, if an Obligor has a
claim against such Trust for violation of any law and such claim materially and
adversely affects such Trust's interest in a Receivable, such violation would
constitute a breach of the warranties of the Seller under such Receivables
Purchase Agreement and would create an obligation of the Seller to repurchase
the Receivable unless the breach is cured. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a vehicle, and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the vehicle
at the time of bankruptcy (as determined by the court), leaving the creditor as
a general unsecured creditor for the remainder of the indebtedness. A bankruptcy
court may also reduce the monthly payments due under a contract or change the
rate of interest and time of repayment of the indebtedness.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment of
Noteholders or Certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases or
Internal Revenue Service ("IRS ") rulings on similar transactions involving both
debt and equity interests issued by a trust with terms similar to those of the
Notes and the Certificates. As a result, the IRS may disagree with all or a part
of the discussion below. Prospective investors are urged to consult their own
tax advisors in determining the federal, state, local, foreign and any other tax
consequences to them of the purchase, ownership and disposition of the Notes and
the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. The opinion of special
Federal tax counsel to each Trust specified in the related Prospectus Supplement
("TAX COUNSEL"), regarding certain federal income tax matters is discussed
below. An opinion of Tax Counsel, however, is not binding on the IRS or the
courts. No ruling on any of the issues discussed below will be sought from the
IRS. For purposes of the following summary, references to the Trust, the Notes,
the Certificates and related terms, parties and documents shall be deemed to
refer, unless otherwise specified herein, to each Trust and the Notes,
Certificates and related terms, parties and documents applicable to such Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether an election is made to treat the Trust as a partnership
under the Code or whether the Trust will be treated as a grantor trust or
whether an election is made to treat the Trust as a FASIT under the Code. 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.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
With respect to a Trust for which a partnership election is made, it is
the opinion of Tax Counsel that such Trust will not be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes. This opinion will be based on the assumption that the terms of the
Trust Agreement and related documents will be complied with, and on Tax
Counsel's opinion that the nature of the income of the Trust will exempt it from
the rule that certain publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any such
corporate income tax could materially reduce cash available to make payments on
the Notes and distributions on the Certificates, and Certificateholders could be
liable for any such tax that is unpaid by the Trust
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Depositor will agree, and
the Noteholders will agree by their purchase of Notes, to treat such Notes as
debt for federal income tax purposes. It is the opinion of Tax Counsel that such
Notes will be classified as debt for federal income tax purposes. The discussion
below assumes this characterization of the Notes is correct.
OID, ETC. The discussion below assumes that all payments on the Notes
are denominated in U.S. dollars, and that the Notes are not Indexed Securities
or Strip Notes. Moreover, the discussion assumes that the interest formula for
the Notes meets the requirements for "qualified stated interest" under Treasury
regulations (the "OID REGULATIONS") relating to original issue discount ("OID"),
and that any OID on the Notes (i.e., any excess of the principal amount of the
Notes over their issue price) does not exceed a de minimis amount (i.e., 1/4% of
their principal amount multiplied by the number of full years included in their
term), all within the meaning of the OID Regulations. If these conditions are
not satisfied with respect to any given series of Notes, additional tax
considerations with respect to such Notes will be disclosed in the applicable
Prospectus Supplement.
INTEREST INCOME ON THE NOTES. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered to be
issued with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID Regulations, a holder of a
Note issued with a de minimis amount of OID must include such OID in income, on
a pro rata basis, as principal payments are made on the Note. A purchaser who
buys a Note for more or less than its principal amount will generally be
subject, respectively, to the premium amortization or market discount rules of
the Code.
A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "SHORT-TERM NOTE") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest income
as interest accrues on a straight-line basis over the term of each interest
period. Other cash basis holders of a Short-Term Note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon the
taxable disposition of the Short-Term Note). However, a cash basis holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
SALE OR OTHER DISPOSITION. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any market discount, acquisition discount, OID
and gain previously included by such Noteholder in income with respect to the
Note and decreased by the amount of bond premium (if any) previously amortized
and by the amount of principal payments previously received by such Noteholder
with respect to such Note. Any such gain or loss will be capital gain or loss if
the Note was held as a capital asset, except for gain representing accrued
interest and accrued market discount not previously included in income. Capital
losses generally may be used only to offset capital gains.
The Taxpayer Relief Act of 1997 revises the maximum rate of tax on net
capital gains for individuals on sales of certain assets (including stocks and
securities). The holding period for which an asset must be held for the gain
from its sale to be eligible for the lowest rate is increased from 12 months to
18 months, with a further rate reduction scheduled to take effect after the year
2000 for the sale of certain assets that have been held at least 5 years. The
Treasury Department is to issue regulations coordinating the capital gain
provisions with other rules involving the treatment of sales and exchange by
pass-through entities such as the Trust.
FOREIGN HOLDERS. Interest payments made (or accrued) to a Noteholder
who is a nonresident alien, foreign corporation or other non-United States
person (a "foreign person") generally will be considered "portfolio interest",
and generally will not be subject to United States federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent shareholder"
of the Trust or the Depositor (including a holder of 10% of the outstanding
Certificates) or a "controlled foreign corporation" with respect to which the
Trust or the Depositor is a "related person" within the meaning of the Code and
(ii) provides the Owner Trustee or other person who is otherwise required to
withhold U.S. tax with respect to the Notes with an appropriate statement (on
Form W-8 or a similar form), signed under penalties of perjury, certifying that
the beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide the relevant signed statement to the withholding agent;
in that case, however, the signed statement must be accompanied by a Form W-8 or
substitute form provided by the foreign person that owns the Note. If such
interest is not portfolio interest, then it will be subject to United States
federal income tax at graduated rates (if received by a non-U.S. person with
effectively connected income) and withholding tax at a rate of 30 percent,
unless reduced or eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
BACKUP WITHHOLDING. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's name,
address, correct federal taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt Noteholder fail
to provide the required certification, the Trust will be required to withhold 31
percent of the amount otherwise payable to the holder, and remit the withheld
amount to the IRS as a credit against the holder's federal income tax liability.
NEW WITHHOLDING REGULATIONS. On October 6, 1997, the Treasury
Department issued new regulations (the "New Regulations") which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. The New Regulations attempt to unify certification
requirements and modify reliance standards. The New Regulations will generally
be effective for payments made after December 31, 1998, subject to certain
transition rules. Prospective investors are urged to consult their own tax
advisors regarding the New Regulations.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the
opinion of Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust. If so treated, the Trust would likely
be treated as a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests. Nonetheless,
treatment of the Notes as equity interests in such a publicly traded partnership
could have adverse tax consequences to certain holders. For example, income to
certain tax-exempt entities (including pension funds) would be "unrelated
business taxable income", income to foreign holders generally would be subject
to U.S. tax and U.S. tax return filing and withholding requirements, and
individual holders might be subject to certain limitations on their ability to
deduct their share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. The Depositor and the Servicer
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificateholders (including
the Depositor in its capacity as recipient of distributions from the Reserve
Account), and the Notes being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates, the
Notes, the Depositor and the Servicer is not clear because there is no authority
on transactions closely comparable to that contemplated herein.
A VARIETY OF ALTERNATIVE CHARACTERIZATIONS ARE POSSIBLE. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Depositor or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
PARTNERSHIP TAXATION. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Receivables. The Trust's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that the Certificateholders will be allocated taxable
income of the Trust for each month equal to the sum of (i) the interest that
accrues on the Certificates in accordance with their terms for such month,
including interest accruing at the Pass Through Rate for such month and interest
on amounts previously due on the Certificates but not yet distributed; (ii) any
Trust income attributable to discount on the Receivables that corresponds to any
excess of the principal amount of the Certificates over their initial issue
price; (iii) prepayment premium payable to the Certificateholders for such
month; and (iv) any other amounts of income payable to the Certificateholders
for such month. Such allocation will be reduced by any amortization by the Trust
of premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining taxable income of the
Trust will be allocated to the Depositor. Based on the economic arrangement of
the parties, this approach for allocating Trust income should be permissible
under applicable Treasury regulations, although no assurance can be given that
the IRS would not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the foregoing method of allocation,
Certificateholders may be allocated income equal to the entire Pass Through Rate
plus the other items described above even though the Trust might not have
sufficient cash to make current cash distributions of such amount. Thus, cash
basis holders will in effect be required to report income from the Certificates
on the accrual basis and Certificateholders may become liable for taxes on Trust
income even if they have not received cash from the Trust to pay such taxes. In
addition, because tax allocations and tax reporting will be done on a uniform
basis for all Certificateholders but Certificateholders may be purchasing
Certificates at different times and at different prices, Certificateholders may
be required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the Trust.
All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees
to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
DISCOUNT AND PREMIUM. Unless otherwise indicated in the Prospectus
Supplement, the applicable Seller will represent that the Receivables were not
issued with OID, and, therefore, the Trust would not have OID income. However,
the purchase price paid by the Trust for the Receivables may be greater or less
than the remaining principal balance of the Receivables at the time of purchase.
If so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium against
interest income on the Receivables. As indicated above, a portion of such market
discount income or premium deduction may be allocated to Certificateholders.
SECTION 708 TERMINATION. Pursuant to final Treasury regulations issued
May 9, 1997 under Section 708 of the Code, a sale or exchange of 50% or more of
the capital and profits in the Trust would cause a deemed contribution of assets
of the Trust (the "old partnership") to a new partnership (the "new
partnership") in exchange for interests in the new partnership. Such interests
would be deemed distributed to the parties of the old partnership in liquidation
thereof and not constitute a sale or exchange.
DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would generally
be treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the
Trust's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificateholders
in proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Depositor is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
SECTION 754 ELECTION. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder had.
The tax basis of the Trust's assets will not be adjusted to reflect that higher
(or lower) basis unless the Trust were to file an election under Section 754 of
the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
ADMINISTRATIVE MATTERS. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's allocable share of items of Trust
income and expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-1 information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Depositor will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. It is not clear whether
the Trust would be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust would be engaged in a trade or business in the United States for
such purposes, the Trust will withhold as if it were so engaged in order to
protect the Trust from possible adverse consequences of a failure to withhold.
The Trust expects to withhold on the portion of its taxable income that is
allocable to foreign Certificateholders pursuant to Section 1446 of the Code, as
if such income were effectively connected to a U.S. trade or business, at a rate
of 35% for foreign holders that are taxable as corporations and 39.6% for all
other foreign holders. Subsequent adoption of Treasury regulations or the
issuance of other administrative pronouncements may require the Trust to change
its withholding procedures. In determining a holder's withholding status, the
Trust may rely on IRS Form W-8, IRS Form W-9 or the holder's certification of
nonforeign status signed under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust's income. Each foreign holder must obtain
a taxpayer identification number from the IRS and submit that number to the
Trust on Form W-8 in order to assure appropriate crediting of the taxes
withheld. A foreign holder generally would be entitled to file with the IRS a
claim for refund with respect to taxes withheld by the Trust, taking the
position that no taxes were due because the Trust was not engaged in a U.S.
trade or business. However, interest payments made (or accrued) to a
Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard to
the income of the Trust. If these interest payments are properly characterized
as guaranteed payments, then the interest will not be considered "portfolio
interest." As a result, Certificateholders will be subject to United States
federal income tax and withholding tax at a rate of 30 percent, unless reduced
or eliminated pursuant to an applicable treaty. In such case, a foreign holder
would only be entitled to claim a refund for that portion of the taxes in excess
of the taxes that should be withheld with respect to the guaranteed payments.
BACKUP WITHHOLDING. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
If a partnership election is not made, it is the opinion of Tax Counsel
that such a Trust will not be classified as an association taxable as a
corporation and that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of the Code. In this case, owners of
Certificates (referred to herein as "GRANTOR TRUST Certificateholders") will be
treated for federal income tax purposes as owners of a portion of the Trust's
assets as described below. The Certificates issued by a Trust that is treated as
a grantor trust are referred to herein as "GRANTOR TRUST CERTIFICATES".
CHARACTERIZATION. Each Grantor Trust Certificateholder will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables in the Trust represented by Grantor Trust Certificates,
including interest, OID, if any, prepayment fees, assumption fees, any gain
recognized upon an assumption and late payment charges received by the Servicer.
Under Sections 162 or 212 of the Code, each Grantor Trust Certificateholder will
be entitled to deduct its pro rata share of servicing fees, prepayment fees,
assumption fees, any loss recognized upon an assumption and late payment charges
retained by the Servicer, provided that such amounts are reasonable compensation
for services rendered to the Trust. Grantor Trust Certificateholders that are
individuals, estates or trusts will be entitled to deduct their share of
expenses only to the extent such expenses plus all other Section 212 expenses
exceed two percent of its adjusted gross income. A Grantor Trust
Certificateholder using the cash method of accounting must take into account its
pro rata share of income and deductions as and when collected by or paid to the
Servicer. A Grantor Trust Certificateholder using an accrual method of
accounting must take into account its pro rata share of income and deductions as
they become due or are paid to the Servicer, whichever is earlier. If the
servicing fees paid to the Servicer are deemed to exceed reasonable servicing
compensation, the amount of such excess could be considered as an ownership
interest retained by the Servicer (or any person to whom the Servicer assigned
for value all or a portion of the servicing fees) in a portion of the interest
payments on the Receivables. The Receivables would then be subject to the
"coupon stripping" rules of the Code discussed below.
PREMIUM. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable based
on each Receivable's relative fair market value, so that such holder's undivided
interest in each Receivable will have its own tax basis. A Grantor Trust
Certificateholder that acquires an interest in Receivables at a premium may
elect to amortize such premium under a constant interest method. Amortizable
bond premium will be treated as an offset to interest income on such Grantor
Trust Certificate. The basis for such Grantor Trust Certificate will be reduced
to the extent that amortizable premium is applied to offset interest payments.
It is not clear whether a reasonable prepayment assumption should be used in
computing amortization of premium allowable under Section 171. A Grantor Trust
Certificateholder that makes this election for a Grantor Trust Certificate that
is acquired at a premium will be deemed to have made an election to amortize
bond premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Certificateholder acquires during the year of
the election or thereafter.
If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a Grantor Trust Certificate acquired at a
premium should recognize a loss if a Receivable prepays in full, equal to the
difference between the portion of the prepaid principal amount of such
Receivable that is allocable to the Grantor Trust Certificate and the portion of
the adjusted basis of the Grantor Trust Certificate that is allocable to such
Receivable. If a reasonable prepayment assumption is used to amortize such
premium, it appears that such a loss would be available, if at all, only if
prepayments have occurred at a rate faster than the reasonable assumed
prepayment rate. It is not clear whether any other adjustments would be required
to reflect differences between an assumed prepayment rate and the actual rate of
prepayments.
STRIPPED BONDS AND STRIPPED COUPONS
Although the tax treatment of stripped bonds is not entirely clear,
based on guidance by the IRS, each purchaser of a Grantor Trust Certificate will
be treated as the purchaser of a stripped bond which generally should be treated
as a single debt instrument issued on the day it is purchased for purposes of
calculating any original issue discount. Generally, under recently issued
Treasury regulations (the "SECTION 1286 TREASURY REGULATIONS"), if the discount
on a stripped bond is larger than a de minimis amount (as calculated for
purposes of the OID rules of the Code) such stripped bond will be considered to
have been issued with OID. See "Original Issue Discount." Based on the preamble
to the Section 1286 Treasury Regulations, Tax Counsel is of the opinion that,
although the matter is not entirely clear, the interest income on the
Certificates at the sum of the Pass Through Rate and the portion of the
Servicing Fee Rate that does not constitute excess servicing will be treated as
"qualified stated interest" within the meaning of the Section 1286 Treasury
Regulations, and such income will be so treated in the Trustee's tax information
reporting.
ORIGINAL ISSUE DISCOUNT. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently Sections 1271 through 1273
and 1275) will be applicable to a Grantor Trust Certificateholder's interest in
those Receivables meeting the conditions necessary for these sections to apply.
Generally, a Grantor Trust Certificateholder that acquires an undivided interest
in a Receivable issued or acquired with OID must include in gross income the sum
of the "daily portions," of the OID on such Receivable for each day on which it
owns a Certificate, including the date of purchase but excluding the date of
disposition. In the case of an original Grantor Trust Certificateholder, the
daily portions of OID with respect to a Receivable generally would be determined
as follows. A calculation will be made of the portion of OID that accrues on the
Receivable during each successive monthly accrual period (or shorter period in
respect of the date of original issue or the final Distribution Date). This will
be done, in the case of each full monthly accrual period, by adding (i) the
present value of all remaining payments to be received on the Receivable under
the prepayment assumption used in respect of the Receivables and (ii) any
payments received during such accrual period, and subtracting from that total
the "adjusted issue price" of the Receivable at the beginning of such accrual
period. No representation is made that the Receivables will prepay at any
prepayment assumption. The "adjusted issue price" of a Receivable at the
beginning of the first accrual period is its issue price (as determined for
purposes of the OID rules of the Code) and the "adjusted issue price" of a
Receivable at the beginning of a subsequent accrual period is the "adjusted
issue price" at the beginning of the immediately preceding accrual period plus
the amount of OID allocable to that accrual period and reduced by the amount of
any payment (other than "qualified stated interest") made at the end of or
during that accrual period. The OID accruing during such accrual period will
then be divided by the number of days in the period to determine the daily
portion of OID for each day in the period. With respect to an initial accrual
period shorter than a full monthly accrual period, the daily portions of OID
must be determined according to an appropriate allocation under either an exact
or approximate method set forth in the OID Regulations, or some other reasonable
method, provided that such method is consistent with the method used to
determine the yield to maturity of the Receivables.
With respect to the Receivables, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Receivables. Subsequent purchasers that
purchase Receivables at more than a de minimis discount should consult their tax
advisors with respect to the proper method to accrue such OID.
MARKET DISCOUNT. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules of
Sections 1276 through 1278 to the extent an undivided interest in a Receivable
is considered to have been purchased at a "market discount." Generally, the
amount of market discount is equal to the excess of the portion of the principal
amount of such Receivable allocable to such holder's undivided interest over
such holder's tax basis in such interest. Market discount with respect to a
Grantor Trust Certificate will be considered to be zero if the amount allocable
to the Grantor Trust Certificate is less than 0.25% of the Grantor Trust
Certificate's stated redemption price at maturity multiplied by the weighted
average maturity remaining after the date of purchase. Treasury regulations
implementing the market discount rules have not yet been issued; therefore,
investors should consult their own tax advisors regarding the application of
these rules and the advisability of making any of the elections allowed under
Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be reduced
by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described in
the relevant legislative history will apply. Under those rules, the holder of a
market discount bond may elect to accrue market discount either on the basis of
a constant interest rate or according to one of the following methods. If a
Grantor Trust Certificate is issued with OID, the amount of market discount that
accrues during any accrual period would be equal to the product of (i) the total
remaining market discount and (ii) a fraction, the numerator of which is the OID
accruing during the period and the denominator of which is the total remaining
OID at the beginning of the accrual period. For Grantor Trust Certificates
issued without OID, the amount of market discount that accrues during a period
is equal to the product of (i) the total remaining market discount and (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the accrual period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the Grantor Trust Certificates) that provide for
payments that may be accelerated by reason of prepayments of other obligations
securing such instruments, the same prepayment assumption applicable to
calculating the accrual of OID will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a Grantor Trust Certificate
purchased at a discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry such Grantor Trust Certificate purchased with market discount. For
these purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
PREMIUM. To the extent a Grantor Trust Certificateholder is considered
to have purchased an undivided interest in a Receivable for an amount that is
greater than its stated redemption price at maturity of such Receivable, such
Grantor Trust Certificateholder will be considered to have purchased the
Receivable with "amortizable bond premium" equal in amount to such excess. A
Grantor Trust Certificateholder (who does not hold the Certificate for sale to
customers or in inventory) may elect under Section 171 of the Code to amortize
such premium. Under the Code, premium is allocated among the interest payments
on the Receivables to which it relates and is considered as an offset against
(and thus a reduction of) such interest payments. With certain exceptions, such
an election would apply to all debt instruments held or subsequently acquired by
the electing holder. Absent such an election, the premium will be deductible as
an ordinary loss only upon disposition of the Certificate or pro rata as
principal is paid on the Receivables.
ELECTION TO TREAT ALL INTEREST AS OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method. If such an election were to be
made with respect to a Grantor Trust Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Grantor Trust Certificateholder owns or acquires. See "--Premium" above. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Grantor Trust Certificate is irrevocable.
SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included in the seller's gross income with respect to the
Grantor Trust Certificate, and reduced by principal payments on the Grantor
Trust Certificate previously received by the seller. Such gain or loss will be
capital gain or loss to an owner for which a Grantor Trust Certificate is a
"capital asset" within the meaning of Section 1221, and will be long-term or
short-term depending on whether the Grantor Trust Certificate has been owned for
the long-term capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the sale
of a Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
NON-U.S. PERSONS. Generally, to the extent that a Grantor Trust
Certificate evidences ownership in underlying Receivables that were issued on or
before July 18, 1984, interest or OID paid by the person required to withhold
tax under Section 1441 or 1442 to (i) an owner that is not a U.S. Person (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 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 (other than a partnership
that is not treated as a United States person under any applicable Treasury
regulations) or an estate, the income of which from sources outside the United
States is includible in gross income for federal income tax purposes regardless
of its connection with the conduct of a trade or business within the United
States or a trust if a court within the United States is able to exercise
primary supervision of the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial decisions of
the trust. Notwithstanding the preceding sentence, to the extent provided in
Treasury regulations, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to such date, that elect to continue to
be treated as United States persons also will be a U.S. Person.
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.
TRUSTS FOR WHICH A FASIT ELECTION IS MADE
GENERAL. It is the opinion of Tax Counsel that the Trust will, on the
startup day, qualify as a FASIT and its proposed method of operation will enable
it to continue to meet the requirements for qualification and taxation as a
FASIT under the Code assuming a timely FASIT election is made. Based on the
foregoing and assuming compliance with the Transaction Documents, certain of the
Securities will qualify as regular interests in a FASIT ("Regular Securities")
which will generally be treated as debt for U.S. federal income tax purposes.
The Small Business Job Protection Act of 1996 added Sections 860H through 860L
of the Code (the "FASIT Provisions "), which provide for a new type of entity
for federal income tax purposes known as a "financial asset securitization
investment trust" (a "FASIT "). Although the FASIT provisions of the Code became
effective on September 1, 1997, no Treasury regulations or other administrative
guidance has been issued with respect to those provisions. Accordingly,
definitive guidance cannot be provided with respect to many aspects of the tax
treatment of the holders of Regular Securities and the ownership interest (the
"Ownership Securities," with the Regular Securities, the "Securities") in a
FASIT (the "FASIT Securityholders "). Investors also should note that the FASIT
discussion contained herein constitutes only the material federal income tax
consequences to holders of FASIT Securities. The Receivables will only be added
to or deleted from a Trust Fund for which a FASIT election has been made only in
a manner consistent with additions or deletions that would be permitted in the
case of a REMIC.
FASIT Securities will be classified as either FASIT Regular Securities,
which generally will be treated as debt for federal income tax purposes, or
FASIT Ownership Securities, which generally are not treated as debt for such
purposes, but rather as representing rights and responsibilities with respect to
the taxable income or loss of the related Series FASIT. The Prospectus
Supplement for each Series of Securities will indicate whether one or more FASIT
elections will be made for that Series and which Securities of such Series will
be designated as Regular Securities, and which, if any, will be designated as
Ownership Securities.
QUALIFICATION AS A FASIT. The Trust Fund underlying a Series (or one or
more designated pools of assets held in the Trust Fund) will qualify under the
Code as a FASIT in which the FASIT Regular Securities and the FASIT Ownership
Securities will constitute the "regular interest" and the "ownership interests,"
respectively, if (i) a FASIT election is in effect, (ii) certain tests
concerning (A) the composition of the FASIT's assets and (B) the nature of the
Securityholders' interests in the FASIT are met on a continuing basis, and (iii)
the Trust Fund is not a regulated investment company as defined in Section
851(a) of the Code.
ASSET COMPOSITION. In order for a Trust Fund (or one or more designated
pools of assets held by a Trust Fund) to be eligible for FASIT status,
substantially all of the assets of the Trust Fund (or the designated pool) must
consist of "permitted assets" as of the close of the third month beginning after
the closing date and at all times thereafter (the "FASIT QUALIFICATION TEST").
Permitted assets include (i) cash or cash equivalents, (ii) debt instruments
with fixed terms that would qualify as REMIC regular interests if issued by a
REMIC (generally, instruments that provide for interest at a fixed rate, a
qualifying variable rate, or a qualifying interest-only ("IO") type rate, (iii)
foreclosure property, (iv) certain hedging instruments (generally, interest and
currency rate swaps and credit enhancement contracts) that are reasonably
required to guarantee or hedge against the FASIT's risks associated with being
the obligor on FASIT interest, (v) contract rights to acquire qualifying debt
instruments or qualifying hedging instruments, (vi) FASIT regular interests, and
(vii) REMIC regular interests. Permitted assets do not include any debt
instruments issued by the holder of the FASIT's ownership interest or by any
person related to such holder.
INTERESTS IN A FASIT. In addition to the foregoing asset qualification
requirements, the interests in a FASIT also must meet certain requirements. All
of the interests in a FASIT must belong to either of the following: (i) one or
more classes of regular interests or (ii) a single class of ownership interest
that is held by a fully taxable domestic C corporation. In the case of Series
that include FASIT Ownership Securities, the ownership interest will be
represented by the FASIT Ownership Securities.
A FASIT interest generally qualifies as a regular interest if (i) it is
designated as a regular interest, (ii) it has a stated maturity no greater than
thirty years, (iii) it entitles its holder to a specified principal amount, (iv)
the issue price of the interest does not exceed 125% of its stated principal
amount, (v) the yield to maturity of the interest is less than the applicable
Treasury rate published by the Service plus 5%, and (vi) it if pays interest,
such interest is payable at either (a) a fixed rate with respect to the
principal amount of the regular interest or (b) a permissible variable rate with
respect to such principal amount. Permissible variable rates for FASIT regular
interests are the same as those for REMIC regular interests (i.e., certain
qualified floating rates and weighted average rates). Interest will be
considered to be based on a permissible variable rate if generally, (i) such
interest is unconditionally payable at least annually, (ii) the issue price of
the debt instrument does not exceed the total noncontingent principal payments
and (iii) interest is based on a "qualified floating rate," an "objective rate,"
a combination of a single fixed rate and one or more "qualified floating rate,"
one "qualified inverse floating rate," or a combination of "qualified floating
rates" that do not operate in a manner that significantly accelerates or defers
interest payments on such FASIT regular interest.
If a FASIT Security fails to meet one or more of the requirements set
out in clauses (iii), (iv), or (v), but otherwise meets the above requirements,
it may still qualify as a type of regular interest known as a "High-Yield
Interest". In addition, if a FASIT Security fails to meet the requirement of
clause (vi), but the interest payable on the Security consists of a specified
portion of the interest payments on permitted assets and that portion does not
vary over the life of the Security, the Security also will qualify as a
High-Yield Interest. A High-Yield Interest may be held only by domestic C
corporations that are fully subject to corporate income tax ("ELIGIBLE
CORPORATIONS"), other FASITs, and dealers in securities who acquire such
interests as inventory, rather than for investment. In addition, holders of
High-Yield Interests are subject to limitations on offset of income derived from
such interest. See "Federal Income Tax Consequences--FASIT Securities--Tax
Treatment of FASIT Regular Securities--Treatment of High-Yield Interests."
CONSEQUENCES OF DISQUALIFICATION. If a Series FASIT fails to comply
with one or more of the Code's ongoing requirements for FASIT status during any
taxable year, the Code provides that its FASIT status may be lost for that year
and thereafter. If FASIT status is lost, the treatment of the former FASIT and
the interests therein for federal income tax purposes is uncertain. The former
FASIT might be treated as a grantor trust, as a separate association taxable as
a corporation, or as a partnership. The FASIT Regular Securities could be
treated as debt instruments for federal income tax purposes or as equity
interests. Although the Code authorizes the Treasury to issue regulations that
address situations where a failure to meet the requirements for FASIT status
occurs inadvertently and in good faith, such regulations have not yet been
issued. It is possible that disqualification relief might be accompanied by
sanctions, such as the imposition of a corporate tax on all or a portion of the
FASIT's income for the period of time in which the requirements for FASIT status
are not satisfied.
TAX TREATMENT OF FASIT REGULAR SECURITIES
GENERAL. Payments received by holders of FASIT Regular Securities other
than High-Yield Interests will be accorded the same tax treatment under the Code
as payments received on other taxable debt instruments. Holders of FASIT Regular
Securities must report income from such Securities under an accrual method of
accounting, even if they otherwise would have used the cash receipts and
disbursements method and accordingly, may report income prior to the receipt of
any cash distribution corresponding to such income. Except in the case of FASIT
Regular Securities issued with original issue discount or acquired with market
discount or premium, interest paid or accrued on a FASIT Regular Security
generally will be treated as ordinary income to the Securityholder and a
principal payment on such Security will be treated as a return of capital to the
extent that the Securityholder's basis is allocable to that payment. FASIT
Regular Securities issued with original issue discount or acquired with market
discount or premium generally will treat interest and principal payments on such
Securities in the same manner as other debt instruments. High-Yield Securities
may be held only by fully taxable domestic C corporations, other FASITs, and
certain securities dealers. Holders of High-Yield Securities are subject to
limitations on their ability to use current losses or net operating loss
carryforwards or carrybacks to offset any income derived from those Securities.
TREATMENT OF REALIZED LOSSES. Although not entirely clear, it appears
that holders of FASIT Regular Securities that are corporations should in general
be allowed to deduct as an ordinary loss any loss sustained during the taxable
year on account of any such FASIT Regular Security becoming wholly or partially
worthless, and that, in general, holders of FASIT Regular Securities that are
not corporations should be allowed to deduct as a short-term capital loss any
loss sustained during the taxable year on account of any such FASIT Regular
Securities becoming wholly worthless. Although the matter is unclear,
non-corporate holders of FASIT Regular Securities may be allowed a bad debt
deduction at such time that the principal balance of any such FASIT Regular
Security is reduced to reflect realized losses resulting from any liquidated
Underlying Assets. The Internal Revenue Service, however, could take the
position that non-corporate holders will be allowed a bad debt deduction to
reflect realized losses only after all Underlying Assets remaining in the
related FASIT have been liquidated or the FASIT Regular Securities of the
related Series have been otherwise retired. Potential investors and Holders of
the FASIT Regular Securities are urged to consult their own tax advisors
regarding the appropriate timing, amount and character of any loss sustained
with respect to such FASIT Regular Securities, including any loss resulting from
the failure to recover previously accrued interest or discount income. Special
loss rules are applicable to banks and thrift institutions, including rules
regarding reserves for bad debts. Such taxpayers are advised to consult their
tax advisors regarding the treatment of losses on FASIT Regular Securities.
In addition, FASIT Regular Securities held by a financial institution
to which Section 585 of the Code applies will be treated as evidences of
indebtedness for purposes of Section 582(c)(1) of the Code. FASIT Securities
will not qualify as "Government securities" for either REIT or RIC qualification
purposes.
TREATMENT OF HIGH-YIELD INTEREST. High-Yield Interests are subject to
special rules regarding the eligibility of holders of such interests, and the
ability of such holders to offset income derived from their FASIT Security with
losses. High-Yield Interests may be held only by Eligible Corporations, other
FASITs, and dealers in securities who acquire such interests as inventory. If a
securities dealer (other than an Eligible Corporation) initially acquires a
High-Yield Interest as inventory, but later begins to hold it for investment,
the dealer will be subject to an excise tax equal to the income from the
High-Yield Interest multiplied by the highest corporate income tax rate. In
addition, transfers of High-Yield Interests to disqualified holders will be
disregarded for federal income tax purposes, and the transfer still will be
treated as the holder of the High-Yield Interest.
The holder of a High-Yield Interest may not use non-FASIT current
losses or net operating loss carryforwards or carrybacks to offset any income
derived from the High-Yield Interest, for either regular federal income tax
purposes or for alternative minimum tax purposes. In addition, the FASIT
provisions contain an anti-abuse rule that imposes corporate income tax on
income derived from a FASIT Regular Security that is held by a pass-through
entity (other than another FASIT) that issues debt or equity securities backed
by the FASIT Regular Security and that have the same features as High-Yield
Interests.
TAX TREATMENT OF FASIT OWNERSHIP SECURITIES
GENERAL. A FASIT Ownership Security represents the residual equity
interest in a FASIT. As such, the holder of a FASIT Ownership Security
determines its taxable income by taking into account all assets, liabilities,
and items of income, gain, deduction, loss, and credit of a FASIT. In general,
the character of the income to the holder of a FASIT Ownership Interest will be
the same as the character of such income to the FASIT, except that any
tax-exempt interest income taken into account by the holder of a FASIT Ownership
Interest is treated as ordinary income. In determining that taxable income, the
holder of a FASIT Ownership Security must determine the amount of interest,
original issue discount, market discount, and premium recognized with respect to
the FASIT's assets and the FASIT Regular Securities issued by the FASIT
according to a constant yield methodology and under an accrual method of
accounting. In addition, holders of FASIT Ownership Securities are subject to
the same limitations on their ability to use losses to offset income from their
FASIT Security as are the holders of High-Yield Interests. See "Federal Income
Tax Consequences--FASIT Securities--Tax Treatment of FASIT Regular
Securities--Treatment of High-Yield Interests."
Rules similar to the wash sale rules applicable to REMIC Residual
Securities also will apply to FASIT Ownership Securities. Accordingly, losses on
dispositions of a FASIT Ownership Security generally will be disallowed where,
within six months before or after the disposition, the seller of such Security
acquires any other FASIT Ownership Security or, in the case of a FASIT holding
mortgage assets, any interest in a Taxable Mortgage Pool, that is economically
comparable to a FASIT Ownership Security. In addition, if any security that is
sold or contributed to a FASIT by the holder of the related FASIT Ownership
Security was required to be marked-to-market under Code section 475 by such
holder, then section 475 will continue to apply to such securities, except that
the amount realized under the mark-to-market rules will be the greater of the
securities' value under present law or the securities' value after applying
special valuation rules contained in the FASIT provisions. Those special
valuation rules generally require that the value of debt instruments that are
not traded on an established securities market be determined by calculating the
present value of the reasonably expected payments under the instrument using a
discount rate of 120% of the applicable Federal rate, compounded semiannually.
The holder of a FASIT Ownership Security will be subject to a tax equal
to 100% of the net income derived by the FASIT from any "prohibited
transactions." Prohibited transactions include (i) the receipt of income derived
from assets that are not permitted assets, (ii) certain dispositions of
permitted assets, (iii) the receipt of any income derived from any loan
originated by a FASIT, and (iv) in certain cases, the receipt of income
representing a servicing fee or other compensation. Any Series for which a FASIT
election is made generally will be structured in order to avoid application of
the prohibited transaction tax.
BACKUP WITHHOLDING, REPORTING AND TAX ADMINISTRATION. Holders of FASIT
Securities will be subject to backup withholding to the same extent holders of
other debt instruments would be subject. For purposes of reporting and tax
administration, holders of record of FASIT Securities generally will be treated
in the same manner as holders of other debt instruments.
* * *
THE FEDERAL TAX CONSEQUENCES SET FORTH ABOVE MAY NOT BE APPLICABLE TO A
PARTICULAR NOTEHOLDER OR CERTIFICATEHOLDER DEPENDING UPON SUCH NOTEHOLDER'S OR
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF FUTURE CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "BENEFIT PLAN"), from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for such persons.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased Notes or Certificates if assets of the Trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "PLAN ASSETS REGULATION"), the assets of a Trust would
be treated as plan assets of a Benefit Plan for the purposes of ERISA and the
Code only if the Benefit Plan acquired an "equity interest" in the Trust and
none of the exceptions contained in the Plan Assets Regulation was applicable.
An equity interest is defined under the Plan Assets Regulation as an interest
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The likely treatment in this
context of Notes and Certificates of a given series will be discussed in the
related Prospectus Supplement.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Securities of a given
series should consult its tax and/or legal advisors regarding whether the assets
of the related Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
SENIOR CERTIFICATES ISSUED BY TRUSTS THAT DO NOT ISSUE NOTES
Unless otherwise specified in the related Prospectus Supplement, the
following discussion applies only to nonsubordinated Certificates (referred to
herein as "SENIOR CERTIFICATES") issued by a Trust that does not issue Notes.
The U.S. Department of Labor has granted to the lead Underwriter named
in the Prospectus Supplement an exemption (the "EXEMPTION") from certain of the
prohibited transaction rules of ERISA with respect to the initial purchase, the
holding and the subsequent resale by Benefit Plans of certificates representing
interests in asset-backed pass-through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The receivables covered by the Exemption include
motor vehicle installment sales contracts such as the Receivables. The Exemption
will apply to the acquisition, holding and resale of the Senior Certificates by
a Benefit Plan, provided that certain conditions (certain of which are described
below) are met.
Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:
(1) The acquisition of the Senior Certificates by a Benefit Plan is on terms
(including the price for the Senior Certificates) that are at least as favorable
to the Benefit Plan as they would be in an arm's length transaction with an
unrelated party;
(2) The rights and interests evidenced by the Senior Certificates acquired by
the Benefit Plan are not subordinated to the rights and interests evidenced by
other certificates of the Trust;
(3) The Senior Certificates acquired by the Benefit Plan have received a rating
at the time of such acquisition that is in one of the three highest generic
rating categories from Standard & Poor's Ratings Service, Moody's Investor
Service, Inc., Duff & Phelps Credit Rating Co. or Fitch IBCA, Inc.;
(4) The Trustee is not an affiliate of any other member of the Restricted Group
(as defined below);
(5) The sum of all payments made to the Underwriters in connection with the
distribution of the Senior Certificates represents not more than reasonable
compensation for underwriting the Senior Certificates; the sum of all payments
made to and retained by the Seller pursuant to the sale of the Contracts to the
Trust represents not more than the fair market value of such Contracts; and the
sum of all payments made to and retained by the Servicer represents not more
than reasonable compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection therewith; and
(6) The Benefit Plan investing in the Senior Certificates is an "accredited
investor" as defined in Rule 501 (a)(1) of Regulation D of the Securities and
Exchange Commission under the Securities Act of 1933.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty (50) percent of the Senior
Certificates and of the aggregate interests in the Trust are acquired by persons
independent of the Restricted Group, (ii) the Benefit Plan's investment in
Senior Certificates does not exceed twenty-five (25) percent of all of the
Senior Certificates outstanding at the time of the acquisition, and (iii)
immediately after the acquisition, no more than twenty-five (25) percent of the
assets of Benefit Plans for which the fiduciary renders investment advice or has
discretionary authority are invested in certificates representing an interest in
one or more trusts containing assets sold or serviced by the same entity. The
Exemption does not apply to Benefit Plans sponsored by the Depositor, the
related Seller, any Underwriter, the Trustee, the Servicer, any obligor with
respect to Contracts included in the Trust constituting more than five percent
of the aggregate unamortized principal balance of the assets in the Trust, or
any affiliate of such parties (the "RESTRICTED GROUP").
The Prospectus Supplement for each series will indicate the classes of
Securities offered thereby to which the Exemptions will apply.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Securities of a given series (the "UNDERWRITING AGREEMENT"), the
Depositor will agree to cause the related Trust to sell to the underwriters
named therein and in the related Prospectus Supplement, and each of such
underwriters will severally agree to purchase, the principal amount of each
class of Notes and Certificates, as the case may be, of the related series set
forth therein and in the related Prospectus Supplement.
In each Underwriting Agreement 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.
This Prospectus may be used, to the extent required, by the Underwriter
in connection with offers and sales related to market making transactions.
Each Underwriting Agreement will provide that the Depositor will
indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters or from the
Depositor.
The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust and the Depositor by Brown & Wood LLP, New
York, New York, and for the Underwriter for such series by Brown & Wood LLP.
Material federal income tax will be passed upon for each Trust by Brown & Wood
LLP.
INDEX OF TERMS
Accelerated Principal Distribution Amount.................................16
Actuarial Receivables.....................................................15
Administration Agreement..................................................41
Administration Fee........................................................41
Administrator.............................................................41
Advance....................................................................5
Advances..................................................................36
Applicable Trustee........................................................28
APR........................................................................6
Available Amount..........................................................21
Base Rate.................................................................24
Benefit Plan..............................................................59
Business Day...............................................................5
Calculation Agent.........................................................24
Calculation Date..................................................25, 26, 28
CD Rate...................................................................25
CD Rate Determination Date................................................25
CD Rate Security..........................................................24
Cede...................................................................2, 12
Cedel.....................................................................29
Cedel Participants........................................................29
Certificate Balance....................................................20, 4
Certificate Distribution Account..........................................34
Certificate Interest Reserve Amount.......................................21
Certificate Pool Factor...................................................16
Certificateholders.........................................................6
Certificateholders' Distributable Amount..................................20
Certificateholders' Interest Carryover Shortfall..........................20
Certificateholders' Interest Distributable Amount.........................20
Certificateholders' Monthly Interest Distributable Amount.................20
Certificateholders' Monthly Principal Distributable Amount................20
Certificateholders' Principal Carryover Shortfall.........................20
Certificateholders' Principal Distributable Amount........................20
Certificates...........................................................1, 18
CERTIFICATES...............................................................1
chattel paper.............................................................41
Class [ ] Final Scheduled Distribution Date...............................5
Class [ ] Notes........................................................3, 4
Class [ ] Rate............................................................5
Closing Date........................................................4, 1, 33
Code...................................................................4, 45
Collection Account..................................................7, 3, 34
Collection Period...................................................5, 2, 35
Commercial Paper Rate.....................................................25
Commercial Paper Rate Determination Date..................................25
Commercial Paper Rate Security............................................24
Commission..............................................................3, 2
Company.........................................................18, 2, 3, 18
Composite Quotations......................................................24
Cooperative...............................................................29
Cut-off Date...........................................................4, 13
Dealer Agreements.........................................................13
Dealers...................................................................12
Definitive Certificates...................................................30
Definitive Notes..........................................................30
Definitive Securities.....................................................30
Depositaries..............................................................28
Depositor...........................................................3, 4, 18
Depository................................................................18
Determination Date..................................................5, 16, 2
Distribution Date.......................................................2, 5
Distribution Dates.........................................................5
DTC....................................................................3, 12
DTC's Nominee.............................................................12
Eligible Deposit Account..................................................35
Eligible Institution......................................................35
Eligible Investments......................................................35
ERISA......................................................................7
Euroclear.................................................................29
Euroclear Operator........................................................29
Euroclear Participants....................................................29
Events of Default.........................................................20
Exchange A.................................................................3
Exchange Act...............................................................2
Exemption.................................................................59
FASIT.....................................................................56
FASIT Provisions..........................................................56
FASIT Qualification Test..................................................56
FASIT Securityholders.....................................................56
Federal Funds Rate........................................................26
Federal Funds Rate Determination Date.....................................26
Federal Funds Rate Security...............................................24
Final Scheduled Distribution Date.....................................18, 11
Final Scheduled Maturity Date........................................4, 1, 6
Financed Motor Vehicles...................................................12
Financed Recreational Vehicles............................................12
Financed Vehicles.......................................................2, 4
Fixed Rate Securities.....................................................24
Floating Rate Interest Accrual Period..................................5, 15
Floating Rate Securities..................................................24
foreign person............................................................47
FTC Rule..................................................................44
Funding Period.............................................................3
Grantor Trust Certificateholders..........................................52
Grantor Trust Certificates................................................52
H.15(519).................................................................24
High-Yield Interest.......................................................57
Indenture..................................................................4
Indenture Trustee......................................................4, 18
Index Maturity............................................................24
Indirect Participants.....................................................28
Initial Cut-off Date.......................................................4
Initial Pool Balance...................................................4, 41
Initial Receivables........................................................4
Insolvency Event..........................................................39
Interest Distribution Amount..........................................18, 11
Interest Rate..............................................................3
Interest Reset Date.......................................................24
Interest Reset Period.....................................................24
Investment Earnings.......................................................35
IO 56
IRS.......................................................................45
Issuer..................................................................4, 3
LIBOR.....................................................................26
LIBOR Determination Date..................................................26
LIBOR Reuters.............................................................26
LIBOR Security............................................................24
Liquidated Receivables....................................................18
Liquidation Proceeds......................................................18
London Banking Day........................................................26
Money Market Yield........................................................25
Motor Vehicle Receivables.................................................12
new partnership...........................................................49
New Regulations...........................................................47
Nonbank Seller.............................................................9
Note Distribution Account.................................................34
Note Pool Factor..........................................................16
Noteholders' Distributable Amount.........................................19
Noteholders' Interest Carryover Shortfall.................................19
Noteholders' Interest Distributable Amount................................19
Noteholders' Monthly Interest Distributable Amount........................19
Noteholders' Monthly Principal Distributable Amount.......................20
Noteholders' Principal Carryover Shortfall................................20
Noteholders' Principal Distributable Amount...............................19
Notes......................................................................3
Obligors..................................................................12
OID...................................................................22, 46
OID regulations...........................................................46
old partnership...........................................................49
Owner Trustee..............................................................4
Participants..........................................................18, 28
Pass Through Rate..........................................................7
Payment Date...............................................................5
Plan......................................................................22
Pool Balance...............................................................4
Pooling and Servicing Agreement............................................3
Pre-Funding Account....................................................18, 3
Prospectus.................................................................3
Rating Agency..............................................................8
Realized Losses...........................................................18
Receivables............................................................2, 18
Receivables Pool......................................................11, 12
Record Date................................................................5
Recreational Vehicle Receivables..........................................13
Redemption Price..........................................................16
Registration Statement.....................................................2
Regular Principal Distribution Amount..................................5, 16
Reuters Screen LIBO Page..................................................26
Sale and Servicing Agreement...............................................4
Securities.................................................................4
Securities Act.............................................................2
Securityholders............................................................6
Seller.....................................................................4
Servicer............................................................4, 18, 3
Servicing Fee Rate........................................................36
Strip Notes................................................................3
Subsequent Receivables....................................................18
Tax Counsel............................................................8, 45
Telerate Page.............................................................27
Total Distribution Amount.................................................18
Transfer and Servicing Agreements.........................................17
Transferor.................................................................3
Trust......................................................................4
Trust Agreement............................................................4
Trustee....................................................................3
Underwriter................................................................3
Underwriting Agreement....................................................23
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Securities (the "Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities through any
of DTC, CEDEL or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against-payment basis
through the respective Depositaries of CEDEL and Euroclear (in such capacity)
and DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, CEDEL and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior debt issues. Investors'
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payments in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the procedures applicable to book-entry
securities in same-day funds.
TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PURCHASER. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a CEDEL Participant or a Euroclear Participant, the purchaser
will send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear, as applicable, will instruct its Depositary to receive the Global
Securities against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding the
settlement date. Payment will then be made by such Depositary to the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
applicable clearing system and by the clearing system, in accordance with its
usual procedures, to the CEDEL Participant's or Euroclear Participant's account.
The Global Securities credit will appear the next day (European time) and the
cash debit will be back-valued to, and the interest on the Global Securities
will accrue from, the value date (which would be the preceding day when
settlement occurred in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the CEDEL or Euroclear cash debit will be
valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within CEDEL or Euroclear. Under this
approach, they may take on credit exposure to CEDEL or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, CEDEL Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each CEDEL
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of CEDEL Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing systems,
through their respective Depositaries, to a DTC Participant. The seller will
send instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. In these cases, CEDEL
or Euroclear will instruct their respective Depositaries, as appropriate, to
deliver the bonds to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date. The payment will then
be reflected in the account of the CEDEL Participant or Euroclear Participant
the following day, and receipt of the cash proceeds in the CEDEL Participant's
or Euroclear Participant's account would be back-valued to the value date (which
would be the preceding day, when settlement occurred in New York). Should the
CEDEL Participant or Euroclear Participant have a line of credit with its
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
CEDEL Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date. Finally, day traders that use CEDEL or
Euroclear and that purchase Global Securities from DTC Participants for delivery
to CEDEL Participants or Euroclear Participants should note that these trades
would automatically fail on the sale side unless affirmative action were taken.
At least three techniques should be readily available to eliminate this
potential problem:
(a) borrowing through CEDEL or Euroclear for one day
(until the purchase side of the day trade is reflected in their CEDEL
or Euroclear accounts) in accordance with the clearing system's
customary procedures;
(b) borrowing the Global Securities in the U.S. from a
DTC Participant no later than one day prior to settlement, which would
give the Global Securities sufficient time to be reflected in their
CEDEL or Euroclear account in order to settle the sale side of the
trade; or
(c) staggering the value dates for the buy and sell
sides of the trade so that the value date for the purchase from the DTC
Participant is at least one day prior to the value date for the sale to
the CEDEL Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
CEDEL or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
EXEMPTION OF NON-U.S. PERSONS (FORM W-8). Beneficial owners of
Notes that are non-U.S. Persons generally can obtain a complete
exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form W-8
changes, a new Form W-8 must be filed within 30 days of such change.
EXEMPTION FOR NON-U.S. PERSON WITH EFFECTIVELY CONNECTED
INCOME (FORM 4224). A non-U.S. Person, including a non-U.S. corporation
or bank with a U.S. branch, for which the interest income is
effectively connected with its conduct of a trade or business in the
United States can obtain an exemption from the withholding tax by
filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the
United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN
TREATY COUNTRIES (FORM 1001). Non-U.S. Persons that are beneficial
owners of Notes residing in a country that has a tax treaty with the
United States can obtain an exemption or reduced tax rate (depending on
the treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced
Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the beneficial
owner of Notes or such owner's agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can
obtain a complete exemption from the withholding tax by filing Form W-9
(Payer's Request for Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The beneficial
owner of a Global Security or, in the case of a Form 1001 or a Form
4224 filer, such owner's agent, files by submitting the appropriate
form to the person through whom it holds the security (the clearing
agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means a citizen or resident of the United
States, a corporation or a partnership organized in or under the laws
of the United States or any political subdivision thereof or an estate,
the income of which from sources outside the United States is
includible in gross income for federal income tax purposes regardless
of its connection with the conduct of a trade or business within the
United States or a trust if a court within the United States is able to
exercise primary supervision of the administration of the trust and one
or more United States fiduciaries have the authority to control all
substantial decisions of the trust.
This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the
Global Securities.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Expenses in connection with the offering of the Securities being
registered herein are estimated as follows:
SEC registration fee.......................... $ 73,750
Legal fees and expenses....................... 100,000
Accounting fees and expenses.................. 35,000
Blue sky fees and expenses.................... 5,000
Rating agency fees............................ 160,000
Trustee's fees and expenses................... 20,000
Indenture Trustee's fees and expenses......... 55,000
Printing...................................... 25,000
Miscellaneous................................. 6,250
-------
Total......................................... $ 480,000
=========
- -------------------
* All amounts except the SEC Registration Fee are estimates of
expenses incurred or to be incurred in connection with the issuance and
distribution of a Series of Securities in an aggregate principal amount
assumed for these purposes to be equal to $250,000,000 of Securities
registered hereby.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
SSB Vehicle Securities Inc. (the "Registrant") has undertaken in its
articles of incorporation and by-laws to indemnify, to the maximum extent
permitted by the Delaware General Corporation Law as from time to time amended,
any currently acting or former director, officer, employee and agent of the
Registrant against any and all liabilities incurred in connection with their
services in such capacities.
ITEM 16. EXHIBITS.
* 1.1 Form of Underwriting Agreement for Owner Trusts
* 1.2 Form of Underwriting Agreement for Grantor Trusts
** 3.1 Articles of Incorporation of the Registrant
** 3.2 Bylaws of the Registrant
* 4.1 Form of Trust Agreement (including form of Certificates)
* 4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)
* 4.3 Form of Indenture (including form of Notes)
** 5.1 Opinion of Brown & Wood LLP with respect to legality
** 8.1 Opinion of Brown & Wood LLP with respect to certain tax matters
*10.1 Form of Sale and Servicing Agreement
*10.2 Form of Administration Agreement
*10.3 Form of Receivables Purchase Agreement
**23.1 Consent of Brown & Wood LLP (included in Exhibit 5.1)
**23.2 Consent of Brown & Wood LLP (included in Exhibit 8.1)
**24.1 Power of Attorney
(included on Page II-4)
- -------------------
* Incorporated by reference from the Registrant's Registration
Statement No. 333-41949.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) As to Rule 415:
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) As to documents subsequently filed that are incorporated by reference:
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) As to indemnification:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(e) As to qualification of trust indentures:
The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe (i) that it
meets all of the requirements for filing on Form S-3 and (ii) that the security
rating requirement will be met by the time of sale of the securities, and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, the State of
New York, on September 29, 1998.
SSB VEHICLE SECURITIES INC.
By: *
----------------------------
Name: Jeffrey A. Perlowitz
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Form S-3 Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President and Director September 29, 1998
- --------------------------- (Principal Executive Officer)
Jeffrey A. Perlowitz
* Treasurer September 29, 1998
- --------------------------- (Principal Financial Officer and Principal
Joseph J. Martinelli Accounting Officer)
Vice President and Director
*
- ---------------------------
Thomas G. Maheras
* Vice President and Director September 29, 1998
- ---------------------------
Mark I. Tsesarsky
* Director September 29, 1998
- ---------------------------
Elizabeth S. Eldridge
* Director September 29, 1998
- ---------------------------
Juliana C. Johnson
*By: /s/ Ted Yarbrough
-----------------------
Ted Yarbrough
Attorney-in-Fact
</TABLE>
Registration No. 333-63005
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
SSB VEHICLE SECURITIES INC.
(Exact name of registrant as specified in its governing instrument)
---------------------
EXHIBIT VOLUME
EXHIBIT INDEX
* 1.1 Form of Underwriting Agreement for Owner Trusts
* 1.2 Form of Underwriting Agreement for Grantor Trusts
** 3.1 Articles of Incorporation of the Registrant
** 3.2 Bylaws of the Registrant
* 4.1 Form of Trust Agreement (including form of Certificates)
* 4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)
* 4.3 Form of Indenture (including form of Notes)
**5.1 Opinion of Brown & Wood LLP with respect to legality
**8.1 Opinion of Brown & Wood LLP with respect to certain tax matters
*10.1 Form of Sale and Servicing Agreement
*10.2 Form of Administration Agreement
*10.3 Form of Receivables Purchase Agreement
**23.1 Consent of Brown & Wood LLP (included in Exhibit 5.1)
**23.2 Consent of Brown & Wood LLP (included in Exhibit 8.1)
**24.1 Power of Attorney (included on Page II-4)
- -------------------
* Incorporated by reference from the Registrant's Registration
Statement No. 333-41949.
** Previously filed.
